TUESDAY, OCTOBER 09, 2012

SECTOR COMMENTARY

The energy space outperformed the broader equity markets for a second straight day as drillers, notably offshore names, led the way. The laggards were integrateds and refiners, which fell on compressed crack spreads as crude prices gained and gasoline prices slid in parts of the country.

WTI gained $3.06 or 3.43% to $92.39, snapping two sessions of losses, as escalating turmoil on the border of Turkey and Syria heightened concerns of a supply disruption in a tense Middle East. Meanwhile, however, the International Monetary Fund, warned that the global economic slowdown is worsening, cutting its growth forecast for the second time since April, which capped oil prices. Analysts are expecting the inventory report to show a 1-million build in crude supplies later this week.

Natural gas futures rose $0.064 or 1.88% to $3.467, extending yesterday’s gains on continued chilly weather across most consuming regions of the nation sparking some early heating demand.

U.S. INTEGRATEDS

Reuters - The U.S. Supreme Court denied a bid by Chevron Corp to block an $18.2 billion judgment against the company in a pollution case in Ecuador.

Reuters - Exxon Mobil warned of flaring beginning Oct. 10 at its 149,500 barrel-per-day refinery in Torrance, California, in a filing with the state pollution regulators.

(Late Monday) Reuters - Ecuador's upcoming appeal to overturn a ruling that awarded $1.77 billion to U.S.-based Occidental Petroleum could take one to two years, the Andean country's attorney general said on Monday.

INTERNATIONAL INTEGRATEDS

(Late Monday) Reuters - BP's billionaire partners in TNK-BP, Russia's third-biggest oil producer, said they could sell or list their 50 percent stake in the business, plunging the venture's plans into further confusion, the Financial Times reported on Tuesday.

Reuters - TNK Vietnam, a subsidiary of Russia's third-largest oil producer TNK-BP, said on Tuesday it has started gas production at the Lan Do field off Vietnam's coast.

Reuters - BP-Azerbaijan said gas flows from Azeri Shah Deniz fields to Turkey were resumed on Tuesday after the supplies were halted last week amid reports of a pipeline blast.

Reuters - Italian oil and gas group Eni said on Tuesday it will sell natural gas to retail customers in France through its own brand as it moves to become of the leading players in the country.

Reuters - Italy's state investment holding company Cassa Depositi e Prestiti (CDP) said on Tuesday it had completed the sale of a 3.3 percent stake in oil group Eni, selling some 58.3 million shares between Sept. 24 and Oct. 9 for around 1 billion euros ($1.29 billion).

Reuters - Gazprom said on Tuesday it has signed an agreement to sell liquefied natural gas (LNG) to Korea Gas Corporation (KOGAS), as it strengthens its position in Asian markets.

Reuters - LUKOIL said on Tuesday the Iraqi government has approved the geologic exploration, development and production contract for Block 10 in the southern part of the country.

Reuters - Output from the Royal Dutch Shell-operated Nyhamna gas processing plant in Norway will be further reduced on Tuesday, the gas system operator Gassco said.

Reuters - France's Total made its first venture into Papua New Guinea on Tuesday, signing a deal with Australia's Oil Search to acquire five licensing agreements in the onshore and offshore Gulf of Papua region.

U.S. E&PS

(Late Monday) Press Release - Continental Resources, Inc. announced today a new five-year growth plan to triple production and proved reserves by year-end 2017. According to its strategic growth plan, the Company plans to generate average production of 300,000 barrels of oil equivalent per day in 2017.

(Late Monday) Press Release - Laredo Petroleum Holdings, Inc., a Delaware corporation, announced today the commencement of an underwritten secondary public offering of 12,500,000 shares of its common stock by affiliates of Warburg Pincus LLC, the selling stockholders. In addition, the underwriters will have a 30-day option to purchase up to 1,875,000 additional shares from the selling stockholders.

(Late Monday) Press Release - Penn Virginia Corporation announced today that it has commenced, subject to market and other conditions, concurrent underwritten public offerings of 12,000,000 shares of its common stock and $50 million of depositary shares each representing a fractional ownership interest in a share of convertible perpetual preferred stock (the “Preferred Equity”). In connection with the offerings, PVA intends to grant the underwriters a 30-day option to purchase up to 1,800,000 additional shares of common stock and additional Preferred Equity depositary shares to cover overallotments. The closings of the common stock offering and the Preferred Equity offering are not contingent upon each other.

Wells Fargo initiated coverage of Pioneer Natural Resources with an ‘Outperform’ rating.

OIL SERVICES

(Late Monday) Press Release – Oceaneering International, Inc. announced today that it has entered into a five-year charter for use of the Cade Candies, a multi-service subsea support vessel owned by Otto Candies LLC. The charter is expected to commence during the second quarter of 2013.

REFINERS

Press Release - CVR Energy, Inc. announced that its wholly-owned subsidiaries, CVR Refining, LLC and Coffeyville Finance Inc. (the "issuers"), have commenced an offering of $500 million aggregate principal amount of second lien senior secured notes due 2022.

Press Release - Marathon Petroleum Corporation and Harvest Pipeline Company signed a letter of intent on Sept. 27, agreeing to jointly develop infrastructure that will facilitate transportation of hydrocarbon liquids production from the Utica Shale in eastern Ohio and western Pennsylvania.

Reuters - Phillips 66 reported a leak in a "recovered oil line" at its 120,200 barrel-per-day (bpd) refinery in Rodeo, California, on Monday, according to a filing with the Contra Costa Health Services.

Reuters - United Refining Inc has agreed to buy Phillips 66's marine terminal and associated assets near New York Harbor, a deal that will add a five-million-barrel oil storage facility to the company's Northeast assets, the two companies said on Tuesday.

MLPS

Reuters - Targa Resources Corp on October 3, 2012 entered into a credit agreement- SEC filing. Credit agreement provides for five-year revolving facility in initial aggregate principal amount up to $150 million.

MARKET COMMENTARY

Stocks fell led by losses in technology after brokerage downgrades of Intel and other major companies as worries increased about third-quarter U.S. earnings.

TOP NEWS

The IMF said the global economic slowdown is worsening as it cut its growth forecasts for the second time since April and warned U.S. and European policymakers that failure to fix their economic ills would prolong the slump.