THURSDAY, SEPTEMBER 06, 2012

SECTOR COMMENTARY

The energy sector rose across the board, in-step with the broader markets as the S&P 500 reached a 4-year high. The bullish trading was driven by ECB President Mario Draghi’s announcement that policy makers agreed to an unlimited bond buying program as they try to regain control of interest rates in the euro zone. E&Ps led the way for the energy sector, with several companies experiencing gains in excess of 5% on the day.

Crude oil futures ended the day higher after an official report indicated oil supplies fell significantly last week and the ECB’s bond buyback program triggered purchasing by commodity bulls. Brent crude rose slightly while WTI rose as high as 2.35% during the day, closing up $0.17 or 0.18% to $95.53.

Natural gas closed down in choppy trade after a report from the EIA showed U.S. gas supplies rose less-than-expected last week. The EIA said in its weekly report that natural gas storage in the U.S. in the week ended August 31 rose by 28 billion cubic feet, below market expectations for an increase of 36 billion cubic feet. Market analysts have warned that without strong late-summer and early-autumn cooling demand, gas inventories will reach the limits of available capacity later this year. The forward month contract closed down $0.019 or 0.68% to $2.776.

US INTEGRATEDS

Reuters - ExxonMobil CEO Rex Tillerson said on Thursday seismic studies at the Arctic Kara Sea oil exploration project with Russian oil major Rosneft were ahead of schedule and he expected drilling to commence in 2014-15.

INTERNATIONAL INTEGRATEDS

Reuters - Russia's gas export monopoly Gazprom said on Thursday its first-quarter net profit fell 24 percent, year-on-year, beating analyst forecast, on the back of falling sales and retroactive payments to European clients.

Reuters - Gazprom said its stake in giant Shtokman gas project will increase to 75 percent after Norway's Statoil exited the partnership, the Russian company said in first-quarter financial report on Thursday.

Reuters - LUKOIL, Russia's No.2 crude producer, is vying to bid for rights to tap Norway's vast offshore oil riches jointly with Det norske, Lundin Petroleum and North Energy, a LUKOIL official told reporters on Thursday.

Reuters - Spanish oil company Repsol said on Thursday that it had made a large natural gas discovery in Peru, with preliminary estimates pointing to one trillion to two trillion cubic feet of the fuel. The discovery, in block 57 of the Camisea fields, would add to Peru's reserves of between 11.2 trillion and 18.6 trillion cubic feet.

Reuters - Russia's Rosneft has taken time out in talks to buy a stake in TNK-BP to avoid falling foul of a shareholder's agreement between its current owners, Rosneft CEO Igor Sechin said on Thursday. BP said in June it would start the process of selling its 50 percent stake in TNK-BP, which it formed nearly a decade ago with a group of Russian tycoons called AAR to tap into the country's vast energy reserves.

(Late Wednesday) Reuters - Royal Dutch Shell Plc is restarting some process units at its 75,000 barrel per day Sarnia, Ontario, refinery, the company said on Wednesday on a community information line.

US E&PS

(Late Wednesday) Reuters - Carrizo Oil & Gas Inc on Wednesday sold $300 million of senior unsecured notes, said IFR, a Thomson Reuters service. The size of the deal was increased from the originally planned $250 million.

Reuters - Chesapeake Energy Corp will sell up to $14 billion in assets by the end of the year as planned, with proceeds targeted to debt reduction, the company's chief executive said on Thursday. The Oklahoma City company also needs to sell some of its oil and gas interests to fill a funding gap that Barclays’ analysts estimate at $4 billion in 2013.

Reuters - Oil and gas producer Pioneer Natural Resources Co said it was looking at selling its properties in the Barnett shale field in Texas to raise capital for its higher-return assets and cut down debt. Pioneer Natural said the sale will allow the company to spend more on assets in the Spraberry field, the Wolfcamp shale and the Eagle Ford shale, all located in Texas.

CANADIAN E&PS

(Late Wednesday) Reuters - Encana Corp said on Wednesday an internal investigation has determined that it did not collude with Chesapeake Energy Corp to lower the price of land acquisitions in Michigan two years ago. The company's board of directors, which led the investigation launched on June 25 with the assistance of outside attorneys, did not provide a report on the scope of the inquiry, nor explain how it reached its conclusion.

(Late Wednesday) Reuters - China's state-owned oil company has formally asked the U.S. government to review its $15.1 billion takeover bid for Canada's Nexen for any national security concerns, a CNOOC spokesman said on Wednesday.

OIL SERVICES

S&P Capital IQ cut Hornbeck Offshore Services to ‘Hold’ from ‘Buy.’

DRILLERS

BMO Capital initiated coverage on Atwood Oceanics with an ‘Outperform’ rating seeing additional possibilities for organic growth as well as considerable potential takeout appeal.

REFINERS

Reuters - Phillips 66 said it expects its 247,000 barrel-per-day Alliance refinery in Belle Chasse, Louisiana, will be back in operation by mid-month after a power failure delayed the restart of the facility, flooded by Hurricane Isaac.

Reuters - Tesoro Corp said on Thursday it completed maintenance at its 166,000 barrel-per-day San Francisco Bay-area refinery in Martinez, California, and the facility was operating at normal rates.

Reuters - Tesoro Corp said Thursday its 96,860 barrel-per-day Los Angeles-area refinery in Wilmington, California, was running at normal operations.

(Late Wednesday) Raymond James initiated coverage of Western Refining with an ‘Outperform’ rating.

MLPS

(Late Wednesday) Press Release - Enbridge Energy Partners, L.P. announced today it has commenced, subject to market conditions, an underwritten public offering of approximately 14 million of its Class A Common Units representing limited partner interests. The Partnership is expected to grant the underwriters a 30-day option to purchase up to an additional 2.1 million units to cover over-allotments, if any. The Partnership expects to use the net proceeds from the offering, including the proceeds from any exercise of the over-allotment option, to fund a portion of its capital expansion projects, for general partnership purposes or any combination of such purposes.

MARKET COMMENTARY

Stocks closed at multi-year highs, with the S&P 500 ending at its highest level since before the collapse of Lehman Brothers as investors hailed a new European bond-buying program aimed at stemming the region's debt crisis.

TOP NEWS

The European Central Bank agreed to launch a new and potentially unlimited bond-buying programme to lower struggling euro zone countries' borrowing costs and draw a line under the debt crisis.

U.S. companies added staff in August at the fastest clip in five months and a gauge of employment in the service sector also improved, upbeat signals for a struggling labor market.