Energy stocks turn lower; Chesapeake leads decline

SAN FRANCISCO (MarketWatch) � Energy stocks lost ground on Monday, with shares of Chesapeake Energy Corp. the top decliner after the natural-gas producer said it sold northern Oklahoma land to China Petroleum & Chemical Corp., or Sinopec, for cheap.

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Chesapeake CHK �shares declined 6.8%.

Chesapeake said it agreed to sell a 50% stake in its Mississippi Lime acreage in Oklahoma to Sinopec SNP �for $1.02 billion in cash.

Sinopec is buying 425,000 net acres. See: Chesapeake�s cheap Sinopec deal.

The natural gas producer sold an acre for $2,400. Analysts with CapitalOne Southcoast said they expected $3,400 an acre.

Chesapeake is the operator of the project, and will conduct all leasing, drilling, completion, operations and marketing activities for the joint venture. The transaction is expected to close in the second quarter of this year.

The deal puts the company well on its way to achieving this year�s asset-sale targets, but �the numbers are not as compelling [versus] industry averages and could offset the positive headline number,� analysts at Simmons & Co. said in a note to clients.

Chesapeake Energy Chesapeake Energy was the top decliner among energy stocks on Monday.

The news itself was not a surprise since Chesapeake was clear in its fourth-quarter conference call that a Mississippi Lime sale was imminent, the analysts added.

Chesapeake has set a goal to sell $4 billion to $7 billion in assets this year. The rest of the asset sales �will have to come largely from undeveloped acreage at a time the market seems to be paying less for acreage deals,� analysts at UBS said.

Meanwhile, shares of BP PLC BP �declined 3.4%.

A civil trial in New Orleans for the 2010 Deepwater Horizon disaster started Monday.

Lawyers for the businesses suing BP as well as Transocean Ltd., which owned the rig, and Halliburton Co., which did cement work around the well, said Transocean did not properly train drilling crews and didn�t maintain safety equipment on the drilling rig.

Shares of Transocean RIG �were down 3.8%. Shares of Halliburton declined 3.1%.

The Deepwater Horizon rig exploded and sank in April 2010, killing 11 workers and triggering the worst offshore oil spill in the U.S.

Ahead of the civil trial, several media reported federal and state officials were readying a $16 billion settlement offer with London-based BP.

Fines under the Clean Water Act would be capped at $6 billion, and BP would also pay $9 billion in damages to natural resources and for the cost of restoration.

The remaining $1 billion would be set aside for a fund to cover extra expenses if more environmental damage were found later.

To date, BP has spent about $26.1 billion post-taxes on the disaster, debt ratings agency Moody�s said. The company is likely to be able to absorb up to $40 billion in costs after taxes and retain its A2 debt rating, Moody�s said.

Meanwhile, shares of Southwestern Energy Co. SWN �declined 1.4%. Goldman Sachs on Monday raised its rating on the stock to �conviction buy� from �buy.�

Shares of Exxon Mobil Corp. XOM �retreated 1.7%, while Chevron Corp. CVX �shares were off 2.1%. ConocoPhillips COP �shares declined 2.3%.

The SPDR Energy Select Sector XLE , an exchange-traded fund focusing on energy names, was down 2.6%. Crude-oil futures CLJ3 �declined 2 cents to end at $93.11 a barrel on the New York Mercantile Exchange.