Endeavour International Corp.’s first-lien notes fell to the lowest level in more than seven months after Standard & Poor’s downgraded it last week, saying the oil and gas exploration and production company may have “difficulty” covering a March 3 interest payment.
Endeavor’s $402.9 million of 12 percent securities due in March 2018 dropped 2.25 cents as of 11:13 a.m. in New York to 99.5 cents on the dollar to yield 12.2 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. That would be the lowest closing price since July 9, and is down from 106.8 cents on Oct. 31.
S&P cut its credit grade on the Houston-based company one step to CCC as its cash flows and liquidity are hurt by production delays, according to a Feb. 20 rating report. The downgrade puts S&P’s rating one step above the that at Moody’s Investors Service, which cut the credit to Caa3 last year.
“The company could have difficulty making its upcoming interest payment and maintaining sufficient liquidity,” S&P analysts Stephen Scovotti and Marc Bromberg wrote in the note, which also lowered the rating on the first-priority notes to CCC- from CCC. The company’s “very weak liquidity” stems from mechanical problems preventing it from bringing the North Sea Rochelle field fully into production.
If the company does make the $33 million interest payment, it will have between $1 million and $10 million of liquidity remaining, the analysts wrote.
Darcey Matthews, director of investor relations, didn’t immediately return a telephone message seeking comment.
The company got a $255 million senior secured first-lien term loan in January to refinance its $115 million revolving line of credit, according to a press release Jan. 27. The new debt pays 8.25 percent in interest.
Endeavour’s stock plunged 12 percent on Feb. 21 in New York trading before climbing 0.8 percent today to $5.28. The shares are up 95 percent in the past 12 months.