Intelsat remains firm post-earnings; Whiting ends mixed; Chesapeake bonds up on asset sale chatter

By Stephanie N. Rotondo

Seattle, July 29 – Recent earnings announcements remained a key driver of distressed bonds on Friday.

Intelsat SA was “the most active” name of the day, according to one trader. Those bonds were pushing up again, as they have been doing since Wednesday when the company released its second-quarter results.

The results beat analysts’ expectations.

Whiting Petroleum Corp. was another one that came out with numbers this week. After posting a wider loss, its bonds have been in retreat – but its convertible debt was trending higher on Friday.

Away from earnings news, Peabody Energy Corp. debt “has been moving up,” a trader said, seeing the 6¼% notes due 2019 pushing up “over a point” to trade with a 15 handle.

A second trader deemed the issue nearly a point better at 15½.

Meanwhile, a trader said Avon Products Inc.’s 6¾% notes due 2023 were “considerably higher” than where they were in mid-July. He pegged the issue at 78 1/8, up 3 points.

Intelsat trending up

A trader said Intelsat’s 7¼% notes due 2019 added over 2 points in Friday trading, closing at 75½.

Another trader said the 2019 paper finished at 75½, up from 74 previously.

The second trader also noted that the 6¾% notes due 2018 ended at 62, which compared to levels around 58 in earlier trading.

On Wednesday, the Luxembourg-based commercial satellite services provider reported earnings.

For the quarter, Intelsat posted earnings per share of 98 cents on revenue of $542 million.

Analysts polled by Thomson Reuters had predicted EPS of 34 cents on revenue of $537.3 million.

Additionally, Intelsat reaffirmed its 2016 guidance, placing revenue between $2.14 billion and $2.2 billion.

Also helping the company’s outlook was a series of refinancings in the second quarter, as well as a tender offer that wrapped just after the third quarter started. The tender swapped about $675 million face value of Intelsat Jackson Holdings SA’s 6 5/8% notes due 2022 for cash.

Whiting mixed

Whiting Petroleum was another active name, a trader said, as the market continued to digest the company’s earnings release late Wednesday.

At one desk, the company’s 5% notes due 2019 were seen weakening almost a point to 87½.

However, its convertible debt, as well as the equity underlying the bonds, improved.

The 1.25% convertible notes due 2020 pushed up to 85.5 from 83.75, a source said.

The equity was also better, rising 53 cents, or 7.75%, to $7.37.

For the quarter, Whiting reported a net loss of $301 million, or $1.33 per share. That compared to a loss of $149.3 million, or 73 cents per share, the year before.

On an adjusted basis, the company posted a loss of 70 cents per share. Analysts polled by Thomson Reuters had predicted a loss of 46 cents per share.

Production declined 22% during the quarter to 12.2 million barrels of oil equivalent.

Despite the wider loss and missed expectations, there were some bright spots in the company’s latest results.

First of all, the Denver-based oil and gas producer said it had inked a well-participation agreement – the second so far this year – that would allow the company to drill 30 additional wells this year, but at a fraction of the cost.

Secondly, as oil prices have rebounded a bit from the beginning of the year, Whiting said it was able to add another $50 million to its capital expenditure budget.

And last but not least, there was the announcement of a $300 million asset sale. The company said it had sold off its North Ward Estes property in Texas.

In addition to the purchase price, the company could receive a contingency payment of up to $100 million over the next two years, depending upon how the price of oil performs.

Chesapeake climbs higher

Also in the oil and gas space, Chesapeake Energy Corp.’s 8% second-lien notes due 2022 were called “up a couple points” on “news they are possibly selling a position in their Barnett Shale” property, a trader said.

The trader saw the paper ending in a 90 zip code, versus levels in an 86½ to 87 context in early trading.

A second trader pegged the notes at 89, up 2½ points.

Chesapeake is based in Oklahoma City.

Cloud Peak gains

In the coal arena, Cloud Peak Energy Inc.’s 6 3/8% notes due 2024 were seen rising over a point to 47¼, according to a trader.

“Haven’t seen them in awhile,” he noted.

The Gillette, Wyo.-based company posted earnings late Thursday, beating Wall Street’s expectations.

For the quarter, earnings per share came to 48 cents on revenue of $174.2 million. For the same quarter the year before, the company reported a loss per share of 87 cents.

For its part, revenue was off 28.6% year over year.

However, analysts had expected a loss per share of 39 cents on revenue of $170.77 million.

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