SECTOR COMMENTARY

Energy stocks were mostly lower today, with the higher beta drillers and services sectors experiencing the largest declines, as commodity prices and broader equity markets fell following a flurry of weak economic data out of the U.S. and Europe.

WTI crude oil futures closed sharply lower down $2.38 or 2.50% to $92.84 hitting six-week lows, while Brent crude oil futures were lower by over 1.5% in today’s session. Data showed that the Federal Reserve Bank of Philadelphia’s manufacturing index fell much more than expected, while initial jobless claims came in higher than forecasted. In Europe, the euro zone PMI fell to 47.8 while analysts had expected it to ease up to 48.4. Adding to the downfall was a higher than expected build in U.S. crude oil inventories last week with the EIA’s weekly report showing that crude inventories rose by 4.1 million barrels, well above estimates of 1.8 million barrels.

Natural gas futures closed down $0.033 or 1.01% to $3.246 as a slightly bullish inventory report capped early losses on profit-taking seen after two straight days of gains. The weekly EIA inventory reports showed that working as in storage fell by 127 Bcf last week, while analysts were expecting a draw of 122 Bcf. This was the first time in four weeks that the draw came in higher than expectations. Citi Futures energy analyst Tim Evans said in a report, "The withdrawal last week was slightly larger than the consensus expectation, and while it was still less than the five-year average for the date, this should speed the market's transition toward looking forward to the cooler-than-normal temps and above-average storage withdrawals that should follow."

U.S. INTEGRATEDS

(Late Wednesday) Reuters - A Brazilian judge dropped criminal charges against Chevron Corp, Transocean Ltd and 17 of their employees related to a November 2011 offshore oil spill, the companies said on Wednesday. The criminal case, and a civil suit seeking as much as 40 billion reais ($20.4 billion) in damages, have cast a chill over Brazil's oil industry.

Reuters - Celtic Exploration Ltd said the Canadian government has approved its acquisition by Exxon Mobil Corp, paving the way for the $2.64 billion deal to be closed four months after it was first announced.

CANADIAN INTEGRATEDS

Reuters - Imperial Oil Ltd, majority owned by Exxon Mobil Corp named Exxon veteran Richard Kruger as chief executive.

U.S. E&PS

• AXAS reported 4Q’12 EPS of $(0.01) versus Thomson Reuters I/B/E/S estimate of $(0.01).
• CWEI reported 4Q’12 EPS of $0.14 versus Thomson Reuters I/B/E/S estimate of $0.38.
• CHK reported 4Q’12 EPS of $0.26 versus Thomson Reuters I/B/E/S estimate of $0.14.
• CXO reported 4Q’12 EPS of $0.96 versus Thomson Reuters I/B/E/S estimate of $1.01.
• DNR reported 4Q’12 EPS of $0.36 versus Thomson Reuters I/B/E/S estimate of $0.29.
• FST reported 4Q’12 EPS of $0.14 versus Thomson Reuters I/B/E/S estimate of $0.10.
• GDP reported 4Q’12 EPS of $(0.19) versus Thomson Reuters I/B/E/S estimate of $(0.08).
• LINE reported 4Q’12 EPS of $0.41 versus Thomson Reuters I/B/E/S estimate of $0.40.
• PVA reported 4Q’12 EPS of $(0.22) versus Thomson Reuters I/B/E/S estimate of $(0.15).
• PXP reported 4Q’12 EPS of $0.41 versus Thomson Reuters I/B/E/S estimate of $0.47.
• SFY reported 4Q’12 EPS of $0.26 versus Thomson Reuters I/B/E/S estimate of $0.29.
• SM reported 4Q’12 EPS of $0.45 versus Thomson Reuters I/B/E/S estimate of $0.23.
• SWN reported 4Q’12 EPS of $0.44 versus Thomson Reuters I/B/E/S estimate of $0.44.
• WMB reported 4Q’12 EPS of $0.25 versus Thomson Reuters I/B/E/S estimate of $0.25.
• XCO reported 4Q’12 EPS of $0.17 versus Thomson Reuters I/B/E/S estimate of $0.16.

(Late Wednesday) Press Release - Abraxas Petroleum Corporation is pleased to provide the following operational update; provide fourth quarter and year-end production and reserve data; and announce the commencement of a sale process for its non-operated Bakken and Three Forks assets.

Reuters - Oil and gas producer Linn Energy LLC will buy Berry Petroleum Co for $2.5 billion in stock, boosting its reserves of lucrative oil and raising total output by about a third. Berry shareholders will receive 1.25 shares of LinnCo LLC, a company set up by Linn to raise money for acquisitions and other purposes. LinnCo, which went public in October, only owns Linn units and has no assets or operations.

Press Release - Chesapeake Energy Corporation today announced financial and operational results for the 2012 fourth quarter and full year. For the 2012 fourth quarter, Chesapeake reported net income available to common stockholders of $257 million ($0.39 per fully diluted common share), ebitda of $1.299 billion (defined as net income (loss) before income taxes, interest expense and depreciation, depletion and amortization), operating cash flow of $1.146 billion (defined as cash flow from operating activities before changes in assets and liabilities) and production of 362 billion cubic feet of natural gas equivalent (bcfe).

Reuters - Chesapeake Energy Corp's board of directors expects to complete its search to replace Chief Executive Officer Aubrey McClendon by the time he leaves on April 1, a company official said on Thursday.

Press Release - Clayton Williams Energy, Inc today provided an update on its strategic plans for 2013 and the status of its Permian Basin and Eagle Ford Shale operations. As previously announced, the Company plans to take steps during 2013 to reduce debt and balance future drilling commitments with expected financial resources.

Press Release - Clayton Williams Energy, Inc today reported its financial results for the quarter and year ended December 31, 2012. Net income attributable to Company stockholders for fiscal 2012 was $35.1 million, or $2.89 per share, as compared to net income of $93.8 million, or $7.71 per share, for fiscal 2011. Cash flow from operations for 2012 was $189.2 million as compared to $280 million for 2011.

(Late Wednesday) Press Release - Concho Resources Inc. today reported financial and operating results for the three months and year ended December 31, 2012. Highlights for the year ended December 31, 2012 include: Production of 29.8 million barrels of oil equivalent (“MMBoe”) for 2012, a 26% increase over 201. Net income of $431.7 million, or $4.15 per diluted share, for 2012, as compared to net income of $548.1 million, or $5.28 per diluted share, in 2011. Adjusted net income1 (non-GAAP) of $388.6 million, or $3.74 per diluted share, for 2012, as compared to $430.1 million, or $4.15 per diluted share, for 2011. EBITDAX2 (non-GAAP) of $1,475.6 million for 2012, a 16% increase over 2011.

Press Release - Denbury Resources Inc. announced adjusted net income (a non-GAAP measure) (1) of $137 million for the fourth quarter of 2012, or $0.36 per diluted share. This compares to $127 million of adjusted net income, or $0.33 per diluted share for the third quarter of 2012(2) , and $175 million of adjusted net income, or $0.45 per diluted share, for the prior year fourth quarter. Fourth quarter of 2012 net income (the GAAP measure) was $115 million, or $0.30 per diluted share, on quarterly revenues of $603 million. This compares to net income of $85 million, or $0.22 per diluted share, on revenues of $595 million for the third quarter of 2012, and net income of $53 million, or $0.13 per diluted share, on revenues of $612 million for the prior year fourth quarter.

(Late Wednesday) Press Release - EXCO Resources, Inc. today announced fourth quarter and full year operating and financial results for 2012. Adjusted net income, a non-GAAP measure adjusting for non-cash gains and losses from derivative financial instruments (derivatives), non-cash ceiling test write-downs and items typically not included by securities analysts in published estimates, was $0.17 per diluted share for the fourth quarter 2012 compared to $0.09 per diluted share for the fourth quarter 2011. Adjusted net income for the full year 2012 was $0.38 per diluted share compared to $0.56 per diluted share for the full year 2011.

(Late Wednesday) Press Release - Forest Oil Corporation today announced that its Board of Directors has approved a 2013 capital budget and provided 2013 average net sales volumes and cost guidance. Total Capital Budget of $355 Million to $375 Million; Exploration and Development Capital of $315 Million to $325 Million 2013 Average Equivalent Net Sales Volumes Guidance of 220 MMcfe/d to 230 MMcfe/d (40% Liquids).

(Late Wednesday) Press Release - Goodrich Petroleum Corporation today announced financial and operating results for the year and fourth quarter ended December 31, 2012. Earnings before interest, taxes, DD&A, non-cash general and administrative expenses and exploration (" Adjusted EBITDAX") increased by 18% to $50.5 million in the quarter, compared to $42.7 million in the prior year period and $48.0 million in the prior quarter. Adjusted EBITDAX for the year increased by 9% to $184.0 million versus $169.2 million in the prior year period.

(Late Wednesday) Press Release - Kodiak Oil & Gas Corp., an oil and gas exploration and production company with primary assets in the Williston Basin of North Dakota, today announced preliminary unaudited operational and financial results for the fiscal year ended December 31, 2012. Kodiak has prepared the preliminary operational and financial information included in this news release based on the most current information available to management.

Press Release - LINN Energy, LLC and LinnCo, LLC announced financial and operating results for the fourth quarter and year-ended December 31, 2012, and outlook for 2013. Increased average daily production 88 percent to 800 MMcfe/d for the fourth quarter 2012, compared to 425 MMcfe/d for the fourth quarter 2011; and 82 percent to 671 MMcfe/d for the full-year 2012, compared to 369 MMcfe/d in 2011. Increased adjusted EBITDA 35 percent to $379 million for the fourth quarter 2012, compared to $281 million for the fourth quarter 2011; and 40 percent to $1.4 billion for the full-year 2012, compared to $998 million in 2011. Achieved a distribution coverage ratio of 1.07x for the fourth quarter 2012, and 1.14x for the full-year 2012. Delivered adjusted net income of $0.41 per unit for the fourth quarter 2012, and $1.44 per unit for the full-year 2012.

(Late Wednesday) Press Release - Penn Virginia Corporation reported financial results for the three and twelve months ended December 31, 2012 and provided initial 2013 guidance. Fourth quarter 2012 results, as compared to third quarter 2012 results where applicable, were as follows: As previously reported, production in the fourth quarter of 2012 was 1.4 million barrels of oil equivalent (MMBOE), or 15,444 barrels of oil equivalent (BOE) per day (BOEPD), compared to 1.4 MMBOE, or 15,245 BOEPD, pro forma to exclude production from assets sold.

Press Release - Plains Exploration & Production Company announces 2012 fourth-quarter and full-year financial and operating results. These results reflect the one month benefit of the Gulf of Mexico assets acquired on November 30, 2012. Adjusted net income attributable to common stockholders (a non-GAAP measure) was $54.8 million, or $0.41 per diluted share, compared to fourth-quarter 2011 adjusted net income attributable to common stockholders of $28.6 million, or $0.20 per diluted share. The adjusted fourth-quarter results include an increase in stock-based compensation expense which resulted in a $0.05 after-tax decrease in earnings per diluted share. Stock-based compensation increased due to the 30% increase in PXP stock price following the Freeport-McMoRan Copper & Gold Inc. merger announcement in December.

Jefferies cut QEP Resources to ‘Buy from ‘Hold.’

Press Release - TPG-Axon, beneficial owner of seven percent of the outstanding shares of SandRidge Energy, Inc. today announced that Glass, Lewis & Co. (Glass Lewis), a leading independent proxy voting and corporate governance advisory firm, has recommended SandRidge stockholders vote the GREEN consent card in support of TPG-Axon’s proposals.

Press Release - SM Energy Company reports financial results for the fourth quarter of 2012 and provides an update on the Company's operating activities. In addition, a new presentation for the fourth quarter earnings and operational update has been posted on the Company's website. Fourth quarter GAAP net loss of $67.1 million or $1.02 per diluted share; adjusted net income of $30.4 million, or $0.45 per diluted share.

(Late Wednesday) Press Release - Southwestern Energy Company today announced its financial and operating results for the fourth quarter and the year ended December 31, 2012. Calendar year 2012 highlights include: Gas and oil production of 565 Bcfe, up 13% over 2011. Adjusted net income of $485.2 million, which excludes non-cash ceiling test impairments of natural gas and oil properties and unrealized net gains on derivative contracts (a non-GAAP measure reconciled below). Net cash provided by operating activities before changes in operating assets and liabilities of approximately $1.6 billion (a non-GAAP measure reconciled below).

Press Release - Swift Energy Company announced today earnings from continuing operations of $11.2 million for the fourth quarter of 2012, or $0.26 per diluted share, a 46% decrease when compared to fourth quarter 2011 earnings from continuing operations of $20.7 million, or $0.48 per diluted share, and an increase of 259% when compared to earnings of $3.1 million in the third quarter of 2012.

(Late Wednesday) Press Release - Williams announced 2012 unaudited net income attributable to Williams of $859 million, or $1.37 per share on a diluted basis, compared with net income of $376 million, or $0.63 per share on a diluted basis for 2011. The increase in net income for 2012 was primarily due to the absence of a $427 million loss from discontinued operations in 2011. The significant loss from discontinued operations in 2011 was primarily due to significant non-cash property impairment and other charges associated with Williams’ former exploration and production business. The 2012 net income also benefited from $136 million of income from discontinued operations, primarily due to gains following the sale of certain of our former Venezuela operations.

CANADIAN E&PS

Reuters - Celtic Exploration Ltd said the Canadian government has approved its acquisition by Exxon Mobil Corp, paving the way for the $2.64 billion deal to be closed four months after it was first announced.

Press Release - Crew Energy Inc. of Calgary, Alberta is pleased to announce the results of its independent reserve evaluation for the year ended December 31, 2012 as prepared by Sproule Associates Ltd. ("Sproule"). Achieved all-in finding, development and acquisition ("FD&A") costs of $8.17 per boe on proved plus probable reserves, including changes in future development costs, resulting in a recycle ratio of 2.7 times.

(Late Wednesday) Press Release - Pacific Rubiales Energy Corp. announced today the discovery of natural gas and condensate in the Manamo-1X exploration well drilled in the Guama Block in the Lower Magdalena basin, onshore northern Colombia. The Company has 100% working interest in the block and is the operator.

Talisman Energy was raised to ‘Outperform’ from ‘Neutral.’

OIL SERVICES

• HLX reported 4Q’12 EPS of $0.10 versus Thomson Reuters I/B/E/S estimate of $0.36.

(Late Wednesday) Press Release - Halliburton announced that its board of directors has approved a 39 percent increase in its quarterly dividend. The 2013 first quarter dividend of twelve and one-half cents ($0.125) a share on the company’s common stock is payable on March 27, 2013, to shareholders of record at the close of business on March 6, 2013.

(Late Wednesday) Press Release - Helix Energy Solutions Group, Inc. reported a net loss of $171.6 million, or $(1.64) per diluted share, for the fourth quarter of 2012 compared with net income of $16.8 million, or $0.16 per diluted share, for the same period in 2011, and net income of $14.9 million, or $0.14 per diluted share, in the third quarter of 2012. Net loss for the year ended December 31, 2012 was $46.3 million, or $(0.44) per diluted share, compared with net income of $129.9 million, or $1.23 per diluted share, for the year ended December 31, 2011.

Press Release - National Oilwell Varco, Inc. today announced that its Board of Directors declared the regular quarterly cash dividend of $0.13 per share of common stock, payable on March 29, 2013 to each stockholder of record on March 15, 2013.

Press Release - Poseidon Concepts announced that the Company is currently in default under its loan agreement dated June 29, 2012. The Company is in discussions with its syndicate of lenders regarding short and long term support which is subject to negotiation, credit approval and revised loan terms, which are yet to be determined.

(Late Wednesday) Press Release - Superior Energy Services, Inc. announced today that it has realigned its segment reporting. As a result, beginning with the 2012 fourth quarter and full-year results (scheduled to be released Tuesday, February 26, 2013), the Company will report business segment information for four reportable segments as follows: Drilling Products and Services, Onshore Completion and Workover Services, Production Services and Subsea and Technical Solutions.

DRILLERS

• ESV reported 4Q’12 EPS of $1.32 versus Thomson Reuters I/B/E/S estimate of $1.29.
• PKD reported 4Q’12 EPS of $(0.03) versus Thomson Reuters I/B/E/S estimate of $0.03.

(Late Wednesday) Press Release - Ensco plc reported diluted earnings per share from continuing operations of $1.04 in fourth quarter 2012, compared to $0.97 per share in fourth quarter 2011. Discontinued operations primarily related to rigs and other assets no longer on the Company’s balance sheet resulted in a loss of $0.10 per share in fourth quarter 2012. Earnings from discontinued operations in fourth quarter 2011 were $0.02 per share. Diluted earnings per share were $0.94 in fourth quarter 2012, compared to $0.99 in fourth quarter 2011.

Reuters - Ensco plc owner of the world's second-largest offshore drilling fleet, expects contract drilling expenses to rise by 19 percent this year as a pick-up in drilling activity leads to more spending to get rigs ready to work.

Press Release - Parker Drilling Company, an international drilling contractor, drilling services and rental tools provider, today reported results for the quarter and year-to-date periods ended December 31, 2012. The Company's results for the 2012 fourth quarter included a net loss of $20.1 million or $0.17 per diluted share on revenues of $157.2 million. Results for the period included $16.3 million, pre-tax, of non-routine expenses primarily related to the previously disclosed proposed settlement of U.S. Department of Justice and Securities and Exchange Commission investigations. Excluding the effects of non-routine items, the Company reported a net loss of $4.0 million or $0.03 per diluted share compared with similarly adjusted 2012 third quarter net income of $11.4 million or $0.10 per diluted share on revenues of $165.3 million, and 2011 fourth quarter net income of $20.2 million or $0.17 per diluted share on revenues of $181.1 million.

(Late Wednesday) Reuters - A Brazilian judge dropped criminal charges against Chevron Corp, Transocean Ltd and 17 of their employees related to a November 2011 offshore oil spill, the companies said on Wednesday. The criminal case, and a civil suit seeking as much as 40 billion reais ($20.4 billion) in damages, have cast a chill over Brazil's oil industry.

REFINERS

(Late Tuesday) Press Release - HollyFrontier Corporation today that its Board of Directors approved a 50 percent increase in the Company’s regular quarterly cash dividend to $0.30 per share from the current rate of $0.20 per share. This is the fifth increase in the regular dividend since our merger in July of 2011, representing a total increase of 300 percent. The regular dividend will be paid on April 2, 2013 to holders of record of common stock on March 15, 2013.

Reuters - Tesoro Corp's 103,800 barrel per day (bpd) Los Angeles-area refinery in Wilmington, California, was operating normally on Thursday following completion of a planned overhaul, a company spokeswoman said.

MLPS

Barclays upgraded Cheniere Energy to ‘Overweight’ from ‘Equal Weight’ and lowered Cheniere Energy Partners to ‘Equal Weight’ from ‘Overweight.’

(Late Tuesday) Press Release - Energy Transfer Equity, L.P. today reported financial results for the fourth quarter and year ended December 31, 2012. Distributable Cash Flow, as adjusted, for the year ended December 31, 2012 was $668 million as compared to $511 million for the year ended December 31, 2011, an increase of $157 million. ETE's net income attributable to partners was $304 million for the year ended December 31, 2012, as compared to $310 million the year ended December 31, 2011.

Press Release - Holly Energy Partners, L.P. today reported financial results for the fourth quarter of 2012. For the quarter, distributable cash flow was $41.6 million, up $9.2 million, or 28.6% compared to the fourth quarter of 2011. Based on these results, HEP announced its 33rd consecutive distribution increase on January 24, 2013, raising the quarterly distribution from $0.4625 to $0.47 per unit, representing a 6% increase over the distribution for the fourth quarter of 2011. On January 16, 2013, HEP completed its two-for-one unit split. All per unit amounts in this earnings release have been adjusted to reflect the unit split.

Reuters - Sunoco Logistics Partners LP would be "very, very" active in the mergers and acquisitions market if assets for sale fit with its growth plans and made sense financially, Chief Executive Michael Hennigan told analysts on Thursday.