Whiting Petroleum debt pops on debt exchange news; energy sector firm; Intelsat bonds remain weak

By Stephanie N. Rotondo

Seattle, March 18 – Whiting Petroleum Corp. was the nom du jour in the distressed debt market on Friday, jumping as much as 10 points on word the company had wrapped a private debt swap.

A trader said the 5% notes due 2019 traded up almost 5 points to 76 on “tons of trades.” He also saw the 6½% notes due 2018 rising 10½ points to 71¼.

At another desk, a trader said the 5% notes improved by 10 points, trading as high as 80. He called the 5¾% notes due 2021 8 points better at 76.

The Denver-based oil and gas producer said Friday that it had reached a deal with bondholders to privately exchange approximately $430 million of unsecured notes for new convertible notes due in 2018, 2019 and 2021.

Elsewhere in the oil and gas space, bonds were trending higher, even as oil prices came in towards the end of the day.

“Oil was up pretty good, but now it’s down almost a buck,” a trader said at the close.

The weakness in the commodity – domestic crude closed off almost 1% at $41.27 a barrel – came as Baker Hughes reported that active drill rigs in the U.S. increased by one this week. The addition comes after 12 weeks of declines.

Profit taking was also blamed for oil’s slip.

A trader said Linn Energy LLC’s 8 5/8% notes due 2020 were up a point at 11¾. The trader also saw Continental Resources Inc.’s 3.8% notes due 2024 popping 3 points to 85½.

Marathon Oil Corp. – a “crossover name that’s trading into our area,” a trader said – meantime saw its 5.2% notes due 2045 inching up half a point to 73.

Late Thursday, it was reported that the Houston-based company was looking to sell its assets in Wyoming in an effort to divest its non-core assets. Once a sale is completed, the company plans to leave the state altogether, following in the footsteps of Anadarko Petroleum Corp.

Anadarko recently sold off fields in Casper, methane assets in the Powder River Basin and mining leases in the southwestern region of the state.

Intelsat fades

Intelsat SA debt remained under pressure on Friday, as investors continued to react poorly to word a planned credit facility amendment had fallen through.

One trader said the name was “fairly active,” seeing the 7¼% notes due 2020 slipping to 67. The 6 5/8% notes due 2022 were off “maybe another half a point to a point,” the trader said, ending in a 56½ to 57 context.

A second trader pegged the 5½% notes due 2023 at 63, off a point.

On Feb. 29, Intelsat said it was seeking permission to permit second-lien pledges by the parent organization over the capital stock of Intelsat Jackson and technical changes confirming its existing ability to refinance term loans with other first-lien debt.

The proposed amendment also outlined that if Intelsat Jackson raises at least $450 million of gross cash proceeds of first-lien debt, the revolving credit commitment will be reduced to $350 million.

Talks apparently broke down and a deadline to get such a deal done expired March 11, according to news reports. Before breaking down, Intelsat was said to have offered creditors 50 basis points and about $8 million on the loans.

It was also reported that because of the breakdown on the credit amendment, the company had entered into talks with bondholders on a possible debt exchange.

Intelsat is a Luxembourg-based provider of satellite services.

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