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PBR $124.42 - Petrobras

I added the breakout entry last week, just in case Petrobras decided to run. PBR gapped open on Monday and hit that trigger at $125.50 only to collapse with oil prices the next three days. It was not a fun way to get an entry.

Fortunately luck was with us and S&P upgraded the entire country of Brazil on Wednesday. S&P also said it may upgrade PBR specifically due to the improved economic environment. Thank you S&P.

The same day Ken Heebner was interviewed on CNBC and he pounded the table on PBR again. He has 2 million shares he bought between $88 and $95 so he is definitely sold on the company. If he can get a dollar pop out of a guest appearance that is a $2 million payday. Glad he is on our side.

** See portfolio listing for any stop loss **

Company Info:

Petroleo Brasileiro SA - Petrobras (Petrobras) is a Brazil-based holding company engaged in the exploration, production, refinement and distribution of oil and gas. The Company is involved in four business areas: Exploration and Production, Downstream, Gas & Energy and International. Petrobras has 109 production platforms and 15 refineries. It operates 31,089 kilometers of pipelines. The Company has various subsidiaries: Petrobras Quimica SA - Petroquisa, which is engaged in the production, commercialization, distribution, import and export of chemical products; Petrobras Distribuidora SA - BR, which is involved in the distribution and commercialization of oil products and natural gas, and Petrobras Netherlands BV - PNBV, which is active in the purchase, sale and rent of equipment and platforms for the production of oil and gas. Petrobras operates in Brazil, Argentina, Mexico, Portugal, the United States, Peru and Turkey, among others.

Breakout trigger: $125.50 hit 4/28

Position: 2010 $150 LEAP Call YMO-AV @ $22.10

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MOS $124.63 + 4.63 Mosaic

Mosaic finally came to us and hit our breakdown trigger at $120. Worries that the commodity rally was over pushed the fertilizer stocks lower. They forgot that everyone who has ever been interviewed said production was over committed for the next two years with people trying to buy it even farther out. We add 75 million new people to the world's population each year and they need to eat. Of the 6.5 billion people on this earth nearly 4 billion depend on fertilizer for food. That is not likely to change given the added load of growing feed crops to make biofuel.

** See portfolio listing for any stop loss **

Company Info:

The Mosaic Company (Mosaic) is a producer of phosphate and potash combined, as well as nitrogen and animal feed ingredients. The Company operates its business through four business segments: phosphates, potash, offshore and nitrogen. The Phosphates segment operates mines and concentrates plants in Florida that produce phosphate fertilizer and feed phosphate, and concentrates plants in Louisiana that produce phosphate fertilizer. The Potash segment mines ad processes potash in Canada and the United States and sells potash in North America and internationally. The Offshore segment produces and markets fertilizer products and provides other ancillary services to wholesalers, cooperatives, independent retailers, and farmers in South America and the Asia-Pacific regions. The Nitrogen segment consists of its equity investment in Saskferco and Mosaics nitrogen sales and distribution activities.

Breakdown trigger: $120 Hit 4/29

Buy 2010 $140 LEAP Call LXW-AX @ $35.10
Sell 2010 $240 LEAP Call KCA-AH @ $13.90

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NE $58.08 +2.08 - Noble Corp

The drop in oil prices gave us an entry at $56 and Noble declined to support at $54 before rebounding. They declared a 4-cent dividend payable on May-30th but the rebound was on positive news for deepwater drillers in general.

Noble recently won a $4 billion contract to drill for Petrobras off the coast of Brazil. This is a monster payday and just one area of exploration for Noble.

** See portfolio listing for any stop loss **

Company Info:

Noble Corporation (Noble) is engaged in contract drilling services worldwide. It performs contract drilling services with its fleet of 62 offshore drilling units located worldwide. This fleet consists of 13 semi-submersibles, three drillships, 43 jackups and three submersibles. The fleet count includes two F&G JU-2000E jackups and three deepwater dynamically positioned semisubmersibles under construction. As of December 31, 2007, approximately 85% of its fleet was deployed internationally. Its other operations include labor contract drilling services, and through November 2007, engineering and consulting services. Its operations are conducted principally in the Middle East, India, United States, Gulf of Mexico, Mexico, the North Sea, Brazil, West Africa and Canada. During the year ended December 31, 2007, Noble completed the rationalization of its technology services division with the sale of the rotary steerable system assets of its Noble Downhole Technology Ltd. subsidiary.

Breakdown trigger $56.00 hit 4/29

Position: 2010 $70 LEAP Call YVJ-AN @ $8.10

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RIG $151.92 +1.92 - Transocean

RIG crashed with oil and rallied back with it on Friday. The correction gave us our entry at $150 although support at $145 was a little scary on Thursday.

RIG has declined slightly from its highs at $160 late in April. RIG is the premier deep-water driller and there is no scenario where they don't continue to move higher.

Earnings are Wednesday so it could be volatile!!

** See portfolio listing for any stop loss **

Company Info:

Transocean Inc. (Transocean) is an international provider of offshore contract drilling services for oil and gas wells. As of February 20, 2008, the Company owned, had partial ownership interests in or operated 139 mobile offshore drilling units. Its fleet included 39 high-specification floaters (ultra-deepwater, deepwater and harsh environment semisubmersibles, and drillships), 29 midwater floaters, 10 high-specification jackups, 57 standard jackups and four other rigs. As of February 20, 2008, the Company also has eight ultra-deepwater floaters contracted for or under construction. The Companys primary business is to contract these drilling rigs, related equipment and work crews primarily on a day rate basis to drill oil and gas wells. In November 2007, the Company completed its merger transaction with GlobalSantaFe Corporation (GlobalSantaFe).

Breakdown trigger: $150 Hit 4/29

Position:
Long 2010 $170 LEAP Call YDR-AN @ $24.00
Shrt 2010 $230 LEAP Call YDR-AW @ $8.50

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NOV $67.20 +0.20 - National Oilwell Varco

NOV declined from its recent high at $76 to touch $64 last week and trigger our entry on the way with a stop at $67.

NOV just completed the acquisition of Grant Prideco on April 21st and the high at $76 was the next day. We are seeing the post merger letdown as the reason for this decline. This was a major acquisition for them and should be very accretive very quickly.

Zacks put out a note on Friday saying the Grant Prideco acquisition was very bullish for Varco. Varco already has a $10 billion order backlog and received $2 billion in new orders in Q1. They paid about $7.37 billion for Prideco. Prideco is the technological leader in drill pipe and bits and will fit nicely into Varco. Zacks recommended a buy on NOV with a price target of $85.

Varco announced earnings on Wednesday that increased +44% or $397 million. That was up from $275 million in the comparison quarter.

** See portfolio listing for any stop loss **

Company Info:

National Oilwell Varco, Inc. is a provider of equipment and components used in oil and gas drilling and production operations, oilfield services, and supply chain integration services to the upstream oil and gas industry. It has three segments: Rig Technology, Petroleum Services & Supplies, and Distribution Services. The Rig Technology segment designs, manufactures, sells and services systems for the drilling, completion and servicing of oil and gas wells. The Petroleum Services & Supplies segment provides consumable goods and services used to drill, complete, remediate and workover oil and gas wells, service pipelines, flowlines and other oilfield tubular goods. The Distribution Services segment provides maintenance, repair and operating supplies, and spare parts to drill site and production locations worldwide. In July 2007, NOV acquired, through a wholly owned subsidiary, a 76% stake in Sara Services and Engineers Private Limited. In April 2008, it acquired Grant Prideco, Inc.

Breakdown trigger: $67 Hit 4/30

Position: NOV $80 Call NOV-KP @ $5.40


 

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