WEDNESDAY, OCTOBER 03, 2012

SECTOR COMMENTARY

Energy stocks were the worst performing group after WTI and Brent oil futures dropped following disappointing economic data from China and Europe and as U.S. domestic oil output hit the highest level in nearly 16 years last week, according to the EIA.

WTI crude oil fell $3.75 or 4.08% to $88.14, its largest drop in four months, after European economic data pointed to a recession that could further hurt global demand for raw materials. Concerns about China and Europe allowed investors to shrug off any supportive sentiment that might have accrued from the EIA weekly inventory report. The EIA said U.S. crude stocks fell 482,000 barrels last week, against forecasts stockpiles would be up 1.5 million. Brent's drop was below two technical levels closely watched by traders charting price movements as the 50-day moving average at $112.06 and the 200-day moving average at $112.09.

Shares of Murphy Oil Corp gained more than 4% after hedge fund manager Daniel Loeb told investors in his hedge fund Third Point that shares in the company could increase in excess of 60 percent from their current levels, and outlined changes the company could make to bring that about. Loeb outlined several steps for the oil company to increase its value including a spin-off of its retail fuel stations.

Henry Hub futures closed at $3.395 down $0.136 or 3.85%, down for the first time in seven sessions, hit by a slightly milder turn in the extended weather forecast and profit-taking ahead of Thursday's inventory report despite the still-cool outlook for next week. Chart traders said the market was due for a technical pullback after climbing 24 percent in the previous six sessions, its biggest six-day run in three years. Fundamental traders, too, remained skeptical of the upside, with storage and production still at or near record highs.

U.S. INTEGRATEDS

Reuters - Indian state-run Bharat Petroleum Corp has signed a deal with Chevron to buy 10,000 barrels per day (bpd) Nigerian crude in the year ending March 31, 2013, two sources familiar with the deal said on Wednesday.

Reuters - ExxonMobil reported a flaring event at its 344,500-barrels-per-day refinery in Beaumont, Texas, according to a message on a community information line.

(Late Tuesday) Reuters - ExxonMobil said it was normalizing operations at its 149,500 barrel-per-day (bpd) Torrance, California, refinery on Tuesday following a Monday morning power outage.

Reuters - Emergency service personnel have responded to a vapor cloud release at Hess Corp's 70,000-barrel-per-day refinery in Port Reading, New Jersey, according to a local media report.

INTERNATIONAL INTEGRATEDS

Reuters - BP reported maintenance on a flare gas recovery compressor at its 225,000 barrel-per-day (bpd) Cherry Point, Washington, refinery, according to a filing with pollution regulators.

Reuters - BP will shut down the North Sea CATS Riser platform from July 1-Aug. 15 next year for maintenance and will undertake similar outages from Aug. 1-2 in 2014 and 2015, a maintenance table showed on Wednesday.

Reuters - Canada's ruling Conservatives will defeat a parliamentary motion asking the government to hold public consultations during its review of the $15.1 billion bid by China's state-owned CNOOC Ltd. to buy Canadian oil company Nexen Inc, Industry Minister Christian Paradis said on Wednesday.

Reuters - The need to guarantee energy supplies means it would not be wise for the Italian government to sell more stakes in energy company Eni or utility Enel, Economy Minister Vittorio Grilli said on Wednesday.

Reuters - Lithuania is seeking 5 billion litas ($1.87 billion) from Gazprom at an international arbitration court, part of a tit-for-tat dispute with the Russian gas giant as the Baltic state pressures it for cheaper prices.

Reuters - Norwegian oil and gas firm Statoil said on Wednesday it had signed contracts to extend use of three rigs offshore Norway to help to achieve its production targets by 2020.

CANADIAN INTEGRATEDS

(Late Tuesday) Reuters - Potential buyers are interested in Imperial Oil Ltd's 88,000 barrel per day Dartmouth, Nova Scotia, refinery, which the company put on the auction block in May as it struggled with weak margins, Imperial Chief Executive Bruce March said on Tuesday.

Reuters - Suncor Energy Inc., Canada's largest energy company, said on Wednesday that output at its oil sands operations averaged 300,000 barrels per day (bpd) in September, down from 373,000 bpd the previous month.

U.S. E&PS

Press Release - Apache Corporation reported that its Gulf of Mexico production facilities are back online following suspended operations due to Hurricane Isaac. Also, production from North Sea assets has recovered following maintenance activities completed during the third quarter.

USCA Securities initiated Concho Resources, Inc. with an ‘Overweight’ rating.

Global Hunter Securities downgraded Energy XXI Ltd. to ‘Neutral’ from ‘Buy.’

Press Release - Marathon Oil Corporation announced that its subsidiary Marathon Ethiopia Limited B.V. has entered into a sale and purchase agreement with Agriterra Limited to acquire their 20 percent working interest in the South Omo concession in Ethiopia with an effective date of Aug. 17, 2012.

Press Release - PDC Energy, Inc. announced the closing of its previously announced offering of $500 million principal amount of senior unsecured notes. PDC is using a portion of the net proceeds of the offering to redeem its 12% senior notes due 2018 and expects to use the remaining net proceeds to repay certain other indebtedness and for general corporate purposes.

Press Release - Penn Virginia Corporation (NYSE: PVA) announced that it acquired approximately 4,100 net Eagle Ford Shale acres in Gonzales and Lavaca Counties, Texas for approximately $10 million.

Press Release - Swift Energy Company announced that it has priced its sale of an additional $150 million in aggregate principal amount of its 7 7/8% senior unsecured notes due 2022 in a private offering to eligible purchasers.

Press Release - Swift Energy Company announced that, subject to market conditions, the Company intends to offer in a private offering to eligible purchasers an additional $150 million in aggregate principal amount of its 7 7/8% senior unsecured notes due 2022.

Press Release - Venoco, Inc. announced that it has closed the transaction contemplated by the merger agreement among Venoco, Timothy Marquez, Denver Parent Corporation and Denver Merger Sub.

CANADIAN E&PS

Reuters - Canada's ruling Conservatives will defeat a parliamentary motion asking the government to hold public consultations during its review of the $15.1 billion bid by China's state-owned CNOOC Ltd. to buy Canadian oil company Nexen Inc, Industry Minister Christian Paradis said on Wednesday.

Press Release – Parex Resources, Inc. said September 2012 production was approximately 11,850 bopd as Las Maracas-4, and Kona-10 recompletion were brought on-stream. Parex' average Colombian production for the third quarter of 2012 was approximately 10,850 bopd compared to 10,389 bopd for the second quarter of 2012.

OIL SERVICES

ABN AMRO downgraded Core Laboratories N.V. to ‘Hold’ from ‘Buy.’

Goldman Sachs resumed National Oilwell Varco with a ‘Buy’ rating.

(Late Tuesday) Press Release - Superior Energy Services, Inc. announced that it expects third quarter 2012 operating earnings per diluted share to be in the range of $0.52 and $0.55. The third quarter was negatively affected by Hurricane Isaac's impact on operations in the Gulf of Mexico, a more rapid decline in the onshore U.S. rig count than originally anticipated and unexpected delays in delivering a unique, Artic-specific spill containment system to a customer in Alaska.

DRILLERS

Reuters - Oil driller Seadrill plans to stay listed on the Oslo stock exchange even after moving its management out of Norway, the firm's chief financial officer said on Wednesday.

(Late Tuesday) Reuters - Seadrill, the world's biggest driller by market capitalization, said it plans to replace CEO Alf Thorkildsen with the head of its Archer Ltd affiliate, and is looking to relocate management outside Norway.

REFINERS

Press Release - The board of directors of Phillips 66 has declared a quarterly dividend of 25 cents per share on Phillips 66 common stock, representing a 25 percent increase from the prior quarter. The dividend is payable on Dec. 3, 2012 to shareholders of record at the close of business on Oct. 15, 2012.

MLPS

(Late Tuesday) Press Release - Martin Midstream Partners L.P. announced that Martin Resource Management Corporation, the owner of its general partner, has settled certain ongoing litigation with certain of its shareholders. The settlement, among other things, provides the Parent, its officers and directors with a full and final release and resolves the litigation styled Scott Martin, et al. v. Martin Resource Management Corporation, et al, originally filed in the 215th Harris County Judicial District Court of Texas under Cause No. 2008-53948 for an undisclosed price. The settlement also resolves all of the other outstanding lawsuits between the parties to the Harris County Litigation.

MARKET COMMENTARY

Wall Street ended modestly higher on stronger-than-expected U.S. labor and service-sector data, but the Dow industrials were hobbled by a slide in Hewlett-Packard.

TOP NEWS

Companies added more jobs than expected in September, while activity in the vast services sector picked up, suggesting the economy remained on track for modest growth.

Best Buy founder Richard Schulze and at least four private equity firms have started examining the books of the world's largest consumer electronics chain, in early steps toward what could become a potential $11 billion buyout, according to people familiar with the matter.