FRIDAY, SEPTEMBER 21, 2012

SECTOR COMMENTARY

The energy sector closed slightly higher, outpacing the broader equity markets which closed relatively flat after initially being boosted by the increasing hopes for a Spanish bailout request that would push Europe in the right direction towards solving its debt problems. Every energy sub-sector enjoyed modest gains on the day with the exception of services, which were marginally lower.

Crude oil futures rose $0.47 or 0.51% to $92.89 after reports surfaced that Spain may be closer to seeking a bailout. Hopes that other central bank stimulus measures around the world will spur more robust growth rates also pressured the commodity higher. Yesterday, oil scraped lows not seen since early August, before turning positive in a move that could be a sign the market is establishing a new range as traders digest a third round of U.S. quantitative easing, unrest in the Middle East and North Africa, and delays in North Sea oil shipments.

Natural gas futures climbed $0.088 or 3.15% to $2.885, continuing to rise even after yesterday’s EIA data revealed that supplies rose broadly in line with market expectations last week.

INTERNATIONAL INTEGRATEDS

Reuters - BP Plc has told President Vladimir Putin it wants to buy a stake in Russian state oil giant Rosneft, adding a new dimension to a long-running struggle for control of a big chunk of Russian oil production. The proposal put by BP Chief Executive Bob Dudley and Chairman Carl-Henric Svanberg would be part of a complex deal in which Rosneft would take BP's stake in the $60 billion TNK-BP venture, the Anglo-Russian oil producer 50 percent-owned by BP, Rosneft CEO Igor Sechin said.

(Late Thursday) Reuters – BP Plc reported sulfur dioxide emissions due to a process unit upset on Thursday at its 225,000 barrel-per-day (bpd) Cherry Point, Washington, refinery, according to a filing with pollution regulators.

(Late Thursday) Reuters - BP Plc's oil drilling in the Gulf of Mexico is approaching levels last seen before its Macondo well ruptured and spewed millions of barrels of crude in 2010, the company's vice president of global deepwater response said.

Reuters - Italian oil and gas group Eni is to convert an unprofitable oil refinery near Venice into a production plant for biofuels from 2014 at an estimated cost of 100 million euros ($130 million).

Reuters - Chinese Commerce Minister Chen Deming will visit Canada next week as Ottawa deliberates whether to approve a landmark $15.1 billion takeover of oil producer Nexen Inc by state-owned Chinese oil company CNOOC Ltd.

Reuters - Gazprom will not be able to make investment decisions about the development of the Yamal peninsula and other strategic regions due to proposed tax increases, which will also hit production, the head of Russia's largest gas producer said.

Reuters - Gazprom has again delayed the start of oil production at its Prirazlomnoye field, Russia's first Arctic offshore oil deposit to be developed, due to safety concerns, a source close to the project told reporters.

Reuters - Russia's No.2 crude producer LUKOIL will not list its shares in Hong Kong next year due to legal restrictions, the company's president Vagit Alekperov said.

(Late Thursday) Reuters - Lawyers for Brazil's state-led oil company Petrobras are working to help drilling contractor Transocean Ltd overturn an injunction barring it from work in Brazil, Petrobras' chief executive.

Reuters - Royal Dutch Shell is exploring possibilities in Iraqi Kurdistan, sources said, having seen rivals Exxon Mobil and Total risk Baghdad's wrath by moving into the autonomous northern region while developing major oilfields in the south.

(Late Thursday) Reuters - Royal Dutch Shell Plc won approval for limited drilling in the Beaufort Sea off northern Alaska, allowing the British oil company to start one exploration well there while it pursues a separate prospect in the Chukchi Sea.

Reuters - Norway's Statoil will resume operations on Saturday at a natural gas field affected by an unplanned outage, the firm said in a market message.

U.S. E&PS

Reuters - Chesapeake Energy Corp has hired James Webb as its new, full-time legal counsel as it tries to recover from damaging reports about controversial land deals in Michigan and personal loans taken out by its chief executive. Webb, who has worked on a contract basis for the company for the past four months, will be Chesapeake's legal and general counsel, the second-largest U.S. natural gas producer said in a statement Friday.

Reuters - Oil and natural gas producer ConocoPhillips said it has been awarded $66.8 million by an international tribunal that settles a dispute on 2006 and 2007 production cuts by Petroleos de Venezuela SA.

(Late Thursday) Iberia Capital assumed coverage on Energy XXI with an ‘Outperform’ rating.

CANADIAN E&PS

Reuters - Chinese Commerce Minister Chen Deming will visit Canada next week as Ottawa deliberates whether to approve a landmark $15.1 billion takeover of oil producer Nexen Inc by state-owned Chinese oil company CNOOC Ltd.

OIL SERVICES

Capital One Southcoast downgraded Baker Hughes and Patterson-UTI Energy to ‘Neutral’ from ‘Add’.

(Late Thursday) Press Release - Halliburton announced that Jeff Miller has been promoted to Executive Vice President and Chief Operating Officer.

DRILLERS

Reuters - Seadrill Partners LLC, which operates and acquires offshore drilling rigs, filed with U.S. regulators on Friday to raise up to $225 million in an initial public offering of common units. The offering is being underwritten by Citigroup, the London-based company said in a filing with the U.S. Securities and Exchange Commission. Seadrill Partners recently formed by Bermuda-based oilfield services company Seadrill Ltd, counts Chevron Corp, BP Plc and ExxonMobil Corp among its customers.

(Late Thursday) Reuters - Lawyers for Brazil's state-led oil company Petrobras are working to help drilling contractor Transocean Ltd overturn an injunction barring it from work in Brazil, Petrobras' chief executive.

REFINERS

Reuters - Alon USA Energy reported emissions related to a carbon monoxide (CO) boiler resulting from a leak in a flue gas bundle steam generator at its 67,000 barrel-per-day (bpd) Big Spring, Texas, refinery, according to a filing with state pollution regulators.

Reuters - A 27,000 barrel per day (bpd) coker was the last unit awaiting restart at Phillips 66's 247,000 bpd Alliance, Louisiana, refinery after Hurricane Isaac, according to a notice filed with Louisiana pollution regulators.

(Late Thursday) Reuters - Phillips 66 reported flaring on Thursday at its 139,000 barrel-per-day (bpd) Los Angeles-area refinery in Wilmington, California, according to a notice filed with state pollution regulators.

Reuters - Valero Energy Corp's 88,000 barrels-per-day (bpd) Houston refinery shut down production at the gasoline producing fluidic catalytic cracking (FCC) unit on Thursday in preparation for a planned overhaul, said a company spokesman.

MLPS

Reuters - Buckeye Partners LP said it is preparing a response to a complaint filed against it by airline carriers, challenging the price it charges to transport jet fuel to three airports in and near New York City.

Reuters - Enterprise Products Partners LP said it temporarily reduced flow through certain sections of its mainline U.S. Gulf Coast-to-Midwest refined products pipeline to conduct maintenance.

Reuters - Kinder Morgan Energy Partners LP said that shippers on its routinely overbooked Trans Mountain oil pipeline system between Alberta and the Pacific Coast will be limited to just 29 percent of their hoped-for volumes in October.

MARKET COMMENTARY

Stocks closed flat, erasing earlier gains that came on hopes that Spain would seek a bailout.

TOP NEWS

EU paymaster Germany said that Spain does not need a European bailout, dousing financial market expectations that Madrid will gain early relief from European Central Bank bond-buying.