Chesapeake Energy notes weaken on earnings report; Endo declines despite posting profit

By James McCandless

San Antonio, Feb. 26 – More news out of the energy and pharma spaces continued to drive the distressed debt space on Wednesday.

Chesapeake Energy Corp.’s notes weakened after releasing its fourth-quarter earnings report and announcing plans for a reverse stock split.

Sector peer Oasis Petroleum Inc.’s issues also fell on the back of its disappointing earnings report.

As oil futures continued to dip, Whiting Petroleum Corp.’s and Antero Resources Corp.’s paper slid.

In the pharma space, Endo International plc’s notes declined despite posting a profit in its latest earnings report.

Generics maker Mallinckrodt plc’s issues tapered off some of its recent gains.

Meanwhile, retailer L Brands, Inc.’s paper drifted to lower levels in anticipation of its Q4 numbers.

Cosmetics maker Revlon, Inc.’s notes picked up steam.

Elsewhere, utilities name PG&E Corp.’s issues were active but ultimately unchanged after the company announced plans to sell about $25 billion in securities.

Chesapeake weaker

Chesapeake Energy’s notes weakened by the end of the session, traders said.

The 11½% notes due 2025 declined by 4¾ points to close at 67½ bid. The 4 7/8% senior notes due 2022 fell 1½ points to close at 60¾ bid.

The two tranches saw about $47 million trading.

Early Wednesday morning, the Oklahoma City-based independent oil and gas producer released a lukewarm earnings report for the fourth quarter.

The company reported a 4 cents per share loss, slightly better than the 6 cents per share loss that analysts had anticipated.

Revenues were $969 million, under analyst predictions.

In an earnings call, president and chief executive officer Doug Lawler said that the company was planning for a reverse stock split in the next few weeks.

“The stock has been getting hammered for months,” a trader said. “They’re getting ahead of any potential delisting situation.”

The stock closed at 31 cents on Wednesday.

Oasis falls

Sector peer Oasis Petroleum’s issues also saw a fall, market sources said.

The 6 7/8% senior notes due 2022 lost 1¾ points to close at 86¼ bid. The 6¼% senior notes due 2026 dipped 2¾ points to close at 64¼ bid.

After the close on Tuesday, the Houston-based producer added its earnings to the pile of recent energy names to issue fourth-quarter numbers in recent days.

A loss of 2 cents per share was reported, narrower than the 6 cents per share loss that marked the analyst consensus.

The company listed $483.86 million in revenues, higher than what was estimated.

Oil declines

As oil futures entered a third day of declines, distressed energy names experienced the same weakness, traders said.

West Texas Intermediate crude oil futures for April delivery dropped by $1.17 to end the session at $48.73 per barrel.

North Sea Brent crude oil futures for April delivery finished at $53.43 per barrel after a $1.52 slide.

Denver-based peer Whiting Petroleum’s paper followed futures to lower levels.

The 6¼% senior notes due 2023 moved lower by 2½ points to close at 50½ bid. The 6 5/8% senior paper due 2026 dipped 2½ points to close at 42¼ bid.

Antero Resources, another Denver-based oil and gas name, saw declines for its notes.

The 5 1/8% senior notes due 2022 gave back 4¼ points to close at 67 bid. The 5 5/8% senior notes due 2023 shed 2½ points to close at 56½ bid.

Endo off

In the pharma space, Endo’s issues were in decline, market sources said.

The 6% senior notes due 2025 were docked 1¼ points to close at 79¼ bid. The 6% senior notes due 2023 lost 1½ points to close at 84½ bid.

The Dublin-based pharmaceuticals maker was another company to show its fourth-quarter earnings on Wednesday morning.

Earnings were pegged at a 74 cents per share profit, outpacing what analysts expected at 57 cents per share.

Revenues also topped estimates at $764.8 million.

Last week, the company appointed executive Blaise Coleman as its new CEO.

Mallinckrodt down

Generic drugs maker Mallinckrodt’s paper tapered off from recent gains, traders said.

The 5¾% senior paper due 2022 dropped 4 points to close at 78 bid. The 5 5/8% senior notes due 2023 dived 8¼ points to close at 60¼ bid.

On Wednesday, S&P Global Ratings placed all of the Dublin-based generic drug producer’s ratings on CreditWatch with positive implications.

The move was in reaction to the company’s Tuesday announcement that, as part of a $1.6 billion blanket settlement with opioid-related legal challengers, it will have its U.S. generics unit file for Chapter 11 bankruptcy.

It also announced that subsidiaries Mallinckrodt International Finance SA and Mallinckrodt CB LLC have agreed to exchange their existing 5¾% senior notes due 2022 for new 10% second-lien senior secured notes due 2025.

L Brands drifts

Meanwhile, retailer L Brands’ notes drifted lower, market sources said.

The 6¾% senior notes due 2036 declined by 1¾ points to close at 102½ bid. The 5¼% senior notes due 2028 shaved off ¼ point to close at 99 bid.

The Columbus, Ohio-based retailer’s structure saw high levels of trading in anticipation of its fourth-quarter earnings report released after Wednesday’s close.

“It’s been a more topical name for a week or so,” a trader said.

The company reported earnings of $1.88 per share, edging out analyst predictions of $1.86 per share.

Revenues underperformed slightly at $4.71 billion.

Last week, the company announced that it was selling a 55% stake in its Victoria’s Secret brand to private equity firm Sycamore Partners and that CEO Leslie Wexner would resign from his position when the sale closes.

New York-based cosmetics name Revlon’s issues picked up steam.

The 5¾% senior notes due 2021 gained 2½ points to close at 88 bid. The 6¼% senior notes due 2024 tacked on 1 point to close at 40½ bid.

PG&E active, flat

Elsewhere, utilities name PG&E’s paper was active but ultimately unchanged, traders said.

The 6.05% notes due 2034 held level at 115¾ bid.

Late Tuesday, the San Francisco-based bankrupt electric utility said that it plans to raise up to $25.68 billion through the sale of securities.

Over the last month, the company has lined up support from a majority of its creditors for its restructuring plan.

Talks are still ongoing with California governor Gavin Newsom, whose approval of the plan is required.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.