Chesapeake Energy rallies on word debt to be paid at maturity; Whiting falls on downgrade

By Stephanie N. Rotondo

Seattle, Feb. 12 – Distressed debt investors were again zeroing in on oil and gas names on Friday, due in part to a 10.5% bounce in domestic crude oil prices.

Crude closed at $28.98 a barrel as truce talks in Syria helped to ease geopolitical concerns. Also helping matters were further comments from OPEC producers about a willingness to curb production amid the low-priced environment.

Chesapeake Energy Corp. debt, however, was also being driven higher by news the company plans to pay off its $500 million in debt maturing next month. The Oklahoma City-based company’s debt has been active for most of the week, but lower as the market speculated that not only would those notes go unpaid, but that a bankruptcy filing could be near.

However, not all oil and gas credits were rising with the general trend of the market.

Whiting Petroleum Corp. was actively traded during the session, as the company’s debt declined in response to a rating downgrade. The company’s convertible debt, as well as its stock, also took a hit.

Elsewhere in the space, Chaparral Energy Inc.’s 7 5/8% notes due 2022 dropped 4 points to 8, according to a trader.

The trader noted that the loss compared to levels seen “a couple weeks ago.”

The decline came as the company said it had drawn down $141 million from a credit agreement inked with JPMorgan Chase.

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