The White Law Group continues to investigate the liability that brokerage firms may have for recommending risky investments in shale energy companies and their leveraged debt (primarily in the form of junk bonds).
Two of the most leveraged companies in the energy space — Hercules Offshore and SandRidge Energy — have recently been downgraded by separate analysts to zero, signally significant concern in these two companies ability to repay their debt.
As of Feb. 15, Hercules had only 10 of its 24 rigs working, with four of those working rigs completing their contracts within the next three months.
SandRidge bonds are now trading at under 70 cents on the dollar for a more than 14% yield. Recently, KLR Group downgraded SandRidge to zero.
Here is a listing of the SandRidge bond offerings:
| Sandridge Engy 7.5% | 03/15/2021 | 1,175.0 | — | 70.9 | 7.500 | Fixed | No | No | 15.00 |
| Sandridge Engy 7.5% | 03/15/2021 | 900.0 | — | — | 7.500 | Fixed | No | No | — |
| Sandridge Engy 7.5% | 02/15/2023 | 825.0 | — | 69.3 | 7.500 | Fixed | No | No | 14.04 |
| Sandridge Engy 7.5% | 02/15/2023 | 825.0 | — | — | 7.500 | Fixed | No | No | — |
| Sandridge Engy 144A 7.5% | 02/15/2023 | 825.0 | — | — | 7.500 | Fixed | No | Yes | — |
| Sandridge Engy 8% | 06/01/2018 | 750.0 | — | — | 8.000 | Fixed | No | No | — |
| Sandridge Engy 8.125% | 10/15/2022 | 750.0 | — | 0.0 | 8.125 | Fixed | No | No | — |
| Sandridge Engy 144A 8.125% | 10/15/2022 | 750.0 | — | — | 8.125 | Fixed | No | Yes | — |
| Sandridge Engy 8.125% | 10/15/2022 | 750.0 | — | 73.4 | 8.125 | Fixed | No | No | 13.89 |
| Sandridge Engy 8.625% | 04/01/2015 | 650.0 | — | — | 8.625 | Fixed | Yes | No | — |
| Sandridge Engy 8.75% | 01/15/2020 | 450.0 | — | — | 8.750 | Fixed | No | No | — |
| Sandridge Engy 144A 8.75% | 01/15/2020 | 450.0 | — | — | 8.750 | Fixed | No | Yes | — |
| Sandridge Engy 8.75% | 01/15/2020 | 450.0 | — | 77.6 | 8.750 | Fixed | No | No | 15.47 |
| Sandridge Engy 9.875% | 05/15/2016 | 365.5 | — | — | 9.875 | Fixed | Yes | No | — |
| Sandridge Engy 7.5% | 03/15/2021 | 275.0 | — | — | 7.500 | Fixed | No | No | — |
| Sandridge Engy 144A 7.5% | 03/15/2021 | 275.0 | — | — | 7.500 | Fixed | No | Yes | — |
| Sandridge Engy 144A 7.5% | 03/15/2021 | 0.002 | — | — | 7.500 | Fixed | No | Yes | — |
Here is a listing of the Hercules bond offerings:
| Hercules Offshore 8.75% | 07/15/2021 | 400.0 | — | 41.5 | 8.750 | Fixed | No | No | 29.67 |
| Hercules Offshore 144A 8.75% | 07/15/2021 | 400.0 | — | — | 8.750 | Fixed | No | Yes | — |
| Hercules Offshore 7.5% | 10/01/2021 | 300.0 | — | 34.8 | 7.500 | Fixed | No | No | 31.58 |
| Hercules Offshore 144A 7.5% | 10/01/2021 | 300.0 | — | — | 7.500 | Fixed | No | Yes | — |
| Hercules Offshore 144A 6.75% | 04/01/2022 | 300.0 | — | — | 6.750 | Fixed | No | Yes | — |
| Hercules Offshore 7.125% | 04/01/2017 | 300.0 | — | — | 7.125 | Fixed | Yes | No | — |
| Hercules Offshore 6.75% | 04/01/2022 | 300.0 | — | 43.0 | 6.750 | Fixed | No | No | 23.36 |
| Hercules Offshore 10.5% | 10/15/2017 | 300.0 | Middle | 102.8 | 10.500 | Fixed | No | No | 9.80 |
| Hercules Offshore 144A 10.25% | 04/01/2019 | 200.0 | — | — | 10.250 | Fixed | No | Yes | — |
| Hercules Offshore 10.25% | 04/01/2019 | 200.0 | — | 113.3 | 10.250 | Fixed | No | No | 6.94 |
| Hercules Offshore 144A Cv 3.375% | 06/01/2038 | 83.1 | — | — | 3.375 | Fixed | Yes | Yes | — |
| Hercules Offshore 144A 7.125% | 04/01/2017 | 79.9 | — | — | 7.125 | Fixed | Yes | Yes | — |
| Hercules Offshore 144A 10.5% | 10/15/2017 | 46.3 | Middle | — | 10.500 | Fixed | No | Yes | — |
| Hercules Offshore Cv 3.375% | 06/01/2038 | 7.027 | — | 100.0 | 3.375 | Fixed | Yes | No | 3.37 |
| Hercules Offshore 10.5% | 10/15/2017 | — | — | — | 10.500 | Fixed | Yes | — | — |
Investors in these companies have options. If you purchased investments in SandRidge or Hercules at the recommendation of your financial advisor, you may have recourse.
Brokerage firms are required to perform due diligence on any investment they recommend and to ensure that all recommendations are suitable in light of the client’s age, investment experience, net worth, income, and investment objectives. If they fail to do either, they can be held liable for losses in a FINRA arbitration claim.
To discuss your litigation options, please call the securities attorneys of The White Law Group at 312/238-9650 for a free consultation.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee.
For more information on the firm, visit http://whitesecuritieslaw.com.
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