COP - $106.90 Conoco Phillips ** No Stop **
Conoco is my favorite oil stock and we got a really nice entry on Monday when the market reopened from the Friday crash. Evidently there were lots of sell orders in the queue and they flushed right to our entry point at $98. I considered not using an insurance put given the distance from our entry but there is still risk that we will return to the 100-day average again. I am going to spend the money on the put in hopes that should we return to the 100-day average we can sell it to reduce our costs in the call. I do not foresee closing the call before December but we always need to be careful.
Helping to produce the rebound was news from Venezuela that Chavez had misspoke when he said the tax rate was going from 34% to 50% on the Orinoco oil contracts. This caused a sharp drop in XOM, COP, TOT and CVX when it was initially announced. When the announcement was corrected and qualified all four major oils rebounded sharply.
COP has been aggressively purchasing assets around the globe and especially in Russia. Putin has said repeatedly that COP assets and agreements are not at risk and that COP is a partner with Russia in producing their oil.
COP has earnings on April 27th and is expected to report the strongest EPS growth of any major oil at +43%.
2007 $100 LEAP Call OJP-AT @ $15.77
Buy the put insurance only if you feel you need it. We are far enough away from the entry point that I feel relatively safe.
Entry (4/18 $98.00)
OXY - $71.34 Occidental Petroleum ** No Stop **
OXY is the 239th largest company in the world and an oil giant. When they report earnings on Tuesday they are expected to report earnings of $1.98 a share compared to $1.23 in the prior year.
Occidental's principal activities are to explore for, develop, produce and market crude oil and natural gas. The operations are carried out through two segments: Oil and Gas and Chemical. The Oil and Gas segment develops, explores for, produces and markets crude oil and natural gas. The Chemical segment manufactures and markets basic chemicals. The company operates primarily in the United States, Qatar, Yemen, Colombia, Oman, Pakistan, Canada, Russia, Ecuador and the United Arab Emirates.
Earnings April 26th before the open.
2007 $70 LEAP Call VXY-AN @ $10.00
Entry $68.00 (4/19)
XOM - $59.42 Exxon Mobil ** No Stop **
XOM dipped to $55.40 on Monday and missed our breakdown entry target of $55 by 40 cents. We were lucky enough to get in on the breakout at $58 when the rebound began. It probably cost us a buck in lost gains but as long as oil continues higher we should be in good shape. XOM actually touched its 100 day average on Monday and gave the clearest entry signal. XOM also has the most pronounced downtrend from the March highs. This trend needs to reverse soon or another test of the 100 day average could result.
XOM has larger reserves and more cash than any other oil company. They have to find something to do with their $28 billion and it will either be returned to the shareholders or used to buy more reserves. They could announce some distribution of that cash with earnings on Thursday April 28th. They are expected to earn $1.20 per share.
XOM is the largest oil company in the world and while it has the largest reserves it also has the highest overhead cost.