Sector Update: Energy


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Energy stocks are lower today with the NYSE Energy Sector Index sliding 0.8% and the S&P Energy Index also falling about 0.8%. Crude oil for September has reversed course since this morning, now trading down 66 cents at $92.21 a barrel. Brent crude futures earlier topped $114 a barrel, its highest level in over three months, while NYMEX crude crested above $94 a barrel.

In company news, Tesoro ( TSO ) shares are up 10% and have hit new year highs after the oil refining and marketing firm agreed to acquire BP plc's ( BP ) Arco refinery business in southern California for $1.18 billion, plus the value of inventory at the time of closing - currently valued at around $1.3 billion. The deal is subject to regulatory approval and is expected to close before mid-2013.

TSO expects to finance the deal through a combination of cash and debt and is projecting EPS should rise by 24% during each of the first two years after the deal closes. Proceeds from the sale of the associated logistics assets to Tesoro Logistics LP ( TLLP ) should generate another $1 billion in cash proceeds within the first year. TLLP units are up about 4% at $41.16 each.

Late Friday, BP plc ( BP ) announced plans to sell two gas processing plants in Texas to Eagle Rock Energy Partners ( EROC ) for $227.5 million in cash. The plants have a combined capacity of 220 million cubic feet of gas per day and a gathering system of about 2,500 miles of pipelines.

EROC today filed registration documents to sell 8 million shares of common equity units, which at current prices would generate nearly $70 million in gross proceeds. EROC share are down about 1.5% and closer to a year low $8.25 apiece. BP is down 0.6% at $42.14 a share.

In other sector news,

(-) MPO, (-1.9%, near year lows) Paying $650 million to buy oil acreage in the Mississippian Lime region of Oklahoma and Kansas from Riverstone Holdings LLC (RSV.V) Deal includes $325 million in cash and $325 million in preferred MPO stock.

(-) SOQ, (-43%, hits year lows) Adds "Going Concern" paragraph to quarterly report because of difficulty obtaining suitable financing for its Joint Oil Block project in north Africa. Said Q2 daily production fell 14% to 2,356 barrels of oil equivalent.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright (C) 2014 All rights reserved. Unauthorized reproduction is strictly prohibited.

This article appears in: Investing Commodities
Referenced Stocks: BP , EROC , TLLP , TSO

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