SECTOR COMMENTARY

Energy stocks closed mostly lower, underperforming the broader markets, which rebounded from earlier losses to close slightly in the green. Oil services were the worst performing subgroup, led by a large decline in McDermott International after reporting earnings that missed analyst estimates. The refiners bucked the trend and finished with a solid gain of more than 2%.

Money managers cut their net long U.S. crude futures and options positions in the week to February 26, the CFTC said. The speculator group cut its combined futures and options position in New York and London by 30,232 contracts to 201,458 during the period.

WTI crude closed lower by $1.37 or 1.49% to $90.68. Brent crude fared slightly better, increasing the spread between the two to almost $20. The front-month WTI contract for April delivery hit a low of $90.04, the weakest since December, and tested below its 200-day moving average at $90.38 a barrel, a key indicator of market sentiment watched by traders. Crude oil exports from OPEC also rose in February, a Reuters survey found, marking the first monthly increase since October and further weighing on prices.

Natural gas futures fell by $0.03 or 0.86% to $3.456 on moderating temperature forecasts in key regions. The number of rigs drilling for natural gas in the U.S. fell this week for the fourth time in five weeks, as relatively weak gas prices continued to discourage dry gas drilling. The gas-directed rig count fell this week by eight to 420, data from Houston based oil services company Baker Hughes Inc. showed.

U.S. INTEGRATEDS

Reuters - Hess Corp wagered less of its money in energy markets last year than any time since 1998, the first full year of operation for its oil and gas trading joint-venture Hetco, a company filing showed on Friday.

INTERNATIONAL INTEGRATEDS

Reuters - British oil major BP said on Friday its oil output at Azerbaijan's Azeri-Chirag-Guneshli fields was down 7 percent in 2012, falling more than the country's total reported crude output, while its output from the Shah Deniz gas field rose.

U.S. E&PS

• KOG reported 4Q’12 EPS of $0.16 versus Thomson Reuters estimate of $0.13.
• NOG reported 4Q’12 EPS of $0.34 versus Thomson Reuters estimate of $0.27.

Sidoti initiated coverage of Callon Petroleum with a ‘Buy’ rating.

Reuters - Chesapeake Energy Corp said the U.S. Securities and Exchange Commission was investigating the company and Chief Executive Aubrey McClendon and had issued subpoenas for information and testimony.

Press Release - EXCO Resources, Inc. today announced that its Board of Directors declared a first quarter cash dividend of $0.05 per share, which represents a 25% increase compared to last quarter’s dividend. The dividend is payable on March 29, 2013 to holders of record on March 15, 2013.

Halcon Resources was cut to ‘Neutral’ from ‘Accumulate’ at Global Hunter.

(Late Thursday) Press Release - Kodiak Oil & Gas Corp. an oil and gas exploration and production company with primary assets in the Williston Basin of North Dakota, today announced financial results for the three and 12-month periods ended December 31, 2012. For the fourth quarter-ended December 31, 2012, the Company reported oil and gas sales of $130.8 million, as compared to $55.0 million during the same period in 2011, an increase of 138%. Kodiak reported an overall 153% increase in quarter-over-quarter equivalent sales volumes with 1.7 million barrels of oil equivalent (MMBOE) sold or an average of 18,200 BOE per day (BOE/d) during the fourth quarter 2012, as compared to 662 thousand BOE, or an average of 7,200 BOE/d in the same period in 2011.

(Late Thursday) Press Release - Northern Oil and Gas, Inc. today announced fourth quarter and full year results, year-end proved reserves, and 2013 production and capital budget guidance. Adjusted Net Income for 2012 was $66.2 million, or $1.05 per diluted share, as compared to $38.8 million, or $0.62 per diluted share, for 2011. The increase in Adjusted Net Income was primarily due to Northern's continued addition of oil and natural gas production from new wells, which was partially offset by a higher depletion rate in 2012 compared to 2011. Northern defines Adjusted Net Income as net income (loss) excluding (i) unrealized gain (loss) on derivative instruments, net of tax, and (ii) severance expenses in connection with the departures of Northern's former president and former chief operating officer, net of tax.

Reuters - Swift Energy Co said it had managed to bring under control an oil spill caused by the collision of a boat with its inactive oil and gas well in Louisiana. An oil service boat struck a wellhead owned by the oil and natural gas producing company off Plaquemines parish on Tuesday, spilling about 840 gallons (3,180 liters) of oil per day.

Stifel downgraded Sandridge Energy to ‘Hold’ from ‘Buy.’

Reuters - SandRidge Energy Inc's shares fell 11 percent as results from its wells in the Mississippi Lime shale field prompted analysts to question the potential upside of the asset, despite the company reporting a surprise quarterly profit.

CANADIAN E&PS

Press Release - Crew Energy Inc. of Calgary, Alberta is pleased to announce that it has purchased 59 sections of Montney lands (the "Option Lands") in Northeast British Columbia, exercising on a portion of and amending the option it obtained in December 2012 as part of its Septimus/Groundbirch acquisition.

Talisman Energy was initiated at Deutsche Bank with a ‘Hold’ rating.

OIL SERVICES

• DRC reported 4Q’12 EPS of $1.05 versus Thomson Reuters estimate of $1.10.
• MDR reported 4Q’12 EPS of $0.17 versus Thomson Reuters estimate of $0.23.

(Late Thursday) Press Release - Dresser-Rand Group Inc., a global supplier of rotating equipment and aftermarket parts and services, reported net income of $80.2 million, or $1.05 per diluted share, for the fourth quarter 2012, which compares with net income of $68.9 million, or $0.91 per diluted share, for the fourth quarter 2011. Net income was $179.0 million, or $2.35 per diluted share, for 2012, which compares with net income of $120.8 million, or $1.54 per diluted share, for 2011.

(Late Thursday) Press Release - Helix Energy Solutions Group, Inc. today announced that effective March 1, 2013, Lloyd Hajdik will resign as Chief Accounting Officer of the Company to pursue certain opportunities available to him outside the Company. It is expected that Mr. Hajdik will leave Helix by the end of April following a transition of his duties. Lloyd has been a valuable member of the Helix team since 2003 and we wish him the best of success in his future endeavors.

(Late Thursday) Press Release - McDermott International, Inc. today reported net income of $40.5 million, or $0.17 per diluted share, for the 2012 fourth quarter. The results of the 2012 fourth quarter compare to income from continuing operations of $9.3 million, or $0.04 per diluted share, in the corresponding period of 2011. Weighted average common shares outstanding on a fully diluted basis were approximately 237.8 million and 236.9 million in the quarters ended December 31, 2012 and 2011, respectively.

BMO cut Weatherford International to ‘Underperform’ from ‘Market perform.’

REFINERS

Western Refining, Inc. was started with an ‘Overweight’ rating at Barclays.

MLPS

(Late Thursday) Press Release - The Crosstex Energy companies, Crosstex Energy, L.P. and Crosstex Energy, Inc. today reported results for the fourth-quarter and full-year 2012. The Partnership realized adjusted EBITDA of $51.7 million and distributable cash flow of $26.7 million for the fourth quarter of 2012, compared with adjusted EBITDA of $54.6 million and distributable cash flow of $31.7 million for the fourth quarter of 2011. Adjusted EBITDA and distributable cash flow are non-GAAP financial measures and are explained in greater detail under “Non-GAAP Financial Information.”

(Late Thursday) Press Release - Copano Energy, L.L.C. today announced its financial results for the three months and year ended December 31, 2012 and its updated 2013 guidance. Total distributable cash flow of $46.2 million, a 9% increase from the fourth quarter of 2011. Total segment gross margin of $74.3 million, a 20% increase from the prior year period. Adjusted EBITDA of $60.9 million, a 6% increase from the prior year period.

(Late Thursday) Press Release - DCP Midstream Partners, LP announced today that it has priced an underwritten public offering of 11,000,000 common units representing limited partner interests at $40.63 per common unit. The offering is expected to close on March 6, 2013. The Partnership also granted the underwriters a 30-day option to purchase up to
1,650,000 additional common units.

Press Release - Kinder Morgan Energy Partners, L.P. today announced that it has completed the previously announced acquisition (drop down) of 50 percent of El Paso Natural Gas Company, L.L.C. (EPNG) and 50 percent of former El Paso Midstream assets in Utah and South Texas from Kinder Morgan, Inc. (NYSE: KMI). The transaction has a total value of approximately $1.655 billion, including approximately $560 million of proportional debt at EPNG. The transaction is expected to be immediately accretive to cash available for distribution to KMP unitholders. KMP now owns 100 percent of both EPNG and the midstream assets.