FRIDAY, OCTOBER 12, 2012

SECTOR COMMENTARY

Energy stocks closed mostly lower as an early equity rally faded in the afternoon due to renewed concerns over the Spanish debt crisis. All major subgroups closed lower with the exception of the drillers while refiners led the way lower, continuing their recent slide.

WTI crude closed lower by $0.21 or 0.23% to $91.86, as the International Energy Agency's prediction of a further decline in oil consumption and higher supplies weighed on oil prices. Brent crude saw steeper lows, as investors took profits in the spread between the two futures contracts that had risen this week to its highest in a year. Money managers raised their net long U.S. crude futures and options positions in the week to October 9, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. The speculator group raised its combined futures and options position in New York and London by 7,340 contracts to 196,333 during the period.

Natural gas futures closed higher for the fourth consecutive day, gaining $0.007 or 0.19% to close at $3.611, reversing earlier losses and touching its highest mark so far this year. Near-term cool weather in consuming regions, a large number of nuclear power plants still off line for refueling or maintenance and recent strength in gas futures have all kept prices firm. The number of rigs drilling for natural gas in the United States fell this week after a slight gain the week before, posting a 13-year low as the fuel's relatively weak price continued to prompt some producers to curb dry gas drilling operations. The gas-directed rig count, which gained last week for only the eighth time this year, slid by 15 this week to 422, the lowest since June 1999, data from Houston-based oil services firm Baker Hughes showed. The gains came despite extended forecasts that called for above-normal temperatures in the Northeast and Southwest and mostly normal readings elsewhere across the nation.

INTERNATIONAL INTEGRATEDS

Reuters - BP Plc, accused of leaving Azerbaijan short of $8 billion in budget revenue with false promises on production from a major group of oil fields, has agreed to work with the Azeri state oil company to address falling output, a source said.

(Late Thursday) Reuters - BP Plc received a crude export license this summer from the Bureau of Industry and Security, a branch of the US Commerce Department, a source familiar with the issue said. BP has yet to export any crude oil on that license, the source told Reuters on condition of anonymity.

(Late Thursday) Reuters - Royal Dutch Shell has applied to the U.S. government to export domestic crude oil, a Shell spokeswoman said.

U.S. E&PS

Howard Weil raised their rating of Continental Resources to ‘Market Outperform’ from ‘Market Perform’.

Press Release - Forest Oil Corporation announced that it has entered into a definitive agreement to sell all of its properties located in South Louisiana for approximately $220 million. The transaction is expected to close on November 16, 2012, with an effective date of August 1, 2012, and is subject to customary closing conditions and post-closing purchase price adjustments.

Press Release - Gulfport Energy Corporation announced that it has priced an offering of $250 million aggregate principal amount of its 7.750% Senior Notes Due 2020 (the "Notes") at an issue price of 98.534% of the aggregate principal amount of the Notes.

(Late Thursday) Press Release - Laredo Petroleum Holdings Inc announces pricing of secondary public offering. Says secondary public offering of 12.5 million common shares priced at $20.25 per share.

Canaccord Genuity initiated coverage of Penn Virginia Corporation with a ‘Buy’ rating.
Press Release - Penn Virginia Corporation announced the pricing of concurrent public offerings of $40 million (8,000,000 shares) of its common stock and $100 million of depositary shares (1,000,000 shares) each representing a fractional ownership interest in a share of 6.00 percent convertible perpetual preferred stock (the “Preferred Equity”). Both offerings are expected to settle and close on October 17, 2012.
BMO has initiated coverage of Plains Exploration & Production Co. with an ‘Outperform’ rating.

CANADIAN E&PS

National Bank Financial has initiated coverage of Encana Corporation with a ‘Sector Perform’ rating.

REFINERS

Deutsche Bank initiated coverage of Northern Tier Energy with a ‘Buy’ rating.

MLPS

(Late Thursday) Press Release - Buckeye Partners, L.P. announced that it has reached a multi-year agreement with a subsidiary of Irving Oil Limited ("Irving Oil") to provide crude oil services at its terminal located in Albany, New York, including off-loading unit-trains, storage, and throughput.

(Late Thursday) Press Release - Targa Resources Corp. announced their quarterly dividend and distribution for the third quarter of 2012. Targa Resources Corp. declared a dividend of $0.4225 for the third quarter 2012, an increase of 7% over the previous quarter and 37% over the distribution for the third quarter 2011.
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(Late Thursday) Press Release - Targa Resources Partners announced their quarterly dividend and distribution for the third quarter of 2012. Targa Resources Corp. declared a dividend of $0.6625 for the third quarter 2012, an increase of 3% over the previous quarter and 14% over the distribution for the third quarter 2011.

(Late Thursday) Press Release - Western Gas Partners announced that they will be increasing their cash distribution for the third quarter of 2012. The distribution will be $0.50 per unit, representing a 4% increase over the prior quarter.

MARKET COMMENTARY

Stocks posted their worst week in four months, led lower by financial shares as results from Wells Fargo and JPMorgan ignited concerns about shrinking profit margins for big lenders.

TOP NEWS

JPMorgan Chase & Co posted a record quarterly profit as falling interest rates and a recovering housing market brought big increases in mortgage lending.

Low interest rates both hurt and helped third-quarter earnings at Wells Fargo & Co, boosting mortgage lending but squeezing core profitability more than analysts expected.