Flint Energy downsizes to C$175 million, bonds flat in trading; Connacher notes soften

By Cristal Cody

Prospect News May 25 - Flint Energy Services Ltd. sold a downsized C$175 million of 7½% eight-year senior notes (B2/BB-) at 99 to yield 7.669% on Wednesday, according to an informed source.

The new bonds traded late afternoon "wrapped around 99," a source said. "There's really been no momentum either side since they priced."

In other activity, Savanna Energy Services Corp.'s new 7% seven-year notes traded unchanged on Wednesday.

North American Energy Partners Inc.'s bonds continued to widen and are likely to stay weak through the summer until a resolution of a dispute arising from a write-down with a customer, a source said.

The senior secured notes (Caa2/BB-) that Connacher Oil & Gas Ltd. sold on Friday in Canadian dollar- and U.S. dollar-denominated tranches were a "little bit softer" in trading on Wednesday, a source said.

"There's been a lot of oilfield services issuance here in the past week or so and energy services headlines lately," the source noted.

Government bonds edged up as the government saw strong demand for the auction of C$3 billion of three-year bonds.

The 10-year bond yield fell 2 basis points to 3.08%. The 30-year bond yield also dropped 2 bps to 3.5%.

U.S. Treasuries were mixed late in the day after a strong auction of five-year debt. In trading, the five-year note yield ended the day down 1 bp to 1.76%.

Flint Energy downsizes

Flint Energy Services priced a downsized C$175 million issue of 7½% eight-year senior notes (B2/BB-) at 99 to yield 7.669% on Wednesday, according to an informed source.

The yield printed 16.9 bps beyond the wide end of the 7¼% to 7½% price talk.

Credit Suisse Securities (Canada), Inc. and BMO Nesbitt Burns Inc. were the joint bookrunners for the issue, which was downsized from C$200 million.

Proceeds will be used to refinance bank debt and for general corporate purposes.

Flint Energy is a Calgary, Alta.-based provider of products and services to the oil and gas industries.

Savanna flat

Savanna Energy Services' 7% senior notes due May 25, 2018 were unchanged in the secondary market on Wednesday, a source said.

"We have them at par, 101," the source noted.

The company sold C$125 million 7% senior notes due May 25, 2018 (/B+/DBRS: B) at par on Thursday.

Calgary, Alta.-based Savanna Energy is a drilling and well servicing provider in the oil and gas industry.

North American Energy widens

North American Energy Partners was in the news last week from a dispute with a customer that sent its "equities and bonds lower," a source said Wednesday.

On May 18, the company's stock dropped nearly 30% after it was reported the company had breached its financial covenants and would likely post an annual loss from a write-down with Canadian Natural Resources Ltd.

The company's 9 1/8% notes due 2017 traded wider, wrapped around 102, 102.5 on Wednesday.

"We were offering them at 103 and a quarter. They've widened out," the source said. "It's gone to a special committee and no resolution until looks like August. We're going to wallow around on this name for a while until there's a resolution."

Calgary, Alta.-based North American Energy provides mining and pipeline installation services to oil-sands operators.

Connacher weaker

Connacher Oil & Gas's two-tranche deal was seen "offered below par" in the secondary market, a source said Wednesday.

The company sold a $550 million tranche of notes due Aug. 1, 2019 at par to yield 8½% and a C$350 million tranche of notes due Aug. 1, 2018 at par to yield 8¾%.

The integrated oil company is based in Calgary, Alta.

OPTI active

A trader said that OPTI Canada's 8¼% notes due 2014 "traded a couple of times - they had decent activity" in finishing around 48½ bid, 49.

However, he said the troubled Calgary, Alta.-based oil-sands energy producer's bonds were about unchanged or "maybe slightly higher."

A market source at another desk saw the company's 7 7/8% notes due 2014 - which pretty much trade in tandem with the 81/4s - up about 5/16 point at 48½ bid.

Catalyst Paper firms

A trader saw Catalyst Paper Corp.'s 7 3/8% notes due 2014 having firmed to the mid-50s - he pegged the Richmond, B.C.-based paper manufacturer's bonds at 55 bid, 56 offered - but said that "while they were quoted up 1 point, like a point higher, they were very inactive.

"There was no activity," he reiterated, "but there were higher bids on the name."

Paul Deckelman and Paul A. Harris contributed to this review

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