Energy sector under pressure; Occidental, QEP notes drop; PBF sees minor improvement

By Abigail W. Adams

Portland, Me., Oct. 29 – Earnings and energy were the major themes in the distressed debt space on Thursday.

The badly battered energy sector took a further beating on Thursday as investor concern over weakened supply sent crude oil futures down another 3% after Wednesday’s steep decline.

Occidental Petroleum Corp.’s notes were among the hardest hit with the capital structure down 1 to 3 points, a source said.

QEP Resources, Inc.’s 5¼% senior notes due 2023 were also trading off alongside the broader sector despite reporting upbeat guidance.

However, PBF Holding Co. LLC’s notes saw a minor reprieve with the notes making nominal gains following the petroleum refiner’s earnings report.

While the notes were improved on Thursday, they have dropped double digits over the past two weeks.

Energy under pressure

The badly battered energy sector was taking a further beating on Thursday even as the tone of the overall market improved following Wednesday’s sell-off.

While the tone of the broader market improved, WTI crude oil futures were down more than 3% after a 6% drop on Wednesday.

Crude oil futures settled at $36.11, a decrease of $1.28 or 3.42%.

Occidental Petroleum’s notes were trading off in high-volume activity with the capital structure down 1 to 3 points, sources said.

Occidental’s 6 5/8% senior notes due 2030 dropped 1 3/8 points to close the day at 88 7/8, a source said.

There was more than $20 million of the bonds on the tape.

The 3.5% senior notes due 2025 were down 2¼ points to 81.

While volume was light, the 4.3% senior notes due 2039 dropped 3 points to 66½.

The fallen angel is scheduled to report earnings on Nov. 10.

QEP drops

QEP Resources’ 5¼% senior notes due 2023 were also trading off alongside the broader energy sector despite earnings, which largely met expectations, and upbeat guidance.

The 5¼% senior notes due 2023 were down 2¾ point to close the day at 80¼.

The oil and gas company largely met expectations with EBITDA of $160 million. Forward guidance was also positive, a source said.

PBF’s reprieve

PBF Energy’s senior notes saw a minor reprieve on Thursday after a brutal sell-off over the past few weeks.

The 7¼% senior notes due 2025 were up ½ point to 42 with more than $10 million in reported volume, a source said.

The 6% senior notes due 2028 were up almost 1 point to 39.

The 9¼% senior notes due 2025 were up ½ point to 88.

PBF reported a negative EBITDA of $229.7 million, a source said.

However, the company also announced it was reconfiguring its East Coast refining system with annual savings expected to be $150 million.

The company also has cash on the balance sheet, a source said.

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