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Thursday's Energy Stocks: Broader indexes mixed; midstream extends rally

Broader markets and energy equities settled mixed on Thursday, Jan. 26. The Dow Jones Industrial Average moved up 0.16% to 20,100.91, but S&P 500 slid down 0.07% to 2,296.68 while the SNL Energy Index picked up 0.50% to 288.39 as midstream shares extended gains.

Following the release of its latest financial report, American Electric Power Co. Inc. ticked up 0.18% in about average trading to settle at $62.64. AEP beat analyst estimates for the fourth quarter of 2016 by a wide margin, thanks to higher earnings across its business segments.

The company reported operating earnings of $330.4 million, or 67 cents per share, up from $232.7 million, or 48 cents per share, in the corresponding quarter of 2015. The S&P Capital IQ consensus normalized EPS estimate for the fourth-quarter 2016 was 55 cents.

AEP said during a conference call that it will continue to pursue restructuring of Ohio's electricity market and that it is open to support for nuclear generation, depending on who picks up the tab. The company also believes that it is positioned well for the likelihood that the corporate tax rate is cut by the Trump administration and the Republican-controlled Congress.

Black Hills Corp. earned 0.34% on slim volume to finish at $62.36, a trading day after raising its quarterly dividend 6% to 44.5 cents per common share, or $1.78 per share on an annualized basis. The dividend is payable March 1 to shareholders of record Feb. 15, according to a company statement.

Williams Capital Group said in a Jan. 26 update that it expected the dividend increase to be closer to $2 per share and found the announced increase "somewhat disappointing."

"With a very low dividend payout ratio and a prospective improvement in the company’s credit profile by late 2018, the company's considerable dividend potential will be realized before too long, in our view," the brokerage said. Williams Capital reiterated Black Hills' "buy" rating, with a price target of $68.

Just Energy Group Inc. advanced 0.66% on strong volume, closing at $5.87 after launching a public offering of an unspecified number of series A preferred shares, primarily to refinance or repurchase its securities maturing in 2018 and 2019.

PG&E Corp. lost 0.13% in weak trading to settle at $60.76, after being sentenced to pay the maximum $3 million fine, retain an outside monitor and publicly advertise its felony convictions as part of its punishment in a case stemming from the 2010 gas line explosion that killed eight people in San Bruno, Calif.

The SNL Merchant Generator Index shed 0.15% to 87.17, and the SNL Electric Company Index dipped 0.10% to 419.42.

Shares of Kinder Morgan Inc. declined 0.80% on below-average volume to finish at $22.42. Moody's said in a Jan. 26 note that FERC's rate investigation into Natural Gas Pipeline Co. of America LLC's NGPL PipeCo LLC on allegations of overcharging is a credit negative for the pipeline that could result in a $70 million revenue cut.

In other midstream stocks, Cheniere Energy Inc. spiked 4.54% to $50.42, EQT Corp. ascended 1.79% to $65.27 and Sunoco Logistics Partners LP edged up 1.32% to $26.16, all on heavy volume. The SNL Midstream Energy Index registered a 1.12% increase to 128.00.

Peabody Energy Corp. gained 10.89% to $2.85. The corporation disclosed an amendment to its plan of reorganization settling claims related to worker pensions and a letter expressing its concerns with an alternate bankruptcy reorganization plan presented by a committee of creditors.

Among other coal components, Cloud Peak Energy Inc. rose 5.06% in light trading to $5.81, Hallador Energy Co. climbed 5.22% in robust trading to $9.67 and Alliance Resource Partners LP closed 2.83% higher to $23.60. The SNL Coal Index closed up 0.04% to 79.50.

Market prices and index values are current as of the time of publication and are subject to change.