SECTOR COMMENTARY

The energy sector outperformed the broader equity markets on the heels of the integrateds, the only sub-sector to post collective gains. ExxonMobil contributed to the outperformance within the integrateds space after the company reported better than expected bottom line results. Mixed earnings and falling commodity prices weighed on the remaining groups within the energy complex.

WTI crude oil futures finished the session lower by $0.39 or 0.40% to close at $96.38, marking the third straight day of declines. Speculation around a possible December taper of U.S. monetary stimulus combined with a strengthened dollar as a result of a stronger than expected Chicago PMI reading pressured the commodity. The Chicago manufacturing purchasing managers’ index jumped to 65.9 in October from 55.7 in September, while analysts had expected the index to decline to 55.0 this month.

Natural gas futures shed $0.039 or 1.08% to close at $3.581 after a bearish EIA inventory report provided another catalyst for the recent sell-off. The weekly inventory report released by the EIA showed that natural gas storage increased by 38 Bcf last week while analysts had expected a build of only 36 Bcf. Prices continued to come under pressure as weather forecasts continue to call for mild weather in much of the U.S. over the next 10 days.

U.S. INTEGRATEDS

• XOM reported 3Q’13 EPS of $1.79 versus Thomson Reuters I/B/E/S estimate of $1.77.

Reuters - Exxon Mobil Corp reported an 18 percent decrease in quarterly profit on weak refining margins. Profit in the third quarter was $7.87 billion, or $1.79 per share, compared with $9.57 billion, or $2.09 per share, in the same period a year earlier. Oil and natural gas output in the quarter rose 1.5 percent from a year earlier, the Irving, Texas, company said.

Canaccord Genuity ended coverage of Exxon Mobil Corp and Chevron Corp.

Reuters - Exxon Mobil Corp is looking into building a rail terminal in Edmonton, Canada to move crude from its Kearl tar sands field to refineries in the United States, the company said on Thursday.

Hess Corp was lifted to ‘Outperform’ from ‘Neutral’ at Credit Suisse.

INTERNATIONAL INTEGRATEDS

• RDS reported 3Q’13 CCS, EPS (ADS) of $1.42.

Reuters - Royal Dutch Shell's third quarter profits undershot analysts' forecasts on Thursday as a weak refining environment and production losses due to disruption in Nigeria weighed on its performance. Third quarter earnings excluding identified items and on a current cost of supply basis came in at $4.5 bln compared with a forecast range of between $4.9 and $5.1 bln and down from $6.6 billion a year ago. CEO Peter Voser, who steps down at the end of the year, said actions taken this year "underline our commitment to shareholder returns".

Reuters - French oil company Total said third-quarter adjusted net profit fell 19 percent year-on-year to 2.7 billion euros ($3.72 billion), hit by very low refining margins in Europe and higher exploration costs. "Refining margins are extremely weak, we still have this endemic problem," Chief Financial Officer Patrick de La Chevardiere told reporters.. The CFO added that he expected oil and gas output to grow this year, depending on production at the Kashagan field, but declined to reiterate a previous goal of output growth of 2-3 percent.

CANADIAN INTEGRATEDS

• IMO reported 3Q’13 EPS of C$0.75 versus Thomson Reuters I/B/E/S estimate of C$1.02.
• SU reported 3Q’13 EPS of C$0.95 versus Thomson Reuters I/B/E/S estimate of C$0.91.

Press Release - Imperial Oil Ltd. has reported third-quarter results that were well below analyst estimates. The Calgary-based company had $647 million of net income, or 76 cents per share in the third quarter. That's down from $1.04 billion or $1.22 a year earlier and below the estimate of 98 cents per share. Imperial's revenue was $8.6 billion, up from $8.3 billion a year earlier, but less than the estimate of $9.5 billion.

(Late Wednesday) Reuters - Suncor Energy Inc reported a 10 percent boost in its third-quarter profit on Wednesday, lifted by record production and higher crude prices. Net profit in the quarter was C$1.7 billion, or C$1.13 per share. That compares with earnings of C$1.5 billion, or C$1.01 per share, in the third quarter of 2012. Operating profit, which excludes most one-time items, rose to C$1.4 billion, or 95 Canadian cents per share, up from C$1.3 billion, or 84 Canadian cents, in the year-ago quarter.

Reuters - Suncor Energy Inc said on it was moving ahead with its Fort Hills oil sands project in Northern Alberta, with first production expected as soon as the fourth quarter of 2017.

U.S. E&PS

• COP reported 3Q’13 EPS of $1.47 versus Thomson Reuters I/B/E/S estimate of $1.45.
• EPL reported 3Q’13 EPS of $0.81 versus Thomson Reuters I/B/E/S estimate of $0.88.
• MUR reported 3Q’13 EPS of $1.34 versus Thomson Reuters I/B/E/S estimate of $1.46.
• SFY reported 3Q’13 EPS of $0.20 versus Thomson Reuters I/B/E/S estimate of $0.17.
• WMB reported 3Q’13 EPS of $0.19 versus Thomson Reuters I/B/E/S estimate of $0.15.

Press Release – ConocoPhillips reported third-quarter 2013 earnings of $2.5 billion, or $2.00 per share, compared with third-quarter 2012 earnings of $1.8 billion, or $1.46 per share Excluding special items, third-quarter 2013 adjusted earnings were $1.8 billion, or $1.47 per share, compared with third-quarter 2012 adjusted earnings of $1.7 billion, or $1.38 per share. Special items for the current quarter primarily related to gains from asset sales of the Clyden undeveloped oil sands leasehold in Canada and the Phoenix Park midstream asset in Trinidad and Tobago.

(Late Wednesday) Reuters - Canada's National Energy Board on Wednesday approved ConocoPhillips's application to start exploratory drilling in the Northwest Territories, the first time the federal regulator has granted authorization for horizontal hydraulic fracturing (fracking) in Canada's Far North.

Press Release - For the third quarter of 2013, EPL Oil & Gas reported a net loss to common stockholders of $1.3 million, or $0.03 per diluted share, compared to a net loss of $2.2 million, or $0.06 per diluted share for the same period a year ago. The net loss for the quarter included $26.5 million of non-cash unrealized losses on derivative instruments and $24.9 million of costs primarily attributable to loss on abandonment activities. These abandonment costs include $21.8 million in abandonment costs related to four wellbores in our non-operated deepwater properties, which are related to investments made prior to the Company's reorganization in 2009. These increased deepwater abandonment costs are primarily attributable to changes in regulatory interpretations and enforcement by the federal regulators in the deepwater that increased the required scope of work. Excluding the impact of these items, EPL's adjusted third quarter net income, a non-GAAP measure, would have been $31.4 million, or $0.81 per diluted share, compared to $12.6 million, or $0.33 per diluted share, for the same period a year ago.

(Late Wednesday) Press Release - Murphy Oil Corporation announced that net income, which includes the results of discontinued operations, was $284.8 million ($1.51 per diluted share) in the third quarter 2013 compared to $226.7 million ($1.16 per diluted share) in the 2012 third quarter. Income from continuing operations in the third quarter of 2013 was $252.1 million ($1.34 per diluted share) compared to $211.7 million ($1.08 per diluted share) in the third quarter of 2012. Income from continuing operations increased in 2013 compared to the prior year, primarily due to higher crude oil production levels.

Baird has raised their rating of SM Energy to ‘Outperform’ from ‘Neutral’.

Press Release - Swift Energy Company announced earnings of $8.9 million for the third quarter of 2013, or $0.20 per diluted share, an increase of 185% when compared to third quarter 2012 earnings of $3.1 million, or $0.07 per diluted share, and an increase of 32% when compared to earnings of $6.7 million, or $0.15 per diluted share in the second quarter of 2013.

Press Release – Williams Companies report third quarter 2013 financial results. New Third-Quarter Net Income Is $141 Million, $0.20 per Share. Adjusted Net Income $130 Million or $0.19 per Share. $61 Million in WPZ`s Higher Fee-Based Revenues More Than Offset $49 Million. Effect of Lower NGL Margins; Downtime at Olefins Plant Lowers Results. Expect Adjusted Segment Profit + DD&A Growth Throughout 2013-2015 Guidance Period - Up Approximately $1.5 Billion. Reaffirming Cash-Dividend Growth of 20% Annually Through 2015.

CANADIAN E&PS

• ALA reported 3Q’13 EPS of C$0.21 versus Thomson Reuters I/B/E/S estimate of C$0.19.
• COS reported 3Q’13 EPS of C$0.51 versus Thomson Reuters I/B/E/S estimate of C$0.44.

Press Release - AltaGas Ltd. reported strong third quarter earnings, doubling its normalized net income applicable to common shares to $24.7 million ($0.21 per share), compared to $12.3 million ($0.13 per share) for the same period 2012. Net income applicable to common shares was $43.3 million ($0.36 per share) for the three months ended September 30, 2013, compared to $8.0 million ($0.08 per share) for the same period 2012.

(Late Wednesday) Reuters - Canadian Oil Sands Ltd said on its third-quarter profit fell 27 percent from a year earlier as maintenance issues reduced output. The company also cut its 2013 production range estimate for the massive Syncrude oil sands mining and synthetic crude operation near Fort McMurray, Alberta, to 97 million barrels from 100 million. Canadian Oil Sands, which has a 37 percent stake in Syncrude, said profit fell to C$246 million ($235.31 million), or 51 Canadian cents per share, from C$336 million, or 69 Canadian cents, in the third quarter of 2012.

OIL SERVICES

• CJES reported 3Q’13 EPS of $0.24 versus Thomson Reuters I/B/E/S estimate of $0.35.
• HOS reported 3Q’13 EPS of $0.57 versus Thomson Reuters I/B/E/S estimate of $0.56.
• KEG reported 3Q’13 EPS of ($0.01) versus Thomson Reuters I/B/E/S estimate of $0.01.
• OIS reported 3Q’13 EPS of $1.46 versus Thomson Reuters I/B/E/S estimate of $1.45.

(Late Wednesday) Press Release - C&J Energy Services, Inc. reported net income of $13.1 million, or $0.24 per diluted share, for the third quarter of 2013. Net income was $20.8 million, or $0.38 per diluted share, in the second quarter of 2013 and $49.3 million, or $0.91 per diluted share, in the third quarter of 2012. Second quarter 2013 results included an after-tax charge of $0.6 million ($0.01 per diluted share) associated with a non-cash inventory write-down related to a decrease in the market value of certain spare parts.

(Late Wednesday) Press Release – Hornbeck Offshore Services recorded net income for the third quarter of 2013 of $59.2 million, or $1.61 per diluted share, compared to net income of $7.4 million, or $0.20 per diluted share, for the year-ago quarter; and net income of $23.8 million, or $0.65 per diluted share, for the second quarter of 2013. Included in the Company's net income is a gain of $60.0 million ($38.1 million after-tax or $1.04 per diluted share) related to the sale of substantially all of its Downstream assets on August 29, 2013.

(Late Wednesday) Press Release - Key Energy Services, Inc. reported third quarter 2013 consolidated revenues of $389.7 million and a pre-tax loss from continuing operations of $2.0 million. The Company incurred a $0.03 per share loss for the third quarter, which includes $0.02 of loss due to effective tax rate impact. Second quarter 2013 consolidated revenues were $411.4 million with normalized pre-tax income from continuing operations of $2.2 million, or $0.01 per share, which excludes $8.3 million of severance and restructuring costs. On a GAAP basis, second quarter 2013 net loss from continuing operations attributable to Key was $4.1 million, or $0.03 per share.

(Late Wednesday) Press Release - Oil States International, Inc. reported net income from continuing operations for the quarter ended September 30, 2013 of $77.1 million, or $1.38 per diluted share, which included $0.08 per diluted share of after-tax significant expense items which are detailed below. These results compare to net income from continuing operations of $97.0 million, or $1.75 per diluted share, reported in the third quarter of 2012.

REFINERS

• MPC reported 3Q’13 EPS of $0.59 versus Thomson Reuters I/B/E/S estimate of $0.61.
• WNR reported 3Q’13 EPS of $0.33 versus Thomson Reuters I/B/E/S estimate of $0.51.

Press Release - Marathon Petroleum Corporation today reported third-quarter earnings of $168 million, or $0.54 per diluted share, compared with $1.22 billion, or $3.59 per diluted share, in the third quarter of 2012. For the third quarter of 2013, earnings adjusted for special items were $183 million, or $0.59 per diluted share, compared with earnings adjusted for special items of $1.13 billion, or $3.31 per diluted share, for the third quarter of 2012.

Reuters - Marathon Petroleum Corporation spent $25 million per month, or a total of $75 million, on ethanol credits in the third quarter to comply with U.S. renewable fuel standards policy, Chief Executive Gary Heminger told analysts on Thursday.

Press Release - Phillips 66, an integrated energy manufacturing and logistics company, plans to develop a liquefied petroleum gas (LPG) export terminal in Freeport, Texas. The new terminal is intended to help meet growing global market demand for U.S.-supplied products.

Press Release - Western Refining, Inc. today reported third quarter 2013 net income, excluding special items, of $29.6 million, or $0.33 per diluted share. This compares to third quarter 2012 net income, excluding special items, of $105.2 million, or $0.99 per diluted share. Including special items, the Company recorded third quarter 2013 net income of $50.3 million, or $0.53 per diluted share, as compared to net income of $6.3 million, or $0.07 per diluted share for the third quarter of 2012. Special items in the third quarter of 2013 primarily consisted of a non-cash unrealized pre-tax hedging gain of $25.7 million and a gain on disposal of assets of $7.0 million. A reconciliation of reported earnings and description of special items can be found in the accompanying financial tables.

MLPS

Boardwalk Pipeline Partners was cut to ‘Underweight’ from ‘Equal Weight’ at Barclays.

(Late Wednesday) Press Release - Enbridge Energy Partners, L.P. today declared a cash distribution of $0.5435 per unit payable November 14, 2013 to unitholders of record on November 7, 2013. Adjusted net income of $61.0 million for the third quarter of 2013 was $56.0 million lower than the same period from the prior year primarily due to: (a) a timing difference between integrity costs incurred pursuant to the scheduled hydrostatic test on our Line 14 and the related recovery of these costs in our tariffs; (b) the impact of lower natural gas liquids ("NGL") prices in our natural gas business; and (c) the inclusion of the deferred distribution from the $1.2 billion of preferred units issued in the second quarter of 2013 as a decrease in net income available to the general and limited partners. We expect full year 2013 adjusted EBITDA to be between $1.18 and $1.2 billion.

Press Release - Enterprise Products Partners L.P. today announced its financial results for the three and nine months ended September 30, 2013. Net income attributable to limited partners for the third quarter of 2013 was $592 million compared to $587 million for the third quarter of 2012. Earnings per unit for the third quarter of 2013 were $0.64 per unit on a fully diluted basis compared to $0.66 per unit on a fully diluted basis for the third quarter of 2012.

Reuters - Enterprise Product Partners LP said on Thursday it would extend its 400,000 barrel-per-day Seaway pipeline by the end of this year to its oil terminal in Houston, where it would add 900,000 barrels of storage in the first quarter next year.

(Late Wednesday) Press Release - Magellan Midstream Partners, L.P. today reported operating profit of $154.6 million for third quarter 2013 compared to $79.3 million for third quarter 2012. Net income grew to $125.6 million for third quarter 2013 compared to $50.5 million for third quarter 2012.

Press Release - Magellan Midstream Partners, L.P. announced today an extension of the open season to solicit capacity commitments from shippers to transport refined petroleum products to Little Rock, Arkansas. Industry feedback continues to be positive, and Magellan management remains optimistic about the prospects for this project. Binding commitments are now due by 5:00 p.m. Central Time on Nov. 20, 2013. The extension provides potential shippers additional time to make commitments.

Press Release - MPLX LP today reported third-quarter net income attributable to MPLX of $21.5 million, or $0.29 per common limited partner unit. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) attributable to MPLX were $30.5 million and distributable cash flow attributable to MPLX was $31.1 million.

Press Release - NuStar Energy L.P. today announced that its Board of Directors has declared a third quarter 2013 distribution of $1.095 per unit. The third quarter distribution will be paid on November 14, 2013 to holders of record as of November 11, 2013.

(Late Wednesday) Reuters - Williams Partners L.P. Wednesday reported third-quarter net income of $279 million or $0.52 per share, compared to $290 million or $0.38 per share last year. Analysts polled by Thomson Reuters expected the company to earn $0.28 per share for the quarter.