SECTOR COMMENTARY

Energy stocks extended recent gains from last week, wiping out all of yesterday’s considerable losses, as commodity prices rose and broader indices closed near session highs.

E&Ps were the best performers, led by the nearly 5% surge in Whiting Petroleum which was attributed to a prolific well result released on the North Dakota Industrial Commission web site. While one well result does not de-risk Whiting’s entire McKenzie County acreage block, it gives visibility into the company's running room in the Bakken outside of the Sanish/Parshall field. Anadarko also gained nearly 3% after the company beat estimates on lower expenses.

WTI crude oil gained $0.47 or 0.49% to $96.64, resuming the three week rally, boosted by positive economic data in Europe that reignited the upward momentum in stock markets. "The S&P 500 has recovered its confidence and there's support for oil prices related to that," said Timothy Evans, energy analyst for Citi Futures Perspective in New York. Traders largely ignored news of Iran's offer of fresh talks with the West over its nuclear program.

Natural gas futures rallied $0.084 or 2.53% to $3.399, rising for a second day in reaction to forecasts for cold weather in the Northeast and Midwest the next few days, which should drive gas usage to heat homes and businesses. "Natural gas futures continue to idle quietly within their recent trading range with temperatures seen as cold enough to keep a floor under the market," Citi Futures energy analyst Tim Evans said in a report.

U.S. INTEGRATEDS

(Late Monday) Press Release - Murphy Oil USA, Inc., a wholly owned subsidiary of Murphy Oil Corporation, announced today the members of its executive team in preparation for the spin-off of the U.S. Retail business later this year.

INTERNATIONAL INTEGRATEDS

• BP reported 4Q’12 ADS of $0.67.

Press Release – BP PLC Tuesday posted a 72% drop in profit for the fourth quarter, as its production fell due to asset sales and it agreed to pay billions of dollars in fines to the U.S. government to settle criminal charges over the Deepwater Horizon oil spill. Replacement cost Profit was $2.14 billion in the three months ended Dec. 31, compared with $7.61 billion in the fourth quarter of 2011. Excluding the impact of one-off gains or losses from asset sales and the Deepwater Horizon settlement, the company's profit was $3.98 billion, down 20% on the year, but above average expectations of $3.373 billion in a Dow Jones Newswires poll of 12 analysts. BP said. BP announced a quarterly dividend of 9 cents a share to be paid in March.

(Late Monday) Reuters - Petroleo Brasileiro SA, said on Monday that fourth-quarter net profit rose 53 percent from a year earlier as unexpected financial gains made up for rising operational costs. Consolidated net income attributable to shareholders was 7.75 billion reais ($3.89 billion) in the three months ending Dec. 31, the Rio de Janeiro-based company said in a filing with Brazil's CVM securities regulator. While profit beat the 6.21-billion-real outlook in a Reuters survey of 12 analysts, Petrobras also said debt also rose to 2.77 times earnings before interest, taxes, depreciation and amortization (EBITDA). That's above the company's own limit of 2.5 times EBITDA, as Reuters reported Dec. 18 after Moody's Investors service put Petrobras debt on watch for a possible downgrade

(Late Monday) Reuters - Canada's National Energy Board on Monday approved a liquefied natural gas export license for Royal Dutch Shell Plc's planned LNG export plant on British Columbia's Pacific Coast

(Late Monday) Reuters - Royal Dutch Shell's 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.

Cheuvreux lowered its rating for Royal Dutch Shell to ‘Outperform’ from ‘Selected List’.

Reuters - Cyprus will sign a production sharing agreement with Total for the exploration of hydrocarbons offshore, its government spokesman said on Tuesday.

Reuters - Total said it has selected a consortium led by Italian gas transport group Snam for exclusive talks on the sale of its TIGF gas network business.

Reuters - The chief executive of Total told a French court on Tuesday he had no knowledge that the French oil giant was buying illegally procured oil during the United Nations oil-for-food programme over a decade ago.

U.S. E&PS

• APC reported 4Q’12 EPS of $0.91 versus Thomson Reuters I/B/E/S estimate of $0.71.

(Late Monday) Press Release - Anadarko Petroleum Corporation announced 2012 fourth-quarter results, reporting net income attributable to common stockholders of $203 million, or $.40 per share (diluted). These results include certain items typically excluded by the investment community in published estimates. In total, these items decreased net income by approximately $254 million, or $.51 per share (diluted) on an after-tax basis.(1) Cash flow from operating activities in the fourth quarter of 2012 was $2.220 billion. Discretionary cash flow for the quarter totaled $1.612 billion.

CapitalOne upgraded Carrizo Oil & Gas to ‘Strong Buy’ form ‘Buy’

Press Release - Matador Resources Company, an independent energy company currently focused on the oil and liquids rich portion of the Eagle Ford shale play in South Texas, today announced that its total proved oil and natural gas reserves at December 31, 2012 were 10.5 million barrels of oil and 80.0 billion cubic feet (“Bcf”) of natural gas, or 23.8 million barrels of oil equivalent.

OIL SERVICES

(Late Monday) Press Release - Baker Hughes Incorporated announced that it will retain its Process and Pipeline Services business. Going forward, this business will be reclassified as continuing operations within the Industrial Services segment.

Bernstein lowered its rating on National Oilwell Varco to ‘Market Perform’ from ‘Outperform’.

DRILLERS

• DO reported 4Q’12 EPS of $1.40 versus Thomson Reuters I/B/E/S estimate of $1.10.

Press Release – Diamond Offshore Drilling, Inc. today reported net income for the fourth quarter of 2012 of $156 million, or $1.12 per share on a diluted basis, compared with net income of $188 million, or $1.36 per share on a diluted basis, in the same period a year earlier. Revenues in the fourth quarter of 2012 were $751 million, compared with revenues of $748 million in the prior-year quarter. During the fourth quarter, the Company reclassified its four cold-stacked rigs as held for sale and recognized an after-tax impairment charge of $40.6 million, or $0.29 per share. These units are the semisubmersible rigs Ocean Epoch, Ocean New Era and Ocean Whittington and the jack-up rig Ocean Spartan. The effective tax rate for the quarter was 15.9 percent, compared with 7.4 percent in the fourth quarter of 2011. Lower tax expense in the prior-year quarter was driven by a reduction of the Company’s liability for uncertain tax positions.

Press Release - Diamond Offshore Drilling, Inc. announced today that the Company has declared a special quarterly cash dividend of $0.75 per share of common stock and a regular quarterly cash dividend of $0.125 per share of common stock. Both dividends are payable on March 1, 2013 to shareholders of record on February 19, 2013.

MLPS

(Late Monday) Press Release – Enterprise Products Partners L.P. announced the commencement of a public offering of 8,000,000 common units representing limited partner interests in the partnership. Enterprise also intends to grant the underwriters a 30-day option to purchase up to 1,200,000 additional common units to cover over-allotments, if any. Enterprise will use the net proceeds from this offering, including any exercise of the over-allotment option by the underwriters, for general partnership purposes.

Reuters - Enterprise Products Partners LP announced it has priced its public offering of 8 million common shares priced at $54.56/unit

Press Release - Magellan Midstream Partners, L.P. reported record quarterly operating profit of $182.7 million for fourth quarter 2012, an increase of $42.9 million, or 31%, compared to $139.8 million for fourth quarter 2011. Net income grew 39% to a quarterly record of $153.8 million for fourth quarter 2012 compared to $110.3 million for fourth quarter 2011, and diluted net income per limited partner unit increased to a record 68 cents in fourth quarter 2012 versus 49 cents in the corresponding 2011 period. Diluted net income per unit excluding mark-to-market (MTM) commodity-related pricing adjustments, a non-generally accepted accounting principles (non-GAAP) financial measure, was 69 cents for fourth quarter 2012, slightly higher than the 68-cent guidance provided by management in Oct. 2012.

Reuters - Magellan Midstream Partners LP's reversed Longhorn Pipeline will begin filling with crude oil in mid-March and reach its 225,000 barrel-per-day capacity in the third quarter this year, the company said on Tuesday

Press Release – Spectra Energy Partners, LP today reported fourth quarter 2012 net income of $48.1 million, compared with $42.0 million in the prior year quarter. For the year, net income was up almost $22 million over 2011, with net income reported at $193.5 million, compared with $172.0 million in 2011. Cash available for distribution was $53.7 million for the quarter, compared with $54.8 million in the prior year quarter. For the year, cash available for distribution was $229.3 million, up from $212.4 million in 2011. Distributions per limited partner unit for 2012 were $1.95, compared with $1.87 per limited partner unit for 2011.

Press Release – SunCoke Energy, Inc. today reported fourth quarter and full year 2012 results. Net income more than tripled to $27.6 million in fourth quarter 2012, or $0.39 per diluted share. For full year, net income rose 63.0 percent to $98.8 million, or $1.40 per diluted share. Adjusted EBITDA approximately doubled for the fourth quarter and full year 2012 reaching $69.7 million and $265.7 million, respectively.

Reuters - Sunoco Logistics Partners reported shut down of an intrastate pipeline on Monday near Breckenridge, Texas following a spill, according to a filing with national regulators.