Oasis Petroleum notes gain on Q2 earnings; American Airlines active in travel space

By James McCandless

San Antonio, Aug. 5 – Secondary trading in the distressed debt market largely focused on energy and travel names on Wednesday.

Oasis Petroleum Inc.’s notes gained after reporting better-than-expected earnings results for the second quarter.

More gains for oil futures were mirrored by rises for Occidental Petroleum Corp.’s and Whiting Petroleum Corp.’s issues while Valaris plc’s paper varied.

Meanwhile, American Airlines Group Inc.’s notes diverged in direction as the market reacted to news of a potential new round of aid for the sector.

Sector peer United Airlines Holdings, Inc.’s issues picked up steam.

Chemicals producer Rayonier Advanced Materials Inc.’s paper shifted upward after reporting its Q2 results.

Elsewhere, drug maker Mallinckrodt plc’s notes were carried higher a day after releasing its second-quarter report.

Housewares name Tupperware Brands Corp.’s was active but unchanged.

Oasis gains

Oasis Petroleum’s notes gained as the session came to an end, traders said.

The 6 7/8% senior notes due 2023 picked up ½ point to close at 19 bid. The 6 7/8% senior notes due 2022 added ½ point to close at 19½.

On Wednesday morning, the Houston-based independent oil and gas producer released its second-quarter earnings results.

The company reported earnings per share of 23 cents, surpassing analyst predictions of a 6 cents per share loss.

Revenues were also better than expected at $166.35 million.

“E&P’s have a relatively low bar to clear in terms of earnings,” a trader said. “With all of the pressures in the market right now, the surprise is what drives the structure up.”

The company reported a 40% decrease in production.

Oil moves up

More gains for oil futures were mirrored by rising distressed energy tranches, market sources said.

West Texas Intermediate crude oil futures for September delivery tacked on 49 cents to close at $42.19 per barrel.

North Sea Brent crude oil futures for October delivery ended the session at $45.17 per barrel after a 74 cent jump.

Houston-based producer Occidental Petroleum’s issues followed futures.

The 2.9% senior notes due 2024 grabbed 1¼ points to close at 95½ bid. The 2.7% senior notes due 2022 tacked on ¼ point to close at 97¼ bid.

Denver-based E&P Whiting Petroleum’s paper joined the positive trend.

The 6¼% senior notes due 2023 shot up 2 points to close at 19 bid. The 6 5/8% senior paper due 2026 rose ½ point to close at 18½ bid.

London-based contract driller Valaris’ notes varied.

The 5.2% senior notes due 2025 held level to close at 4 bid. The 7¾% senior notes due 2026 drifted 1¼ points higher to close at 5 bid.

Airlines eyed

Meanwhile, American Airlines’ issues diverged in direction, traders said.

The 5% senior notes due 2022 closed level at 58 bid. The 3¾% senior notes due 2025 jumped up 13½ points to close at 59 bid.

During the Wednesday session, the Fort Worth-based air carrier and the rest of the sector saw positive attention from the market after U.S. legislators proposed a second round of federal aid for the sector.

A group of U.S. senators has proposed a $25 billion aid package for the troubled sector, supplementing the original $32 billion package passed in March.

During a press conference on Wednesday afternoon, president Donald Trump expressed support for the new aid.

The money would go toward keeping employees on payrolls, while the company has warned of thousands of potential furloughs.

Chicago-based sector peer United Airlines’ paper picked up steam.

The 5% senior notes due 2024 moved up 1 point to close at 86 bid. The 4¼% senior paper due 2022 improved by 1½ points to close at 91 bid.

Rayonier better

Chemicals name Rayonier’s notes shifted upward, market sources said.

The 5½% senior notes due 2024 gained ½ point to close at 61¾ bid.

After the Tuesday session, the Jacksonville, Fla.-based specialty chemicals maker released its results for the second quarter.

The company showed a loss per share of 20 cents, stronger than the 32 cents per share loss expected by analysts.

Revenues were pegged at $397 million.

The company also reported $16 million in free cash flow.

Mallinckrodt higher

Elsewhere, drug producer Mallinckrodt’s issues also saw positivity, traders said.

The 5¾% senior notes due 2022 tacked on 1½ points to close at 22 bid. The 5 5/8% senior notes due 2023 added 4¾ points to close at 23 bid.

Early Thursday, the Staines-upon-Thames, England-based pharmaceutical name put out its second-quarter earnings results.

The company reported a profit of $1.89 per share and revenues of $700.9 million, both exceeding analyst predictions.

Concurrently, the company said that it may be forced to file for Chapter 11 bankruptcy due to numerous factors, including a large write-down on one of its popular products and its debt obligations.

Mallinckrodt has $5.29 billion in debt outstanding.

Tupperware active, flat

Housewares name Tupperware’s paper was active but ultimately unchanged, market sources said.

The 4¾% senior notes due 2021 closed level at 91½ bid.

In the past week, the Orlando, Fla.-based household products marketer’s paper has seen weakness after a law firm announced Friday that it is investigating disclosure statements released in March for potential fraud in the company’s operations.

The company’s latest earnings report showed a per share profit of 84 cents and revenues of $397.4 million in the second quarter.

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