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Friday's Energy Stocks: Markets inch up; Peabody dives on restructuring plan

Broader markets registered small gains on Friday, Dec. 23, while the energy sector tallied slightly stronger gains. Ahead of the Christmas holiday weekend, the Dow Jones Industrial Average increased 0.07% to 19,933.81, the S&P 500 increased 0.13% to 2,263.79 and the SNL Energy Index picked up 0.30% to 283.19.

Memorial Production Partners plunged 55.96% in about 11 times the normal trading to settle at 18 cents, following agreements with senior noteholders that give creditors nearly all of the partnership's common equity as part of a restructuring plan to get Memorial out from under about $1.3 billion of debt.

To prepare for the restructuring, Memorial monetized some of its hedge positions, the net proceeds of which were used to reduce outstanding borrowings under its revolving credit facility by about $190 million. Memorial expects to file for Chapter 11 bankruptcy protection in the coming weeks.

In other midstream stocks, Energy Transfer Partners LP inched up 0.52% on about average volume to close at $36.39, Energy Transfer Equity LP climbed 1.56% in light trading to settle at $19.59 and Sunoco LP gained 1.73% on twice the average volume to finish at $26.98.

A report that the private equity giant Blackstone Group LP is looking to buy a multibillion-dollar stake in Energy Transfer Partners projects or assets sent analysts and stock traders to their tea leaves. "The deal seems a little strange to us given former CFO Welch sued Energy Transfer after he was fired earlier this year," CreditSights analysts told their clients.

Given that Energy Transfer Partners is in the process of being merged into another Energy Transfer Equity master limited partnership, Sunoco Logistics, in an all-stock deal, the number of projects that might be on offer is limited, CreditSights said.

The SNL Midstream Energy Index advanced 0.72% to 122.10.

Peabody Energy Corp. dived 9.58% in over-the-counter trading to end at $7.46, a day after filing a reorganization plan and disclosure statement with the U.S. Bankruptcy Court for the Eastern District of Missouri, as the company gears up to emerge from Chapter 11 bankruptcy.

Peabody's proposed plan recapitalizes the company through a backstopped rights offering of $750 million, a private placement of mandatorily convertible preferred stock of $750 million and the issuance of new common stock to satisfy certain creditor claims. The company hopes to exit bankruptcy with sufficient liquidity for its near- and long-term needs. The plan insists Peabody has an opportunity to "not only survive but to thrive for the long-term benefit of its many stakeholders."

In other coal stocks, Cloud Peak Energy Inc. rose 4.37% to $5.97, Hallador Energy Co. earned 4.54% to $8.98 and Westmoreland Coal Co. edged up 3.87% to $17.72, all on thin volume. The SNL Coal Index ascended 0.52% to 80.00.

Power producers ended the week with modest gains as the SNL Merchant Generator Index rose 0.64% to 81.09. Among components, Dynegy Inc. closed up 3.75% to $8.31, NRG Energy Inc. moved 1.73% higher to $12.34 and Covanta Holding Corp. saw an increase of 1.29% to $15.75.

Electric and diversified utilities were generally quiet. NiSource Inc. declined 0.58% to $22.30 in light trading.

January 2017 natural gas futures started on Dec. 23 with a session low of $3.534/MMBtu and moved higher throughout the morning before eventually peaking at $3.715/MMBtu. The market held near the highs throughout the afternoon and ended with a gain of 12.4 cents to settle at $3.662/MMBtu.

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