EOG $74.90 EOG Resources ** Stop Loss $70.00 **
EOG is a large independent producer of natural gas with a very strong growth profile. Recently EOG said they expect to post a +15% growth in production rates for 2005 followed by +9.5% growth in 2006. For 2006-2010 they estimated annual production growth of +7% to +11% per year on existing properties.
We played EOG earlier this year and were stopped out in the early July volatility. That stop cost us $15 in missed appreciation to the current price of $74.90. Gas was $8 back then as well. As we approach earnings for energy stocks EOG should ramp nicely as analysts start applying a +100% jump in gas prices in just over 90 days.
Earnings Scheduled: Nov-2nd
EOG Resources, Inc. (EOG) explores for, develops, produces and markets natural gas and crude oil primarily in major producing basins in the United States, Canada, offshore Trinidad, the United Kingdom North Sea and, from time to time, select other international areas. At December 31, 2004, EOG's total estimated net proved reserves were 5,647 billion cubic feet equivalent (Bcfe), of which 5,047 billion cubic feet (Bcf) were natural gas reserves and 100 million barrels (MMBbl), or 600 Bcfe, were crude oil, condensate and natural gas liquids reserves. At such date, approximately 50% of EOG's reserves (on a natural gas equivalent basis) were located in the United States, 25% in Trinidad, 24% in Canada and 1% in the United Kingdom North Sea. EOG's operations are all natural gas and crude oil exploration and production related.
BUY April 2006 $80 Call EOG-DP
Entry $74.90 (10/02)
TSO - $67.20 Tesoro ** Stop loss $62.00 **
Tesoro is a smaller refiner with only 558,000 bbls of capacity but half of that capacity is capable of refining heavy crude from Saudi and South America. This increases their profit margins substantially from those refiners only capable of refining light crude.
Because of this capability I would not be surprised to see them an acquisition target by a larger company. Higher margins normally attract bigger fish. TSO has been prepaying debt with the additional profits from these higher margins.
Earnings Schedule: Nov-4th (approx)
Tesoro Corporation (Tesoro), formerly Tesoro Petroleum Corporation, is an independent refiner and marketer of petroleum products with two major operating segments, Refining and Retail. Through its refining segment, the Company manufactures products, primarily gasoline and gasoline blendstocks, jet fuel, diesel fuel and heavy fuel oils for sale to a variety of commercial customers principally in the mid-continental and western United States. It operates six refineries in the United States with a combined rated crude oil capacity of 558,000 barrels per day. During the year ended December 31, 2004, approximately 50% of the Company's total refining throughput was heavy crude oil. Its retail segment distributes motor fuels through a network of branded gas stations, primarily trading under the Tesoro and Mirastar brands. The Company markets its products to wholesale and retail customers, as well as commercial end users. On November 8, 2004, the Company changed its name to Tesoro Corporation.
Feb 2006 $70 CALL TSO-BN @ $6.10
Entry $65.00 (9/26)
PBR - $71.47 Petroleo Brasileiro ** Stop Loss $66.00 **
PBR is very heavy into exploration and production and expects to spend $11.5 billion on upstream projects in 2005. On Wednesday they announced that three Japanese companies, Mitsubishi, Mitsui and Sumitomo had been short listed to buy an offshore block for up to $3 billion from PBR. Mitsubishi and Mitusi have already purchased interests in other Brazilian offshore fields. PBR is selling the undeveloped assets to pay for onshore exploration and production.
PBR announced on Thursday that it was going to build a new $2.5B refinery in Brazil and the Venezuela oil company PDVSA was going to share the cost 50:50. The refinery will be capable of refining heavy crude when completed in 2011.
Earnings Schedule: Nov-11th
Petroleo Brasileiro engages in the exploration for oil and gas and in the production, refining, purchasing and transportation of oil and gas products. For the last quarter reported, net revenues increased 35% to $10.73B. Net income increased 53% to $2.05B.
Petroleo Brasileiro S.A. - Petrobras (Petrobras) is a wholly owned government enterprise responsible for all hydrocarbon activities in Brazil. The Company also has oil and gas operations in international locations, with the significant international operations being in Latin American countries. Petrobras is engaged in a range of oil and gas activities, which include segments like exploration and production; refining, transportation and marketing; distribution; natural gas and power; international, and corporate. During the year ended December 31, 2004, the Company had estimated proved developed and undeveloped crude oil and natural gas reserves of approximately 11.82 billion barrels of oil equivalent in Brazil and other countries.
Breakdown Target @ $68.50 entry 8.10
Entry $68.50 (9/26)