THURSDAY, SEPTEMBER 27, 2012

SECTOR COMMENTARY

Energy stocks lead the broader markets higher today after Spain detailed an austerity plan focused on spending cuts instead of tax hikes, and as better than expected U.S. jobs data outweighed a lower than expected final second quarter GDP reading and underwhelming durable goods data. All energy sub-sectors were up on the day led by refiners and E&Ps, which both posting an over 2% gains.

In sector news, Transocean lagged the peer group and ended the day lower following news that it was served with a preliminary injunction by a federal court in Brazil that will require the company's nine rigs operating in waters off the country to cease operations in 30 days, due to a civil lawsuits seeking about $20 billion in damages from Transocean and Chevron for the spill in the Frade field.

WTI futures closed higher by $1.87 or 2.08% to $91.85 and Brent was up over 2%, as renewed fears over tensions between Israel and Iran continued to raise concerns about potential supply disruptions and the announcement of new austerity measures out of Spain helped to lift prices. Futures also drew support from expectations policymakers in China will do more to stimulate economic activity in the world’s second largest economy.

Natural gas closed up $0.082 or 2.55% to $3.297, hitting a 9-month high following reports that the number of nuclear power plants offline for maintenance remained high. The gains came despite data from the EIA showing that U.S. gas supplies rose more-than-expected last week. Working gas in storage increased by 80 Bcf while traders had been expecting an increase of only 76 Bcf.

U.S. INTEGRATEDS

Reuters - Chevron Pacific Indonesia (CPI), a subsidiary of U.S. oil and gas giant Chevron, is deeply concerned by the arrest of four employees held in an investigation into alleged corruption on an environmental project, the company said on Thursday.

Press Release - ExxonMobil is investing more than $200 million to expand its Baton Rouge chemical and lubricants plants to increase capacity for synthetic lubricant base stocks manufacturing and lubricants blending, packaging and storage.

INTERNATIONAL INTEGRATEDS

Reuters - Norwegian oil services firm Aker Solutions has won a five-year 2.3 billion crown ($400 million) contract to manage and construct the offshore assets of Royal Dutch Shell's Brunei unit, it said on Thursday.

U.S. E&PS

Press Release - Devon Energy Corporation today announced the closing of its previously announced $1.4 billion joint venture agreement with Sumitomo Corporation. The joint venture covers approximately 650,000 net acres in the Cline Shale and the Midland-Wolfcamp Shale. Sumitomo will invest $1.4 billion in exchange for 30 percent of Devon’s interest in these projects.

Press Release - Noble Energy, Inc. today announced that it has entered into a 36 month contract with a subsidiary of Atwood Oceanics Inc. for a new build drillship to support its global new ventures efforts in deepwater exploration and development. The agreement demonstrates the Company's commitment to global offshore exploration.

(Late Wednesday) Press Release - Noble Energy, Inc. announced today that it has closed the previously announced sale of certain oil and natural gas properties in central Kansas to an affiliate of Citation Oil & Gas Corp., a privately held Houston based oil and gas company. Proceeds from the transaction were approximately $130 million and included certain adjustments from the effective date of April 1, 2012.

Press Release - RANGE RESOURCES CORPORATION today announced that one of its subsidiaries has signed a 15-year agreement with Sunoco Logistics Partners, L.P. to become the anchor shipper on the Mariner East Project subject to final approval by FERC. The Mariner East Project is a pipeline, processing and export project that will interconnect the natural gas liquids resources in southwest Pennsylvania to Sunoco’s existing infrastructure and international port at its Marcus Hook facility near Philadelphia.

(Late Wednesday) Press Release - Rex Energy Corporation today announced initial production results from its first Ohio Utica Shale well and provided an update on its operations. The Brace #1H, located in Carroll County, Ohio, was brought online to sales from its 60-day resting period at a 24-hour sales rate, assuming full ethane recovery, of 1,094 Boe/d (43% NGLs, 31% gas, 26% condensate).

(Late Wednesday) Press Release - W&T Offshore, Inc. reports that at about 10:00 a.m. this morning, a fire started on its Ship Shoal 233 B Platform and was subsequently extinguished at 11:35 a.m. This production processing facility, which is operated by the Company, is located approximately 30 miles south of Louisiana in the Gulf of Mexico, in 128 feet of water. To respond to this incident, the Company activated its emergency response plan, evacuated personnel and mobilized equipment and personnel to assess and address the incident. All appropriate government agencies were notified.

CANADIAN E&PS

(Late Wednesday) Reuters - China's CNOOC Ltd believes it is poised to win Canada's go-ahead for the $15.1 billion purchase of oil producer Nexen Inc after talks with provincial leaders boosted its confidence that Canada values China as an investor in its huge oil sands sector and as a future energy customer, sources said.

Barclays initiated coverage of Petrobank Energy with an ‘Overweight’ rating.

DRILLERS

Press Release - Noble Energy, Inc. today announced that it has entered into a 36 month contract with a subsidiary of Atwood Oceanics Inc. for a new build drillship to support its global new ventures efforts in deepwater exploration and development. The agreement demonstrates the Company's commitment to global offshore exploration.

Reuters - Transocean Ltd said on Thursday it was served with a preliminary injunction by a federal court in Brazil that will require the company's nine rigs operating in waters off the country to cease operations in 30 days.

REFINERS

Press Release - Delek US Holdings, Inc., a diversified energy company with assets in the petroleum refining, marketing and retail industries, today announced that its Board of Directors declared a special cash dividend of $0.10 per share. Shareholders of record on October 16, 2012 will receive the special cash dividend payable on October 30, 2012.

Reuters - Tesoro Corp reported the startup of the No. 3 reformer unit at its 166,000 barrel per day Golden Eagle refinery in Martinez, California, according to a notice the refinery filed with the Contra Costa County Health Department Hazardous Materials Program dated Sept 23 and released on Thursday.

Reuters - Valero Energy Corp is selling its retail business, which operates gas stations and convenience stores, through an auction that could fetch more than $3.5 billion and has lured the interest of private equity firms and convenience-store operators, people familiar with the matter said.

MLPS

(Late Wednesday) Press Release - MarkWest Energy Partners, L.P. announced today that it has signed a 10-year agreement to become a firm shipper on the Mariner East pipeline subject to final regulatory approvals. Mariner East is currently designed to transport ethane and propane sourced at MarkWest’s Houston, Pennsylvania processing and fractionation complex to Sunoco’s Marcus Hook facility located near Philadelphia. Once delivered, the ethane-propane mix will be re-fractionated into purity products for sale into domestic and international markets.

(Late Wednesday) Reuters - Sunoco Logistics Partners said on Wednesday that it will build its Mariner East natural gas liquids pipeline to connect producing areas in the Marcellus shale in Pennsylvania to its Marcus Hook processing facility, after a successful open season on the line.

MARKET COMMENTARY

The S&P 500 snapped a five-day string of declines in a broad-based rally, as Spain's plans for economic reform eased some worries about one of the euro zone's most troubled countries.

TOP NEWS

Orders for long-lasting U.S. manufactured goods fell sharply in August, suggesting the main engine of economic growth was stalling and offsetting the hopeful sign provided by a drop in new claims for jobless benefits.