Drawer of a tailor: Talking about of Strategic Industries ...: eNergy STOCKS: Chesapeake output, asset plans tickle investors

Oil stocks join market sell-off. A 150-point sell-off by the Dow Jones industrials set up a weak session for energy stocks Wednesday, with underlying commodities providing little support to stop the slide.

The Amex Oil Index (XOI: 1,384.02, -7.20, -0.5%) fell 0.5% at 1,384 points as the October crude-oil futures rose 8 cents to $75.16 a barrel in New York, reversing their run in the previous session to a one-month high.

U.S.-traded shares of Spain's Repsol SA (REP:35.34, -0.52, -1.5%) were leading percentage decliners in the group, down 1.5% at $35.33.

The Amex Natural Gas Index (XNG:488.69, -0.37, -0.1%) was pinned to a narrow range, last down 0.1% at 488 points, gathering support relative to the rest of the sector from a 1.6% rise in natural-gas futures.

Oil stocks join market sell-off. A 150-point sell-off by the Dow Jones industrials set up a weak session for energy stocks Wednesday, with underlying commodities providing little support to stop the slide. The Amex Oil Index (XOI: 1,384.02, -7.20, -0.5%) fell 0.5% at 1,384 points as the October crude-oil futures rose 8 cents to $75.16 a barrel in New York, reversing their run in the previous session to a one-month high. U.S.-traded shares of Spain's Repsol SA (REP:35.34, -0.52, -1.5%) were leading percentage decliners in the group, down 1.5% at $35.33. The Amex Natural Gas Index (XNG:488.69, -0.37, -0.1%) was pinned to a narrow range, last down 0.1% at 488 points, gathering support relative to the rest of the sector from a 1.6% rise in natural-gas futures. With crude prices holding firmly above $65 in recent weeks, Morgan Stanley raised its long-term price estimates for benchmark West Texas Intermediate to $65 a barrel from $55, and raised its 2007 and 2008 estimates to $65 a barrel from $60.

With crude prices holding firmly above $65 in recent weeks, Morgan Stanley raised its long-term price estimates for benchmark West Texas Intermediate to $65 a barrel from $55, and raised its 2007 and 2008 estimates to $65 a barrel from $60.

"We believe that while the rate of change in pricing [around 20% in the last five years] is likely to slow, realizations should remain at high levels," it said.

Energy companies look undervalued both in absolute terms and relative to wider equity markets, the broker added, lifting share price targets on several companies.

Shares of giant independent gas producer Chesapeake Energy Corp. (CHK:33.91, +1.09, +3.3%) were up 3.3% at $33.90 following the company's announcement Tuesday it plans to sell off $550 million worth of production assets by the end of the year, the first in several asset sales over the next two years it hopes will bring in about $2 billion. Chesapeake said it also plans to set up a private MLP to own a non-operating majority interest in its midstream natural gas assets, a deal it values at more than $1 billion.

Combined, the company said the moves would allow it to monetize about $3.5 billion of its assets, bringing its capital expenditures much closer in line with cash flow.

Chesapeake also decided to trim near-term output by about 6% and curb some drilling to reflect lower gas prices. It nevertheless stuck by 2007 and 2008 growth forecasts.

Meanwhile, the Philadelphia Oil Service Index ($OSX:281.28, -0.23, -0.1%) rose fractionally as investors locked in profit from its 2.7% surge on Tuesday and fretted about whether Chesapeake's move to row back on drilling might be matched by other producers.