THURSDAY, OCTOBER 04, 2012

SECTOR COMMENTARY

The energy sector rose today with the broader markets after weekly data offered a positive read on the U.S. labor market a day before the September jobs report. Each energy sub-sector was higher on the day, led by drillers and refiners.

Crude oil futures closed up $3.57 or 4.05% to $91.71, after ECB President Mario Draghi restated that the central bank was ready to start purchasing the debt of troubled euro zone states earlier in the day, despite his bearish growth comments. Growing concerns over escalating tensions between Syria and Turkey offered further support to prices.

Natural gas futures ended the day higher by $0.011 or 0.32% to $3.406, despite EIA inventory data showing a larger than expected rise in supplies last week. Working gas in storage increased 77Bcf while analysts were expecting an increase of only 71Bcf. Bullish speculators are betting on the cooler weather potentially leading to some early-Autumn demand for the heating fuel.

U.S. INTEGRATEDS

Reuters - Exxon Mobil Corp said Wednesday's fire at its giant Baytown, Texas, complex would affect production even as other units at the nation's largest operating refinery remained in service.

INTERNATIONAL INTEGRATEDS

Reuters - Oil processing at Russia's Saratov oil refinery, owned by Anglo-Russian company TNK-BP, was suspended on Thursday after it caught fire, TNK-BP said.

Reuters - Britain's gas production is set for a three percent boost next year from current levels after BP's Devenick North Sea gas field started production on Thursday, Energy Minister John Hayes said.

Reuters - A Madrid court has agreed to open a case that was brought by Spanish oil major Repsol against Argentine energy company YPF for unfair competition, a source said on Thursday.

Reuters - Royal Dutch Shell Plc has started drilling a well in the Beaufort Sea off northern Alaska, making good on exploration plans that had been stalled by floating ice, technical delays and problems with meeting oil spill-preparation requirements.

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

Reuters - Increasing the amount of ethanol Brazil blends into gasoline to 25 percent would be the best way for Brazil to cut fuel imports and improve refinery output, the chief executive of Brazil's state-led oil company Petrobras said on Thursday.

Reuters - Norway's Statoil was partially restarting production on its Snorre A oil and gas platform in the Norwegian North Sea on Thursday morning after gas alarms overnight shut the facility, a company spokeswoman said.

CANADIAN INTEGRATEDS

(Late Wednesday) Reuters - Husky Energy Inc reached agreement with the United Steelworkers union, after a four-month strike, for members to return to work at the 155,000 barrel-per-day Lima, Ohio, refinery starting Oct. 8, a company spokesman said on Wednesday.

U.S. E&PS

Reuters - State-run firms Oil India Ltd and Indian Oil Corp have jointly bought a 30 percent stake in Houston-based Carrizo Oil & Gas's Niobrara shale asset in Colorado for $82.5 million, the companies said in a statement.

(Late Wednesday) Reuters - Chesapeake Energy Corp extended employment contracts with certain executives through the end of the year as its board of directors reviews the oil and gas company's compensation practices, according to a regulatory filing on Wednesday.

Canaccord Genuity started Energy XXI Ltd with a ‘Buy’ rating.

Press Release - SM Energy Company announces that its Board of Directors has promoted Javan D. Ottoson, age 54, to President of the Company. Mr. Ottoson will continue to serve as the Company’s Chief Operating Officer, a position he has held since December 2006. Anthony J. Best, formerly President, will continue to serve as the Company’s Chief Executive Officer and as a member of its Board of Directors.

CANADIAN E&PS

Press Release - Athabasca Oil Corporation is pleased to announce that the Lieutenant Governor in Council has authorized the Energy Resources Conservation Board to grant Approval No. 11888 for the development of its 12,000 barrels per day (bbl/d) Hangingstone Project 1.

Encana was lowered at Deutsche Bank to ‘Sell’ from ‘Hold.’

Reuters - Canada's main opposition party on Thursday demanded the government reject a Chinese state-owned company's landmark $15.1 billion bid for oil producer Nexen Inc, saying approval of the deal could trigger "a tidal wave" of foreign takeovers.

(Late 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 evacuated Yme oil platform is at risk of collapsing into the Norwegian North Sea this winter, operator Talisman Energy warned safety authorities in a July letter seen by Reuters on Thursday.

DRILLERS

Press Release - Atwood Oceanics, Inc. announced today that one of its subsidiaries has been awarded a contract by CEC International, Ltd. for the newbuild jackup Atwood Manta. The day rate for the work in the Gulf of Thailand and offshore Malaysia will be $145,000 and the award is for a firm duration of 12 months. The Atwood Manta is currently under construction with PPL Shipyard PTE LTD in Singapore and will have a rated water depth of 400 feet, accommodation for 150 personnel and significant offline handling features. Contract commencement is expected in December 2012 in direct continuation of shipyard delivery, currently anticipated to be late November 2012.

(Late Wednesday) Reuters - Shipping tycoon John Fredriksen announced on Wednesday plans to move management at Seadrill out of Norway, prompting the chief executive of the world's biggest deepsea drilling rig owner to leave and opening a new chapter in Fredriksen's controversial love-hate relationship with his former homeland.

REFINERS

UBS cut HollyFrontier Corp to ‘Neutral’ from ‘Buy.’

(Late Wednesday) Reuters - Phillips 66 said on Wednesday that a planned overhaul was under way at its 139,000 barrel per day (bpd) Los Angeles refinery on Wednesday, and that no work was underway at the company's 120,200 bpd San Francisco refinery.

Press Release - Energy Transfer Partners, L.P. and Sunoco, Inc. today announced that, at Sunoco’s special meeting of shareholders held on October 4, 2012 (the “Special Meeting”), Sunoco’s shareholders approved the merger of Sunoco with a wholly owned subsidiary of ETP pursuant to the previously announced Agreement and Plan of Merger. ETP and Sunoco expect to close the merger effective October 5, 2012.

MLPS

(Late Wednesday) Press Release - Atlas Pipeline Partners, L.P. announced today that a new, 200 mmcfd, cryogenic processing plant on the Partnership's WestOK gathering and processing system in northwest Oklahoma and southern Kansas, was transferred to operations on September 22, 2012. The new facility, referred to as the Waynoka II plant, is online and already operating at approximately 130 mmcfd. This expansion brings the total nameplate processing capacity at the Waynoka location to 400 mmcfd, and total nameplate processing capacity on the entire WestOK system increases from 258 mmcfd to 458 mmcfd, a 78% increase in nameplate processing capacity.

(Late Wednesday) Press Release - Boardwalk Pipeline Partners, LP (today announced that it plans to offer 10,000,000 common units representing limited partner interests in a registered offering. The underwriters are also expected to be granted a 30-day option to purchase up to 1,500,000 additional common units.

Press Release - Energy Transfer Partners, L.P. and Sunoco, Inc. today announced that, at Sunoco’s special meeting of shareholders held on October 4, 2012 (the “Special Meeting”), Sunoco’s shareholders approved the merger of Sunoco with a wholly owned subsidiary of ETP pursuant to the previously announced Agreement and Plan of Merger. ETP and Sunoco expect to close the merger effective October 5, 2012.

Press Release - Plains All American Pipeline, L.P. today announced a quarterly cash distribution of $0.5425 per unit ($2.17 per unit on an annualized basis) on all of its outstanding limited partner units. The distribution will be payable on November 14, 2012, to holders of record of such units at the close of business on November 2, 2012. This is the first distribution payable following the recently completed two-for-one unit split. Comparative distribution amounts reflected in this press release have been adjusted for the unit split.

Press Release - SunCoke Energy, Inc. today reported that third quarter 2012 U.S. coke production is expected to be approximately 1,099 thousand tons, an estimated increase of 135 thousand tons, or 14%, versus the same period in 2011. The estimated year-over-year increase in U.S. coke production in third quarter 2012 was driven by our Middletown facility, partly offset by lower production at our Indiana Harbor facility.

MARKET COMMENTARY

The S&P 500 extended gains to a fourth day, putting it on the cusp of a new high for the year if Friday's jobs report shows encouraging signs for the labor market.

TOP NEWS

The U.S. Federal Reserve may adopt numerical thresholds for inflation and joblessness that would serve as guideposts for policy, according to minutes from a September meeting that revealed some reticence about the central bank's latest stimulus.

The number of Americans filing new claims for unemployment benefits rose only slightly last week after a big drop the week before, a hopeful sign the job market is still on the mend.