Oil and gas bonds lose ground as supply worries pressure crude; Intelsat firms

By Stephanie N. Rotondo

Seattle, May 3 – Oil and gas-linked distressed bonds were getting hit Tuesday, as renewed concerns about a supply glut weighed on crude oil prices.

Chesapeake Energy Corp.’s 8% second-lien notes due 2022 were off almost 3 points at 64, according to one trader. Another trader placed the issue at 64 as well, “down a couple points.”

Another market source pegged the 6 5/8% notes due 2020 at 58½ bid, also down nearly 3 points.

Also, the 2.5% convertible notes due 2037 were seen trading just south of 83 by a market source. That was off 6 to 7 points from Friday trades.

Whiting Petroleum Corp. was another loser, with a trader calling the 5¾% notes due 2021 down 4½ points at 76½. Its 1.25% convertible notes due 2020 dipped a point to a 72 to 72.5 context.

The equity (NYSE: WLL) lost 50 cents, or 4.63%, ending at $10.29.

Domestic crude prices were down 2.46% on Tuesday, falling to 43.68 a barrel. That was in addition to the nearly 3% loss seen on Monday.

Investors are once again growing more concerned about oversupply, especially as Iraq reported that its shipments from its southern assets averaged 3.364 million barrels per day in April. That was up from an average of 3.286 million bpd seen in March.

Saudi Arabia said that its average production for the month was 10.15 bpd. Chatter is that production could soon grow to near-record highs around 10.5 million bpd.

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