SECTOR COMMENTARY

Energy stocks gained, closing near session highs, helping to lead the broader markets to the upside, along with material stocks.

Drillers were the best performers, led by Ensco which announced a 33% year-over-year increase to its divided while Transocean and Atwood had more modest gains as they were both downgraded to Neutral at Macquarie. E&Ps were relative underperformers, with losses led by Stone Energy which fell nearly 2% after posting a large earnings beat but lowered its production guidance due to reduced projected Marcellus volumes in January and most of February from damage to a third party pipeline.

WTI crude oil closed at $92.63, down by $0.48 or 0.52% while Brent had even steeper losses as worries about an inconclusive Italian election revived investor concerns about instability in the euro zone and threatened the outlook for fuel demand. Investors are also expecting bearish data from the inventory reports later today and tomorrow.

Natural gas futures gained $0.013 or 0.38% to $3.427, extending yesterday's sharp rise, driven by expectations that heating demand will pick up as fairly cold weather settles across much of the eastern half of the nation for the next few weeks. "There's a blizzard in the midsection of the country, and there's been talk of well freeze offs," a Texas trader said.

INTEGRATEDS

Reuters - Exxon Mobil's Augusta refinery in Sicily is operating close to its normal output levels following a fire on Monday that hit a vacuum distillation unit, a company spokeswoman said.

Reuters - Celtic Exploration Ltd announces completion of acquisition by ExxonMobil Canada Ltd.

INTERNATIONAL INTEGRATEDS

(Late Monday) Reuters - A 102,500 barrel-per-day gasoline-producing fluidic catalytic cracking unit remains shut at BP Plc's 240,000 bpd Los Angeles-area refinery in Carson, California, after maintenance work was extended, according to sources familiar with operations at the refinery.

Reuters - Gazprom Marketing & Trading signed an exclusive deal to buy and market liquefied natural gas from the Tamar floating liquefied natural gas project off the coast of Israel, the company said on Tuesday.

Reuters - Russian energy group Gazprom said it is in exclusive talks to buy liquefied natural gas from the Tamar field off Israel's coast, which could strengthen its hand in the booming Asian LNG market.

Reuters - LUKOIL has agreed to sell its idle oil refinery in Ukraine's Black Sea port of Odessa to a local trading company, two sources close to the deal said on Tuesday.

(Late Monday) Reuters - Brazil's state-led oil giant Petrobras and Repsol announced on Monday that it has found good quality sub-salt crude in the Santos basin while drilling well 1-SPS-98 (1-BRSA-1063-SPS), known as Sagitário.

Reuters - EU antitrust regulators will clear Russian oil producer Rosneft's plan to acquire control of TNK-BP without any conditions, as they have not found any competition concerns, a source familiar with the matter said on Tuesday.

Press Release - Royal Dutch Shell plc continues to expand its industry leadership in Liquefied Natural Gas, today agreeing to acquire part of Repsol S.A's LNG portfolio outside of North America, including supply positions in Peru and Trinidad & Tobago, for a cash consideration of $4.4 billion. Shell will also assume and consolidate balance sheet liabilities predominantly reflecting leases for LNG ship charters of currently $1.8 billion. The balance sheet impacts are subject to final assessment prior to completion of the transaction.

U.S. E&PS

• CRZO reported 4Q’12 EPS of $0.54 versus Thomson Reuters I/B/E/S estimate of $0.35.
• CIE reported 4Q’12 EPS of ($0.16) versus Thomson Reuters I/B/E/S estimate of ($0.10).
• OAS reported 4Q’12 EPS of $0.49 versus Thomson Reuters I/B/E/S estimate of $0.48.
• ROSE reported 4Q’12 EPS of $0.79 versus Thomson Reuters I/B/E/S estimate of $0.94.
• SGY reported 4Q’12 EPS of $0.89 versus Thomson Reuters I/B/E/S estimate of $0.59.

(Late Monday) Wells Fargo lowered its rating on Berry Petroleum Co to ‘Market Perform’ from ‘Outperform’.

Press Release - Carrizo Oil & Gas, Inc. announced the Company's record financial results for the fourth quarter of 2012, which included the following highlights: Record Oil Production of 9,033 Bbls/d, a 4% sequential increase over the third quarter of 2012 and a 190% increase over the fourth quarter of 2011. Natural Gas and NGL Production of 100,924 Mcfe/d. Total Production of 2,379 MBoe, or 25,859 Boe/d. Record Oil Revenue of $81.2 million, amounting to 76% of total revenue, a 6% sequential increase over the third quarter of 2012 and a 188% increase over the fourth quarter of 2011.

(Late Monday) Johnson Rice downgraded Chesapeake Energy Corp to ‘Equal Weight’ from ‘Overweight’.

Press Release - Cobalt International Energy, Inc. announced a net loss of $67 million, or $0.16 per basic and diluted share for the fourth quarter of 2012, compared to a net loss of $51 million, or $0.13 per basic and diluted share, for the fourth quarter of 2011. Cobalt reported a net loss of $283 million, or $0.70 per basic and diluted share, for the year ended December 31, 2012, compared to a net loss of $134 million, or $0.35 per basic and diluted share, for the same period in 2011.

Press Release - FX Energy, Inc. reported that it has drilled and cored a 36 meter section of Main Dolomite in the Tuchola-3K well. The Main Dolomite is the first of two target zones in this well. Very good gas shows were observed throughout the entire 36 meter section, but the drill stem test (DST) of the Main Dolomite from 2,641 to 2,677 meters did not encounter any inflow of gas or fluid. Core samples confirm that the Main Dolomite is tight and the fractures are cemented with anhydrite. Drilling will continue on the Tuchola-3K well to test a projected Devonian oil target at a depth of 3,180-3,820 meters.

(Late Monday) Press Release - Oasis Petroleum Inc. announced financial results for the quarter and year ending December 31, 2012. Increased revenue by 108% to $686.7 million in 2012, up from $330.4 million in the prior year. Grew Adjusted EBITDA by 118% to $512.3 million in 2012, up from $234.5 million in the prior year. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income and net cash provided by operating activities, see "Non-GAAP Financial Measures" below. Increased net income by 93% to $153.4 million in 2012, up from $79.4 million in the prior year.

Press Release - Rosetta Resources Inc. today reported fourth quarter 2012 net income of $42.3 million, or $0.80 per diluted share, versus net income of $32.2 million, or $0.61 per diluted share, for the same period in 2011. Adjusted net income (non-GAAP) for the quarter was $42.0 million, or $0.79 per diluted share, excluding an unrealized gain on derivative activities of $0.6 million, or $0.4 million after-tax. Fourth quarter earnings also include a $0.14 per diluted share impact related to stock-based compensation.

(Late Monday) Press Release - Stone Energy Corporation today announced financial and operational results for the fourth quarter and year-end of 2012. Some of the highlights include: Net income was $149.4 million, or $3.03 per share for the year ended December 31, 2012; Net daily production for 2012 was 42 MBoe per day, a 15% annual increase compared to 2011; and Estimated proved reserves as of December 31, 2012 increased to 129 MMboe or 773 Bcfe from year-end 2011, representing an annual increase of 28% and a production replacement of 285%.

CANADIAN E&PS

• GTE reported 4Q’12 EPS of $0.15 versus Thomson Reuters I/B/E/S estimate of $0.13.

Reuters - Celtic Exploration Ltd announces completion of acquisition by ExxonMobil Canada Ltd.

Press Release - Gran Tierra Energy Inc. today announced its financial and operating results for the quarter and year ended December 31, 2012. Revenue and other income for the year was $585.2 million, a 2% decrease over 2011; Net income fell by 21% from the prior year to $99.7 million, representing basic and diluted net income per share of $0.35, compared with net income of $126.9 million, or $0.46 per share basic and $0.45 per share diluted, in 2011.

OIL SERVICES

• GLF reported 4Q’12 EPS of ($0.19) versus Thomson Reuters I/B/E/S estimate of $0.27.

Macquarie Research downgraded Atwood Oceanics and Oceaneering International to ‘Neutral’ from ‘Outperform’.

(Late Monday) Press Release - GulfMark Offshore, Inc. announced the results of operations for the three- and twelve-month periods ended December 31, 2012. For the three months ended December 31, 2012, consolidated revenue was $95.0 million, and the net loss for the same period was $4.9 million, or $0.19 per diluted share. For the twelve months ended December 31, 2012, consolidated revenue was $389.2 million and net income was $19.3 million, or $0.73 per diluted share.

Macquarie Research recommends Halliburton, Schlumberger and Weatherford as its preferred names.

DRILLERS

Press Release - Ensco plc announced today that its Board of Directors has declared a regular quarterly cash dividend of US$0.50 per Class A ordinary share payable on 22 March 2013 to holders of Ensco’s shares as of the 11 March 2013 record date. The prior quarterly dividend was $0.375 per share.

Macquarie Research downgraded Transocean Ltd to ‘Neutral’ from ‘Outperform’.

REFINERS

• HFC reported 4Q’12 EPS of $2.03 versus Thomson Reuters I/B/E/S estimate of $2.26.

Press Release - HollyFrontier Corporation today reported fourth quarter net income attributable to HollyFrontier stockholders of $391.6 million or $1.92 per diluted share for the quarter ended December 31, 2012, compared to $223.4 million or $1.06 per diluted share for the quarter ended December 31, 2011. For the year ended December 31, 2012, net income attributable to HollyFrontier stockholders totaled $1,727.2 million or $8.38 per diluted share compared to $1,023.4 million or $6.42 per diluted share for the year ended December 31, 2011.

Reuters - A process unit upset at Phillips 66's 362,000 barrel-per-day Wood River refinery in Roxana, Illinois, led to flaring, according to a filing with state pollution regulators.

Reuters - Tesoro Crop reported a small fire on top of a non-active vessel on Monday at its 166,000-barrel-per-day Golden Eagle refinery in Martinez, California, according to a filing with the Contra Costa health department on Tuesday.

Reuters - Valero Energy Corp said the coker remained in operation during flaring reported at its 292,000 barrel-per-day Port Arthur, Texas, refinery on Monday.

Reuters - Valero Energy Corp reported emissions from a hydrocracking unit (HCU) after a compressor trip at its 292,000 barrel-per-day Port Arthur, Texas, refinery on Tuesday, according to a filing with state pollution regulators.

MLPS

(Late Monday) Press Release - ONEOK Partners, L.P. announced that 2012 net income attributable to ONEOK Partners was $888.0 million, or $3.04 per unit, a 7 percent increase, compared with $830.3 million, or $3.35 per unit, in 2011.

Credit Suisse downgraded ONEOK Partners, L.P. to ‘Neutral’ from ‘Outperform’

Reuters - Alberta's Energy Resources Conservation Board, which regulates pipelines in the province, on Tuesday issued four "high-risk enforcement actions" against Plains All American Pipeline LP's Canadian unit after concluding an investigation into a 2011 pipeline break in northern Alberta.

(Late Monday) Reuters - A Sunoco Logistics Partners' pipeline leaked an estimated 550 barrels of crude oil near Woodville, Texas on the weekend, a spokesman for the Railroad Commission (RRC) of Texas said on Monday.