Energy stocks closed mostly higher, taking cues from the broader markets, which were led by telecoms and consumer discretionary, while materials continued to trade lower, all on modest volumes.

Among energy stocks, oilfield services were the laggards with declines among most of the large cap providers while the sector’s main outlier to the downside was ExxonMobil, which fell nearly 1% after reporting results that missed estimates on lower production. Meanwhile, Exxon’s counterpart, Royal Dutch Shell, gained nearly 4% in New York trading after reporting earnings that beat forecasts with an 11 percent rise in quarterly profit, as higher oil prices and a ramp-up of new projects outweighed the impact of lower U.S. natural gas prices.

Among E&Ps, gas-levered equities outperformed their oil-levered counterparts in a rally sparked by short-covering and value buying that coincided with the intraday highs in the underlying commodity.

Natural gas futures closed at $2.036, down $0.032 or 1.55% reversing the 6% intraday spike to a three-week high following the release of the EIA inventory data. Natural gas futures initially moved higher on the storage report, which showed that supplies rose by 47 Bcf last week, matching expectations. The reported injection, however, included an 11 bcf downward revision from previous data, which gave the report a slightly bullish slant. Natural gas prices ultimately closed lower on sell-pressure as traders rolled into the June contract, which becomes the front-month tomorrow upon the expiration of the May contract at the close of today’s session.

WTI crude oil gained $0.43 or 0.41% to $104.55 and Brent gained about 0.6% to $119.80, bolstered by a weaker dollar and as data showing a solid pickup in U.S. home sales overshadowed disappointing data on jobless claims.

U.S. Integrateds

  • XOM reported 1Q’12 EPS of $2.00 versus Thomson Reuters I/B/E/S estimate of $2.09.

Reuters - Chevron Corp reported an equipment malfunction led to sulfur dioxide emissions at its 245,271 barrel-per-day Richmond, California refinery on Thursday, according to a notice filed with the state pollution regulators.

Macquarie raised ConocoPhillips to ‘Neutral’ from ‘Underperform’ reflecting the approximately 10% upside the stock will offer to the firms target price on a post-spin value.

(Late Wednesday) Reuters - ConocoPhillips' 198,200 barrel per day (bpd) Ponca City, Oklahoma, refinery reported flaring on Tuesday night to Oklahoma pollution regulators, according to a spokeswoman for Ponca City's Emergency Department.

Barclays Capital downgraded Hess Corp to ‘Equal-Weight’ from ‘Overweight’ shares will likely continue to struggle throughout this year and will trade substantially below our estimate of its fair asset value due to the lack of visible catalysts as well as increased investors skepticism over management’s execution record.

Credit Suisse downgraded Hess Corp to ‘Neutral’ from ‘Outperform’ after the company suffered from the double blow of lower production and higher capex guidance on 1Q earnings, just months after issuing said guidance.

JPMorgan cut Hess Corp to ‘Neutral’ from ‘Overweight’ based on increased risk of lower near-term production in the Bakken and higher 2012 capital spending.

Press Release - Exxon Mobil Corp reported first quarter earnings of $9,450 million, which included gains from asset sales of about $400 million, decreased 11% or $1,200 million from the first quarter of 2011. Earnings per share (assuming dilution) were $2.00, a decrease of 7%. Capital and exploration expenditures were $8.8 billion, up 13% from the first quarter of 2011. Oil-equivalent production decreased over 5% from the first quarter of 2011. Excluding the impact of higher prices on entitlement volumes, OPEC quota effects and divestments, production was down 1%. Cash flow from operations and asset sales was $21.8 billion, including proceeds associated with asset sales of $2.5 billion. Share purchases to reduce shares outstanding were $5 billion. Dividends per share of $0.47 increased 7% compared to the first quarter of 2011.

Reuters - Exxon Mobil Corp reported the shutdown of unspecified equipment following a malfunction at its 238,600-barrel-per-day refinery in Joliet, Illinois, a notice filed with pollution regulators showed on Thursday.

International Integrateds

  • RDS reported 1Q’12 CCS earnings per ADS of $2.34

(Late Wednesday) Reuters - A federal judge on Wednesday said he may grant preliminary approval to billions of dollars in civil claim settlements stemming BP Plc's 2010 Gulf of Mexico oil spill.

Reuters - The Russian government has approved a 15 percent increase in domestic gas tariffs for Gazprom, First Deputy Prime Minister Igor Shuvalov told reporters.

(Late Wednesday) Reuters - Petrobras' poorly performing shares will recover in the coming months as more drilling rigs are delivered and more oil reserves are incorporated, the chief executive of the Brazilian state-run oil company said on Wednesday.

Reuters - Royal Dutch Shell Plc and Saudi Aramco became co-owners of the largest U.S. refinery on Thursday when a new crude distillation unit at their joint-venture Motiva Enterprises Port Arthur, Texas, plant received oil for the first time, said Shell's Chief Financial Officer.

Reuters - Royal Dutch Shell CFO Simon Henry said that Shell was looking at brownfield sites in Louisiana and Texas for the construction of a possible gas-to-liquids plant.

Reuters - Royal Dutch Shell said it was in talks on sharing planned liquefied natural gas facilities with rivals in Queensland, Australia, and that it was open to buying additional gas exploration assets in Mozambique.

Press Release - Royal Dutch Shell's first quarter 2012 earnings, on a current cost of supplies (CCS) basis (see Note 1), were $7.7 billion compared with $6.9 billion in the same quarter a year ago. First quarter 2012 CCS earnings excluding identified items (see page 5) were $7.3 billion compared with $6.3 billion in the first quarter 2011, an increase of 16%. Basic CCS earnings per share excluding identified items for the first quarter 2012 increased by 15% versus the same quarter a year ago. Cash flow from operating activities for the first quarter 2012 was $13.4 billion. Excluding net working capital movements, cash flow from operating activities in the first quarter 2012 was $12.7 billion.

Reuters - Gas is continuing to leak from Total's Elgin gas field in the UK North Sea but engineers have installed diverter equipment to lead the flow away from the production platform to make it safer to get on board to tackle the leak, the company said on Thursday.

International Integrateds

  • HSE-T reported 1Q’12 EPS of C$0.60 versus Thomson Reuters I/B/E/S estimate of C$0.55.
  • IMO reported 1Q’12 EPS of C$1.18 versus Thomson Reuters I/B/E/S estimate of C$0.93.

Reuters - Husky Energy Inc was still processing about 120,000 barrels per day of fuel at its Lima, Ohio, refinery after a leak shut down a unit, an executive.

Reuters - Husky Energy Inc has taken its Western Canadian heavy oil upgrader down for minor maintenance this month, and plans major maintenance in May on the production vessel for its offshore Newfoundland oil field. Husky said the 82,000 barrel a day Lloydminster upgrader on the Alberta-Saskatchewan border will be down for 20 days and is expected to be back in full operation in early May.

Reuters - Husky Energy Inc reported a system shutdown following a leak at its 155,000 barrel-per-day (bpd) Lima, Ohio, refinery on Wednesday, according to a filing with regulators.

(Late Wednesday) Press Release - Husky Energy Inc. delivered a strong performance in the first quarter of 2012. Net earnings for the quarter were $591 million, or $0.60 per share (diluted). This compared to $626 million, or $0.70 per share in first quarter of 2011, when the Company recorded an after-tax gain of $143 million on the sale of non-core assets. Excluding the after-tax gain and related taxes, net earnings increased 22 percent on a normalized basis compared to a year ago.

(Late Wednesday) Press Release - The Board of Directors of Husky Energy has declared a quarterly dividend of $0.30 (Canadian) per share on its common shares for the three-month period ended March 31, 2012. The dividend will be payable on July 3, 2012 to shareholders of record at the close of business on May 22, 2012.

Press Release - Imperial Oil's earnings in the first quarter of 2012 were $1,015 million, up 30 percent from the first quarter of 2011. Strong operating performance in all business segments allowed us to capture the benefits of both higher liquids realizations and strong mid-continent refining margins in the quarter. A consistent focus on operations excellence and cost efficiency sustains our operating performance while we advance our company growth at Kearl and now at Cold Lake, with our Nabiye project. Net income was $1,015 million, compared with $781 million for the first quarter of 2011, an increase of 30 percent. Net income for the Downstream segment was $455 million in the quarter, the best quarter on record. Net income per common share on a diluted basis was $1.19, up 30 percent from the first quarter of 2011.

U.S. E&PS

  • BRY reported 1Q’12 EPS of $0.91 versus Thomson Reuters I/B/E/S estimate of $1.03.
  • COG reported 1Q’12 EPS of $0.14 versus Thomson Reuters I/B/E/S estimate of $0.14.
  • EQT reported 1Q’12 EPS of $0.50 versus Thomson Reuters I/B/E/S estimate of $0.60.
  • NBL reported 1Q’12 EPS of $1.75 versus Thomson Reuters I/B/E/S estimate of $1.41.
  • OXY reported 1Q’12 EPS of $1.92 versus Thomson Reuters I/B/E/S estimate of $1.92.
  • RRC reported 1Q’12 EPS of $0.15 versus Thomson Reuters I/B/E/S estimate of $0.12.
  • WLL reported 1Q’12 EPS of $1.03 versus Thomson Reuters I/B/E/S estimate of $1.06.
  • WMB reported 1Q’12 EPS of $0.39 versus Thomson Reuters I/B/E/S estimate of $0.36.

Press Release - Berry Petroleum Company reported net earnings of $34 million, or $0.61 per diluted share, for the first quarter of 2012. Net earnings for the quarter were affected by a non-core asset sale, a gain on sale of derivatives, non-cash changes in the mark to market of derivatives, and other items. Excluding these items, adjusted net earnings was $50.3 million, or $0.91 per diluted share. Sales of oil and natural gas were $234 million during the quarter. Discretionary cash flow for the quarter totaled $131.5 million and net cash provided by operating activities totaled $155 million.

(Late Wednesday) Press Release - Cabot Oil & Gas Corporation announced an improvement in first quarter profits over last year, driven primarily from continued expansion of the Company's production base, with both oil and natural gas volumes setting new Company production records. The Company posted net income of $18.3 million, or $0.09 per share, cash flow from operations of $131.8 million and discretionary cash flow of $138.5 million for the first quarter of 2012. This compares to the first quarter of 2011 when the Company reported net income of $12.9 million, or $0.06 per share, cash flow from operations of $91.2 million and discretionary cash flow of $112.3 million. Excluding the effect of certain selected items detailed in the tables below, first quarter 2012 net income was $28.5 million, or $0.14 per share, compared to $20.7 million, or $0.10 per share, in first quarter 2011.

Reuters - A blow out at a Chesapeake Energy Corp. well in Wyoming doesn't pose a threat to water supply in the region, and leaking natural gas and drilling mud are being effectively contained, the U.S. Environmental Protection Agency said.

Reuters - The U.S. Securities and Exchange Commission has opened an informal inquiry into Chesapeake Energy Corp's controversial program that granted Chief Executive Aubrey McClendon a share in each of the natural gas producer's wells, a source familiar with the matter said. That investigation, being led by the SEC's office in Fort Worth, Texas, comes after Reuters reported about loans McClendon had obtained on those wells that raised concerns about a potential conflict of interest by the company's CEO.

Press Release - Chesapeake Energy Corporation announced that its Board of Directors has determined that it does not intend to extend the company’s Founder Well Participation Program (FWPP) with its chief executive officer, Aubrey K. McClendon, beyond its present 10-year term ending December 31, 2015. The Board of Directors and Mr. McClendon have committed to negotiate the early termination of the FWPP and the amendment to Mr. McClendon’s employment agreement necessary to effectuate the early termination. The FWPP, which was approved by shareholders for a 10-year term in 2005, in conjunction with Mr. McClendon’s employment agreement with the company, provides Mr. McClendon a contractual right to participate and invest as a working interest owner (with up to a 2.5% working interest) in new wells drilled on the company’s leasehold.

Press Release - EQT Corporation announced first quarter 2012 earnings of $72.0 million, or $0.48 per diluted share. First quarter 2011 earnings were $122.3 million, or $0.82 per diluted share. Operating cash flow was $227.1 million in the first quarter 2012, compared to $249.4 million in the first quarter of 2011. Both quarters included non-recurring items, which should be considered when comparing results, most notably a significant gain on the sale of the Langley natural gas processing complex (Langley) in the first quarter of 2011. Allowing for the non-recurring items, the adjusted earnings per diluted share were $0.50 for the first quarter 2012, compared to $0.66 for the first quarter 2011; and adjusted cash flow per share was $1.52 in the first quarter 2012, compared to $1.67 in the first quarter 2011. The non-recurring items are discussed in more detail below and reconciled in the Non-GAAP Disclosures section of this press release.

Press Release - Forest Oil Corporation announced that its bank group has reaffirmed Forest’s $1.25 billion borrowing base related to its credit facilities maturing in June 2016. The bank group continues to have $1.5 billion of commitments, and there were no changes in the terms or conditions of the credit facility. Forest further announced today the addition of Douglas E. Brooks as Senior Vice President, Business Development and Larry C. Busnardo as Director, Investor Relations.

Capital One Southcoast downgraded GeoResources Inc to ‘Neutral’ post acquisition.

Press Release - Ryan & Maniskas, LLP investigating potential claims against the board of directors of GeoResources, Inc concerning possible breaches of fiduciary duty and other violations of law related to the Company’s efforts to sell GeoResources to Halcon Resources Corp. in a transaction valued at approximately $1 billion.

Press Release - Noble Energy, Inc.reported first quarter 2012 net income of $263 million, or $1.47 per share diluted, on revenues of $1,165 million. Excluding the impact of unrealized commodity derivative losses, first quarter 2012 adjusted net income(1) was $314 million, or $1.75 per share diluted. Net income for the first quarter 2011 was $14 million, or $0.08 per share diluted, on revenues of $899 million. Adjusted net income(1) for the first quarter of 2011 was $240 million, or $1.35 per share diluted.

Press Release - Occidental Petroleum Corporation announced net income of $1.6 billion ($1.92 per diluted share) for the first quarter of 2012, compared with the first quarter of 2011 net income of $1.5 billion ($1.90 per diluted share). In announcing the results, Stephen I. Chazen, President and Chief Executive Officer, said, “For the quarter, we generated strong results with diluted EPS of $1.92 per share, cash flow from operations of $2.8 billion and annualized ROE of 16 percent. We increased our annual dividend rate by $0.32 per share, or 17 percent, to $2.16 per share.

(Late Wednesday) Press Release - RANGE RESOURCES CORPORATION announced its first quarter 2012 results. Revenues for the first quarter 2012 totaled $247 million, a 16% increase over the prior year quarter. Net cash provided from operating activities including changes in working capital totaled $156 million, an 11% increase over the prior year first quarter. The net loss for the first quarter 2012 was $42 million ($0.26 loss per diluted share) versus a net loss of $25 million for the first quarter 2011. Revenue and cash flow results were driven by higher production volumes and lower unit costs offset by lower realized prices. Earnings also included the impact of a derivative mark-to-market loss and a onetime retroactive charge for the recently adopted Pennsylvania impact fee.

(Late Wednesday) Press Release - Whiting Petroleum Corp reported Q1 2012 Production Up 22% YoY and 14% Over Q4 2011 to a Record 7.348 MMBOE (80,747 BOE/d); Exceeds Upper End of Guidance by 150,000 BOE. Q1 2012 Net Income Available to Common Shareholders of $98.2 Million or $0.83 per Diluted Share and Adjusted Net Income of $122.0 Million or $1.03 per Diluted Share. Q1 2012 Discretionary Cash Flow Totals a Record $351.9 Million. Raising Mid-Point of 2012 Guidance Post Trust Offering to 29.6 MMBOE (80,874 BOE/d) on $1.8 Billion Capital Budget. Company Reports Continuing Success in Williston Basin Bakken, Permian Basin Wolfcamp and DJ Basin Niobrara.

(Late Wednesday) Press Release - Williams announced first-quarter 2012 unaudited net income attributable to Williams of $423 million, or $0.70 per share on a diluted basis, compared with net income of $321 million, or $0.54 per share on a diluted basis for first-quarter 2011. On a continuing basis, improved results in the Williams Partners and Midstream Canada & Olefins segments were more than offset by the absence of a $124 million income tax benefit primarily associated with a federal settlement that was recorded during first-quarter 2011. The absence of the tax benefit drove the slight decline in income from continuing operations in first-quarter 2012. Adjusted income from continuing operations was $236 million, or $0.39 per share, for first-quarter 2012, compared with $169 million, or $0.28 per share for first-quarter 2011.

Canadian E&PS

  • ALA-T reported 1Q’12 EPS of C$0.46 versus Thomson Reuters I/B/E/S estimate of C$0.41.
  • MEG-T reported 1Q’12 EPS of C$0.12 versus Thomson Reuters I/B/E/S estimate of C$0.11.

Press Release - AltaGas Ltd. reported net income applicable to common shares of $41.3 million ($0.46 per share) for the three months ended March 31, 2012, compared to $26.7 million ($0.32 per share) for the same period 2011. Normalized net income applicable to common shares was $40.2 million ($0.45 per share) for the three months ended March 31, 2012, compared to $34.6 million ($0.42 per share) for the same period 2011. Normalized EBITDA for the three months ended March 31, 2012, was $92.5 million, compared to $81.8 million for the same period 2011. Normalized funds from operations were $75.5 million ($0.84 per share) for the three months ended March 31, 2012, compared to $61.5 million ($0.74 per share) for the same period 2011.

Press Release - MEG Energy net earnings for the first quarter of 2012 were $53.4 million ($0.27 per share, diluted) compared to $45.4 million ($0.23 per share, diluted) in the first quarter of 2011. Operating earnings, which are adjusted for items that are not indicative of operating performance, increased in the first quarter of 2012 to $23.5 million ($0.12 per share, diluted) from $20.9 million ($0.11 per share, diluted) in the same period of 2011. Cash flow from operations for the first quarter of 2012 was $72.0 million ($0.36 per share, diluted) compared to $69.3 million ($0.35 per share, diluted) in the first quarter of 2011. The increase in operating earnings and cash flow from operations was primarily due to increased production, as well as higher price realizations and lower operating costs resulting in strong operating netbacks on sales volumes in the quarter.

Oil Services

  • CAM reported 1Q’12 EPS of $0.54 versus Thomson Reuters I/B/E/S estimate of $0.55.
  • OII reported 1Q’12 EPS of $0.47 versus Thomson Reuters I/B/E/S estimate of $0.46.
  • PDS reported 1Q’12 EPS of $0.39 versus Thomson Reuters I/B/E/S estimate of $0.43.
  • PTEN reported 1Q’12 EPS of $0.62 versus Thomson Reuters I/B/E/S estimate of $0.57.

Press Release - Cameron reported net income of $134.0 million, or $0.54 per diluted share, for the quarter ended March 31, 2012, compared with net income of $109.5 million, or $0.43 per diluted share, for the first quarter of 2011. The first quarter 2011 results included after-tax charges of $7.0 million, or $0.03 per diluted share, primarily related to litigation costs associated with the Deepwater Horizon matter.

Press Release - Oceaneering International, Inc. reported record first quarter earnings for the period ended March 31, 2012. On revenue of $594.9 million, Oceaneering generated net income of $51.5 million, or $0.47 per share. During the corresponding period in 2011, Oceaneering reported revenue of $470.4 million and net income of $42.1 million, or $0.39 per share.

Press Release - PATTERSON-UTI ENERGY, INC. reported financial results for the three months ended March 31, 2012. The Company reported net income of $97.3 million, or $0.62 per share, for the first quarter of 2012, an increase of 37% compared to net income of $71.3 million, or $0.46 per share, for the quarter ended March 31, 2011. Revenues for the first quarter of 2012 were $746 million, compared to $567 million for the first quarter of 2011, an increase of 31%.

Press Release - Precision Drilling Corporation reported net earnings of $111 million or $0.39 per diluted share for the three months ended March 31, 2012 compared to net earnings of $66 million or $0.23 per diluted share for the first quarter of 2011. Revenue for the first quarter of 2012 totalled $640 million compared to $525 million for the same period of 2011. Earnings before income taxes, other items and depreciation and amortization ("EBITDA") were $246 million for the first quarter of 2012 compared to $186 million for the first quarter of 2011 (see "Additional GAAP Measures" in this news release). Higher dayrates in both the Canadian and U.S. markets and increased drilling activity in the United States in the first quarter of 2012 over the same period of 2011, led to the 22% increase in revenue and 32% increase in EBITDA.

Drillers

  • HERO reported 1Q’12 EPS of $(0.28) versus Thomson Reuters I/B/E/S estimate of $(0.26).
  • HP reported 1Q’12 EPS of $1.13 versus Thomson Reuters I/B/E/S estimate of $1.21.

Press Release - Helmerich & Payne, Inc. reported income from continuing operations of $129,763,000 ($1.18 per diluted share) from operating revenues of $769,982,000 for its second fiscal quarter ended March 31, 2012, compared to income from continuing operations of $98,961,000 ($0.91 per diluted share) from operating revenues of $604,406,000 during last year's second fiscal quarter ended March 31, 2011. Included in this year's and last year's second fiscal quarter income from continuing operations were $0.05 and $0.02 per share, respectively, of after-tax gains related to the sale of used drilling equipment. Net income for the second fiscal quarter of 2012 was $129,719,000 ($1.18 per diluted share), compared to net income of $98,790,000 ($0.91 per diluted share) during last year's second fiscal quarter.

Press Release - Hercules Offshore, Inc. reported a loss from continuing operations of $38.3 million, or $0.28 per diluted share, on revenue of $143.3 million for the first quarter 2012, compared with a loss from continuing operations of $13.6 million, or $0.12 per diluted share, on revenue of $159.4 million for the first quarter 2011.

Refiners

Reuters - Tesoro Corp's reported clean fuels hydrotreater startup at its 120,000 barrel-per-day refinery in Anacortes, Washington, according to a filing with state pollution regulator.

MLPS

Reuters - TransAlta Corp has abandoned plans to build a C$1.4 billion ($1.42 billion) carbon capture and storage facility at an Alberta coal-fired electricity plant because the company had no buyers for the carbon dioxide and no way to credit from the plan. TransAlta, whose first quarter profit tumbled on weak power prices and maintenance costs, said on Thursday it would not proceed with Project Pioneer, a carbon-capture demonstration plant with partners Enbridge Inc and Capital Power Corp. The project was also backed by C$779 million of funds from the Alberta and federal governments.

(Late Wednesday) Press Release - Williams Partners L.P. announced unaudited first-quarter 2012 net income of $348 million, or $0.85 per common limited-partner unit, compared with first-quarter 2011 net income of $307 million, or $0.81 per common unit. Williams Partners L.P. announced unaudited first-quarter 2012 net income of $348 million, or $0.85 per common limited-partner unit, compared with first-quarter 2011 net income of $307 million, or $0.81 per common unit.

market Commentary

Stocks rose for a third day after upbeat housing data and stronger-than-expected results from companies, including Lockheed Martin, overshadowed some high-profile earnings miss.

The number of Americans lining up for new jobless benefits fell slightly last week but remained above levels posted earlier this year, suggesting improvement in the labor market is stalling.

Earnings from some of Europe's top banks showed the scars of the euro zone crisis, with big losses on Spanish property and fragile economic recovery likely to dampen an early investment banking rebound.

Thomson Reuters Energy Contacts:

Tim Moloughney:

646-822-2225

Rich Pontillo:

646-822-6326

Tamar Essner:

646-822-3646

Jeff O’Malley:

646-822-2926

Roopak Chakravarty

312-288-3090

Jasna Sulejmanagic