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October 19, 2011

Energy Data Highlights

Crude oil futures price 10/17/2011: $86.38/bbl up$0.97 from week earlier up$5.13 from year earlier Natural gas futures price 10/17/2011: $3.688/mmBtu up$0.147 from week earlier up$0.148 from year earlier Retail gasoline price 10/17/2011: $3.476/gal up$0.059 from week earlier up$0.642 from year earlier Retail diesel price 10/17/2011: $3.801/gal up$0.080 from week earlier up$0.728 from year earlier Weekly coal production 10/8/2011: 21.602 million tons down0.309 million tons from week earlier up0.137 million tons from year earlier http://www.eia.gov/

Natural Gas/ Power News

EIA Storage Release 10/13/11 (Actual): +112 Bcf Previous Week: +97 Bcf -1.6% Change from 1 Year Ago +2.0% Change 5-year Average Heating Costs Look to Cool High gasoline prices have tugged at household budgets this year, but relief from energy costs might arrive, surprisingly, when temperatures start to tumble this winter. Natural gas, used to heat nearly half of U.S. homes, is expected to hit some of the lowest winter prices in years as rising production and a mild autumn send U.S. stockpiles of the fuel to record levels. Natural gas, used to heat nearly

half of U.S. homes, is expected to hit some of the lowest winter prices in years as rising production and a mild autumn send U.S. stockpiles of the fuel to record levels. Normally, natural-gas prices surge beginning in December, as cold blankets the U.S. and residents heat their homes. But the supply glut is pushing down futures prices, and utilities have responded by locking in low prices they can pass on to consumers. http://online.wsj.com/article/SB1000142405297020365880457663933347622854 2.html?mod=WSJ_Commodities_LEFTTopNews EU regulatory agency adopts gas balancing framework guidelines The EU's energy regulatory agency ACER has adopted framework guidelines for gas balancing, the agency said Wednesday. Under the EU's third package of energy market reforms, which came into force on March 3, ACER is to prepare framework guidelines on a number of issues that can then be translated into network codes by the new transmission system operator bodies for electricity (Entso-e) and gas (Entsog). The guidelines set out an obligation on gas transmission system operators to buy and sell so-called "flexible" gas so that they can keep their gas systems operating within safe limits. But they stress that TSOs should buy flexible gas and related gas balancing services in a way that helps minimize the cost of balancing the system by accepting lowest offers and highest bids. They should also do this on wholesale markets in a transparent way, the guidelines state. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/8480760

Green/ Alternative Energy News

Officials see increased accountability for US-funded clean-energy projects Declining government budgets and a flagging global economy will lead federal and state agencies to demand clearer results and more accountability from cleanenergy developers that receive government funding, officials said Tuesday. "The days of getting some government money and maybe hitting your milestones and maybe not, and maybe getting some more time and limping along, and sort of being successful and maybe not, or maybe you hit the jackpot, those days are over," said Sarah Bittleman, a senior adviser to US Agriculture Secretary Tom Vilsack. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/6590755

Crude Oil News

OPEC Daily Basket Price 10/17/2011- $107.94

(10/17/2011- $110.13)

Oil Trades Near Highest Price in a Month After Goldman Cites Upside Risk Oil traded near the highest price in more than a month after Goldman Sachs Group Inc. predicted upside potential, amid signs U.S. crude stockpiles are increasing less rapidly than previously forecast. Futures gained as much as 0.6 percent, extending yesterdays 2.3 percent gain. Energy Department data today may show that supplies climbed 2 million barrels. Yesterdays report by the industry-funded American Petroleum Institute indicated they dropped for a third week. Goldman Sachs said an improving economic outlook in Europe and declining crude supplies may present a real upside risk to Brent prices. The market certainly drew some support from pronounced crude and product draws in the API data, as well as more optimism creeping back in about the euro-zone bailout, said Andrey Kryuchenkov, an analyst at VTB Capital in London, who predicts prices will end the year little changed from current levels. Libya will come back on line, but not especially fast, and geopolitical risks surrounding Iran will give support. http://www.bloomberg.com/news/2011-10-19/oil-trades-near-highest-in-a-monthas-goldman-sees-upside-risk-.html

Oil Moves Cautiously Higher With Europe Stocks U.S. crude oil prices edged higher Wednesday after losing ground during Asia market hours, appearing to take their cue from a higher move among European stocks. http://www.cnbc.com/id/44953802 European discord over Greek debt undermines markets The price of crude oil topped $88/bbl in intraday trading Oct. 17 in New York but closed at a small loss for the day as commodities and equities retreated after French and German officials clashed over a second rescue package for Greece. Germany wants banks to accept cuts of 50-60% on their Greek bond holdings to reduce Greeces overall debt load that otherwise could reach 180% of the countrys economic output next year. German officials say a solution must be found to allow Greece to repay its debts over the long run. http://www.ogj.com/articles/2011/10/market-watch-european-discord-over-greekdebt-undermines-markets.html Oil Giants in $100 Billion Iraq Investment Exxon Mobil Corp., BP PLC and Italy's Eni SpA will spend around $100 billion to upgrade three oilfields in southern Iraq, the top energy adviser to the Iraqi Prime Minister said Wednesday. Thamer Ghadhban said some $50 billion would be spent to upgrade the supergiant West Qurna Phase 1 oilfield which is being developed by Exxon Mobil. The remaining $50 billion will be spent by BP and Eni to upgrade the Rumaila and Zubair oil fields respectively, he said. http://online.wsj.com/article/SB1000142405297020448530457664067415312577 8.html?mod=WSJ_hp_LEFTWhatsNewsCollection

Anadarko may dodge a ratings bullet with BP settlement One could probably hear the sigh of relief from outside Anadarko Petroleums headquarters in The Woodlands on Monday when the company said it would pay BP $4 billion to settle its liabilities around the clean-up following the Deepwater Horizon accident. Anadarkos 25 percent stake in the well could have stuck the booming E&P with a hefty piece of the clean-up bill and exposure to even more payments in the future. The deal puts a ceiling on the largest piece of the bill, but still leaves Andarko exposed to some future civil, criminal and administrative fines that could be as much as $1.85 billion. The settlement is good news for Anadarkos credit rating, which Moodys said it will review for an upgrade. http://fuelfix.com/blog/2011/10/18/anadarko-may-dodge-a-ratings-bullet-with-bpsettlement/ Mexican Presidential Hopeful Wants Private Sector Involved In Pemex Enrique Pena Nieto, a candidate for Mexico's presidency, wants to open up the country's state-owned oil sector to private interests, the Financial Times reported Tuesday. The state-owned oil firm Petroleos Mexicanos, or Pemex, "can achieve more, grow more and do more through alliances with the private sector," Pena Nieto told the newspaper. He said that Mexico could follow the example of Brazil, whose Petroleo Brasileiro (PBR, PETR4.BR) held a minority-share issue in 2010. http://www.foxbusiness.com/markets/2011/10/18/mexican-presidential-hopefulwants-private-sector-involved-in-pemex-ft/

Brazils Odebrecht plans oil expansion The oil and gas arm of Odebrecht, one of Brazils biggest multinationals, is hoping to treble revenues over the next three years as it seeks to tap the potential of the Latin American countrys vast offshore oilfields. The ambitious plans from Odebrecht Oil and Gas, which is part-owned by Temasek, Singapores sovereign wealth fund, follow the companys sale of a separate stake to JPMorgans flagship Brazilian hedge fund and private equity group, Gvea Investments. We want to create the largest provider of services to Petrobras and we are making investments with that in mind, said Roberto Ramos, chief executive. http://www.ft.com/intl/cms/s/0/b62f0cc0-f980-11e0-bf8f00144feab49a.html#axzz1b8IkMBRu IEA sees less potential for Q4 oil price spike than earlier The International Energy Agency now sees less potential for oil prices to spike in the fourth quarter than it did in June, David Fyfe, head of the agency's oil industry and markets division, said Wednesday. Fyfe told journalists in Paris that the IEA had been scaling back its economic growth forecasts, although he said the consensus view among macro-economic forecasters was for slowdown rather than a double-dip recession. Nevertheless, he said, "we don't think that this is a market [in which] producers should be looking to scale back supply" and that there was "an ample market for OPEC production at or above current levels" of around 30.1 million b/d.

http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8480850

Recent Rig Counts Change from Prior Count +11 -10 -9 Date of Prior Count 7 Oct 11 7 Oct 11 August 2011 Change Date of from Last Last Year's Year Count +353 +89 +54 15 Oct 10 15 Oct 10 September 2010

Area U.S. Canada

Last Count 14 Oct 11 14 Oct 11

Cou nt 2023 512

Internatio Septemb 1174 nal er 2011

http://investor.shareholder.com/bhi/rig_counts/rc_index.cfm

Weather

6 to 10 Day Outlooks Temperature

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