PBR $105.45 - Petrobras *** Stop Loss $87 ***
I recommended entering the Petrobras position in the Monday night alert after it declined to close at $95. We saw a rebound on Wednesday to just under $110 and then the oil volatility knocked it back again. I really like Petrobras. They are rapidly becoming the biggest deep-water driller/producer around the world. They are not just drilling off the coast of Brazil but everywhere there is exploration potential. Their recent announcement of an 8 billion barrel find at 23,000 ft deep in 10,000 feet of water is just another example.
Because of the volatility in oil and in Petrobras itself over the last two weeks we can't afford to buy put insurance. I would be comfortable selling a short-term call against your LEAP but I am not going to recommend a specific strike here. Let your conscience be your guide.
Petroleo Brasileiro S.A. - Petrobras (Petrobras) is a wholly owned enterprise of the Brazilian Government, which is responsible for all hydrocarbon activities in Brazil. The Company is engaged in a range of oil and gas activities. Petrobras operates in six segments: exploration and production, supply, distribution, gas and power, international and corporate. In June 2007, Petrobras announced that it completed transfer of all of the shares of Petrobras Bolivia Refinancion S.A. to YPF S.A. In March 2007, the Company, Braskem S.A. and Ultrapar Participacoes S.A. announced the acquisition of Grupo Ipiranga. In September 2006, the Company announced the closing of the acquisition by Petrobras America, Inc. (PAI), its wholly owned subsidiary in the United States Gulf of Mexico, of 50% of Pasadena Refining System Inc. In June of 2006, it completed the acquisition of 66% of Gaseba Uruguay-Grupo Gaz de France S.A.
LEAPs Alert Entry 11/12 @ $95
Position: 2009 $90 LEAP Call VDW-AR @ $17.10
SGR - Shaw Group *** Stop Loss $55 ***
The Shaw Group is service provider to the energy, chemical, environmental and infrastructure industries. Basically they build things like power plants, pipelines, platforms and lots of infrastructure to the energy sector. Reportedly they are currently bidding or preparing bids on over $1 trillion in projects. The mammoth scale of the current requirements around the globe is staggering. They have been one of the sleeper momentum stocks with very little press. They were off about 22% in three days to close at $61 on Monday. There is strong support at $60 and the 100-day average at $57. I recommended Shaw Group on Monday night after the big drop. Because they are not specifically oil based they do not react directly to the volatility in oil prices. I suggested spending the extra $6 to go to 2010 instead of 2009 LEAPs.
Position: 2010 $70 LEAP Call YCW-AN @ $20.40
JEC $77.90 Jacobs Engineering Group *** Stop Loss $70 ***
Check any news source on the web and you will find dozens of articles of contract awards to Jacobs. Their Q3 profits rose +43% and they raised guidance for all of 2008. JEC hit our breakdown target of $80 on Monday's market implosion and then remained volatile for the rest of the week. Support is $75.
Jacobs Engineering Group Inc. announced that it will host a live internet broadcast of its presentation to financial analysts in New York City on Tuesday, November 20, 2007. The presentation will focus on results for Fiscal Year 2007 and the outlook for Fiscal Year 2008. Interested parties can view slides and listen to the presentation, which begins at 8:00 a.m. Eastern Time, by logging onto the Internet at http://www.jacobs.com. An archived version will be available at the same site within a few hours of the presentation's completion and will remain accessible through Tuesday, November 27, 2007.
Jacobs Engineering Group Inc. is a professional services firm that focuses on providing a range of technical, professional and construction services. It provides project services, which include engineering, design, architectural, and similar services; process, scientific, and systems consulting services; operations and maintenance services, and construction services, which include direct-hire construction and construction management services. It concentrates its services on selected industry groups and markets, including oil and gas exploration, production and refining; programs for various federal governments; pharmaceuticals and biotechnology; chemicals and polymers; buildings, which includes projects in the fields of healthcare and education, as well as civic, governmental and other buildings; infrastructure and technology and manufacturing. In April 2006, its Canadian subsidiary acquired Techna-West Engineering Limited. In October 2006, it acquired W.H. Linder & Associates, Inc.
Breakdown target: $80.00 Hit 11/12
Buy APR 2008 $90 Call JEC-DR @ $6.50
VLO $67.66 Valero Energy *** Stop Loss $64.00 **
We finally got the dip on Valero but with all the worry over refiner margins I am not sure we still want it. I am adding a stop at $64 and we will play what the market gives us. We were triggered on this entry when it touched $67.50 on Monday.
Valero Energy Corporation owns and operates 18 refineries located in the United States, Canada and Aruba that produce refined products, such as reformulated gasoline blendstock for oxygenate blending, gasoline meeting the specifications of the California Air Resources Board (CARB), CARB diesel fuel, low-sulfur and ultra-low-sulfur diesel fuel, and oxygenates (liquid hydrocarbon compounds containing oxygen). It also produces conventional gasolines, distillates, jet fuel, asphalt, petrochemicals and other refined products. It markets branded and unbranded refined products on a wholesale basis in the United States and Canada through a bulk and rack marketing network. It sells refined products through a network of approximately 5,800 retail and wholesale branded outlets in the United States, Canada and Aruba. During the year ended December 31, 2006, it sold all of its ownership interest in Valero GP Holdings, LLC. In July 2007, the Company sold its Lima, Ohio refinery to Husky Energy Inc.
Breakdown target: $67.50 Hit 11/12
Position: 2009 $75 LEAP Call VHB-AO @ $10.00
COP $78.92 Conoco Phillips *** Stop Loss $74.00 ***
We were triggered on Conoco when it hit our $80 entry on Monday. The weakness in Conoco is from the low crack spreads on high priced crude. It will change once crude begins to fall. COP announced a new $15 billion buyback at the end of September.
ConocoPhillips (ConocoPhillips) is an international, integrated energy company. The Company's business is organized into six segments. Exploration and Production segment primarily explores for, produces and markets crude oil, natural gas and natural gas liquids on a worldwide basis. Midstream segment gathers, processes and markets natural gas produced by ConocoPhillips and others, and fractionates and markets natural gas liquids, primarily in the United States and Trinidad. Refining and Marketing segment purchases, refines, markets and transports crude oil and petroleum products, mainly in the United States, Europe and Asia. LUKOIL Investment segment consists of its equity investment in the ordinary shares of OAO LUKOIL (LUKOIL). The Chemicals segment manufactures and markets petrochemicals and plastics on a worldwide basis. Emerging Businesses segment includes the development of new technologies and businesses outside the Company's normal scope of operations.
Breakdown target: $80 hit 11/12
Position: 2009 $90 LEAP Call OJP-AR @ $8.60
MRO $57.42 - Marathon Oil *** Stop Loss $53.50 ***
Marathon fell to hit our trigger at $57 on Tuesday and selling continued to touch the 200-day average at $55 before the rebound began. I believe the 200-day is decent support and I put a stop under that Tuesday low.
On July 31st Marathon announced its purchase of Western Oil Sands for $5.5 billion. This will be an immediate increase in production for Marathon of 31,000 bpd. The acquisition gives them 20% interest in the Athabasca Oil Sands Project in Alberta. The other partners are Shell 60% and Chevron 20%.
Marathon Oil Corporation (Marathon) is engaged in exploration, production and marketing of crude oil and natural gas worldwide. The Company operates in three segments: Exploration and Production (E&P), which explores for, produces and markets crude oil and natural gas on a worldwide basis; Refining, Marketing and Transportation (RM&T), which refines, markets and transports crude oil and petroleum products, primarily in the Midwest, the upper Great Plains and southeastern United States, and Integrated Gas (IG), which markets and transports products manufactured from natural gas, such as liquefied natural gas (LNG) and methanol, on a worldwide basis, and is developing other projects. During the year ended December 31, 2006, Marathon completed leasehold acquisitions totaling approximately 200,000 acres in the Bakken Shale oil play. In July 2006, it completed a natural gas leasehold acquisition in the Piceance Basin of Colorado, in Garfield County in the Greater Grand Valley field complex.
Breakdown target: $57 Hit 11/13
Position: 2009 $65 LEAP Call VXM-AM @ $7.50
CNQ $72.67 Canadian Natural Resources
CNQ performed an almost textbook drop to the 100-day average and immediately found buyers. I don't think we could have asked for a better entry.
Canadian Natural Resources Limited (CNRL) is an independent crude oil and natural gas exploration, development and production company head-quartered in Calgary, Alberta, Canada. The Company's operations are focused in North America, largely in Western Canada, the United Kingdom portion of the North Sea and Offshore West Africa. In November 2006, the Company completed the acquisition of Anadarko Canada Corporation from Anadarko Petroleum Corporation. The Company's crude oil and natural gas activities are conducted in three geographic segments: North America, North Sea and Offshore West Africa. These activities relate to the exploration, development, production and marketing of crude oil, natural gas liquids and natural gas. The Company's Horizon Project has been classified as a separate segment. Midstream activities include the Company's pipeline operations and an electricity co-generation system.
Breakdown Trigger: $75.50 11/12 email alert
Position: 2009 $90 LEAP Call OKR-AR @ $9.10
CLB $132.25 - Core Labs
We got a gift from Core Labs when it fell -$25 off its highs to give us our entry at $130. That was exactly the 50-day average and strong support it appears from the quick stop.
Core Laboratories N.V. (Core Lab) is a provider of reservoir description, production enhancement and reservoir management services to the oil and gas industry. These products and services are directed toward enabling the Company's clients to improve reservoir performance and increase oil and gas recovery from their producing fields. It has over 70 offices in more than 50 countries. Core Lab derives its revenues from services and product sales to clients in the oil and gas industry. Its reservoir optimization services and technologies are interrelated and are organized into three complementary segments: Reservoir Description, which encompasses the characterization of petroleum reservoir rock, fluid and gas samples; Production Enhancement, which includes products and services relating to reservoir well completions, perforations, stimulations and production, and Reservoir Management, which combines and integrates information from reservoir description and production enhancement services.
Breakdown Trigger: $130 11/12
Position: 2009 $140 LEAP Call ZYM-AH @ $21.30
FTI $54.54 FMC Technologies *** Stop Loss $49 ***
FTI split the difference between the 50-day and 100-day to give us our entry. So far it has failed to give up support at $54 despite the weak market. I am putting a stop at $49 just in case.
FMC Technologies, Inc. (FMC Technologies) is a global provider of technology solutions for the energy industry and other industrial markets. The Company designs, manufactures and services systems and products, such as subsea production and processing systems, surface wellhead production systems, high-pressure fluid control equipment, measurement solutions, and marine loading systems for the oil and gas industry. It also produces food processing equipment for the food industry and specialized equipment to service the aviation industry. FMC Technologies business segments are Energy Systems (comprising Energy Production Systems and Energy Processing Systems), FoodTech and Airport Systems. In April 2007, the Company increased its stake in CDS Engineering BV to 91%. In June 2007, the Company acquired Technisys, Inc.
Breakdown Trigger: $57 hit 11/12
Position: APR $65 Call FTI-DM @ $4.75
Cisco gave back almost 20% post earnings but was actually positive on Monday. I think Cisco is in the right spot globally even if U.S. sales are lagging. The stock is cheap and the options are cheap. I added them to the portfolio in Monday's alert. As long as they stay over the 200-day average at $29 we are in good shape.
Cisco Systems, Inc. designs, manufactures, and sells Internet Protocol-based networking and other products relating to the communications and information technology industry worldwide. The company offers routers that interconnect computer networks and moving information between networks; switching systems, which provide connectivity to end users, workstations, and servers; application networking solutions to deploy and deliver business applications; home networking products, such as voice and data modems, network cards, media adapters, Internet video cameras, network storage, and USB adapters; hosted small-business systems, including integrated voice and data products; and Cisco security solutions to protect information systems. It also provides storage area networking products that deliver connectivity between servers and storage systems; unified communication products, which integrate voice, video, data, and mobile applications on fixed and mobile networks; video systems, including digital set-top boxes and digital media technology products; and in-building and outdoor wireless networking products. Further, the company offers cable access, service provider VoIP services, and optical networking products. It provides its products and services through its direct sales force, systems integrators, service providers, resellers, distributors, and retail partners to large enterprises, small and medium-sized businesses, and small/home offices.
Alert entry 11/12 @ $29.11
Position: 2009 $30 LEAP Call VYC-AF @ $5.00
RIMM $107.53 Research in Motion *** Covered Call ***
RIMM was been knocked back from $137 to $102 on absolutely no news. RIMM options are extremely expensive and that gives us the opportunity to profit by adding RIMM as a covered call. RIMM was $102, the $150 LEAP was $18.50. If RIMM moves over $150 by next January that gives us $48 in stock appreciation and $18 in premium received. That is $66 profit on a $102 stock. I cannot conceive that RIMM will not continue higher since they are just breaking into the Asian markets and their new products in the U.S. are selling like hotcakes.
Research In Motion Limited engages in the design, manufacture, and marketing of wireless solutions for the mobile communications market worldwide. It provides platforms and solutions for access to email, phone, short messaging service, Internet, and Intranet-based applications. The company offers technology that enables third party developers and manufacturers to enhance their products and services with wireless connectivity to data. Its portfolio of products includes BlackBerry wireless platform, the RIM Wireless Handhelds product line, software development tools, radio-modems, and other hardware and software products. The company's BlackBerry wireless solution comprises wireless devices, software, and services. It also enables the use of personal information management functions, such as calendar, address book, task list, and other functions associated with personal organizers. The company also offers BlackBerry Mobile Data System that allows users to access data from enterprise applications and the Internet; and BlackBerry Internet Service, which allows the integration of up to 10 supported email accounts on the same BlackBerry smartphone. Research In Motion also licenses BES software, as well as offers client access licenses, technical support, and upgrades. The company distributes its products through carrier partners and resellers. Research In Motion was founded in 1984 and is headquartered in Waterloo, Canada.
Alert entry 11/12 @ $29
Covered LEAP Call:
LONG RIMM currently $102.60