SECTOR COMMENTARY

The energy space was one of the worst performers driven by the weak Chinese manufacturing news. Drillers witnessed the biggest losses after several sell side firms lowered estimates and ratings. Hercules Offshore fell over 15% after releasing a negative fleet status report and Noble Corp fell nearly 9% as one of the worst performers in the S&P 500 after reporting 4Q earnings that were in line with Street estimates and after saying that rig utilization was expected to drop in 2014.

WTI closed at $97.32 up $0.59 or 0.61% and Brent fell narrowing the WTI/Brent spread to the lowest level for two months following a jump in heating fuel to the highest price of 2014 after a draw down in distillates inventories. WTI rallied despite a 990,000 barrel build in stocks reported by the EIA, the first increase in eight weeks. Brent oil fell after data showed China’s factory sector contracted in January for the first time in six months.

Natural gas futures gained $0.041 or 0.87% to close at $4.730 as the United States prepared for another Arctic plunge in temperatures over the next five days. The EIA reported a 107 bcf fall in the weekly inventory over the warmer week, just below estimates averaging a 110 bcf draw made by analysts polled Thomson Reuters.

INTERNATIONAL INTEGRATEDS

Reuters - Russia's top natural gas producer Gazprom expects its exports to Europe to fall to between 150 and 155 billion cubic metres (bcm) this year, a company representative said on Thursday.

Reuters - Brazil's state-run oil company Petroleo Brasileiro SA said on Thursday in a market filing that the consortium it leads in the Libra oil field plans to invest $400 million to $500 million in 2014.

Reuters - Royal Dutch Shell's 28-inch Nigerian Trans Niger Pipeline, one of two which Shell operates carrying Nigeria's Bonny Light crude oil, re-opened after closing on January 17 due to leakages caused by oil theft, a spokesman said on Thursday.

U.S. E&PS

(Late Wednesday) Press Release - Cobalt International Energy, Inc. in partnership with the National Concessionaire Sonangol and the Block 21 partners announces the first discovery in the Syn-rift interval in the Bicuar #1A Pre-salt deepwater exploratory well offshore Angola. The well was successfully drilled to a measured depth of 5,739 meters and encountered approximately 56 meters (180 feet) of net pay from multiple Pre-salt intervals. Results of an extensive logging, coring and fluid acquisition program confirmed the existence of both oil and condensate in multiple intervals. No free gas zones or water contacts were observed. All well data was collected via open hole logging technology.

CANADIAN E&PS

Press Release - Canacol Energy Ltd. is pleased to provide its 2014 capital program and production guidance. The Corporation plans to spend net capex of US$ 150 million in calendar 2014 on drilling, work overs, seismic, production facilities, and pipelines in Colombia and Ecuador, and anticipates net average production before royalties of between 11,500 and 12,500 barrels of oil equivalent per day ("boepd"), which represents a 30% to 40% increase from average 2013 production of 8,796 boepd which consisted of 5,827 barrels of oil per day ("bopd") and 17.2 million standard cubic feet of gas per day ("mmscfpd") (2,969 boepd) gas. The production split for 2014 is expected to be approximately 70% oil and 30% gas.

OIL SERVICES

Press Release - Baker Hughes Incorporated Chairman and Chief Executive Officer, Martin S. Craighead, announced today that the Baker Hughes Board of Directors declared the regular quarterly cash dividend of $0.15 per share of common stock payable February 14, 2014, to holders of record on February 3, 2014.

Dresser-Rand Group was upgraded to ‘Outperform’ from ‘Market Perform’ at Clarkson Capital.

DRILLERS

• NE reported 4Q’13 EPS of $0.82 versus Thomson Reuters I/B/E/S estimate of $0.82.

Hercules Offshore was cut to ‘Neutral’ from ‘Buy’ at Global Hunter.

(Late Wednesday) Press Release - Hercules Offshore, Inc. announced today that it has published the January Fleet Status Report ("the Report"). The Report includes the Hercules Offshore Rig Fleet Status (as of January 22, 2014), which contains detailed contract information for each of the Company's drilling rigs. The Report also includes the Hercules Offshore Liftboat Fleet Status Report, which contains information by liftboat class for December 2013, including revenue per day and operating days.

(Late Wednesday) Press Release - Noble Corporation today reported fourth quarter 2013 net income of $174 million, or $0.68 per diluted share. Results for the fourth quarter included an after tax charge of $36 million, or $0.14 per diluted share, relating to an impairment taken on the FPSO Seillean. Excluding the impairment charge, net income for the fourth quarter would have totaled $210 million, or $0.82 per diluted share. For the third quarter of 2013, the Company reported net income of $282 million, or $1.10 per diluted share, which included after tax gains totaling approximately $63 million, or $0.25 per diluted share. Excluding the gains, net income in the third quarter would have been $219 million, or $0.85 per diluted share. During the fourth quarter of 2012, net income was $128 million, or $0.50 per diluted share. Revenues for the fourth quarter of 2013 were $1.17 billion compared to $1.08 billion in the third quarter of 2013 and $966 million in the fourth quarter of 2012.

Rowan Companies was cut to ‘Neutral from ‘Buy’ at UBS.

Transocean was cut to ‘Market Perform’ from ‘Outperform’ at Clarkson Capital.

REFINERS

Raymond James raised Phillips 66 to ‘Outperform’ from ‘Market Perform’ and downgraded Valero to ‘Outperform’ from ‘Strong Buy’ and loweredHollyFrontier, Delek US Holdings and PBF Energy to ‘Market Perform’ from ‘Outperform.’

Reuters - Lifting the U.S. ban on crude exports would give refiners more flexibility to run a variety of grades and help narrow the gaping U.S. trade deficit, a Phillips 66 official said on Wednesday as did former Secretary of State James Baker.

(Late Wednesday) Press Release - Valero Energy Corporation announced today that the company expects to report net income attributable to Valero stockholders in the range of $2.20 to $2.40 per share for the fourth quarter of 2013. Included in the fourth quarter 2013 estimate is a nontaxable gain of $325 million, or $0.60 per share, related to the disposition of Valero's retained interest in CST Brands, Inc. Excluding this item, Valero's fourth quarter 2013 net income attributed to Valero stockholders is expected to be in the range of $1.60 to $1.80 per share.

(Late Wednesday) Press Release - The Board of Directors of Valero Energy Corporation has approved an increase in the company's regular quarterly cash dividend on common stock from $0.225 per share to $0.25 per share, effective with the quarterly dividend the Board has declared to be payable onMarch 12, 2014 to holders of record at the close of business on February 12, 2014..

MLPS

(Late Wednesday) Press Release - MarkWest Energy Partners, L.P. today announced that the Board of Directors of the General Partner of MarkWest Energy Partners, L.P., declared a cash distribution of $0.86 per common unit for the fourth quarter of 2013, for an implied annual rate of $3.44 per common unit.

(Late Wednesday) Press Release - Tesoro Logistics LP today announced the declaration of its quarterly cash distribution for the fourth quarter 2013 of $0.565 per limited partnership unit, or $2.26 on an annualized basis. This distribution represents a 4% increase over the quarterly distribution of $0.545 per unit ($2.18 per unit on an annualized basis) paid in November 2013.