SECTOR COMMENTARY

Energy stocks ended the day lower, in line with the broader equity markets on muted volumes, with drillers and E&Ps leading the downturn. A weak reading from the manufacturing sector this morning and renewed concerns over the euro zone debt crisis triggered traders to lock in profits as major markets began pulling back from gains in the prior session that left the S&P 500 at a five-year high and the Dow above the 14,000 mark.

WTI crude oil futures fell $1.60 or 1.64% to close at $96.17 while Brent fared slightly better, off 1.04% on the day, with both contracts hit by profit-taking in a correction after recent multi-week surges. WTI saw steeper pressure following reports of operating restrictions on the Seaway pipeline in Texas, which traders fear will keep a glut of oil near the delivery point for futures from draining.

Natural gas futures ended the day higher by $0.014 or 0.42% at $3.315, backed by some technical buying after an early attempt to move lower stalled and cold Northeast/Midwest weather forecasts for the next few days that should underpin demand. Despite recent attempts to rally off last week's low in the $3.20 area, many traders remain skeptical of the upside, with inventories relatively high, production at or near a record peak and no sustained cold to put a serious dent in supplies. Technical traders noted the front contract broke some key support over the last two weeks and has been unable to rally above near resistance at the 40-day moving average in the $3.39-3.40 area, leaving the chart picture slightly bearish.

U.S. INTEGRATEDS

UBS downgraded Chevron Corp to ‘Neutral’ from ‘Buy’ based on valuation.

Press Release – Genesis Energy, L.P. announced the company plans to invest approximately $125 million to improve existing assets and develop new infrastructure in Louisiana to connect into Exxon Mobil Corporation’s Baton Rouge Refinery, one of the largest refinery complexes in North America with more than 500,000 barrels per day of refining capacity. The project is expected to generate positive economic benefits both for the community of Baton Rouge and the state of Louisiana.

INTERNATIONAL INTEGRATEDS

(Late Friday) Reuters - Marathon Petroleum Corp on Friday closed its $2.4 billion acquisition of BP Plc's Texas City, Texas, refinery, both companies said.

Reuters - Italian oil and gas giant Eni said it started gas production on Jan. 31 at its MLE field in Algeria with partner Sonatrach.

(Saturday) Reuters - RWE expects an out-of-court settlement with Russia's Gazprom in a dispute over gas price contracts, in the first half of this year, is financial chief told a German newspaper.

(Saturday) Reuters - Two oil and gas production platforms under construction at a southern Brazilian shipyard collided on Saturday after high winds dislodged their moorings, according to Brazil's state-run oil company Petrobras.

Reuters - Anglo-Dutch oil major Royal Dutch Shell Indian unit will challenge a claim by the local tax authorities that a share sale to its overseas parent in 2009 was undervalued by $2.7 billion, the latest tax conflict involving a foreign company in India. Shell India said on Monday that as part of its investment in the country Shell India Markets Pvt Ltd issued 87 million shares to parent Shell Gas BV at 10 rupees apiece in 2009.

JP Morgan upgraded Statoil t ‘Neutral’ from ‘Underweight citing improved exploration credentials and near term yield attraction.

CANADIAN INTEGRATEDS

AltaCorp Capital initiated coverage on Cenovus Energy and Suncor Energy with an ‘Outperform’ rating and Husky Oil and Imperial Oil with a ‘Sector Perform’ rating.

(Sunday) Reuters - Husky Energy Inc's 155,000 barrel per day (bpd) Lima, Ohio, refinery reported a malfunction in an incinerator on Saturday, according to a notice filed with U.S. pollution regulators.

U.S. E&PS

Press Release - Denbury Resources Inc. announced that its total estimated proved oil and natural gas reserves at December 31, 2012 were 409 million barrels of oil equivalent ("MMBOE"), consisting of 329 million barrels of crude oil, condensate and natural gas liquids, and 482 billion cubic feet (80 MMBOE) of natural gas. Reserves were 80% liquids and 60% proved developed, and 49% of such reserves were attributable to Denbury's carbon dioxide enhanced oil recovery ("CO(2) EOR" or "tertiary") operations. Nearly all of Denbury's reserves not attributable to CO(2) EOR operations at year-end 2012 relate to planned future CO(2) EOR operations.

Press Release - FX Energy, Inc. reported that production has started from the Winna Gora production facility. The well is currently producing at a rate of 1.5 mmcf/d. The Winna Gora well is located in the 850,000 acre Fences concession, where the Polish Oil and Gas Company (PGNiG) is the operator and holds a 51% interest; the Company holds a 49% interest.

Ladenburg Thalmann downgraded SandRidge Energy to ‘Neutral’ from ‘Buy’.

(Sunday) Press Release - Glancy Binkow & Goldberg LLP announces that it is investigating potential claims on behalf of purchasers of the securities of SandRidge Energy, Inc. concerning possible breaches of fiduciary duties by the Company or its fiduciaries. SandRidge operates as an independent natural gas and oil company and engages in the exploration, development and production of oil and gas properties in the United States.

OIL SERVICES

Press Release - McDermott International, Inc. announced that its Indonesian subsidiary has been awarded a contract by PC Muriah Ltd., an affiliate of PETRONAS Carigali Sdn. Bhd., to develop offshore surface facilities and an infield flowline for the Kepodang Field, located approximately 180 kilometers northeast of Semarang, Central Java, in water depths of up to 70 meters. The project will be included in McDermott's fourth quarter 2012 backlog.

Press Release - PATTERSON-UTI ENERGY, INC. reported that for the month of January 2013, the Company had an average of 197 drilling rigs operating, including 187 rigs in the United States and 10 rigs in Canada. Average drilling rigs operating reported in the Company's monthly announcements represent the average number of the Company's drilling rigs that were operating under a drilling contract. The Company cautioned that numerous factors in addition to average drilling rigs operating can impact the Company's operating results and that a particular trend in the number of drilling rigs operating may or may not indicate a trend in or be indicative of the Company's financial performance. The Company intends to continue providing monthly updates on drilling rigs operating shortly after the end of each month.

DRILLERS

Press Release - Noble Corporation reported that the Company's Board will recommend that shareholders approve an increase in the Company's dividend for the 2013-2014 dividend cycle. The proposed increase will be submitted for shareholder approval and authorization at the annual general meeting in April 2013. The proposed dividend would be in the amount of USD $1.00 per share and would be funded from the Company's capital contribution reserve. If approved by shareholders, the dividend will be paid in four equal installments of USD $0.25 per share with expected payment dates in August 2013, November 2013, February 2014 and May 2014. Noble also announced that its 2013 annual general meeting of shareholders will be held on Friday, April 26, 2013, at 3:00 p.m. local time at the Park Hotel Zug in Zug, Switzerland.

REFINERS

Reuters - Alon USA Energy Inc said a fire at a vacuum tower was quickly extinguished on Sunday at its 67,000 barrel-per-day Big Spring, Texas, refinery.

(Sunday) Reuters - A fire was reported at a natural gas processing facility of Alon USA Energy Inc's 67,000 barrel-per-day Big Spring, Texas, refinery late on Sunday, according to a filing lodged with regulators.

(Late Friday) Reuters - Marathon Petroleum Corp on Friday closed its $2.4 billion acquisition of BP Plc's Texas City, Texas, refinery, both companies said.

Macquarie Capital raised Valero Energy Corp to ‘Neutral’ from ‘Underperform’.

Reuters - Valero Energy Corp said its Wilmington, California, refinery's fluid catalytic cracker (FCC) and alkylation units were brought back down for planned work, which would last about two weeks.

MLPS

(Late Friday) Reuters - Philadelphia Energy Solutions reported maintenance on a reformer on Jan. 18 and startup of a cumene unit on Jan. 23 at the Girard Point section of its 335,000 barrel-per-day refinery in Philadelphia. Philadelphia Energy is a joint venture of Carlyle Group and Energy Transfer Partners, which bought its former owner, Sunoco.

Press Release - Magellan Midstream Partners, L.P. announced that it plans to construct new pipeline and terminal infrastructure at the partnership's Galena Park, Texas terminal to originate crude oil to Magellan's Gulf Coast crude oil distribution system for delivery to refineries in the Houston and Texas City area.