MONDAY, SEPTEMBER 17, 2012

SECTOR COMMENTARY

The energy sector ended the day lower, in line with commodities and the broader equity markets, with refiners seeing the steepest losses followed by drillers and E&Ps. Investors were seen selling off across the board after last week’s rally as skepticism over whether or not the recent action by both the ECB and Fed would be enough to stoke growth in the global economy.

WTI crude oil futures erased earlier gains to end the session lower by $2.38 or 2.40% at $96.62 while Brent crude saw an over 3% decline on the day. Traders sold off futures in late afternoon trading after rumors surfaced that the U.S. government is considering a Strategic Petroleum Reserve release. The unsubstantiated rumors where followed by a statement from The White House in after hours which said that a release of crude from the Strategic Petroleum Reserve remains "on the table" but it had no further announcement, pressuring futures lower in electronic trading.

Natural gas futures fell $0.078 or 2.65% to end the day at $2.865, pressured by milder autumn weather that has curbed any late-season air conditioning demand or any early-season heating demand. In addition, weaker gas futures for a third day in a row added more weight to the downside but traders said a large number of nuclear power plant outages could help limit more losses, as utilities turn to gas to make up for the lost generation. Canadian spot natural gas prices fell on Monday on cool temperatures in eastern markets and a drop in futures.

U.S. INTEGRATEDS

(Late Friday) Reuters - Chevron Corp.'s 245,000 barrel per day Richmond, California, refinery reported a hydrogen leak from a heat exchanger on Friday, according to a notice filed with the Contra Costa Health Department Hazardous Materials Program.

INTERNATIONAL INTEGRATEDS

Renaissance initiated coverage of Gazprom with a ‘Buy’ rating.

Reuters - Royal Dutch Shell said it had decided to delay its hunt for oil in Alaska until next year after a piece of equipment used in a test was damaged, highlighting the difficulties of drilling in the icy Arctic sea. Shell, which has spent about $4.5 billion on its effort to drill Arctic oil, said it will not attempt to drill into any oil or gas-containing rocks this year as a dome which could be used to contain oil in the event of a spill will take time to repair.

U.S. E&PS

(Late Friday) Press Release - Cimarex Energy Co. announced that its Board of Directors has declared a regular cash dividend on its common stock of 12 cents-per-share. The dividend is payable on December 3, 2012 to stockholders of record on November 15, 2012.

Capital One Southcoast downgraded Southwestern Energy to ‘Neutral’ from ‘Add’ based on valuation.

CANADIAN E&PS

Reuters - Petrobakken Energy Ltd announced normal course issuer bid to purchase up to 8.7 million class a shares, representing 5% of issued and outstanding class a Petrobakken share.

DRILLERS

Global Hunter Securities downgraded its rating on Atwood Oceanics to ‘Accumulate’ from ‘Buy’ due to the lack of upside on the firm’s current price target and the belief that the pending catalysts for the company will come in at the market’s expectations.

Global Hunter Securities downgraded its rating on Dril-Qip, Inc to ‘Neutral’ from ‘Accumulate’ citing on valuation.

REFINERS

Citi downgraded Marathon Petroleum, Phillips 66 and Valero Energy to ‘Neutral’ from ‘Buy’ based on valuation.

Reuters - Phillips 66 says it is in process of restarting 139,000 barrel per day Los Angeles-area refinery in Wilmington, California, following a power outage that occurred on Saturday, Sept. 15. The company expects to have a majority of the Los Angeles refinery units back online by the middle to end of this week.

(Sunday) Reuters - Phillips 66's 139,000 barrel per day Los Angeles-area refinery in Wilmington, California, refinery reported an upset and flaring on Saturday, according to a notice the refinery filed with California pollution regulators.

(Late Friday) Reuters - Sunoco Inc has received approval from U.S. regulators for its west Texas-Nederland project, which will carry 40,000 barrels per day of sour crudes from west Texas and New Mexico to its Nederland, Texas terminal by the first quarter of 2013.

(Late Friday) Press Release - Tesoro Corporation and Tesoro Logistics LP announced that Tesoro Corporation ("Tesoro") has contributed the Long Beach marine terminal and Los Angeles short-haul pipelines owned by Tesoro's subsidiary, Tesoro Refining and Marketing Company, to Tesoro Logistics LP for total consideration of $210 million.

MLPS

Citi upgraded Access Midstream Partners to ‘Buy’ from ‘Neutral’ based on improved drop-down visibility and counterparty risk profile.

(Late Friday) Press Release - Tesoro Corporation and Tesoro Logistics LP announced that Tesoro Corporation ("Tesoro") has contributed the Long Beach marine terminal and Los Angeles short-haul pipelines owned by Tesoro's subsidiary, Tesoro Refining and Marketing Company, to Tesoro Logistics LP for total consideration of $210 million.

MARKET COMMENTARY

Stocks fell in light trading after a rally that drove the S&P 500 last week to its highest level in nearly five years and as falling oil prices hit energy shares.

TOP NEWS

Lowe's Cos said it had withdrawn its C$1.8 billion proposal to buy Rona in the face of stiff opposition to the unsolicited bid for the Canadian home improvement retailer.

Tyco International shareholders have approved a breakup of the industrial conglomerate into three pieces, the company said.

President Barack Obama said the U.S. was challenging Chinese auto and auto-parts subsidies that threatened American jobs as he campaigned in Ohio, an auto manufacturing state that could be decisive in the November presidential election.