Oil and gas stocks pushed further ahead Monday, extending last week's gains on surging oil prices and $6.5 billion worth of natural gas asset sales by Virginia-based energy provider Dominion Resources -- the biggest of several gas deals driving the market.
By midday, the Amex Oil Index (XOI : 1,406.66, +18.58, +1.3% ) was up 1.4%, moving for the first time above 1,400 points. The sector was getting some support from the oil trading floor in New York, where crude oil for July delivery was up $1.19 at $66.27 a barrel. See Futures Movers.
Sector gains on firmer crude, $6.5 billion gas deals
Top performers in the oil group were refiner Sunoco Inc. (SUN :84.17, +3.06, +3.8% ) , up 4% at $84.37, and Occidental Petroleum Corp. (OXY :58.38, +2.05, +3.6% ) , up 2.7% at 57.82.
The Amex Natural Gas Index (XNG : 527.43, +10.95, +2.1% ) was up 2.1%, led by XTO Energy's (XTO : 61.61, +3.24, +5.6% ) 5.9% jump on news it has bought some of Dominion Resources' (D : 87.87, +0.23, +0.3% ) gas assets for $2.5 billion. Most of the properties, estimated to hold about 1 trillion cubic feet of gas reserves, are in the Rocky Mountains and South Texas.
XTO also said it is considering setting up a $500 million master limited partnership in association with the deal, a move analysts said would allow XTO to finance the deal through the partnership and cash already on the balance sheet, avoiding the need to issue new equity.
Loews Corp. (LTR :52.35, +1.33, +2.6% ) , a conglomerate that also has a hand in the natural gas business, is buying $4 billion worth of Dominion gas assets, primarily in the Permian Basin of West Texas as well as operations in Michigan and Alabama. The sale to Lowes includes about 2.5 trillion cubic feet of gas reserves.
With these two latest transactions, Dominion has found buyers for about 85% of the gas assets plans to divest as it exits the gas exploration and production business to focus instead on its core power generation, gas storage and gas transportation businesses.
Dominion said it expects to close both deals in August. See full story.
Shares of Anadarko Petroleum Corp. (APC : 51.95, +2.30, +4.6% ) were up as much as 3.9% after announcing it had struck a deal to sell its natural gas gathering and processing systems to Atlas Pipeline Partners L.P. (APL :55.05, +3.33, +6.4% ) for $1.85 billion.
Energy Partners Ltd. (EPL :17.67, +0.40, +2.3% ) was also up sharply -- 3% -- on yet another asset sale in the group. The company announced it has agreed to sell nearly all of its onshore South Louisiana assets to a privately-held company for $71.7 million. Energy Partners said the deal, expected to close in June, represents about a third of the reserves the company announced it plans to divest.
The Philadelphia Oil Service Index ($OSX :58.40, +2.77, +5.0% ) , up 4.4% at $58.09 a share - yet another all-time high.
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