By Steve Gelsi
Losses mounted in the U.S. energy sector Monday, retreating on
fresh prospects for a weak economy on the heels of the latest
bailout effort for American International Group Inc. (AIG), while
the Dow Jones Industrial Average dropped to depths not seen since
late 1997.
The Amex Oil Index (XOI) dropped 5.8% to 778, within striking
distance of its 52-week low of 745 last Oct. 10.
Sector leader ExxonMobil (XOM) fell 2.2% to $66.40, while fellow
integrated oil giant Chevron (CVX) gave up 4.3% to $58.07. Both
stocks are Dow industrials components.
The Amex Natural Gas Index (XNG) retreated 7.9% to 303, within a
whisker of its 52-week low of 301 on Oct. 10. Shares of index
component Williams Cos. (WMB) dropped 9% to $10.32.
The Philadelphia Oil Service Index (OSXX) surrendered 8% to 110,
as component National Oilwell Varco (NOV) dropped 10% to
$24.18.
In energy trading, crude-oil prices retreated $4.06 to stand at
$40.70 a barrel.
"Oil prices remain under pressure, as markets are once again in
the grip of recession concerns," said analysts at Action Economics.
Strength in the U.S. dollar also pressured energy prices, they
said.
Among energy stocks in the Monday spotlight, Chesapeake Energy
Corp. (CHK) announced the latest in a series of production
cutbacks. Shares fell 10% to $14.03.
The company said it'll curtail about 240 million cubic feet of
natural gas equivalent per day, or about 7% of its gross natural
gas and oil production due to low wellhead prices. Looking ahead,
Chesapeake forecasts that production cuts in the gas business will
allow markets to "regain better supply/demand balance by the end of
2009, if not sooner."
Chesapeake also granted Plains Exploration (PXP) a one-time
option to avoid paying the last $800 million of Plains' $1.65
billion drilling carry obligation to Chesapeake. Shares of Plains
Exploration also felt selling pressure, down 10% to $17.20.
ConocoPhillips (COP) fell 5% to $35.55. On Saturday, billionaire
investor Warren Buffett said he made a mistake by investing in the
oil giant during the height of the energy bubble last year.
"I in no way anticipated the dramatic fall in energy prices that
occurred in the last half of the year," he said. "I still believe
the odds are good that oil sells far higher in the future than the
current $40-to-$50 price. But so far I have been dead wrong. Even
if prices should rise, moreover, the terrible timing of my purchase
has cost Berkshire several billion dollars."
Also on the move, shares of Enterprise GP Holdings (EPE) fell
3.2% to $18.95.
The limited partnership, which owns Enterprise Products &
Partners, Teppco Partners and Energy Transfer Equity, said
fourth-quarter net income rose to $26.1 million, or 21 cents a
unit, from the prior year's $21.8 million, or 18 cents a unit,
while total revenue fell to $5.9 billion from $8.5 billion.
Analysts had been looking for earnings of 38 cents a share,
according to a survey by FactSet Research.
Shares of Regency Energy Partners (RGNC) fell 25 cents to
$10.02.
Fourth-quarter net income rose to $32 million from $5 million,
the limited partnership said. Looking ahead to 2009, Regency Energy
plans to maintain its current distribution of 44.5 cents per
unit.
-Steve Gelsi; 415-439-6400; AskNewswires@dowjones.com
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