Energy names weaken as supply glut pressures oil prices; Cliffs extends early tender date

By Stephanie N. Rotondo

Phoenix, March 12 – Another decline in oil prices was weighing down distressed energy names in Thursday trading.

Prices fell after the Energy Information Administration said Wednesday that U.S. stockpiles were at 80-year highs.

West Texas Intermediate crude declined $1.24, or 2.57%, to $46.93 a barrel. Brent crude slipped 50 cents to $57.04.

Among oil and gas names, EXCO Resources Inc.’s 7½% notes due 2018 were “down significantly,” according to a trader. He pegged the notes at 68, down 6 points from Monday.

Among other big losers, Comstock Resources Inc.’s 7¾% notes due 2019 were seen down 7 points from trades a week ago, with a trader placing the issue at 49¾.

In Swift Energy Co., the 7 7/8% notes due 2022 declined 4 points from Monday, ending Thursday’s session at 47. The 8 7/8% notes due 2020 closed down 1¾ points at 47½.

And, Midstates Petroleum Co. Inc.’s 10¾% notes due 2020 dropped 5 points to 56, a trader said.

“Yikes,” he said.

Another trader noted that the weak oil environment was also weighing on recent new deals from the sector.

He saw Peabody Energy Corp.’s $1 billion of 10% notes due 2022 at 96, off a point. Energy XXI Gulf Coast Inc.’s $1.45 billion of 11% notes due 2020 meantime slipped half a point to a point to a 96½ to 97 context.

Both issues priced March 5 at a discount: Peabody at 97.566 and Energy XXI at 96.313.

Cliffs provides early tender results

Cliffs Natural Resources Inc. announced early tender results on Wednesday, reporting that $635 million of its four series of notes had been validly tendered.

Additionally, the company said it extended the early tender date to midnight ET at March 25.

One trader said the bonds were better on the day after the announcement.

He saw the 6¼% notes due 2040 moving into the “higher-50s,” which were previously around 50. The 4 7/8% notes due 2021 were meantime closing in a 64 to 65 zip code, up from the low-60s.

However, another trader deemed the debt lower, seeing the 4 7/8% notes at 64½, off half a point.

The 5.95% notes due 2018 – an issue not included in the tender offer – were down almost a point at 80, the trader said.

The exchange offer – holders will receive 7¾% senior secured notes due 2020 for their holdings – was first announced Feb. 27.

Cliffs is a Cleveland-based mining and natural resources company.

Bon-Ton bonds gain

Bon-Ton Stores Inc.’s 8% notes due 2021 were improving Thursday following the company’s earnings release.

One trader called the issue 4 points better at 78, while another saw the issue rising 3 points to 77½.

For the fourth quarter, the retailer posted net income of $71.7 million, or $3.55 per share, up from $61.3 million, or $3.04 per share, the year before.

The quarter included a $10.8 million insurance settlement gain.

Same-store sales improved 4.3% and sales for the holiday quarter increased to $942.6 million.

For the year, the company reported a net loss of $7 million, or 36 cents per share.

That was wider than the $3.6 million loss, or 19 cents per share, in 2013.

Still, same-store sales were slightly higher, rising 0.2%. Total sales were down 0.5% to $2.76 billion.

For 2015, Bon-Ton is expecting adjusted earnings of $150 million to $160 million. Earnings per share are forecast between a loss of 25 cents and an income of 25 cents.

© 2015 Prospect News.
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