Energy stocks up, Chesapeake tops list on CEO exit - MarketWatch

SAN FRANCISCO (MarketWatch) — Energy stocks on Wednesday extended gains to a third session, with positive earnings pushing shares higher and Chesapeake Energy Corp. leading the way after its embattled chief executive announced his retirement.

Shares of Chesapeake   rose 8.3%, having rallied more than 10% in early trading. The natural gas producer announced late Tuesday Chief Executive Officer Aubrey McClendon has agreed to retire on April 1.

McClendon, a co-founder of the Oklahoma City, Okla. company, stepped down as chairman last year amid allegations of conflict of interest. An investigation cleared him but “the time has come for the company to select a new leader,” Chesapeake said.

Refiner Phillips 66  also topped gainers on Wednesday, on the heels of a fourth-quarter profit decline. The company, however, raised its annual dividend by 25% and added a share buyback.

Phillips 66 reported a profit of $708 million, or $1.11 a share, down from $2.01 billion, or $3.17 a share, a year earlier. Excluding write-downs and other items, earnings were up at $2.06 from 60 cents. Revenue decreased 11% to $44.67 billion on fewer asset-sale gains. Analysts projected per-share earnings around $1.68.

Shares of Pioneer Natural Resources Co.  gained 2%.

The company has agreed to sell 40% of its stake in the Wolfcamp shale field in Texas’ Permian Basin to Chinese conglomerate Sinochem Group for $1.7 billion, a move Pioneer said will accelerate development in the area.

Marathon Petroleum Corp.  shares rose 0.9% after the company posted fourth-quarter results that beat analyst expectations. The company reported a profit of $755 million, or $2.24 a share, compared with a loss of $75 million, or 21 cents a share, a year earlier.

Excluding items such as pension settlement expenses, per-share earnings were $2.26. Analysts expected per-share results of $2.10.

Marathon Petroleum’s sales and revenue were up 6.5% year over year to $20.68 billion.

Among the decliners, shares of Hess Corp.  were down 0.6%, after a two-day rally on Elliott Management’s push for a company shake-up and the announcement of asset sales.

Hess reported a profit of $566 million, or $1.66 a share, compared with a year-earlier loss of $131 million, or 39 cents a share.

Revenue increased 9.9% to $9.7 billion. Analysts expected earnings around $1.20 a share on revenue of $9.63 billion.

Hess was in the headlines Monday and Tuesday after it said it was planning to sell a New Jersey refinery and other assets. On Tuesday, the hedge fund sent a scathing letter to Hess shareholders calling for more changes at the oil and gas company and more focus on oil and gas exploration.

Big Oil shares were among the day’s laggards, with Exxon Mobil Corp.  down 0.4%. Macquarie has cut Exxon Mobil shares to neutral From outperform, the Dow Jones Newswires reported.

Rival Chevron Corp.  was also down 0.4%. ConocoPhillips  shares were off 0.3%.

ConocoPhillips is slated to report fourth-quarter results later Wednesday. The company is seen reporting earnings of $1.42 a share, down from $1.54 a share in the same quarter of 2011, on revenue of nearly $12.7 billion.

Exxon and Chevron are expected to report Feb. 1, with Exxon seen posting a profit of $1.99 a share, up 2 cents from $1.97 a share in the same period of 2011. Revenue for the quarter is seen slipping to $117 billion from $121 billion.

Chevron is expected to report earnings of $3.07 per share, up from $2.58 a share a year earlier, on $68.3 billion in revenue.

The SPDR Energy Select Sector , an exchange fund focused on energy names, was flat. Crude-oil futures  rose 0.2% at $97.71 a barrel on the New York Mercantile Exchange.

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Boeing Batteries Said to Fail 10 Times Before Incident - Businessweek

All Nippon Airways Co. (9202) said it changed lithium-ion batteries or chargers on its Boeing 787 planes 10 times before a Jan. 16 emergency landing that led to the Dreamliner’s worldwide grounding.

The disclosure came as the U.S. National Transportation Safety Board broadens its probe of the batteries beyond the ANA incident and a fire on a Japan Airlines Co. 787 nine days earlier in Boston. The safety board said it’s aware of reports of prior battery issues and is studying the power packs’ history since the 787 entered service late in 2011.

The previous battery failures didn’t cause cancellations or delays, and therefore weren’t reported to Japan’s Transport Ministry, Megumi Tezuka, an All Nippon spokeswoman, said in an interview today. More than 100 units failed and were returned to the manufacturer before the two incidents with the Japanese airlines, the Seattle Times reported today, citing an unidentified person inside the 787 program.

The safety board “will be reviewing the data related to those problems to determine if there is any relevant information,” Kelly Nantel, a safety board spokeswoman, said in an e-mail today.

The widening of the NTSB’s inquiry shows the 787’s grounding won’t end any time soon. Flights on Chicago-based Boeing’s most advanced jet were stopped by the Federal Aviation Administration and other aviation authorities Jan. 16, in the first such U.S. action involving an entire aircraft type since 1979, after a battery smoldered and emitted fumes on an ANA domestic flight in Japan.

Boeing isn’t aware of any 787 batteries being replaced because of safety concerns, Marc Birtel, a spokesman, said in an e-mailed statement today. The batteries were made by GS Yuasa Corp. (6674), based in Kyoto.

“The batteries are being returned because our robust protection scheme ensures that no battery that has been deeply discharged or improperly disconnected can be used,” he said.

Some batteries had exceeded their shelf life, he said. “This is a fact of life in dealing with batteries; they sometimes expire and must be returned,” he said.

Tokyo-based ANA was the first customer for the 787, which uses new technology such as carbon-fiber materials to save weight and improve efficiency. The plane was the first to use large lithium-ion batteries for backup power and to start the auxiliary power unit, a turbine engine that drives a generator mainly for power on the ground.

Japan Airlines also had battery issues before the Boston incident, Sze Hunn Yap, a company spokeswoman, said today. The previous incidents weren’t serious and they didn’t cause any cancellation of flights or delays, she said.

Air India Ltd. (JETIN) had no battery problems with its 787s, Chairman Rohit Nandan said in a text message.

LOT Polish Airlines SA, the only European carrier to fly the aircraft so far, hasn’t encountered any issues with batteries on its 787s, a spokesman said in a telephone interview. While there were some technical issues on the aircraft, they were “teething issues,” he said. LOT has one Dreamliner stranded in Warsaw and one in Chicago.

Mary Ryan, a spokeswoman for United Continental Holdings Inc. (UAL), the only U.S. airline operating the Dreamliner, declined to say whether the company had replaced batteries.

Boeing today said net income for 2013 will be $5 to $5.20 a share. That compares with an average estimate of $5.16 in a Bloomberg survey of 25 analysts. Boeing said its forecast assumed no significant impact from the Dreamliner’s grounding and shipments of more than 60 of the planes this year.

Under the FAA’s order, the Dreamliner won’t fly until Boeing and airlines can show the batteries are safe. The agency is also reviewing the plane’s certification and manufacture, including its own 2007 decision allowing Boeing to use lithium batteries in the plane’s design.

The NTSB, which is assisting Japan’s investigation into the ANA incident, hasn’t been able to identify what caused the failures.

Investigators are still attempting to determine whether a common manufacturing error could have led to the failures even though the batteries on the ANA and Japan Air planes were made 10 months apart, according to two people familiar with the investigation. They asked not to be identified because they weren’t authorized to speak about the probe.

The safety board hasn’t ruled out potential causes ranging from damage during operations to a circuitry failure, the people said.

U.S. investigators are putting evidence under microscopes as they also look globally for patterns of flaws with the plane’s lithium batteries, the agency said in an e-mailed update yesterday.

The battery that burned on the ANA plane was a replacement unit made in November 2011 and installed in October 2012 after an unspecified failure, according to Japan’s Transport Ministry and ANA.

The unit on the JAL plane was made in September 2012, according to the NTSB and Japan’s Transport Ministry.

Teams of NTSB specialists are examining with microscopes the battery that failed, and performing chemical analysis in the areas where they found internal short circuiting and thermal damage, according to its release.

The safety board is also scanning data contained on the JAL plane’s two flight-data recorders.

Japan’s transport ministry completed the inspections at a battery-box monitor maker based in Fujisawa yesterday, said Shigeru Takano, a director for air transportation at the ministry’s Civil Aviation Bureau. They didn’t find any problems “directly linked” to the battery fire, Takano said.

To contact the reporters on this story: Alan Levin in Washington at alevin24@bloomberg.net; Chris Cooper in Tokyo at ccooper1@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net; Anand Krishnamoorthy at anandk@bloomberg.net

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Japanese airlines had 787 battery issues before recent incidents - Reuters

The Boeing 787 Dreamliner aircraft is surrounded by employees and special guests during its world premiere outside the Boeing assembly plant in Everett, Washington, July 8, 2007.

Credit: Reuters/Robert Sorbo

TOKYO | Wed Jan 30, 2013 10:35am EST

TOKYO (Reuters) - Japan's two biggest airlines replaced lithium-ion batteries on their Boeing Co 787 Dreamliners in the months before separate incidents led to the technologically advanced aircraft being grounded worldwide due to battery problems.

Comments from both All Nippon Airways (9202.T), the new Boeing jetliner's biggest customer to date, and Japan Airlines Co Ltd (9201.T) point to reliability issues with the batteries long before a battery caught fire on a JAL 787 at Boston's airport and a second battery was badly charred and melted on an ANA domestic flight that was forced into an emergency landing.

ANA said it changed 10 batteries on its 787s last year, but did not inform accident investigators in the United States because the incidents, including five batteries that had unusually low charges, did not compromise the plane's safety, spokesman Ryosei Nomura said on Wednesday.

JAL also replaced batteries on the 787 "on a few occasions", said spokeswoman Sze Hunn Yap, declining to be more specific on when units were replaced or whether these were reported to authorities.

ANA did, however, inform Boeing of the faults that began in May, and returned the batteries to their manufacturer, GS Yuasa Corp (6674.T). A spokesman for the battery maker declined to comment on Wednesday. Shares of the company fell 1.2 percent.

Boeing, in a statement, said battery replacements are not unusual for airplanes.

"We have not seen 787 battery replacements occurring as a result of safety concerns," the company said.

An NTSB spokesman said the board was aware of the reports of the prior battery problems and would review the data to see if it was relevant to the broader 787 probe.

LITTLE HEADWAY

Under aviation inspection rules, airlines are required to perform detailed battery inspections once every two years.

Officials are carrying out detailed tests on the batteries, chargers and monitoring units in Japan and the United States, but have so far made little headway in finding out what caused the battery failures.

Japan's transport ministry said the manufacturing process at the company which makes the 787 battery's monitoring unit did not appear to be linked to the problem on the ANA Dreamliner that made the emergency landing.

The NTSB said on Tuesday it was carrying out a microscopic investigation of the JAL 787 battery. Neither it nor the Japan Transport Safety Board has been able to say when they are likely to complete their work.

The global fleet of 50 Dreamliners - 17 of which are operated by ANA - remain grounded, increasing the likely financial impact to Boeing, which is still producing the aircraft but has stopped delivering them, and the airlines that fly the Dreamliner.

Boeing said on Wednesday that its 2013 financial forecast assumes no significant impact from the grounding. Boeing shares rose slightly in early trading and are down just 0.5 percent since the 787 was grounded.

ANA posts its earnings on Thursday. ANA shares rose 0.56 percent on Wednesday. (Reporting by Tim Kelly, Dominic Lau, James Topham, Alwyn Scott and Andrea Shalal-Esa; Editing by Ian Geoghegan)

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Global stocks weighed by disappointing US GDP data - Reuters

1 of 5. Electronic information boards display market information at the London Stock Exchange in the City of London January 2, 2013.

Credit: Reuters/Paul Hackett

NEW YORK | Wed Jan 30, 2013 10:59am EST

NEW YORK (Reuters) - An unexpected contraction in the U.S. economy in the fourth quarter sent stocks in Europe and the United States lower on Wednesday but helped keep the euro close to a 14-month high on expectations the U.S. central bank will continue its easy monetary policy.

Positive stock sentiment after strong results at Boeing and Amazon.com and a strong private sector employment report was offset by the negative U.S. gross domestic product report.

The Federal Reserve is expected to maintain asset buying at $85 billion a month when it concludes its meeting later in the day and stick to its commitment to hold interest rates near zero until unemployment falls to at least 6.5 percent from the current 7.8 percent.

That expectation was bolstered for some investors by the GDP data, which showed the world's largest economy in the fourth quarter unexpectedly suffered its first decline since the 2007-09 recession. Gross domestic product fell at a 0.1 percent annual rate after growing at a 3.1 percent clip in the third quarter.

The GDP data also overshadowed a third straight rise in European economic confidence, an increase in European Central Bank crisis loan repayments and a solid sale of five- and 10-year Italian bonds, which provided fresh evidence of the recent improvement in the region.

"This is one chink in the armor of the recent better-than-expected economic indicators. This will make people start to get wary," said Wayne Kaufman, chief market analyst at John Thomas Financial in New York. "If it turns out Sandy and the 'fiscal cliff' were the reasons for (the contraction), people will shrug it off."

The Dow Jones industrial average .DJI was down 18.43 points, or 0.13 percent, at 13,935.99. The Standard & Poor's 500 Index .SPX was down 3.08 points, or 0.20 percent, at 1,504.76. The Nasdaq Composite Index .IXIC was down 3.45 points, or 0.11 percent, at 3,150.21.

European shares .FTEU3 were down 0.5 percent, although an earlier rise in Asian shares kept the MSCI world share index .MIWD00000PUS flat after reaching a 21-month high.

EURO HIGHER

There had been optimism earlier in the day after several encouraging reports on the European economy that caused the euro to break above $1.35 for the first time since December 2011. The euro was last at $1.3563.

Expectations of easy U.S. monetary policy added to the attractiveness of the euro. In recent years investors would buy the dollar as a safer haven on bad economic data, but at least on Wednesday, they saw the euro as a better bet.

"This is a source of weakness for the dollar because it takes away the narrative that the U.S. economy is performing better than the rest of the world," said Joe Manimbo, senior market analyst at Western Union Business Solutions.

Alongside the rebound in confidence in the euro zone, one of the key drivers behind the currency's recent spike has been the eagerness of banks to repay the crisis loans they took from the ECB just over a year ago.

Banks returned a larger-than-expected 137.2 billion euros of those loans on Wednesday and also surprised analysts by trimming their three-month funding, despite predictions they would use it partly to restock their coffers.

CONFIDENCE RALLY

The focus of the Fed decision will be on its outlook for the economy and its bond buying program after it sounded slightly more hawkish last month.

The benchmark 10-year U.S. Treasury note was down 5/32, the yield breaking a recent barrier at 2.0154 percent.

Bund futures fell to session lows on Wednesday, with investors taking the view that the contraction in the U.S. economy last year was not going to have significant impact on the Fed's policy moves.

Bund futures fell as low as 141.36, down 46 ticks on the day.

China's promising economic growth forecast for 2013 raised expectations for robust demand for fuel and industrial commodities, underpinning oil prices and lifting copper.

Brent crude oil reached its highest level in three and a half months as it passed $115 a barrel. It last traded at $114.60. U.S. light sweet crude oil was flat at $97.57 per barrel.

"Oil has followed risk assets higher, but we think it's strong versus the fundamentals, with production cuts needed from Saudi Arabia due to strong supply from OPEC," cautioned Filip Petersson, an SEB analyst in Stockholm.

(Reporting by Nick Olivari; Editing by Dan Grebler)

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Wall Street Cheers Exit of Chesapeake CEO McClendon - Fox Business

By Matt Egan

Published January 30, 2013

FOXBusiness

Shares of Chesapeake Energy (CHK) soared 7% on Wednesday as Wall Street bets the departure of longtime CEO Aubrey McClendon will allow the natural-gas producer to turn the page on a rocky 2012 and clear the way for asset sales.

Chesapeake announced late Tuesday that McClendon, 53, will retire on April 1 even though an extensive review of alleged conflicts of interest and other matters involving the executive found “no improper conduct.”

The No. 2 U.S. natural gas producer and McClendon had been dogged by probes from federal regulators and the board about antitrust issues and the executive’s conduct in financing matters.

In a statement, McClendon acknowledged “certain philosophical differences” with the new board but said he will work to ensure a “smooth transition.”

Chesapeake, which has been searching for direction amid a heavy debt load, said McClendon will continue to serve as CEO until a successor has been appointed. McClendon has led the company since its founding in 1989.

Chesapeake Chairman Archie Dunham praised McClendon for his “strong leadership” and credited him with creating “one of the most valuable and innovative companies in the energy industry.”

“However, as the company moves towards more fully developing the value of its outstanding assets, Chesapeake is at an important transition in its history and Aubrey and the board of directors have agreed that the time has come for the company to select a new leader,” said Dunham.

Chesapeake said the decision to find a new CEO is not related to the board’s pending review of McClendon’s financing arrangements and other matters, which is scheduled to be released on February 21.

“I am extremely proud of what we have built over the last quarter of a century, and I am confident that Chesapeake is in a great position to continue to grow and achieve great success in the future as it realizes the full value of its outstanding assets,” said McClendon.

Activist investor Carl Icahn who has helped shake up Chesapeake released a statement late Tuesday saying McClendon has a “right to be proud” of the talent and collection of assets he has built.

“While it is known that some of these assets will be sold by the company in due course, I do not believe that this will in any way effect the ultimate realization of Chesapeake's potential,” Icahn said.

Despite the cloud of controversy following McClendon, Chesapeake said the executive will receive his “full” compensation and other benefits. According to Reuters, McClendon is entitled to receive total compensation of about $47 million, including $11.7 million in total cash compensation based on salary and bonus and $33.5 million in restricted stock awards.

The company has hired executive-search firm Heidrick & Struggles to help find a successor to McClendon, who also serves as chairman and president.

Shares of Oklahoma City-based Chesapeake jumped 7.22% to $20.34 Wednesday morning, leaving them up 22% so far this year.

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US Data React: ADP Beats Estimates, Might Raise The Bar In Jan - MNI News

By Ian McKendry

WASHINGTON (MNI) - The January ADP employment report beat expectations with 192,000 private sector jobs added for the month, and could be an indication that private employment growth is starting to pick up.

"I feel like its 175 [thousand]," Mark Zandi, chief economist at Moody's Analytics said on CNBC immediately after the ADP report was released. He was referencing job growth-per-month as measured by the Bureau of Labor Statistics in its employment report.

Official January jobs data will be published Friday, and the median forecast in a survey of economists by MNI is for private payrolls to increase by 156,000 in January. MNI's median forecast for the ADP report was a 155,000 increase in jobs, while the median forecast for overall job growth in January, including the public sector, is for 160,000 jobs added.

Over the last five months, private job growth in the BLS report has had an average increase of about 160,000 -- which is about 15,000 more than ADP for comparable months -- but with the latest ADP figures, the average moved up about 8,000 to 153,000.

"I feel like it's moved up and I think that will be confirmed on Friday when we get the BLS data, because we will get the benchmark revisions and we know that will be revised up," Zandi said.

The preliminary revisions to the employment report by the BLS in September implied that private payroll growth for 2012 would be revised up by about 450,000 jobs on the year.

While the headline figure was better-than-expected, the December ADP payrolls number was revised down from up 215,000 to up 185,000 which caused some analyst to raise caution.

Andrew Grantham, an economist at CIBC wrote in a research note that the downward revision "largely offsets the upside surprise from the latest number," but added that CIBC is maintaining their above consensus forecast for headline job growth to increase by 188,000 in January.

TD Securities strategist Millan Mulraine was slightly more bullish on the ADP report but maintained a lower forecast for the BLS jobs report.

"The better-than-expected ADP print of 192,000 for private sector employment in January points to some modest upside bias for the current consensus forecast of 168,0000 for private payrolls (161,000 on total payrolls)," Mulraine said in a research note, adding "this was the first time in some time that this has taken place and it is an indication that this segment of the economy is finally beginning to provide a tailwind for growth."

However, Mulraine said TD is also maintaining their below-consensus payrolls forecast for +154,000 jobs added in January.

First Trust was the first and only (so far) of MNI's survey participants to revise their BLS Employment report forecast based on the ADP report, revising their forecast for overall job growth from +145,000 to +160,000 and likewise their forecast for private sector job growth from +150,000 to +165,000.

--MNI Washington Bureau; tel: +1 202-371-2121; email: imckendry@mni-news.com

[TOPICS: MAUDS$,M$U$$$]

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With 787 Dreamliners Still Grounded And Few Leads On Battery Fires, Boeing ... - Forbes

NTSB chair Deborah Hersman reveals little progress in their investigation of the 787 Dreamliner fire in Boston - Image credit: Getty Images via @daylife

Despite delivering a solid quarter and decent guidance, Boeing was still in the spotlight given issues with its 787 Dreamliners, which have been grounded across the globe.  The company revealed it has delivered nearly 50 787s over the past two years, with chief executive Jim McNerney adding “our first order of business for 2013 is to resolve the battery issue on the 787 and return the airplanes safely to service with our customers.”

Boeing managed to beat EPS estimates, earning $1.28 on a GAAP basis; Wall Street expected $1.19.  While net income fell 30% to $978 million, better commercial sales and improved margins offset weakness at Boeing’s defense, space & security (BDS) unit, which faces the specter of sequester cuts.

With the 787s on everyone’s mind, Boeing unveiled record sales of $22.3 billion, up 14% from a year ago and in line with estimates.  The company’s total backlog rose to $390 billion, while operating cash flow stood at $4.2 billion.  In all, 787 deliveries total 49 since becoming available to airlines in late 2011.

Regulators in the U.S. and Japan, along with engineers at Boeing, have been trying to figure out what caused fires on several Dreamliners, forcing the FAA and other agencies to ground all the operating aircraft indefinitely.  The National Transportation Safety Board (NTSB) revealed last week they are still working to find what sparked the malfunctions, while Japanese regulators ruled out the battery and its charger, manufactured by Japanese firm GS Yuan, as the cause.

With regulators at a loss and Boeing failing to detail what their internal investigation has shown, a cloud hangs over the stock, which remains essentially flat from a year ago.  According to a report in the New York Times, the two airlines operating the largest number of 787 Dreamliners, All Nippon Airways and Japan Airlines, had experienced battery problems before the two incidents that caused the grounding.

All Nippon had replaced 10 batteries prior to the incidents on their 787s, with five of them showing unexpectedly low charge, and three failing to start correctly.  Boeing convinced regulators to allow the use of lithium-ion batteries on its 787, which are lighter and pack more energy than traditional nickel-cadmium batteries, but are prone to catching on fire.  Until the battery issue is resolved, Boeing’s shares will remain “handcuffed,” as Citi analyst Jason Gursky put it.

The company did give 2013 guidance, with GAAP EPS expected to fall between $5.00 and $5.20 (analysts expected $5.13).  Core EPS, which excludes pension expense, was forecast at $6.10 to $6.30.  Revenue guidance came in a bit light, at $82 to $85 billion probably on lower than expected 787 deliveries; Wall Street was looking for $88 billion.

Production marches on and Boeing’s cash outlook is improving, Citi’s analyst explained, but attention will remain centered on the 787 Dreamliner and its battery issues.  Shares in Boeing zigzagged in early trading, but were making their way up by 11:12 AM in New York, gaining 1.2% to $74.50.  Competitor Lockheed Martin was down 1%, while major airlines like Delta, JetBlue, Southwest, and United Continental were mixed.

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