SECTOR COMMENTARY

Energy stock climbed in concert with the broader markets which rebounded from three consecutive days of losses as investors looked optimistically to this Friday’s jobs report. Refiners and integrateds paced the sector as gasoline prices gained more than 1% as the extreme cold weather triggered a handful of refinery glitches that curtailed supply and as the widespread freezing conditions bolstered heating fuel demand.

However, oil services and drillers experienced some pressure following several downgrades and estimate reductions. Shares of Key Energy was the primary detractor with shares falling more than 3% after its fourth quarter operations update which indicated a lower than expected rig count in the international segment due almost entirely to PEMEX reduction issues.

WTI crude oil gained $0.24 or 0.26% to $93.67 while Brent had slightly steeper gains, ending their five day losing streak as new worries about Libyan output and fighting in Iraq helped prices rebound.

Natural gas futures fell $0.007 or 0.16% to $4.229, reversing all their morning gains despite freezing near-term weather conditions as traders expected temperatures to moderate and booked some profits from the commodity’s recent price run-up.

U.S. INTEGRATEDS

Reuters - Exxon Mobil Corp's 238,600-barrel-per-day (bpd) Joliet, Illinois, refinery reported problems with process units on Monday due to cold weather which caused flaring, according to a notice filed with U.S. pollution regulators.

INTERNATIONAL INTEGRATEDS

(Late Monday) Reuters - Petroleo Brasileiro SA said on Monday that it expects to restart the coking unit at its REDUC Refinery near Rio de Janeiroon Friday.

Reuters - Royal Dutch Shell, Austria's OMV and Japan's Mitsui will drill an exploration well off New Zealand's southeast coast, becoming the latest group to search for natural gas in the country's largely untapped deepwater basins.

Reuters- Weather conditions in southern Ontario prompted Royal Dutch Shell Canada to shut one unit at its 75,000 barrel per day Sarnia refinery for minor repairs on Tuesday, causing some flaring, a company spokesman said.

(Late Monday) Reuters - Total SA's Total Petrochemical USA reported the loss of high pressure steam due to freezing weather conditions on Monday, at its 225,500-barrel-per-day (bpd) Port Arthur, Texas, refinery, according to a notice filed with Texas pollution regulators.

U.S. E&PS

(Late Monday) Reuters - Abraxas Petroleum Corporation provided an operational and acquisition update.

(Late Monday) Press Release - Callon Petroleum Company issued the following statement concerning recent demands made by Lone Star Value Management, LLC ("Lone Star"): Lone Star's demands appear both ill-advised and self-serving. By advocating for a sale now, Lone Star seems to be focused on realizing a quick trading profit, which would be contrary to the interests of the Company's longer-term investors. In addition, Lone Star's claims regarding Callon's performance are not supported by the facts

BofA Merrill Lynch lowered its rating on Chesapeake Energy to ‘Neutral’ from ‘Buy’.

BofA Merrill Lynch raised its rating on Continental Resources to ‘Buy’ from ‘Neutral’.

(Late Monday) Press Release - Endeavour International Corporationtoday announced that it intends to refinance its existing revolving credit facility and two reimbursement agreements with new credit facilities.

Press Release - Energy XXI today provided an operations update, including production and recent exploration, development and acquisition activity.

RBC lowered its rating on Gulfport Energy Crop to ‘Sector Perform’ from ‘Outperform’.

KLR lowered its rating on Gulfport Energy Crop to ‘Hold’ from ‘Buy’.

(Late Monday) Press Release - Gulfport Energy Corporation today announced that it achieved record daily production of approximately 27,780 barrels of oil equivalent per day ("BOEPD") on December 31, 2013.

Press Release - Eureka Hunter Pipeline, LLC, a majority-owned subsidiary ofMagnum Hunter Resources Corporation, announced today that throughput volumes on Eureka Hunter's gas gathering pipeline system located in West Virginia and Ohio have increased to approximately 166,500 MMBtu per day.

Press Release - Prompted by ongoing drilling success in its onshore operations and a more focused Mid-Continent strategy, SandRidge Energy, Inc. today announced the sale of its Gulf of Mexico business, which comprises all of SandRidge's Gulf of Mexico and Gulf Coast properties, to Fieldwood Energy LLC, for $750 million of cash and the assumption of $370 million of abandonment liabilities and subject to customary purchase price adjustments. SandRidge will also retain a 2.0% overriding royalty interest in certain exploration prospects. The proceeds are expected to be reinvested over time in the company's Mid-Continent drilling projects. SandRidge also announced revised guidance for 2014, including production growth of 26% in 2014, an increase from the previous guidance of 12% growth.

OIL SERVICES

Cowen and Company lowered its ratings on Baker Hughes, Cameron International Corp, Nabors Industries Ltd and Superior Energy Services Inc to ‘Market Perform’ from ‘Outperform’.

Guggenheim lowered its rating on C&J Services Inc and Halliburton Co to ‘Neutral’ from ‘Buy’.

(Late Monday) Press Release - Key Energy Services, Inc. provided updates for the fourth quarter 2013.

Canaccord Genuity initiated coverage of Western Energy Services Corpwith a ‘Buy’ rating.

DRILLERS

Cowen and Company lowered its rating on Helmerich & Payne Inc andNabors Industries Ltd to ‘Market Perform’ from ‘Outperform’.

Press Release - Parker Drilling Company today announced that it intends, subject to market and other conditions, to offer and sell to eligible purchasers $360 million aggregate principal amount of Senior Notes due 2022. The Company intends to use the net proceeds from the offering to fund a portion of its tender offer for any and all of its outstanding 9.125% Senior Notes due 2018 and the related consent solicitation and to pay related premiums, fees and expenses.

Press Release - Parker Drilling Company today announced that it has commenced a cash tender offer to purchase any and all of its outstanding 9.125% Senior Notes due 2018 ("Notes") and a related solicitation of consents from the holders of the Notes. The offer will expire at 11:59 p.m., New York City time, on February 4, 2014.

(Late Monday) Canaccord Genuity initiated coverage of Trinidad Drillingwith a ‘Buy’ rating.

REFINERS

Reuters - Alon USA Energy Inc reported that the sulfur recovery unit (SRU) feed was diverted to flare for undetermined reasons at its 67,000-barrel-per-day refinery in Big Spring, Texas, according to a filing with the U.S. National Response Center.

Reuters - Marathon Petroleum Corp said its 120,000-barrel-per-day Detroit refinery experienced a loss of instrument air due to extreme cold weather that resulted in several units shutting down.

Reuters - Phillips 66 reported an electrical problem leading to flaring at its 239,400-barrel-per-day Lake Charles refinery in Westlake, Louisiana, said a filing with the U.S. National Response Center.

Reuters - Top U.S. oil refiner Valero Energy voiced the first major opposition to ending a decades-old ban on crude oil exports on Tuesday, adding to a debate that will likely shape the biggest energy issue of the year.

MLPS

Morgan Stanley initiated coverage of Cheniere Energy Inc with an ‘Overweight’ rating.

Goldman Sachs initiated coverage of Cheniere Energy Inc with a ‘Buy’ rating.

Credit Suisse initiated coverage of Cheniere Energy Inc with a ‘Neutral’ rating.

Press Release - Enterprise Products Partners L.P. today announced a further expansion of its liquefied petroleum gas export terminal at Oiltanking`s complex on the Houston Ship Channel. Enterprise`s expanded LPG terminal is supported by a 50-year service agreement with Oiltanking Partners, L.P. to provide additional dock space and related services.

Press Release - SunCoke Energy, Inc. today reported fourth quarter 2013 domestic coke production is expected to be 1,056 thousand tons, down an estimated 26 thousand tons versus the same prior year period. Full year coke 2013 production is expected to be 4,269 thousand tons, down approximately 73 thousand tons compared to 2012.