Monday, September 24, 2012

SECTOR COMMENTARY

The energy sector ended the day mostly lower on lighter-than-average volumes, in line with broader equity markets, while the underlying commodities extended their trends lower. The higher-beta spaces continued to see the steepest declines, with drillers leading the way, while the large cap integrateds bucked the trend and were mixed.

Several of the S&P Energy indices felt slight relief today from investors purchasing some of the quarter's better performers. Increased concerns over prospects for global economic growth, little sector developments, weakness in commodities and a light economic calendar today gave little motivation for investors to offer support. Investors are also skittish to make any large moves ahead of several major data points due out later this week including another reading on jobless claims and the 2Q GDP release.

WTI crude oil futures fell $0.96 or 1.03% to end the day at $91.93, while Brent futures saw an over 1.5% decrease. Disappointing data out of Germany and China earlier today reinforced concerns about slowing global economic growth and weakened the euro against the dollar, weighing on prices.

Natural gas futures ended lower by $0.048 or 1.66% at $2.837, declining for the first time in three sessions. Record high supplies, mild weather forecasts and slowing demand drove prices lower and most traders remain skeptical of any upside until cooler temperatures arrive to stir more heating load, particularly with storage and production still running at or near record highs.

u.s. INTEGRATEDS

Howard Weil upgraded their rating of Chevron Corporation to ‘Market Outperform’ from ‘Neutral’ sighting strong net income per Boe and an attractive production CAGR outlook through 2017.

INTERNATIONAL INTEGRATEDS

Reuters - BP will have to invest billions of dollars more than previously planned if it is to slow falling output at an Azeri oil project that is also that country's biggest cash cow, oil executives and diplomats say. The investments required to cut the decline at the Azeri-Chirag-Gunashli fields are so large that it may not even be commercially viable for the companies to spend the money unless they receive sweeteners from the government

Reuters - The European Commission must negotiate directly with the Russian government to resolve a dispute on Gazprom's European pricing after a Kremlin decree increasing state control over the gas export monopoly, its export chief said in an interview. "The presidential order just puts this situation in an equal weight class," the head of Gazprom Export, Alexander Medvedev, told Reuters in an interview in the Black Sea resort of Sochi.

Reuters - A prosecutor from Brazil's Public Ministry has charged state-run oil company Petrobras with environmental crimes for a spill at its Duque de Caxias refinery that allegedly contaminated the mangroves and estuary of Guanabara Bay off Rio de Janeiro.

Press Release - Royal Dutch Shell announced that it has entered into an irrevocable, non-discretionary arrangement with an independent third party to enable the purchase of `B' ordinary shares.

Press Release - Quicksilver Resources Inc said it struck a deal with a unit of Royal Dutch Shell Plc to jointly develop oil and gas properties in the Sand Wash Basin in Northwest Colorado. The companies will own 50 percent interest each in about 330,000 acres, with SWEPI LP, the Shell unit, operating a majority of the properties.

Press Release – Total announces the signature of a farm-in agreement with the Malaysian state-owned company, Petronas, for the acquisition of a 40% interest in the Production Sharing Contract covering the offshore blocks area 3 and area 6 located in the prolific Rovuma Basin. Petronas will retain the operator ship. The two blocks cover an area of 15,250 square kilometers with water depths ranging up to 2,500 meters. An exploration well is planned by year-end.

Reuters - French oil group Total expects its production potential to reach about 3 million barrels of oil a day in 2017 bolstered by new projects, the bulk of which have already come on stream, up from about 2.4 million now.

canadian INTEGRATEDS

Press Release - Suncor announced it has entered into a pre-defined plan with a designated broker to allow for the repurchase of its common shares under its previously announced normal course issuer bid.

U.S. E&Ps

Reuters - State oil company PDVSA will present more arguments against an arbitration panel's recent ruling before it "considers paying" a $66.8 million award to U.S. oil company ConocoPhillips, Venezuela Oil Minister Rafael Ramirez said.

Press Release - Goodrich Petroleum Corp said the SEC completed an investigation into its disclosures on wells and reserves in the Haynesville shale field and that no action had been recommended. The company received a fact-finding subpoena from the New York attorney general and the SEC in July 2011 requesting information on the natural gas wells and reserves in the Haynesville region, which spans Louisiana and Texas.

Press Release - Quicksilver Resources Inc said it struck a deal with a unit of Royal Dutch Shell Plc to jointly develop oil and gas properties in the Sand Wash Basin in Northwest Colorado. The companies will own 50 percent interest each in about 330,000 acres, with SWEPI LP, the Shell unit, operating a majority of the properties.

Reuters - U.S. natural gas producer Ultra Petroleum Corp believes natural gas prices are on the cusp of a recovery driven by industry-wide supply cutbacks, and that higher prices should start to take hold next year - assuming a normal winter.

oil services

ISI group increased their ratings on Oceaneering International and Baker Hughes to ‘Buy’ from ‘Neutral’.

(Late Friday) Reuters - Onshore drilling contractor Patterson-UTI Energy Inc said its Chief Executive Douglas Wall will retire at the end of this month. He will be replaced by Chief Operating Officer William Hendricks. Wall has been the CEO since October 2007.

Drillers

ISI group increased their rating of Dril Quip to ‘Buy’ from ‘Neutral’.

Reuters - Contract driller Parker Drilling named Gary Rich as its chief executive, replacing Robert Parker, effective Oct. 1. Rich joins from Baker Hughes Inc where he served as the vice president of global sales.

Reuters - Drilling firm Seadrill has ordered a new ultra-deepwater drillship from South Korea's Samsung Heavy Industries for an estimated $600 million for delivery in the fourth quarter of 2014.

refiners

Press Release - Tesoro Corporation has completed the redemption of all of its outstanding $299 million 6 1/4% Senior Notes due November 2012.

market Commentary

Stocks edged lower as disappointing German data increased concerns that global economic growth remains weak.

TOP NEWS

Apple sold out of its latest smartphone, with more than 5 million iPhone 5s sold in the three days since it hit stores, the company said.

German business sentiment dropped for a fifth straight month in September, raising fears of recession, as companies struggled with a bleaker economic outlook and the European Central Bank's bond buying plan failed to create much boardroom cheer.