Wednesday, February 8, 2012

Two New Energy Credits

These popped up on my radar: the Stone Energy (SGY) bonds due 2017 yielding ~8 percent and the Comstock Resources (CRK) bonds due 2017 yielding ~10 percent. Interestingly, Comstock owns about ten percent of Stone Energy.

SGY has a market cap of $1.5 billion and net debt of $500 million, consisting of the 2014 sub notes ($200mm) and the 2017 senior notes ($375mm). Their ttm EBITDA is $574 million.

Various facts from the Jan 23 guidance and update: Estimated proved reserves as of December 31, 2011 increased to 100 million Boe or 602 Bcfe, representing an annual increase of 27% and a production replacement of 264%. The present value of the estimated future net cash flows from estimated proved reserves before income taxes at December 31, 2011 was $2.1 billion. The proved reserve base is 20% deepwater GOM, 30% Marcellus shale, and 50% GOM shelf.

CRK has a market cap of $600 million and net debt of ~$1.1 billion (more levered than SGY). Also, there is a bank loan, so owning CRK notes is less favorable than owning the SGY senior notes. Almost twenty percent of the float was short as of January 2012. Their ttm EBITDA is $270 million.

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