Range Resources notes weaken after mixed earnings; PG&E lower as regulator levies fine

By James McCandless

San Antonio, Feb. 28 – Persistent concerns about the coronavirus permeated distressed debt trading, with the brunt of the weakness hitting the energy space.

Range Resources Corp.’s notes declined after the company released its fourth-quarter earnings, yielding mixed results.

Sector peer Southwestern Energy Co.’s issues varied as a result of its lukewarm earnings for the fourth quarter.

As oil futures ended the week with another decline, California Resources Corp.’s paper followed suit while Whiting Petroleum Corp.’s notes saw a partial recovery.

In the utilities space, PG&E Corp.’s issues were seen losing as a California regulator levied a $2.1 billion fine on the company.

Meanwhile, telecom name Intelsat SA’s paper diverged after the Federal Communications Commission established rules for a C-band spectrum auction.

Wireline communicator Frontier Communications Corp.’s notes were trailing.

Pharma names Endo International plc’s and Mallinckrodt plc’s issues were under water.

Range declines

Range Resources’ notes experienced a decline as the week finished, traders said.

The 5% senior notes due 2023 lost 2 points to close at 72¾ bid. The 4 7/8% senior notes due 2025 shed 2 points to close at 64 bid.

After the close on Thursday, the Fort Worth-based independent oil and gas producer released its fourth-quarter earnings report.

The company reported a profit of 8 cents per share where analysts were expecting it to break even.

Revenues were pegged at $606 million, missing analyst predictions of $639 million.

The company said on Friday that it is marketing an asset sale of noncore assets in Louisiana.

“With the way prices are going, I’d expect more M&A’s to look for things to sell,” a trader said.

Southwestern varies

Sector peer Southwestern Energy’s issues varied in direction, market sources said.

The 7½% senior notes due 2026 tacked on ¼ point to close at 76¼ bid. The 7¾% senior notes due 2027 held level at 76 bid.

The Spring, Tex.-based producer was another name to add its fourth-quarter earnings report to the late-week pile.

Earnings came in at an 18 cents per share profit, higher than what analysts predicted at 10 cents per share.

Revenues were underwhelming at $745 million.

Oil futures decline

Crude oil futures ended the week with another drop amid demand concerns as the coronavirus spreads, traders said.

West Texas Intermediate crude oil futures for April delivery dived $2.33 to settle the week at $44.76 per barrel.

North Sea Brent crude oil futures for April delivery finished at $50.32 per barrel after a $1.66 loss.

Los Angeles-based peer California Resources’ paper shifted downward.

The 6% senior notes due 2024 moved down 1¾ points to close at 21¼ bid. The 8% senior secured paper due 2022 slipped 1¾ points to close at 22¼ bid.

Denver-based oil and gas name Whiting Petroleum’s notes saw a partial recovery.

The 6¼% senior notes due 2023 inched up ¼ point to close at 45¼ bid. The 6 5/8% senior notes due 2026 added ¼ point to close at 36¾ bid.

PG&E lower

In the utilities space, PG&E’s issues were seen losing ground, market sources said.

The 6.05% notes due 2034 shed 1½ points to close at 114 bid.

Late Thursday, news broke that the California Public Utilities Commission has decided to increase its fine on the San Francisco-based bankrupt electric utility to $2.1 billion.

Originally, the company and the regulator had agreed to a $1.7 billion agreement, representing a $462 million increase.

Another provision stipulates that any tax savings from payments of the fine should go to PG&E customers.

On Wednesday, the company argued in bankruptcy court for a reduction in the amount that federal and state emergency management agencies are claiming.

In total, the agencies are seeking $6.3 billion for emergency services provided during recent wildfires.

Intelsat diverges

Meanwhile, telecom name Intelsat’s paper diverged, traders said.

Intelsat (Luxembourg) SA’s 8 1/8% senior notes due 2023 rose 1¼ points to close at 42¼ bid. The 9½% senior paper due 2023 shaved off ¾ point to close at 59¼ bid.

Midday Friday, the Luxembourg-based satellite operator’s structure was eyed after the FCC voted to adopt its proposed rules for a C-band spectrum auction.

Despite continued lobbying from the company to increase the amount of revenue allotted to it, the agency decided to lock in the proposed $4.85 billion.

As the company angled to increase the potential revenue, other members of the C-Band Alliance criticized the move.

Hedge fund manager David Tepper, who’s Appaloosa Management recently disclosed a large stake in Intelsat, argued that the company should file for bankruptcy to strengthen its negotiating position.

The auction is planned for December.

“I think if everyone weren’t so focused on everything else going on this would be more in front,” a trader said. “We’ll see how it shakes out next week.”

Norwalk, Conn.-based wireline name Frontier’s notes trailed.

The 10½% senior notes due 2022 lost 2 points to close at 45½ bid. The 11% senior notes due 2025 dropped 1¼ points to close at 45¾ bid.

Endo, Mallinckrodt down

Pharmaceutical name Endo’s issues were under water, market sources said.

The 6% senior notes due 2025 fell 1 point to close at 77 bid. The 6% senior notes due 2023 was pushed ½ point lower to close at 79½ bid.

This week, the Dublin-based drug producer released a positive fourth-quarter earnings report.

The company overshot expectations with a 74 cents per share profit and $764.8 million in revenue.

Executive Blaise Coleman was recently appointed as its chief executive officer.

The Dublin-based generic pharmaceutical company, which agreed to have its U.S. unit file for bankruptcy, saw its paper go negative.

The 5½% senior notes due 2025 slipped ½ point to close at 50 bid. The 5 5/8% senior paper due 2023 lost 1¼ points to close at 57¾ bid.

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