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By Steve Gelsi

Energy stocks took a familiar path lower on Thursday as crude traded below $37 a barrel and natural gas future slipped under the level of $5 per thousand cubic feet for the first time in more than two years.

Shares of oil producers, natural gas producers and drilling firms also took their cue from the broad market, weighed down by woes in the financial sector.

The Amex Oil Index (XOI) fell 2% to 902. Component Repsol (REP) dropped 5% to $18.62.

The Amex Natural Gas Index (XNG) subtracted 1.8% to 356, ahead of weekly inventory data. In the previous session, natural gas prices fell below $5 per thousand cubic feet for the first time since September 2006.

The Philadelphia Oil Service Index (OSXX) rose fractionally at 119. Component Exterran (EXH) fell 4% to $21.15.

Crude prices fell $1.14 to $36.14 a barrel.

Venezuelan President Hugo Chavez is courting Western oil giants' expertise to help the country boost production in the face of lower petroleum prices, The New York Times reported Thursday.

Chavez officials have been soliciting bids from Chevron (CVX), Royal Dutch Shell (RDSA) and Total (TOT) as the country looks to maintain oil revenue flowing into social programs that help boost Chavez's support from voters.

"If re-engaging with foreign oil companies is necessary to his political survival, then Chavez will do it," Roger Tissot, an authority on Venezuela's oil industry at Gas Energy, told the newspapers. "He is a military man who understands losing a battle to win the war."

Chavez nationalized the Western companies' oil fields in 2007. Exxon Mobil (XOM) and ConocoPhillips (COP) are still engaged in legal battles over lost projects.

Oil giant BP (BP) said three new non-executive directors, including former German Chancellor Gerhard Schroeder, will be appointed to the board of TNK-BP, its Russia joint venture. BP said the shareholders of TNK-BP agreed to appoint the directors to avoid the risk of deadlock on the board. The other two non-executive directors will be James Leng, the chairman-designate of Rio Tinto and Alexander Shokhin, president of the Russian Union of Industrialists and Entrepreneurs.

Among small cap energy names, Hiland Partners, LP (HLND) and Hiland Holdings GP, LP (HPGP) both received a proposal from Harold Hamm to acquire all of the outstanding common units of each of the Hiland companies not owned by Hamm, his affiliates or Hamm family trusts.

Hiland Partners, LP unitholders would receive $9.50 in cash per common unit and Hiland Holdings GP, LP unitholders would receive $3.20 in cash per common unit.

Hiland Partners LP shares jumped 8% to $8.53. Hiland Holdings GP, LP shares rose 14% to $3.

-Steve Gelsi; 415-439-6400; AskNewswires@dowjones.com

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