Ultra Petroleum falls after posting production numbers; Sanchez drops on oil guidance

By James McCandless

San Antonio, April 20 – Traders reported an increase in activity in the distressed debt market as companies report or prepare to report first-quarter results.

Ultra Petroleum Corp.’s notes declined again after the company posted first-quarter production numbers on Thursday, disappointing some investors.

Sanchez Energy Corp.’s bonds fell as it also posted production numbers after the market close on Thursday, falling short of its estimates on oil production.

Community Choice Financial Inc. traded down amid talk from traders over when the company will decide to restructure.

Intelsat SA’s notes were mixed, continuing trading off of news that a subsidiary would take part in a government project. Frontier Communications Corp.’s issues were mixed as it searches for a buyer for certain assets. Community Health Systems, Inc.’s notes were mixed after Wednesday’s announcement of another asset sale.

Ultra Petroleum off again

Houston-based independent oil and gas name Ultra Petroleum’s notes declined for a second day after the company announced first-quarter production numbers on Thursday, traders confirmed. Production exceeded midpoint guidance, but a segment of investors had been hoping for better numbers.

The company also amended its credit agreement to account for a higher maximum net leverage covenant to 4.50 times from 4.25 times.

The 7 1/8% notes due 2025 lost about 2¾ points to close at around 70½ bid. The 6 7/8% notes due 2022 fell about 3 points to close at around 76½ bid.

The 7 1/8% notes lost 2½ points and the 6 7/8% lost ¾ point on Thursday.

Sanchez disappoints

Houston-based independent oil and gas producer Sanchez Energy’s notes saw a multi-point drop after the company posted oil production numbers well under estimates.

The company pointed to several issues as the cause, citing a weather-related disruption, a temporary problem with third-party natural gas infrastructure, and some operational issues due to testing new ways to complete wells.

The company focuses primarily on production in the Eagle Ford Shale.

The 6 1/8% notes due 2023 cratered about 3¾ points to close at around 75½ bid.

Community Choice down

Dublin, Ohio-based financial services company Community Choice saw its paper lose some of the gains made on Thursday, a market source confirmed, as traders and investors continue to speculate on when the company will announce a restructuring to rectify its debt issues.

The 10¾% paper due 2019 lost about ½ point to close at 71 bid.

Volume names trade

Luxembourg-based satellite communications company Intelsat’s notes were mixed to end the week. Earlier this week, the company announced a subsidiary’s involvement in a satellite payload project for the Federal Aviation Administration.

The Intelsat Jackson SA 5½% notes due 2023 traded up ¼ point to close at 84½ bid. The 7¼% notes due 2020 remained level at 97¼ bid.

Norwalk, Conn.-based wireline telecom name Frontier Communications’ issues were mixed amid a continuing search for buyers for certain assets.

The 7 5/8% notes due 2024 shaved off about ½ point to close at 65 bid. The 10½% notes due 2022 fell about ¾ point to close at around 89¼ bid. The 11% notes due 2025 gained about 1¼ points to close at around 79¼ bid.

Franklin, Tenn.-based hospital operator Community Health Systems’ paper ended mixed. The company’s latest part of its divestiture plan took place Wednesday when the company announced the sale of another hospital.

The 7 1/8% paper due 2020 lost about 2½ points to close at 81¾ points. The 6 7/8% paper due 2022 remained level at 56 bid.

“We’re starting to see some more movement on our end,” a trader said. “It will probably increase as more companies post their numbers next week.”

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