Wednesday, Jan 28, 2009


 
   By Steve Gelsi

Most energy stocks caught a lift from the broad market on Wednesday ahead of key weekly petroleum-supply inventory data, as investors sifted through results from ConocoPhillips (COP), Baker Hughes Inc. (BHI) and Hess Corp. (HES).

Meanwhile, UBS downgraded sector leader Exxon Mobil (XOM) to neutral from buy, with the analyst saying the oil giant's 21% outperformance to peers seems overdone. Shares of the oil giant fell $1.34, or 1.7%, to $77.58.

"Investors have flocked to Exxon Mobil since mid-2008 as an energy safe haven as oil prices plummeted, and then hid in its cash-rich balance sheet as liquidity concerns mounted last fall. But with liquidity improving and our view that oil prices have put in the lows, we expect investors to begin to step out on the energy equity risk curve making (Exxon) a less attractive 'relative' investment," the brokerage said.

Analysts expect weekly inventory levels from the Energy Information Administration to rise by 2.8 million barrels for crude oil. A rise of 1.8 million barrels for gasoline is also expected, according to research firm Tudor Pickering Holt.

Crude prices rebounded slightly, recently gaining 24 cents to $41.82.

Against this backdrop, the Amex Oil Index rose by nearly 1 point to 963, boosted by a 1% rise in shares of oil major BP PLS (BP) to $43.47.

The Amex Natural Gas Index rose 1.1% to 385. The Philadelphia Oil Service Index jumped 2.8% to 133.

Among energy stocks in the spotlight, oil major ConocoPhillips rose nearly 1% to $49.89. The oil giant's adjusted earnings of $1.28 a share fell one cent short of the target of $1.29 a share, and the company said it'll boost production in the first quarter over the year-ago period.

Drill bit making giant Baker Hughes managed to hammer out a lift of 8% in fourth-quarter profit, but tempered its outlook for the coming year. Shares rose 7.5% to $35.15.

Hess Corp. swung to a loss on a slowdown in its exploration and production business, after the energy company's production fell partly on hurricane activity in the third quarter. Shares fell $1.66, or 2.8%, to $57.45.

Also in the spotlight, U.S.-listed shares of Total SA (TOT) rose 2.4% to $52.26 after the French integrated-oil giant bid C$617 million in cash for Canadian oil sands producer UTS Energy Corp. (UTS.T). Late Tuesday, Total bid a premium of 57% above UTS' closing price of 83 cents a share on the Toronto Stock Exchange.

Chesapeake Energy Corp. (CHK) said fourth-quarter daily production averaged 2.32 billion cubic feet equivalent, or 4% over the 2.2 billion cubic feet equivalent produced per day in the year-ago period. Based on lower commodity prices at December 31, the company anticipates reporting an after-tax, non-cash impairment charge to natural gas and oil properties of approximately $1.7 billion. Chesapeake shares rose 3.3% to $16.17.

-Steve Gelsi; 415-439-6400; AskNewswires@dowjones.com

(END) Dow Jones Newswires

January 28, 2009 10:16 ET (15:16 GMT)