BP rises as it cements Macondo well; Transocean draws downgrade
By Steve Gelsi, MarketWatch
NEW YORK (MarketWatch) -- Energy stocks fell with the broad market on Friday morning, after a disappointing monthly jobs report.
The NYSE Arca Oil Index (XOI 1,024, -5.47, -0.53%) fell 0.9% to 1,020. The NYSE Arca Natural Gas Index (XNG 534.15, -4.61, -0.86%) fell 1.4% to 531. The Philadelphia Oil Service Index (OSX 188.48, -2.00, -1.05%) subtracted 1.4% to 188.
The Dow Jones Industrial Average (DJIA 10,634, -41.47, -0.39%) dropped 0.7%. Exxon Mobil (XOM 62.15, -0.56, -0.89%) and Chevron, the energy components of the DJIA, fell 0.8% and 0.6% respectively.
Crude oil futures dropped 1.2% to $80.98.
Among stocks in the spotlight, BP PLC (BP 41.13, +0.45, +1.09%) rose 0.7% to $40.95 after it said it cemented its leaky Macondo well as part of its static kill operation.
Transocean (RIG 56.16, -1.77, -3.06%) fell 3% to $56.34 after drawing a downgrade from J.P. Morgan, and after its shares jumped 8% in the previous session.
J.P. Morgan cut their rating on Transocean to underweight from neutral.
Transocean asserted that its Deepwater Horizon contract protects it from liabilities in the April 20 explosion that triggered the worst maritime oil leak in U.S. history.
Analysts at J.P. Morgan said Transocean shares moved above their $55 price target and that the contract's indemnification doesn't eliminate all liability risk, but the stock is priced that way.
"While we aren't predicting the outcome, the liability risk is not zero, and we believe investors should be compensated with a discount valuation before investing in this stock," analysts said.
