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Weekly Newsletter, Saturday, 03/03/2007

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Table of Contents

  1. Commentary
  2. Changes in Portfolio
  3. Portfolio Listing
  4. New Plays
  5. Existing Plays
  6. Watch List

Leaps Trader Commentary

Floating Boats

You would think another two month high for oil at $62.40 would be enough to rescue the energy sector from the sell off in the broader markets. That was not the case last week. Just as a rising tide floats all boats an easing tide lets them back down again. Or maybe a better analogy is a helium balloon in a down elevator. A stock can be the best investment in its sector but if that sector sinks with the market that individual stock will sink as well.

Last week was ugly for the broad markets with an average drop of 5% across all the indexes. Many of our energy positions duplicated that drop despite the price of oil holding at $62 all week. We did not have any negative news in the sector and winter continued to blast its way across the Midwest and Northeast in one final effort to make its presence felt before spring. Crude inventories rose less than expected and distillates fell more than expected but both were ignored by investors due to the turmoil in the broader markets.

There was some interesting news about Peak Oil in an unexpected place last week. Republican Representative Roscoe Bartlett said the world may have reached the peak in oil production. He based this comment on data from a draft report from the US Government Accountability Office due out next month. The report is going to say the peak in oil may have arrived or is very near but will stop short of proclaiming the event a done deal. Apparently government staffers were unable to get their questions answered by several major oil producers like Saudi Arabia and Iran. Seems they don't want to make their reserve data public. That should be no surprise to anyone except maybe the government researchers used to having everyone jump at their requests. Bartlett said, "They (major OPEC producers) have no reason to tell us and little reason to be truthful so it is very difficult to determine a specific date when the world will reach peak oil." Welcome to our reality Mr. Bartlett. He also said, "according to the report the largest number of experts believe that it has already occurred and conventional supplies have peaked." When the report is released it will be notable not in its content but that it was done at all. Elected officials have been notorious for sticking their head in the sand and not wanting to face the unpopular issue of oil depletion and its consequences. It is easier to say conserve energy than actually do it.

Venezuela announced last week that is was taking control of the remaining oil assets in Venezuela previously owned and operated by outside companies. The assets located in the Orinoco belt were run by Conoco, Exxon, BP, Chevron, Total and Statoil. Chavez said the companies have until May 1st to turn over majority ownership to state run PDVSA or leave the country. The majors are not talking to the press but Conoco CEO Jim Mulva in an interview on another topic did say that it would be a challenge to those companies. All have extensive investments in the Orinoco Belt and large scale operations. I am afraid you can kiss those assets goodbye Mr. Mulva and the world can expect falling production from that area for decades to come.

A study to be released next Thursday by Rice University says the rise of national oil companies is going to crimp future oil production. 75% of the world's proven reserves are now controlled by national oil companies. Historically the national oil companies see production slow because money needed for exploration and maintenance is siphoned away to pay for other things in the countries budget. The slowing of investment into new production efforts slows future production as depletion accelerates. Most countries fail to realize that depletion never sleeps and to slow investment into new exploration is the easiest way to cut off future cash flow permanently. Countries view their social responsibilities as more important than investing in exploration. Unfortunately without exploration there will be no future funds to pay for those social needs.

AA recent study found that coal to liquids (CTL) produces twice the carbon emissions (CO2) as conventional gasoline. Officials say this will be overcome by new technology but that the technology has yet to be discovered. CTL is widely discussed as a solution to the oil import problem because of our abundance of coal. There are nine CTL plants in the planning/construction stages in the US and slated to begin production by 2009. These nine plants would produce about three billion gallons of fuel per year. Currently CTL plants being developed have no plans to sequester CO2 and the costs of CO2 curtailment are not part of the projected budget. One $800 million project in Gilberton, PA., would make 5,000 barrels of CTL fuel per day and produce 3.2 million tons of CO2 emissions per year. Including the emissions from burning the fuel in vehicles the amount of total emissions for CTL is 85% greater than that for gasoline or diesel. With the growing likelihood the US will eventually establish emission controls the financial viability of these plants is doubtful at best.

It was not a good week for earnings with Forest Oil and ATPG both surprising to the downside for steep losses. Both were closed. Losses in the Asian and Latin American markets knocked out PTR and PTR.

For the coming weeks we will remain at the mercy of the broader market. Oil prices should moderate slightly once warmer weather arrives as is projected for the next 14 days but then gasoline demand will begin to grow. This will push oil prices higher as we approach summer. Until then we should view any further dips in the broader market and energy stocks as a buying opportunity. The dip gave us an opportunity to add some new stocks to the watch list. Any further drop should give us some new entries. I am also adding some short puts to existing plays to reduce our costs.

Jim Brown


April Crude Chart - Daily

April Gas Futures Chart - Daily

 


Changes in Portfolio

New Energy Plays

None - See Watch List


New Non-Energy Plays

None - See Watch List


Dropped Plays
DVN - $64.45 Devon Energy ** Closed **
FST - $30.70 Forest Oil ** Closed **
PBR - $86.47 Petroleo Brasileiro ** Stopped $89.50 **
ATPG - $38.58 ATP Oil and Gas Corp ** Closed **
PTR - $112.66 Petrochina ** Stopped @ $119 **

New Watch List Plays Triggered
SNP - $76.00 Sinopec

Portfolio Listing & Top Picks


New Plays

Most Recent Plays

SNP - $76.00 - Sinopec

The implosion in China knocked $10 off the price of Sinopec and unfortunately triggered our breakdown entry on Tuesday at a price well above Friday's close. It is a cheap option and the China problem will not continue indefinitely.

Sinopec just signed a deal with Syntroleum for a joint effort in construction of a 17,000 bpd gas-to-liquids plant in China. They also signed a deal with Exxon and Saudi Aramco to triple the capacity of a refinery in the Fujian province to 240,000 bpd by 2009. The deal includes two 800,000 ton per year crackers to produce other petroleum products including polyethylene.

Company info:

China Petroleum & Chemical Corporation (Sinopec Corp.) is an integrated energy and chemical company with upstream, midstream and downstream operations. The Company and its subsidiaries operate mainly in the People's Republic of China. The principal operations of Sinopec Corp. and its subsidiaries include exploring for and developing, producing and trading crude oil and natural gas; processing crude oil into refined oil products, producing refined oil products and trading, transporting, distributing and marketing refined oil products, and producing, distributing and trading petrochemical products. Sinopec Corp. has five operating segments: exploration and production, refining, marketing and distribution, chemicals, and corporate and others. On June 21, 2005, Sinopec Corp. entered into an agreement with Beijing Yanhua Hitech Co., Ltd., pursuant to which Sinopec Corp. acquired 95% equity of Beijing Yanhua Hi-tech Catalyst Co., Ltd., held by Yanhua Hi-tech Corp.

Breakdown target $82.50 hit on 2/27

Position: OCT $85 Call SNP-JQ @ $7.00
 


Play Updates

Existing Plays

The current format of the Play Updates has changed. Only the pertinent data that has changed from the prior week will be shown in an effort to concentrate more on new commentary on new plays rather than restating existing positions. Each play has a link back to either its last full commentary or its initial description.

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THE $32.94 -1.21 - TODCO ** Stop Loss $30.00 **

Todco gave back exactly what it earned the prior week and most of that was on Friday.

Earnings were reported on Thursday at $1.11 compared to analyst estimates of $1.01. This was more than a 300% gain over the same quarter in 2005. Revenues rose 73% on stronger day rates and improved rig utilization.

The drop came from post earnings depression as those traders who weathered the China storm ahead of earnings raced for the exits with their profits.

To see the initial commentary on this position click here

Earnings: March 1st, $1.11 vs .34 cents in comparison quarter

Current recommendation: Hold

Breakdown target $39 hit 12/7/06

Position: 2009 $45 LEAP ZYU-AI @ $8.40

Insurance Put: None

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CHK $29.89 -.58 - Chesapeake Energy ** Stop loss $28.50 **

CHK declined slightly and given the market conditions I have no complaints. No news and no change in play.

To see the initial commentary on this position click here

Earnings: Feb-23rd, 90 cents vs est 76 cents.

Current recommendation: Hold

Position: 2009 $35 LEAP VEC-AG @ $5.30

Insurance put: none

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FXI $95.10 -10.30 - China 25 Index Fund ** New Stop $93 **

That was a very ugly week for the FXI with the majority of losses coming from the Tuesday crash in Shanghai. We entered this position at $94.50 back in November and that $10 drop erased our gains. That is the peril of investing and we should be glad we are still up +2.40 on the LEAP. With some analysts saying there is still another drop coming in the Chinese markets I am going to add a stop loss at $93 to avoid going negative on the LEAP.

The iShares FTSE/Xinhua China 25 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the FTSE/Xinhua China 25 Index.

Component list

This iShare focuses on the largest companies in China (58% of it positions) and Hong Kong (42%). These are the most liquid companies in these markets. With Asia growing by leaps and bounds the FXI generated a +40% return in 2005 without using options. We hope to do better using LEAPs.

Current recommendation: Buy under $105

Breakout target: $94.50 hit 11/22/06 on gap open to $95.80

Position: 2009 $100 LEAP Call VHF-AT @ $13.50

No insurance

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MRO $89.24 -3.35 - Marathon Oil

Marathon dropped with the market despite very positive production news. MRO said production available for sale in 2007 would range between 390,000bpd and 425,000bpd compared to 365,000bpd in 2006. Based on their current projects they see available production rising t between 465K-520K bpd by 2010. No change in play.

To see the initial commentary on this position click here

Earnings: Feb-1st 3.06 vs 3.43 (Q4/05) $1.08 billion profit

Current recommendation: Buy at $85

Position 2009 $100 LEAP Call VXM-AT @ $12.60

Insurance put: 2/18/07
Position: March $85 PUT MRO-OQ @ 65 cents. Stop $85

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HES - $51.42 -4.16 - Hess Corporation
(Formerly (AHC))

The new high was short lived and the -$5 drop triggered our put insurance entry at $52.50. Maintain a profit stop on that put at $47. FBR upgraded HES to an outperform on Thursday citing an increase in reserves and growth from several new projects. The analyst raised his target price to $69 from $58 saying a 100% owned Gulf of Mexico project would add $15 to the share price.

To see the initial commentary on this position click here

Earnings: Jan 31st, $1.13, vs $1.44 in Q4/05, 230% replacement

Current recommendation: Buy at $47

Position:
11/05/06 2009 $50 LEAP Call VHS-AJ @ $6.80
Cost adjustment put exit +1.60, cost = $8.40

Insurance Put: Triggered Jan-3rd @ $49
01/03/07 May $45 put HES-QI @ $2.60, exit 1/26 $1.00

Insurance Put: 2/26/07
MAY $50 PUT IGG-QJ @ $1.35, profit stop $47

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BTU - $38.94 -5.50 - Peabody Energy

The buyout of TXU was responsible for the coal crash. TXU had planned to build 11 new coal fired plants and the coal would have come from Peabody and Arch Coal. As part of the deal to acquire TXU the investor group said they would scrap plans to build 8 of the 11 plants. This knocked BTU back into consolidation range where it spent the last six months. The plants were not going to be completed to 2011 so you could say this was a drastic over reaction to the news. I am adding a short put to reduce costs if BTU declines to $35.

SELL JAN-08 $30 PUT LLW-MF is BTU touches $35

To see the initial commentary on this position click here

Earnings: Jan-25th +42% including special items.

Current recommendation: Buy at $35

Position:
10/22/06 Jan-2009 $50 LEAP Call ZZT-AJ @ $8.70
02/05/07 March put stopped -$1.00, cost = $9.70

Insurance put: Triggered with drop through $39
01/03/07 March $35 Put BTU-OG at $1.15, stopped @ $42.50

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DVN - $64.45 -1.71 - Devon Energy ** Closed **

Devon continued to show no life and I said last week I would close it without any rebound. The LEAP is 10 cents below our purchase price and the put is in the money. We will exit with a breakeven or better.

Devon is on the brink of a support failure at $63.50 and we still have the March $50 put. I would monitor the put carefully on any further decline in Devon and it is entirely possible we could see a touch of $60 before the March expiration. It is currently in the money so we should capture any further drop. I am removing the stop and leaving it up to you when to close the put now that Devon is out of the portfolio. The impending fall in nat gas prices is the weight on Devon.

To see the last full commentary on this position click here

Earnings: Feb-7th, $1.36 vs est of $1.36

Current recommendation: Buy at $60

LEAP Position:
10/03/06 Position: 2009 $70 LEAP Call VVH-AN @ $9.00
Cost update: 1/22 Put exit +0.20 = $9.20

Insurance put: 2/16/07
MARCH $65 PUT DVN-PM @ $1.05.

Insurance put: Triggered 12/18 at $69
Position: Apr-2007 $60 Put DVN-PL @ $1.30, exit $1.10 1/22

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RIG - $75.43 -3.32 - Transocean Inc ** New Stop $74 **

The nearly $6 drop from Monday's highs put RIG back into the congestion range where it spent the last two months. There was no news and no change in their positive outlook. It was just a market correction at its finest. No news and no change in play.

Their rig report released Feb-2nd

To see the last full commentary on this position click here

Earnings: Feb-14th, $1.25 vs 46 cents in prior quarter.

Current recommendation: Buy at $74

LEAP Position:
10/03/06 Position: 2009 $80 LEAP Call VOI-AP @ $12.90
01/31/06 Cost update Put stopped -1.15 cost = 14.05

Insurance put: Triggered at $79 on Jan-3rd
1/3/07 Feb $75 PUT RIG-NO @ $2.55, stopped $77.50, $1.40

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TSO - $92.20 +.97 - Tesoro Corporation ** Stop Loss $89.00 **

Tesoro survived the market crash and actually posted a gain for the week. I raised the stop once again because I think this spike is getting out of hand. We are up +$25 on the LEAP and I am not giving that back! If stopped we will reenter with a different strike on the next dip. Citigroup raised the price target for TSO to $112. Let's hope they are right!

To see the last full commentary on this position click here

Earnings: Jan-29th, $2.28 +129%

Current recommendation: Hold

LEAP Position:
10/04/06 Position: 2009 $70 LEAP Call ZGC-AN @ $7.70

Insurance put: None

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SLB $62.25 -2.33 Schlumberger

SLB gave back last week's gains and returned to support on no news. I added a short put to reduce costs.

SELL JAN $55 PUT WUB-MK on a touch of $60 by SLB

To see the last full commentary on this position click here

Earnings schedule: Jan 19th, +71% to $1.13 billion

Current recommendation: Buy at $60, stop at $55

LEAP Position:
1/2 9/11/06 @ $8.60
1/2 9/12/06 @ $8.00
Position: 2009 $70 LEAP Call VWY-AN @ $8.30
Cost update for expired Jan put +2.00 = $10.30

Insurance Put: 9/18
Position: Jan $50 Put SLB-MJ @ $2.00, expired

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SUN $63.87 -2.38 - Sunoco

Sun actually performed rather well and gave back only about half of the prior week's gains. No complaints here!

SELL JAN $55 PUT WUD-MK on a touch of $60 by SUN

To see the last full commentary on this position click here

Earnings: Jan-31st, -57% $1.00 vs $.96 analyst est.

Current recommendation: Buy at $60, stop at $54

LEAP Position:
9/12/06 Position: 2009 $70 LEAP Call VUN-AN @ $13.50
Cost update expired Jan put +2.40 = $15.90

Insurance Put:
Position: Jan $55 Put SUN-MK @ $2.40, expired

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FST $30.70 -2.69 - Forest Oil ** Closed **

Forest disappointed everyone with a drop in earnings and a warning that Q1 would also be lower due to production problems and bad weather. This was a real case of bait and switch. Forest had been very positive in their conference presentations and then posted at 46% drop in earnings.

Enercom conference presentation

To see the last full commentary on this position click here

Earnings schedule: Feb-27th

Current recommendation: Buy at $30, stop at $27

LEAP Position: 9/12/06
Position: 2009 $40 LEAP Call OJG-AH @ 4.50

No insurance due to cheap LEAP

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VLO $57.00 -1.77 - Valero Energy

Valero held its ground and part of the prior week's gain despite the various refinery problems.

They presented at the Credit Suisse Energy Conference on the 8th. You can listen to that presentation here

No other news and no change in play.

To see the last full commentary on this position click here

Earnings: Feb-1st

Current recommendation: Buy at $50, stop at $45

LEAP Position:
9/24/06 Position: 2009 $60 LEAP Call VHB-AL @ $7.70
Cost update expired Jan put +2.25 = $9.95

Insurance Put:
Position: 9/25 Jan $45 Put VLO-MI @ $2.25, expired

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PBR - $86.47 -9.14 - Petroleo Brasileiro ** Stopped $89.50 **

Petrobras imploded with China and the Latin America markets. It was also hurt by the Chavez nationalization of the remaining properties in the Orinoco Belt. It was a bad week for Asia and South America.

To see the last full commentary on this position click here

Earnings schedule: N/A

Current recommendation: Buy at $92, stop at $85

LEAP Position:
9/08/06 Position: 2009 $100 LEAP Call VDW-AT @ $14.90
Cost update Jan expired put +1.80 = $16.70, exit $12.50, -4.20

Insurance put:
9/11 January $70 PBR-MN @ $1.80, expired

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DO - $75.12 -4.72 - Diamond Offshore ** New Stop $73.00 **

DO continued its decline and based on the chart I don't want to spend any further money on puts. I added a new stop loss and we will exit if support breaks.

To see the last full commentary on this position click here

Earnings schedule: Feb-8th

Current recommendation: Buy at $75, stop at $69

LEAP Position:
8/29/06 Position: 2009 $80 LEAP Call VCT-AP @ 14.20
Cost reduction: Oct $70 Put profit -3.15, cost now $11.05
Cost increase: Dec $60 put expired -2.40, cost now $13.45

Insurance Put:
10/08 Dec $60 Put DO-XL @ $2.40, expired

Position closed:
10/03 October $70 put DO-VN @ $1.65, exit @ $4.80, +3.15

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ATPG - $38.58 -4.36 - ATP Oil and Gas Corp ** Closed **

ATPG also disappointed with earnings and another star performer bit the dust. This was not a good week for earnings surprises!

To see the last full commentary on this position click here
Earnings schedule: Mar-2nd.

Current recommendation: Buy at $38, stop at $34

LEAP Position:
8/20/06 Position: 2009 $40 LEAP Call VCL-AH @ $11.70
12/17/06 Cost update expired Dec 35 put -1.50 = $13.20
Exit 3/04 @ 8.50, -4.70

Insurance put:
9/06 Position Dec $35 PUT HKU-XG @ $1.50, expired

***********************

PTR - $112.66 -7.86 - Petrochina ** Stopped @ $119 **

PTR took a substantial hit on the Asian debacle and gapped through our stop at $119 on Tuesday. I like PTR again in the $105-$110 range so I am putting back on the watch list.

To see the last full commentary on this position click here

Earnings schedule: N/A

Current recommendation: Buy under $125.50, stop at $119

LEAP Position:
5/14/06 Position: 2008 $120 LEAP Call LJC-AD @ $16.20
Cost adjustment: Close short Dec $115 call +1.30 = $17.50
Cost adjustment: Close long July $90 puts +3.00 = $20.50
Cost adjustment: Close long Sept $110 put -2.60 = $17.90
Cost adjustment: Expired Dec $100 put +2.20 = $20.00
Cost adjustment: Closed Jan $135 put -2.60 = $17.40
Exit 2/26 bid at $10.40 for -$7.00

Insurance put: (12/31)
1/03/07 Jan $135 Put PTR-MG at $138.50, $1.90
1/04/07 Profit stop at $132.50, $4.50 for +2.60.

Insurance put: (9/11)
Position: December $100 Put PTR-XT @ $2.20, expired

Insurance put: (8/13)
Position closed:
Sept $110 Put PTR-UB @ $2.40, stop @ $106 @ $5.00, +2.60

Insurance combo: Closed
Short: Dec $115 Call PTR-LC @ $3.20, 6/13, exit $4.50, -1.30
Long: (2) July $90 Puts PTR-SR @ $3.70, 6/13, exit $0.70, -3.00

Insurance puts: (Closed 6/7)
Closed: June $105 PUT PTR-RA, @ $4.20 (5/22), exit 6/7 @ $4.30


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Non-Energy Positions
****************************

None
 


Leaps Trader Watch List

Dropped Entries

None


New Watch List Entries
CCJ
Cameco
We got a second chance at $36 but I am not willing to just jump in given the current market volatility. I am adding it with some trigger points.
PTR Petrochina Time to reenter with a new and longer LEAP.
BHP BHP Billiton Back in the range of reality
ATI Allegheny Tech Coming back to support as well
TEX Terex Corp Support approaching

Current Watch List

UPL - Ultra Petroleum

Ultra Petroleum Corp. (Ultra) is an oil and gas company engaged in the development, production, operation, exploration and acquisition of oil and gas properties. The Company's operations are focused primarily in the Green River Basin of southwest Wyoming and Bohai Bay, offshore China. As of December 31, 2005, Ultra owned interests in approximately 148,007 gross acres in Wyoming covering approximately 230 square miles. The Company owns working interests in approximately 330 gross productive wells in this area and is operator of 53% of the 330 gross wells. Its domestic operations are focused on developing and expanding a tight gas sand project located in the Green River Basin in southwest Wyoming. During the year ended December 31, 2005, the Company's Wyoming production was approximately 87.4% of total oil and natural gas production on a thousand cubic feet of natural gas equivalent (MCFE) basis and 98.5% of the Company's estimated net proved reserves were in Wyoming on an MCFE basis.

Breakdown target $45

Buy JAN 2009 $50 LEAP Call AZH-AJ

*************************

OSX - Oil Service Index

Index Description:

The Philadelphia Oil Service Index is an index of 15 companies that provide drilling and production services, oil field equipment, support services and geophysical/reservoir services. This index contains companies like Halliburton, Nabors, Schlumberger, etc.

Complete list of OSX components

Breakdown trigger $180

SHORT Sept $220 PUT - OFJ-UD, Stop loss OSX $160

************************

CCJ - Cameco

Cameco Corporation (Cameco) is primarily engaged in the exploration for and the development, mining, refining and conversion of uranium for sale as fuel for generating electricity in nuclear power reactors in Canada and other countries. The Company has a 31.6% interest in Bruce Power L.P. (BPLP), which operates the four Bruce B nuclear reactors in Ontario. Cameco's 52.7% subsidiary Centerra Gold Inc. (Centerra) is involved in the exploration for and the development, mining and sale of gold. Cameco has four segments: uranium, fuel services, nuclear electricity generation and gold. In June 2006, the Company acquired a 19.5% interest in UNOR Inc

Cameco appears to have the Cigar Lake disaster under control and is taking steps to reopen the mine.

http://biz.yahoo.com/iw/070301/0222031.html

Breakdown trigger: $34.00
Breakout trigger: $37.50

BUY JAN-09 $40 LEAP Call ZBK-AH

************************

BHP - BHP Billiton

BHP Billiton Limited is a diversified resources group. The Company has seven business units, or Customer Sector Groups: Petroleum, which explores for, produces, processes and markets hydrocarbons, including oil, gas and liquefied natural gas; Aluminium, which explores for and mines bauxite, and processes and markets aluminium and alumina; Base Metals, which explores for, mines, processes and markets copper, silver, zinc, lead, uranium and copper by-products, including gold and molybdenum; Carbon Steel Materials, which explores for, mines, processes and markets metallurgical coal, iron ore and manganese used in the production of carbon steel; Diamonds and Specialty Products, which explores for and mines diamonds and titanium minerals; Energy Coal, which explores for, mines, processes and markets energy coal for use in electricity generation, and Stainless Steel Materials, which explores for, mines, processes and markets nickel, which is used in the production of stainless steel.

Breakdown target $40.00
Breakout target $43.50

BUY JAN-09 $50 LEAP Call ZPK-AJ

************************

ATI - Allegheny Tech

Allegheny Technologies Incorporated (ATI) is a diversified specialty metals producer. The Company operates in three segments: High Performance Metals, Flat-Rolled Products and Engineered Products. The High Performance Metals segment produces, converts and distributes a range of high-performance alloys, including nickel and cobalt-based alloys and superalloys, titanium and titanium-based alloys, zirconium, hafnium, niobium, nickel-titanium and their related alloys. The Flat-Rolled Products segment produces, converts and distributes stainless steel, nickel-based alloys, and titanium and titanium-based alloys. The Engineered Products segment produces tungsten powder, tungsten heavy alloys, tungsten carbide materials and carbide cutting tools. ATI products are used in various markets. These markets include aerospace, defense, chemical process industry, oil and gas, electrical energy and medical.

Breakdown target $92.50

Call spread:
BUY JAN-09 $100 LEAP Call OYG-AA
SELL JAN-09 $140 LEAP Call ZKG-AH

************************

TEX - Terex Corp

Terex Corporation (Terex) is a diversified global manufacturer of capital equipment delivering solutions for the construction, infrastructure, quarry, mining, shipping, transportation, refining and utility industries. The Company operates in five business segments: Terex Construction, Terex Cranes, Terex Aerial Work Platforms, Terex Materials Processing & Mining, and Terex Roadbuilding, Utility Products and Other. The Company's products are manufactured at plants in North America, Europe, Australia, Asia and South America, and are sold primarily through dealers and distributors worldwide. During the year ended December 31, 2005, it acquired Halco Holdings Limited and its affiliates, and Power Legend International Limited and its affiliates. It entered into a joint venture with North Hauler Joint Stock Company Limited to produce high-capacity surface mining trucks in China. It has a 50%-ownership interest in Sichuan Changjiang Engineering Crane Co., Ltd.

Breakdown target $60.00

Call spread
BUY JAN-09 $70 LEAP Call VXQ-AN
SELL JAN-09 $110 LEAP Call VXQ-AB

************************

PTR - Petrochina

PetroChina Company Limited operates a range of petroleum and related activities through four primary business segments: Exploration and Production Segment, Refining and Marketing Segment, Chemicals and Marketing Segment, and Natural Gas and Pipeline Segment. The activities include the exploration, development, production and sales of crude oil and natural gas; the refining, transportation, storage and marketing of crude oil and petroleum products; the production and sales of basic petrochemical products, derivative chemical products and other chemical products, and the transmission of natural gas, crude oil and refined products, and the sales of natural gas.

Breakdown targets: $110 1/2 position, $105 1/2 position

BUY JAN-09 $120 LEAP Call ZJK-AD

Breakout target $118.50

BUY JAN-09 $130 LEAP Call ZJK-AF
 

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