NEW YORK (MarketWatch) - Energy stocks rose early Wednesday on a set of surprisingly bullish weekly U.S. oil supply numbers and ahead of an announcement on interest rates from the Federal Open Market Committee.
The NYSE Arca Oil Index (XOI 1,065, +13.83, +1.32%) rose 1.4% to 1,066. The NYSE Arca Natural Gas Index (XNG 533.77, +7.60, +1.44%) rose 1.5% to 534. The Philadelphia Oil Service Index (OSX 194.83, +3.90, +2.04%) rose 2.2% to 195.
Gains across the sector accelerated on a 3% jump in crude prices after the Energy Information Administration reported crude inventories fell 3.7 million barrels in the week ended Dec. 11. Energy analysts polled by Platts Monday had been expecting the report to show a 2-million-barrel crude inventory drawdown in crude supplies.
Among energy stocks in the spotlight, Chevron (CVX 78.07, +0.70, +0.91%) rose 0.9% to $78.08. The energy giant said it inked a deal to sell liquid natural gas from its Gorgon facility in Australia to Japan's Chubu Electric Power Co. Chevron will sell 1.44 million metric tons per year of LNG for 25 years. As part of the deal, Chubu Electric will purchase a 0.417% equity stake in Gorgon.
Cobalt International Energy Inc. (CIE 13.30, -0.20, -1.48%) shares briefly fell as low as $13.10 in their stock market debut on Wednesday, below the stock's offering price of $13.50 a share. The Houston-based oil production firm with leases in the Gulf of Mexico, offshore Angola and offshore Gabon priced 63 million shares at $13.50 a share, raising $850 million. The initial public offering priced below its $15 to $17 estimated price range.
Range Resources Corp. (RRC 49.09, +1.75, +3.70%) said Wednesday its net production rate in the Marcellus Shale region of Pennsylvania reached 100 million cubic feet equivalent (Mmcfe). The Fort Worth, Texas energy company said the figure touches the high end of its production target of 80 to 100 Mmcfe net per day. Range's Marcellus Shale production target exit rate for 2010 is 180 to 200 Mmcfe net per day. Range Resources said it now expects a 2011 exit rate from the Marcellus Shale of 360 to 400 Mmcfe net per day.
Range entered 2009 running four rigs in the Marcellus Shale play and will end the year with eleven rigs, including both horizontal and vertical rigs.
Shares of Range Resources rose 3.8% to $49.13.
Total SA (TOT 63.83, +0.98, +1.56%) said Wednesday it struck oil in the southern portion of its license in deep ocean waters off the coast of Nigeria. The Owowo South B-1 well was drilled in waters of 670 meters to a measured depth of 2,227 meters. Total said the well yielded several oil bearing reservoirs with a fluid that qualified as light oil. Total operates the area and holds an 18% interest. Chevron (CVX 78.07, +0.70, +0.91%) owns 27% and Exxon Mobil (XOM 69.38, +0.21, +0.30%) owns 27% Nexen Petroleum (NXY 23.14, +0.51, +2.25%) holds an 18% interest and Nigerian Petroleum Development Co. Ltd. holds a 10% interest.
Shares of Total jumped 1.6% to $63.83 on Wednesday.
Precision Drilling Trust (PDS 7.00, +0.10, +1.45%) said it plans to spend $75 million on capital expenditures in 2010. The driller will decommission 38 rigs including 26 in Canada and 12 in the U.S. Precision Drilling will book a non-cash, pre-tax charge to earnings in the range of $80 to $90 million for the fourth quarter of 2009. After this decommissioning, Precision's rig fleet will stand at 352 rigs.
Precision also said it made a $75 million payment to reduce debt in the fourth quarter, leading to a non-cash, pre-tax fourth-quarter charge of $8 million for amortization of deferred financing costs.
