Tuesday 31 July 2018 by FIIG Research Company updates

Company updates - BHP, HCA Healthcare, Transocean

This week, BHP sells shale gas assets to BP, HCA Healthcare full year forecast lifted, Transocean second quarter results shows earning levels return to 2017 levels, updated Factsheets

BHP sells shale gas assets to BP

On 27 July 2018, BHP Billiton announced it had reached agreement with energy giant BP for the sale of its shale gas assets in the Eagle Ford, Haynesville and Permian basins. BHP will raise USD10.5bn from the sale. This is in addition to the sale of the Fayetteville assets for USD300m. These two transactions mark the end of BHP’s foray in the US oil & gas shale sector which started in 2011 with the acquisition of Chesapeake Energy for USD4.75bn, followed by Petrohawk for USD12.1bn.

The following BHP bonds are available to wholesale investors only:

  • BHP Billiton EUR 5.625% bond at a yield to worst (YTW) of 1.94%pa. View Factsheet here.
  • BHP Billiton GBP 6.50% bond at a YTW of 2.75%pa. View Factsheet here.
  • BHP Billiton USD 6.25% bond at a YTW of 3.35%pa. View Factsheet here.
  • BHP Billiton USD 6.75% bond at a YTW of 4.88%pa. View Factsheet here.

HCA Healthcare reports 2Q18 results and lifts full year forecast as admissions rise

HCA Healthcare (HCA) reported its 2Q18 results. The key points were:

  • Revenues increased 7.4% to USD11.53bn
  • Adjusted EBITDA totalled USD2.23bn, an increase of 6.6%
  • Same facility equivalent admissions increased 2.8%
  • Cash flows provided by operating activities in the quarter totalled USD1.582bn compared to USD1.404bn in 2Q17
  • As of 30 June 2018, HCA held cash of USD868m, total debt of USD33.19bn
  • HCA’s leverage ratio as measured by Total Debt/Adjusted EBITDA was 3.91x, compared to 4.02x as of 31 December 2017
  • During the six months ended 30 June 2018, HCA repurchased 9.040 million shares of its common stock at a cost of USD893m. The company has USD910m remaining under its existing repurchase authorisation.

As a result of the positive trend over the last six months, HCA increased its 2018 guidance as follows:

  • Revenues: USD45.5 to USD46.5bn
  • Adjusted EBITDA: USD8.65 to USD8.85bn

The following HCA bonds both rated BBB- are available to wholesale investors only:

  • HCA USD 5.25% April 2025 at a YTW of 4.51%pa. View Factsheet here.
  • HCA USD 5.88% March 2022 at a YTW of 3.75%pa. View Factsheet here.

Second quarter results in for Transocean

Transocean (NYSE: RIG) released its 2Q18 results on 31 July 2018. Revenue during the period was up USD126m compared to 1Q18, with adjusted EBITDA of USD348m, up USD140m compared to the previous quarter. The performance was supported by improved fleet utilisation and better revenue efficiency. This trend enabled Transocean to return to earning levels similar to those in the first half of 2017.

While activity remained somewhat subdued, the improved earnings and discipline on cost have enabled the company to be broadly cash flow neutral during the quarter, with net debt levels largely unchanged. At the end of June, Transocean’s net debt to EBITDA stood at about 6x, a level which is not expected to materially improve in the near term.

The Transocean 9.00% July 2023 bond is rated B+ is available to all investors at yield to worst of 6.23%pa. View Factsheet here.

Updated Factsheets

Here is a list of all recently updated Factsheets available to wholesale investors only:

  • IAMGOLD Corporation USD 6.75% 1 Oct 2020 senior unsecured notes factsheet here.
  • Kinross Gold Corporation USD 5.95% 15 March 2024 senior unsecured notes factsheet here.
  • Kinross Gold Corporation USD 5.125% 1 September 2021 senior unsecured notes factsheet here.

Please note yields are accurate as of 31 July 2018, subject to change. S&P ratings are shown.


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