SECTOR COMMENTARY

Energy stocks underperformed the broader markets today with services and drillers being the two biggest laggards, while the other sub-sectors also witnessed losses.

Services and drillers were brought down following a solid run and after Schlumberger reported lower first quarter 2013 guidance yesterday and as Baker Hughes told investors to expect a squeeze on its European margins in the first half of this year as it ramps up to an expanded contract in Norway and faces a few delays on UK projects. Integrateds were lower after Occidental Petroleum said that it expects a $200 million drop in first quarter earnings compared to the fourth quarter due to lost oil and gas sales caused in part by maintenance at a Qatar facility and pipeline disruptions in Colombia.

WTI crude oil futures ended the session lower by $1.58 or 1.69% to close at $92.16, while Brent was down nearly 2% to 3-month lows, after uncertainty over a bailout for Cyprus raised concern about the euro zone debt crisis and its impact on energy demand. "The situation in Cyprus, although small, goes to show that the problems in the EU are far from over and it will exacerbate the declining demand within EU, keeping a lid on oil prices if not pushing them down," said Natixis analyst Abhishek Deshpande in London.

Natural gas futures closed higher by $0.087 or 2.24% to close at $3.969 as weather forecasts are predicting colder-than-normal temperatures to start the spring. Forecasts are calling for cold temperatures for at least the next 10 days, which should increase heating demand and therefore the need for natural gas.

U.S. INTEGRATEDS

(Late Monday) Reuters - Sanchez Energy Corp said it has signed a $265 million deal for producing oil assets and reserves in the Eagle Ford formation in South Texas from Hess Corp, which is shedding properties as investors press for change.

(Late Monday) Reuters - Occidental Petroleum Corp, the fourth-largest U.S. oil company, expects a $200 million drop in first quarter earnings from its fourth quarter due to lost oil and gas sales caused in part by maintenance at a Qatar facility and pipeline disruptions in Colombia.

INTERNATIONAL INTEGRATEDS

Press Release - FMC Technologies, Inc. announced that it has signed a contract with BP Plc for the manufacture and supply of subsea equipment to support the Mad Dog Phase 2 field development. The Mad Dog Phase 2 field development is located near Green Canyon Block 825 of the Gulf of Mexico, 150 miles (240 kilometers) south of New Orleans in about 5,100 feet (1,550 meters) of water. Under the initial contract, FMC Technologies will supply subsea trees, manifolds, and jumper equipment.

(Late Monday) Reuters - BP Plc's 225,000 barrel per day (bpd) Cherry Point, Washington, refinery was operating normally on Monday, one day after the refinery notified state and federal pollution regulators of a malfunction, said sources familiar with operations at the refinery.

Reuters - Russia's state gas monopoly Gazprom is interested in acquiring gas assets of Italy's Eni in Mozambique, Gazprom's spokesman Sergei Kupriyanov told Reuters.

Reuters - Brazil's state-run oil company Petroleo Brasileiro SA and its board of directors are committed to maintaining their investment-grade debt rating and not selling new stock, Chief Financial Officer Almir Barbassa told investors on a conference call.

Reuters - Gas output from Statoil, western Europe's top supplier, will be down by 7.6 million cubic metres (mcm) per day, the firm said in a market message.

U.S. E&PS

Sterne Agee downgraded Chesapeake Energy to ‘Underperform’ from ‘Neutral’.

(Late Monday) Press Release - Chesapeake Energy Corporation announced that it has priced its previously announced public offering of $2.3 billion in aggregate principal amount of its senior notes at par. As previously announced, the offering will include three series of notes: $500 million in 3.25% Senior Notes due 2016; $700 million in 5.375% Senior Notes due 2021; and $1.1 billion in 5.75% Senior Notes due 2023. Chesapeake expects the issuance and delivery of all three series of senior notes to occur on April 1, 2013, subject to customary closing conditions.
Susquehanna Financial downgraded Marathon Oil to ‘Neutral’ from ‘Positive’ for stabilized reserves improvements, and take FST’s target down to reflect tardiness of deal flow that has eroded investor confidence about the quality and scale of ongoing activity.

CANADIAN E&PS

• LEG-T reported 4Q’12 EPS of C$0.01 versus Thomson Reuters I/B/E/S estimate of C$0.02.

(Late Monday) Press Release - Legacy Oil + Gas Inc. is pleased to announce it has filed on SEDAR its audited financial statements and related Management's Discussion and Analysis ("MD&A") for the year ended December 31, 2012 as well as its annual information form ("AIF") for the year ended December 31, 2012. Selected financial and operational information is outlined below and should be read in conjunction with Legacy's audited financial statements, the related MD&A and the AIF which are available for review on the company website.

OIL SERVICES

Press Release – FMC Technologies, Inc. announced that it has signed a contract with BP Plc for the manufacture and supply of subsea equipment to support the Mad Dog Phase 2 field development. The Mad Dog Phase 2 field development is located near Green Canyon Block 825 of the Gulf of Mexico, 150 miles (240 kilometers) south of New Orleans in about 5,100 feet (1,550 meters) of water. Under the initial contract, FMC Technologies will supply subsea trees, manifolds, and jumper equipment.

REFINERS

Reuters - Hedge funds and others looking to bet on prices of U.S. ethanol credits shouldn't use that market as a "casino," the chief executive of HollyFrontier Corp told refining executives.

(Late Monday) Press Release - Holly Energy Partners, L.P. announced today that it intends to offer 1,875,000 common units representing limited partner interests in an underwritten public offering. In addition, HollyFrontier Corporation and certain of its affiliates are collectively offering 1,875,000 common units in the offering as selling unitholders.

MLPS

Press Release - Enterprise Products Partners L.P. announced the start of an open commitment period for the purpose of soliciting long-term transportation agreements with interested shippers for movements of diluent-quality natural gasoline from its Mont Belvieu, Texas liquids storage complex to several potential delivery points in and around the Chicago area, including potential connections to the Southern Lights and Cochin pipelines. The final delivery point(s) will be determined after evaluating the binding commitments received.

(Late Monday) Press Release - Holly Energy Partners, L.P. announced that it intends to offer 1,875,000 common units representing limited partner interests in an underwritten public offering. In addition, HollyFrontier Corporation and certain of its affiliates are collectively offering 1,875,000 common units in the offering as selling unitholders.

(Late Monday) Press Release - MarkWest Utica EMG, L.L.C., a joint venture between MarkWest Energy Partners, L.P. and The Energy and Minerals Group (EMG), today announced definitive agreements with PDC Energy, Inc. to provide gathering, processing, fractionation, and marketing services in the Utica Shale.

(Late Monday) Reuters - Phillips 66 said that planned maintenance remained underway at its 362,000 barrel-per-day (bpd) refinery in Wood River, Illinois.

Reuters - The head of Valero Energy Corp said his company is not pursuing a sale of its two California refineries, putting an end to months of speculation over whether the refining major was seeking buyers for the two plants.