THURSDAY, SEPTEMBER 13, 2012

SECTOR COMMENTARY

Energy stocks rose along with the broader markets, closing higher across each sub-sector as the Federal Reserve announced that it would purchase $40 billion of mortgage-backed securities every month until the labor market improves. Integrateds led the climb with the S&P 500 Integrated Index posting an over 2% gain on the day. The Federal Open Market Committee also said it would likely keep the federal funds rate near zero through at least the middle of 2015.

Brent crude futures were outpaced by WTI futures which ended the day higher by $1.30 or 1.34% to close at $98.31. Growing concerns over geopolitical risk in the Middle East boosted energy prices, as did the FOMC announcement, which lifted hopes for global growth. Earlier in the session, U.S. crude futures were up by as much as 1.6% to hit a session high of $98.58, which was the strongest level since May 4 while Brent futures also reached a four month high during the day. Trading was heavy in both contracts, with Brent volume up 17 percent over the 30-day average, while U.S. volume was 35 percent above that average.

Natural gas futures closed down by $0.026 or 0.85%, to $3.037, recovering from as much as a 3% loss earlier in the day, after the EIA showed that U.S. gas supplies rose less than expected last week. The report showed that natural gas storage in the U.S. for the week ended September 7 rose by 27 billion cubic feet, just below market expectations for an increase of 28 billion cubic feet.

INTERNATIONAL INTEGRATEDS

Reuters – BP Plc announced that it has agreed to sell its 18.36 % non-operated interest in the Draugen field in the Norwegian Sea to AS Norske Shell for $240 million in cash.

JPMorgan cut Lukoil to ‘Neutral’ from ‘Overweight.’

JPMorgan raised Rosneft to ‘Overweight’ from ‘Neutral.’

Reuters - Norwegian oil and gas firm Statoil has signed a letter of intent with Samsung Heavy Industries to build a new permanent floating storage unit for the Heidrun field, Statoil said in a statement on Thursday.

Press Release - Total announces that its gas trading affiliate Total Gas & Power Limited has signed an agreement with South Korean national company Kogas (Korea Gas Corporation) for the purchase of 0.7 million metric tons per year of LNG from the Sabine Pass terminal in Louisiana for a duration of twenty years.

Reuters – South Sudan will split a massive oil block largely held by Total into three parts, giving one to the French company and the others to two firms, officials said, in the biggest shake-up of the nation's concessions since it seceded from Sudan.

Citi raised Total to ‘Hold’ from ‘Sell.’

US E&PS

Reuters - Cobalt International Energy Inc disclosed malfunction of critical rig system on the ocean confidence drilling rig on offshore Angola occurred.

Press Release - Halcón Resources Corporation today announced the pricing of an underwritten secondary offering of 35,000,000 shares of its common stock offered by EnCap Energy Capital Fund VIII L.P. (the "Selling Shareholder") at $7.00 per share. The underwriters have a 30-day option to purchase up to 5,250,000 additional shares (100% secondary) of common stock from the Selling Shareholder. Halcón will not sell any shares or receive any proceeds from the offering. The offering is expected to close on or about September 18, 2012, subject to customary closing conditions.

Credit Suisse initiated coverage of Magnum Hunter Resources with an ‘Outperform’ rating.

DRILLERS

(Late Wednesday) Press Release - Noble Corporation today announced that its report of drilling rig status and contract information has been updated as of September 12, 2012.

Wells Fargo raised Precision Drilling Corp to ‘Outperform’ from ‘Market Perform.’

REFINERS

(Late Wednesday) Press Release - HollyFrontier Corporation announced today that its Board of Directors declared an additional special cash dividend in the amount of $0.50 per share, payable on October 2, 2012 to holders of record of common stock on September 25, 2012.

(Late Wednesday) Press Release - Phillips 66 will build its new global headquarters at a 14-acre site in the Westchase District of Houston. The property, which will be acquired from an affiliate of Thomas Properties Group, Inc., is located off Beltway 8 West, between Westheimer Road and Briar Forest Drive.

MARKET COMMENTARY

The S&P 500 closed at its highest level since December 2007 after the Federal Reserve's aggressive action to bolster the economy encouraged investors to dive back into the market.

TOP NEWS

The U.S. Federal Reserve launched another aggressive stimulus program, saying it will buy $40 billion of mortgage-backed debt per month until the outlook for jobs improves substantially as long as inflation remains contained.

U.S. producer prices in August rose by the most in three years as energy costs surged, while other data underscored the weakness in the labor market with the number of Americans filing new claims for state unemployment benefits touching a two-month high, although some of the gain was attributed to Tropical Storm Isaac.