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New Watch List Plays Triggered

BP $68.87 - BP PLC

Our patience was rewarded. BP finally came back to trigger our entry at $68 on Wednesday. That is $10 off its high in May. Unfortunately it declined on news that the Russian TNK-BP partnership is about to breakup. Like Russia did with every other independent oil company over the last five years they have begun to wear BP down with red tape. In January Russia declared visas for 148 expatriate employees were invalid and would not let them work for several weeks. Later another Russian owned firm filed suit seeking to block BP's expat specialists from working for TNK-BP. The court has yet to deliver a judgment but has barred the employees from working in the meantime. Last week the CEO of the partnership was summoned to court on a tax probe covering the last 7 years. That is another Russian ploy to wear down the target. I had hoped BP would be spared the same fate as Shell, Exxon, etc, when each was reduced to a minority stake in their billion dollar projects and the ownership turned over to Gazprom. It is rumored that Gazprom is going to take ownership of the TNK-BP partnership. BP currently owns 50% and AAR, a Russian holding company owns the other 50%. BP derived 11% of its profits from the TNK-BP venture.

Recent progress announcements on the Thunder Horse platform in the Gulf suggested that BP was going to finally start producing. BP is on track to begin producing 250,000 bpd of oil and 200 million cubic feet of gas per day from Thunder Horse. The platform covers the area of three football fields and sleeps 185 workers. The gas-powered generator could power 80,000 homes. The project cost so far has been $3.5 billion. It will collect oil from 25 wells. I am hoping the Thunder Horse project will offset any further news from Russia.

Company Info:

BP p.l.c. (BP) is a holding company. The Company three business segments: Exploration and Production, Refining and Marketing and Gas, Power and Renewables. Exploration and Productions activities include oil and natural gas exploration, development and production (upstream activities), together with related pipeline, transportation and processing activities (midstream activities). The activities of Refining and Marketing include the supply and trading, refining, marketing and transportation of crude oil, petroleum and chemicals products. Gas, Power and Renewables activities included marketing and trading of gas and power, marketing of liquefied natural gas (LNG), natural gas liquids (NGLs) and low-carbon power generation through its Alternative Energy business. During the year ended December 31, 2007, BP acquired Chevrons Netherlands manufacturing company, Texaco Raffiniderij Pernis B.V. In April 2008, BP registered in Russia its subsidiary BP Exploration Services.

Breakdown trigger: $68. Hit June 4th.

Position: 2010 $70 LEAP Call WAO-AN @ $7.30


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