Hi-Crush notes down in aftermath of earnings report; Jupiter Resources lower

By James McCandless

San Antonio, Oct. 31 – The distressed space tilted further towards energy in Wednesday’s session amid declines in news-driven names.

Hi-Crush Partners LP’s notes were under pressure Wednesday as the company faces market scrutiny over its recent third-quarter earnings report.

Meanwhile, Jupiter Resources Inc.’s issues moved lower after the company announced a recapitalization transaction.

Elsewhere in the energy space, Weatherford International plc’s paper improved after two days of declines in the wake of its dismal third-quarter report.

Ensco plc’s paper was mixed after the company and Rowan Cos., which it is set to acquire, posted earnings losses this week.

Sanchez Energy Corp.’s notes continued to take a beating as California Resources Corp.’s issues improved.

In telecom, Intelsat SA’s notes were mixed a day after the company reported a loss in its third-quarter earnings. Frontier Communications Corp.’s issues saw gains.

Diebold Nixdorf, Inc.’s paper saw a boost after topping revenue estimates in its third-quarter report posted Wednesday.

Hi-Crush lower

Hi-Crush’s notes were declining Wednesday, traders said.

The 9½% notes due 2026 fell about 2½ points to close at 80½ bid.

On Tuesday, the Houston-based energy logistics company reported earnings of 36 cents per share, surpassing analyst estimates of 31 cents per share, a 10.9% drop in profit during the same period last year.

“When you look at it that way, the numbers were weaker than expected,” a trader said. “There’s also some talk of issues with its recent acquisition. On the conference call, someone accused them of being a part of a fraudulent conveyance.”

Last week, the company announced that it would be purchasing partner Hi-Crush Proppants. The new corporate structure saw six board members resign.

“They’ve been a target for a few weeks now,” the trader said.

The 9½% notes were trading at 92½ bid on Oct. 22 when news of the transaction broke.

Jupiter down

Meanwhile, Jupiter Resources’ issues also trended negative, market sources said.

The 8½% senior notes due 2022 lost about 2¼ points to close at around 36¾ bid.

On Tuesday, the Calgary, Alta.-based independent oil and gas producer announced that it had reached an agreement with 85% of the holders of the senior notes for a recapitalization transaction.

“The deal seems to be that equity holders will get some kind of new equity, and the senior noteholders will be entitled to some new equity pro rata plus cash.”

The 8½% senior notes are trading at a low for the year, starting 2018 in the 60s context, according to Trace data.

Weatherford bounces back

Elsewhere in the energy space, Weatherford’s paper saw some gains after two days of losses, traders said.

The 9 7/8% paper due 2025 picked up about 2¾ points to close at 78¼ bid. The 7¾% paper due 2021 rose 1 point to close at 83 bid.

On Tuesday, the 9 7/8% paper plummeted about 10¼ points and the 7¾% paper tumbled 9½ points.

On Monday, the Baar, Switzerland-based oilfield services company reported a 10 cents per share loss and $1.44 billion in revenues for the third quarter.

“It was just as heavily traded as yesterday, but I guess people wanted to give it a break today,” a trader said.

The sector also saw mixed results for London-based contract drilling service provider Ensco’s notes.

The 7¾% notes due 2026 rose about ½ point to close at around 93½ bid. The 5.2% notes due 2025 fell about ¼ point to close at around 82¼ bid.

On Monday, the company posted a 33 cents per share loss in the third quarter versus analyst predictions of 35 cents per share. Rowan Cos., a Houston-based competitor that Ensco recently offered $2.38 billion to acquire, reported a $1.13 per share loss against estimates of a $1.15 per share loss.

Houston-based producer Sanchez Energy’s issues saw more declines.

The 6 1/8% notes due 2023 lost 2 points to close at 37½ bid.

On Tuesday, the 6 1/8% notes dropped 7½ points.

“This whole sector has been getting killed,” a trader said. “Sanchez has been the poster boy for that.”

Los Angeles-based peer California Resources’ paper, another energy bellwether, improved.

The 6% paper due 2024 rose ¾ point to close at 81¼ bid. The 8% paper due 2022 added about 1¼ points to close at around 91¼ bid.

West Texas Intermediate crude oil futures took another hit, moving 87 cents lower to end at 65.31 per barrel, representing a 10.8% drop from the start of October. North Sea Brent crude lost 44 cents to close at $75.47, an 8.8% decline on the month.

Intelsat mixed

Away from energy, Intelsat’s notes were mixed, market sources said.

The Intelsat Jackson SA 5½% notes due 2023 shaved off about ½ point to close at 88½ bid. The Intelsat (Luxembourg) SA 8 1/8% notes due 2023 shot up about 3 points to close at around 86½ bid.

The Luxembourg-based satellite company reported a 46 cents per share loss in its third-quarter earnings statement, more than the 34 cents per share loss that analysts predicted. The company also posted $536.92 in revenues for the quarter, under the $539 million estimate.

Elsewhere in telecom, Norwalk, Conn.-based wireline communications name Frontier’s issues improved.

The 7 5/8% notes due 2024 added about ¼ point to close at around 60 bid. The 10½% notes due 2022 gained about ¾ point to close at around 83½ bid. The 11% notes due 2025 rose about ½ point to close at around 73½ bid.

Diebold jumps

Diebold’s paper snapped a negative trend, traders said.

The 8½% paper due 2024 picked up about 3½ points to close at around 63 bid.

On Wednesday, the North Canton, Ohio-based connected commerce solutions company reported a 61 cents per share loss for the third quarter, missing analyst estimates of a 9 cents per share loss. Despite the negativity on the surface, the company reported $1.12 billion in revenues, topping predictions.

“I think people were just surprised that there was some positivity to run on,” a trader said.

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