SECTOR COMMENTARY

Energy stocks ended the week on a bullish note, following the broader markets higher. The E&Ps and refiners led the sector higher, while the services group lagged and finished in negative territory. The broader markets staged a partial comeback after yesterday's rout due to disappointment that the Fed was not more emphatic in providing further stimulus. Bank stocks also ended higher, shrugging off a Moody's Investor Services downgrade of 15 large global banks.

Brent oil futures rose above $91 a barrel, rebounding from an 18-month low, but remained on course for a weekly decline of about 7% as investors worried about signs of slowing global economic growth. An action by the European Central Bank to ease collateral requirements, a move designed with Spain's woes in mind, caused the euro to rally early and also support oil futures. The euro later headed lower as some doubts on the effectiveness of the action surfaced. WTI crude gained $1.56 to $79.76. It slid as low as $77.56, the lowest since Oct. 5, 2011, after dropping 4% yesterday.

Natural gas futures increased $0.043 or 1.67% to $2.625. Gains were tempered as The Weather Channel's weather.com said recent heat would end as a cold front made its way into the region, bringing severe thunderstorms in its path. Yesterday's inventory build fell just short of Reuters poll estimates for a 64 bcf gain and again came in well below last year's gain of 90 bcf and the five-year average increase for that week of 87 bcf.

U.S. INTEGRATEDS

Reuters - Pacific Drilling SA announced a five-year contract for the Pacific Sharav. The company was awarded the contract by Chevron for operations in the Gulf of Mexico. Pacific Sharav is scheduled for delivery by Samsung Heavy Industries in Korea in the fourth quarter of 2013. The estimated maximum contract revenue is expected to be approximately $1,076 million.

Reuters - Russia's top crude oil producer, Rosneft, has been in talks with Exxon Mobil over the possibility of teaming up with the American major to tap Iraq's huge West Qurna-1 oilfield, Kommersant daily reported on Friday.

Reuters - U.S. oil major Exxon Mobil said there were currently no works affecting units at its UK Fawley plant on Friday. A spokesman for the company said earlier work had been completed and the refinery was fully operational.

Press Release - Atlas Pipeline Partners LP announced that the Partnership has brought online the expansion at Velma, a new, state-of-the-art 60 mmcfd cryogenic facility that increases the total processing capacity to 160 mmcfd. This expansion supports the Partnership's long-term, fee-based agreement with XTO Energy Inc, a subsidiary of Exxon Mobil, to provide natural gas gathering and processing services for up to an incremental 60 million cubic feet per day from the Woodford Shale.

INTERNATIONAL INTEGRATEDS

(Late Thursday) Reuters - Pan American Energy LLC has halted oil production at Argentina's biggest field, Cerro Dragon, after about 500 workers took over some facilities there, a company source said on Thursday. Cerro Dragon lies in the Patagonian province of Chubut and produces about 100,000 barrels of crude per day, or roughly 15 percent of total output in the country. Pan American is controlled by oil major BP Plc.

(Late Thursday) Reuters - Indian energy major Reliance Industries and its partners BP Plc and Niko Resources plan to spend $4 billion to develop satellite gas fields off India's east coast, the Economic Times reported on Friday, citing company officials and government sources.

Reuters - Russia's Gazprom and France's EDF agreed to jointly build and acquire existing gas-fired power plants in Europe, Gazprom said on Friday. "The agreement also states that Gazprom will be exclusive gas supplier for jointly-owned power stations," Gazprom said.

(Late Thursday) Reuters - Ecuador's pipeline company OCP plans to start transporting some 15,000 barrels per day (of Colombian crude this year and may expand its network to transport up to 150,000 bpd in three years, OCP's executive director said on Thursday. Sote and OCP are the two largest pipelines in the OPEC-member country. OCP is controlled by several oil companies, including Spain's Repsol, France's Perenco and Brazil's Petrobras.

S&P revised Repsol outlook to ‘Stable’ from ‘Negative’.

Reuters - Royal Dutch Shell Plc said it was restarting an unspecified unit at its 100,000 barrel-per-day Scotford refinery near Edmonton, Alberta, according to a notice on a community information line.

Reuters - Russia will change the composition of a consortium to develop the giant Shtokman gas field, bringing in oil major Royal Dutch Shell Plc in place of France's Total and keeping Norway's Statoil, a report said on Friday.

Reuters - State-run Korea Gas Corp $699 million to fully own KOGAS Prelude Pty Ltd so as to participate in the Prelude floating liquefied natural gas project in Australia. South Korea's economy ministry said last August that KOGAS, the world's largest corporate buyer of LNG, would acquire a 10 percent stake in the Prelude project by Royal Dutch Shell Plc.

Reuters - Oil workers in Norway have threatened to go on strike from as early as Sunday if negotiations over their pay and pensions collapse. The unions said they would initially strike at two Statoil operated fields, Heidrun and Oseberg, which together account for about nine percent or 150,000 barrels per day of Norwegian oil production, and four percent of total gas output. They would also target BP Plc's Skarv field, which has not started producing yet.

Reuters - Marathon Oil Corp said on Friday it will explore for oil and gas off Gabon as part of a project operated by France's Total SA. Marathon, based in Houston, will take a 21.25 percent interest in the Diaba license located off the southern coast of Gabon. Marathon last operated in Gabon in 2009. Exploration drilling is planned for the first quarter of 2013. The farmout agreement with Total is expected to close in the third quarter.

U.S. E&PS

Reuters - Anadarko Petroleum Corp said on Friday the company would begin removing nonessential workers from its oil and natural gas platforms in the Gulf of Mexico throughout the day while monitoring a low-pressure system near the Yucatan Peninsula, but no production has yet been shut in.

Press Release - Cabot Oil & Gas today announced the Company has signed a definitive agreement with a wholly-owned U.S. subsidiary of Osaka Gas Co., Ltd. for the sale of a 35 percent non-operated working interest in the Pearsall Shale in approximately 50,000 net acres leased by the Company in Atascosa, Frio, La Salle and Zavala counties of Texas for a total price of $250 million.

Reuters - Forest Oil Corp appointed interim CEO, Patrick R. McDonald. The company said McDonald succeeded H. Craig Clark as chief executive officer and the board has initiated a search process for a permanent chief executive officer.

Reuters - Marathon Oil Corp said on Friday it will explore for oil and gas off Gabon as part of a project operated by France's Total SA. Marathon, based in Houston, will take a 21.25 percent interest in the Diaba license located off the southern coast of Gabon. Marathon last operated in Gabon in 2009. Exploration drilling is planned for the first quarter of 2013. The farmout agreement with Total is expected to close in the third quarter.

(Late Thursday) Press Release - Pioneer Natural Resources Co announced that it has priced an offering of $600 million of 3.95% Senior Notes that will mature July 15, 2022 pursuant to a shelf registration statement that was previously filed with the Securities and Exchange Commission. The price to the public for the 2022 Notes is 99.44% of the principal amount.

CANADIAN E&PS

(Late Thursday) Reuters - Connacher Oil and Gas Ltd announced that Greg Pollard will assume the role of chief financial officer of the company. Pollard will replace Brenda Hughes, the current CFO, who has resigned effective June 30, 2012. The company added that the strategic review process is on-going, during Q3 2012; company expects to be railing with canexus and others, as much as 40% of its bitumen production.

OIL SERVICES

PIberia Capital Partners downgraded Basic Energy Services Inc to ‘Sector Perform’ from ‘Outperform’.

FBR downgraded Key Energy Services Inc to ‘Market Perform’ from ‘Outperform’.

(Late Thursday) Reuters - Vantage Drilling Co announced updates for its jack-up fleet. The company announced that it has received two contract awards for the sapphire driller and the contract awards will generate an estimate $34.5 million of revenue, net of taxes.

Macquarie Research initiated coverage of Weatherford International with an ‘Outperform’ rating.

REFINERS

Reuters - Valero Energy Corp said a gasoline-making fluid catalytic cracking unit (FCCU) was expected to return to planned rates Friday at its 292,000 barrel-per-day refinery in Port Arthur, Texas.

MLPS

Press Release – Atlas Pipeline Partners LP announced that the Partnership has brought online the expansion at Velma, a new, state-of-the-art 60 mmcfd cryogenic facility that increases the total processing capacity to 160 mmcfd. This expansion supports the Partnership's long-term, fee-based agreement with XTO Energy Inc, a subsidiary of Exxon Mobil, to provide natural gas gathering and processing services for up to an incremental 60 million cubic feet per day from the Woodford Shale.

Reuters - Canadian pipeline operator Enbridge Inc said Friday it would ration space on its Line 5 for July due to high nominations and capacity restrictions. The company, whose pipelines carry the bulk of Canada's crude exports to the United States, said shipments on Line 5 -- running from Superior in Wisconsin to Sarnia in Ontario -- would be apportioned by 26 percent. This means customers would get only 74 percent of the space they requested.

Reuters - Kinder Morgan Energy Partners said on Friday that its Trans Mountain pipeline system between Alberta and the Pacific Coast is overbooked by 73 percent in July, resulting in shippers being limited to just 27 percent of their nominated volumes. Total nominations for the system are 280,389 barrels a day for the Trans Mountain pipeline, 119,646 bpd for the Puget Sound line and 77,458 bpd for the Westridge Dock, the company said.

MARKET COMMENTARY

Stocks ended higher, led by gains in bank shares, as the S&P 500 index bounced back from its second-worst decline of the year.

TOP NEWS

German Chancellor Angela Merkel resisted pressure for common euro zone bonds or a more flexible use of Europe's rescue funds but agreed with leaders of France, Italy and Spain on a 130 billion euros package to revive growth.

Downgrades by ratings agency Moody's will make funding more expensive for banks that rely the most on capital markets, while reinforcing the competitive advantage of "safe haven" banks that can fund themselves from stable customer deposits.