Oil and gas drilling firm Paragon Offshore plc (PGN) announced that it has repurchased senior unsecured notes worth $25.2 million in December. Shareholders appreciated this move and Paragon Offshore stock gained nearly 7% on the NYSE.
Of the total notes bought back, $15.2 million comprised of senior notes due 2022 and carried an interest rate of 6.75%. The remaining $10 million comprised notes due 2024, carrying an interest rate of 7.25%.
The company added that the repurchase – an addition to the $10 million buyback made earlier in the current quarter – was made at an average price of 60.6% of the face value of the notes.
Paragon Offshore stated that due to these repurchases it will recognize a gain of about $11.7 million in the fourth-quarter. Of this, about $1.5 million gain on debt retirement is owing to the earlier announced repurchases.
Paragon Offshore used available cash and funds under its credit facility to pay for these repurchases. The company added that of its $100 million senior notes repurchase program $35 million remains.
Houston, TX based Paragon Offshore is an offshore drilling company with a fleet of 42 rigs consisting of 34 jackups and 8 floaters. On Nov 10, the company reported strong third-quarter earnings of 59 cents, beating the Zacks Consensus Estimate of 37 cents amid higher contract rates.
However, considering the weak fundamentals of the broader drilling industry due an oversupply of rigs and low commodity prices, Paragon Offshore currently carries a Zacks Rank #3 (Hold).
Better-ranked players from the energy sector include Seadrill Partners LLC (SDLP), Atlas Pipeline Partners, L.P. (APL) and Spectra Energy Partners, LP (SEP). All these stocks sport a Zacks Rank #1 (Strong Buy).
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