SECTOR COMMENTARY

Energy stocks closed sharply higher, outperforming the broader equity markets which also posted strong gains as the Dow Jones Industrial Average closed above 14,000 for the first time since late 2007. Equity futures got a boost after the January employment report showed upward revisions to previous months. The refiners were the best-performing group, widening its year-to-date lead versus the other energy subgroups. The integrateds were the relative laggards as both ExxonMobil Corp. and Chevron reported earnings.

WTI crude rose $0.28 or 0.29% to $97.77. Brent crude rose to a four-month peak on Friday, boosted by optimism about the global economic recovery and heavy trading of the spread with U.S. oil futures. Brent's premium to West Texas Intermediate rose more than $1 a barrel earlier in the session on expectations that inventories at the Cushing, Oklahoma delivery point for the U.S. oil futures would continue to build.

Money managers raised their net long U.S. crude futures and options positions in the week to January 29, the U.S. Commodity Futures Trading Commission said on Friday. The speculator group raised its combined futures and options positions in New York and London by 4,932 contracts to 231,484 during the period.

Natural gas futures fell $0.038 or 1.14% to $3.301. The latest National Weather Service six-to-ten-day forecast issued on Thursday also called for above-normal readings for a little more than the eastern half of the country. The number of rigs drilling for natural gas in the United States fell this week after a slight gain last week, as relatively soft gas prices again pressured producers to slow dry gas drilling. The gas-directed rig count dropped by six to 428, the third decline in the last four weeks, data from Houston-based oil services firm Baker Hughes showed on Friday.

U.S. INTEGRATEDS

• XOM reported 4Q’12 EPS of $2.20 versus Thomson Reuters I/B/E/S estimate of $2.00.

Press Release - Chevron Corporation reported earnings of $7.2 billion ($3.70 per share – diluted) for the fourth quarter 2012, compared with $5.1 billion ($2.58 per share – diluted) in the 2011 fourth quarter. Results in the 2012 period included a gain of $1.4 billion from an upstream asset exchange. Full-year 2012 earnings were $26.2 billion ($13.32 per share – diluted), down 3 percent from $26.9 billion ($13.44 per share – diluted) in 2011. Sales and other operating revenues in the fourth quarter 2012 were $56 billion, down from $58 billion in the year-ago period, mainly due to lower crude oil volumes.

Press Release - Exxon Mobil Corp reported 4th-Quarter Net Up 5.9% on Strong Downstream Earnings. Earnings of $9,950 million increased $550 million or 6% from the fourth quarter of 2011. Earnings per share (assuming dilution) were $2.20, an increase of 12% from the fourth quarter of 2011. Gains from asset sales in the fourth quarter of 2012 were nearly $600 million, down $800 million from the prior year. LIFO inventory gains were over $300 million for the fourth quarter of 2012, similar to the 2011 level. Capital and exploration expenditures were $12.4 billion, up 24% from the fourth quarter of 2011. Oil-equivalent production decreased 5% from the fourth quarter of 2011. Excluding the impacts of entitlement volumes, OPEC quota effects and divestments, production decreased 2%. Cash flow from operations and asset sales was $14.0 billion, including proceeds associated with asset sales of $0.8 billion. Share purchases to reduce shares outstanding were $5 billion. Dividends per share of $0.57 increased 21% compared to the fourth quarter of 2011.

Reuters - Exxon Mobil Corp and Iraqi Kurdistan officials visited an oil exploration block caught in a dispute between Baghdad's central government and the autonomous Kurdish region, and discussed building a camp there, a local official and sources say.

(Late Thursday) Reuters - Gasoline climbed 5 cents a gallon in the Los Angeles spot market on a cut in gasoline production at Exxon Mobil Corp.'s 149,500 barrel per day (bpd) Los Angeles-area refinery in Torrance, California, traders said on Thursday.

Global Hunter lowered its rating on Hess Corp to ‘Accumulate’ from ‘Buy’ following the run-up in share price this week on the announced closure of the Port Reading refinery and a letter from activist Elliott Management calling for board seats and ultimately the split up of the company.

INTERNATIONAL INTEGRATEDS

Press Release - Marathon Petroleum Corporation announced that it has closed the transaction with BP Plc to purchase several assets, including a 451,000 barrel per calendar day refinery located in Texas City, Texas. The refinery will be renamed and referred to in future MPC communications as the Galveston Bay refinery. Additionally, the transaction includes a 1,040 megawatt cogeneration facility, four light product terminals located in the Southeast, retail marketing contract assignments for approximately 1,200 branded sites representing approximately 61,000 barrels per day (bpd) of gasoline sales, three operating intrastate natural gas liquids pipelines originating at the refinery and a 50,000 bpd allocation of BP's Colonial Pipeline Company shipper history.

(Late Thursday) Reuters - A former trader at BP Plc has filed a lawsuit for breach of contract in which he alleges the British company's Houston-based unit, BP Energy Co, is attempting to manipulate the U.S. natural gas liquids market.

Reuters - Rosneft came in slightly below forecasts with a 7 percent rise in 2012 net profit on Friday while free cash flow halved ahead of its $55 billion takeover of TNK-BP, sending shares in Russia's top oil producer lower.

Reuters - Rosneft has signed several deals to supply customers in Europe directly via the Druzhba pipeline, as Russia's top crude oil producer moves to diminish the influence of traders in its sales schemes and cut costs.

BoA/ML cut Royal Dutch Shell to ‘Underperform’ from ‘Neutral.

UBS Securities downgraded Royal Dutch Shell to ‘Neutral’ from ‘Buy’.

Reuters - Aker Solutions has won a contract worth 2 billion crowns ($365.33 million) from oil firm Statoil, the Norwegian oilfield engineering firm said on Friday.

CANADIAN INTEGRATEDS

• IMO-T reported 4Q’12 EPS of C$1.26 versus Thomson Reuters I/B/E/S estimate of C$0.99.

Press Release - Imperial Oil announces estimated fourth quarter financial and operating results. Imperial Oil announces estimated fourth quarter financial and operating results. Net income was $1,076 million, compared with $1,005 million for the fourth quarter of 2011, an increase of seven percent. Net income per common share on a diluted basis was $1.26, up seven percent from the fourth quarter of 2011. Cash generated from operating activities was $1,647 million, an increase from $1,216 million in the fourth quarter of 2011, primarily due to deferred income tax effects. A strong balance sheet was maintained, with total debt representing nine percent of capital at 2012 year-end.

Reuters - Imperial Oil Ltd said its final cost of initial development of the Kearl oilsands project in Alberta is expected to be C$12.9 billion ($12.9 billion), C$2 billion more than earlier projections, due to transportation delays and harsh weather.

U.S. E&PS

(Late Thursday) Press Release - Bill Barrett Corporation announced certain unaudited operating results and estimated reserves for year-end 2012 and certain operating guidance for 2013. Highlights from 2012 include (unaudited): Production growth of 10% to 118 Bcfe, including 80% growth in oil production. Proved reserves of 1.04 Tcfe, including 66% growth in oil reserves. Proved reserves plus risked resources of 2.9 Tcfe. Continued DJ Basin success with 82% growth in proved reserves and nearly four-fold increase in resource drilling locations. Strong balance sheet with $825 million line of credit undrawn.

Press Release - Magnum Hunter Resources Corporation announced today that it has declared a monthly cash dividend on the Company's 10.25% Series C Cumulative Perpetual Preferred Stock ("Series C Preferred Stock"), a monthly cash dividend on the Company's 8.0% Series D Cumulative Preferred Stock ("Series D Preferred Stock") and a monthly cash dividend on the Company's 8.0% Series E Cumulative Convertible Preferred Stock ("Series E Preferred Stock"). The outstanding shares of Series E Preferred Stock are represented by depositary shares (the "Depositary Shares"), each representing a 1/1,000th interest of a share of Series E Preferred Stock.

(Late Thursday) Press Release - Oasis Petroleum Inc. announced 2012 operational results and estimated net proved reserves, updated its 2012 financial outlook, and provided its 2013 outlook. Achievements in 2012 include: Increased average daily production to 22,469 barrels of oil equivalent per day ("Boepd") in 2012, up from 10,724 Boepd in 2011 for an increase of 110%. Completed and placed on production 117 gross (93.3 net) operated wells during 2012, including 31 gross (25.4 net) operated wells in the fourth quarter of 2012. Increased total estimated net proved oil and natural gas reserves at December 31, 2012 to 143.3 million barrels of oil equivalent ("MMBoe"), an 82% increase over year-end 2011 estimated net proved reserves. Approximately 89% of estimated net proved reserves at year-end 2012 consisted of oil and 49% were classified as developed. Continued to high-grade and grow the Company's leasehold position to 335,383 total net acres in the Williston Basin, primarily targeting the Bakken and Three Forks ("TFS") formations. The Company increased its operated drill blocks by 37 through acreage additions and trades during 2012. In addition, Oasis has 264,595 net acres held-by-production as of December 31, 2012. Successfully launched and utilized Oasis Well Services ("OWS"), the Company's internal frac service provider on its operated wells. Reduced well costs by 16% from $10.5 million in the first half of 2012 to $8.8 million as of year-end 2012, while maintaining similar estimated ultimate recoveries ("EURs") on wells. Ended the year with $239 million of cash, cash equivalents, and short-term investments and had total liquidity of $987 million, including the Company's revolving credit facility ($750 million borrowing base).

CANADIAN E&PS

• COS-T reported 4Q’12 EPS of C$0.46 versus Thomson Reuters I/B/E/S estimate of C$0.50.

(Late Thursday) Press Release - Canadian Oil Sands announced 2012 Financial Results and a $0.35 Per Share Dividend. Cash flow from operations was $418 million ($0.86 per Share) in the fourth quarter of 2012 compared with cash flow from operations of $363 million ($0.75 per Share) in the same quarter of 2011. For the 2012 year, cash flow from operations totalled $1,581 million ($3.26 per Share), down 17 per cent from $1,897 million ($3.91 per Share) in 2011. The quarter-over-quarter increase in cash flow from operations reflects higher sales volumes, partially offset by a lower realized selling price. The year-over-year decrease in cash flow from operations reflects a lower realized selling price, partially offset by lower Crown royalties. Net income for the fourth quarter of 2012 was $221 million ($0.46 per Share), down from $232 million ($0.48 per Share) in the 2011 fourth quarter. On an annual basis, net income was $981 million ($2.02 per Share) in 2012 compared with $1,144 million ($2.36 per Share) in 2011. COS maintained its quarterly dividend at $0.35 per Share, payable on February 28, 2013 to shareholders of record on February 22, 2013. During 2012, the Corporation paid a total of $654 million, or $1.35 per Share, in dividends to shareholders.

Press Release - Cub Energy Inc., a Ukraine-focused upstream oil and gas company, announces the discovery of commercial volumes of natural gas in the Krutogorovskoye-7 ("K-7") exploration well in Ukraine. The K-7 well is operated by KUB-Gas, a partially-owned subsidiary in which Cub has a 30% ownership interest. The K-7 well commenced drilling in September 2012 and was cased to a total depth ("TD") of 3,206 metres in early November 2012. Wireline logging of the well indicated up to 5 potential gas zones in the Bashkirian and Serpukhovian sands between depths of approximately 2,390 metres and 2,760 metres. A 10 metre section of the Bashkirian B12 zone, from a depth of 2,395 to 2,398 metres and from 2,400 to 2,407 metres, was selected for testing.

OIL SERVICES

• NOV reported 4Q’12 EPS of $1.49 versus Thomson Reuters I/B/E/S estimate of $1.44.
• TDW reported 4Q’12 EPS of $0.68 versus Thomson Reuters I/B/E/S estimate of $0.43.

CapitalOne Southcoast downgraded Helmerich & Payne to ‘Neutral’ from ‘Buy’.

Press Release - National Oilwell Varco, Inc. reported that for the fourth quarter ended December 31, 2012 it earned net income of $668 million, or $1.56 per fully diluted share. Earnings improved nine percent compared to the third quarter of 2012, and improved 16 percent compared to the fourth quarter of 2011. Excluding $51 million in pre-tax transaction charges and a net $69 million tax benefit related to certain U.S. foreign tax credits in the fourth quarter of 2012, net income was $638 million, or $1.49 per fully diluted share, down two percent from the third quarter of 2012, and up nine percent from the fourth quarter of 2011, excluding transaction charges from all periods. The net $69 million tax benefit resulted from a strategic reorganization of certain foreign operations to more fully integrate recently acquired business groups.

Press Release - TETRA Technologies, Inc. announced 2013 earnings guidance and a preliminary estimate of fourth quarter 2012 results. estimating fourth quarter 2012 earnings per fully diluted share attributable to TETRA stockholders of $0.18 to $0.20, excluding Maritech and unusual charges totaling $(0.24) per share; confirming cash generation in excess of $80.0 million during the fourth quarter of 2012 from the sale of certain assets and accounts receivable improvements; targeting completion of Maritech's decommissioning liabilities by the third quarter of 2013; and projecting an increase in adjusted 2013 earnings per share of 29%, based on the midpoints of estimated 2012 results and 2013 guidance, reflecting recent acquisitions and a favorable outlook for Offshore Services, Compressco, and the Fluids Division, which is expected to offset potential weakness in the onshore North American market. Excluding an expected loss from the continued winding-down of the Maritech segment, earnings guidance for 2013 is $0.75 to $0.85 per fully diluted share from continuing operations attributable to TETRA stockholders. The Company expects the loss attributable to the continued winding-down of the Maritech segment during 2013 to be approximately $0.03 per fully diluted share. Including such loss, earnings guidance for 2013 on a U.S. GAAP basis is $0.72 to $0.82 per fully diluted share.

Press Release - Tidewater Inc. announced third quarter earnings for the period ended December 31, 2012, of $29.9 million, or $0.61 per share, on revenues of $309.5 million. For the same quarter last year, net earnings of $34.1 million was reported, or $0.67 per share, on revenues of $272.1 million. The immediately preceding quarter ended September 30, 2012, had net earnings of $41.4 million, or $0.83 per share, on revenues of $311.9 million, which included approximately $7.4 million of vessel revenue associated with retroactive rate increases agreed to during the September 2012 quarter, but related to the period from January 1, 2012 through June 30, 2012.

DRILLERS

Press Release - Noble Corporation reported that the Company's Board has set the record and payment dates for the third installment of a payment to shareholders in the form of a dividend funded from the Company's capital contribution reserve. This installment payment will be in the amount of USD $0.13 per share. The ex-dividend date for this payment is expected to be February 7, 2013, with a record date of February 11, 2013 and a payment date of February 21, 2013.

Press Release - Seadrill has entered into an agreement for the construction of two high specification jack-up drilling rigs with Dalian Shipbuilding Industry Offshore Inc. in China. The new units are scheduled for delivery during the first and second quarter 2015, and the estimated total project price is approximately US$230 million (including project management, capitalized interest, drilling and handling tools, spares and operation preparations) per rig, with tail-heavy payment terms.

(Late Thursday) Press Release – In the third quarter financial report Seadrill estimated the downtime for the deepwater rigs in operation to be 41 days for the fourth quarter. After closing the quarter revised estimates show downtime has increasing to approximately 100, days, mainly due to BOP issues on several of the Company's rigs. In line with what the Company communicated in the third quarter financial report, general and administrative costs have increased due to the management transition process to London, as well as expenses related to the development of one specific IT project. During the transition process the general and administrative costs will be US$10-20 million higher than what has been historically reported, but is expected to be reduced after the transition process has been finalized in the second half of 2013.

REFINERS

Reuters - Phillips 66 reported flaring due to "compressor surging" at its 362,000 barrel-per-day Wood River refinery in Roxana, Illinois, according to a filing with state pollution regulators.

Reuters - Western Refining Inc's 21,100 barrel-per-day Gallup refinery in New Mexico reported a saturation gas unit rupture, in a filing with national pollution regulators.

MLPS

Press Release - Levi & Korsinsky is investigating the Board of Directors of Copano Energy for possible breaches of fiduciary duty and other violations of state law in connection with the sale of the Company to Kinder Morgan Energy Partners, L.P.

(Late Thursday) Press Release - The securities litigation firm of Brower Piven, A Professional Corporation, has commenced an investigation into possible breaches of fiduciary duty to current shareholders of Copano Energy L.L.C. and other violations of state law by the board of directors of Copano relating to the proposed acquisition of the Company by Kinder Morgan Energy Partners, L.P. The firm’s investigation seeks to determine, among other things, whether the board of directors of Copano breached their fiduciary duties by failing to maximize shareholder value.

Press Release - Marathon Petroleum Corporation announced that it has closed the transaction with BP Plc to purchase several assets, including a 451,000 barrel per calendar day refinery located in Texas City, Texas. The refinery will be renamed and referred to in future MPC communications as the Galveston Bay refinery. Additionally, the transaction includes a 1,040 megawatt cogeneration facility, four light product terminals located in the Southeast, retail marketing contract assignments for approximately 1,200 branded sites representing approximately 61,000 barrels per day (bpd) of gasoline sales, three operating intrastate natural gas liquids pipelines originating at the refinery and a 50,000 bpd allocation of BP's Colonial Pipeline Company shipper history.

Press Release - NuStar Energy L.P. announced its fourth quarter distributable cash flow from continuing operations available to limited partners was $57.1 million, or $0.73 per unit, compared to 2011 fourth quarter distributable cash flow of $59.5 million, or $0.90 per unit. For the year ended December 31, 2012, distributable cash flow from continuing operations available to limited partners was $202.6 million, or $2.77 per unit, down from the $305.3 million, or $4.70 per unit earned in 2011. Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations were $77.6 million for the fourth quarter of 2012 compared to $91.9 million for the fourth quarter of 2011. For the year ended December 31, 2012, EBITDA from continuing operations was $99.1 million, lower than the $476.5 million in 2011.