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Weekly Newsletter, Sunday, 10/28/2007

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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

Another Fun Week For Oil Bears

I am beginning to think there is a vast right wing conspiracy preventing oil prices from declining. Wait, somebody already used that excuse so I can't use it. I have to admit it was almost funny watching the Chief Economist from Tesoro on CNBC claiming oil was only worth $60 today. Of course he was as dumbfounded as the rest of us as to why oil continues to rise in the face of nearly everybody on the planet claiming there is plenty of oil.

Lynn Westfall said they can buy oil in any quantity and from anyone and there is no shortage. Because they don't do long-term contracts preferring instead to just buy it on the liquid market as needed Lynn said they would be the first ones cut off from supply if there was a shortage. Those refiners with long-term contracts would continue to be supplied at least theoretically. He said people they have never bought from are banging on their door every day trying to get Tesoro to buy oil from them. Lynn was emphatic in his claim there is no shortage.

That was Thursday night and oil had just touched $90 again. On Friday crude spiked to 92.22 on the new U.S. sanctions on Iran, new attacks and shutdowns in Nigeria, Lebanese troops firing on Israel planes and Turkey bombing locations inside Iraq. It was a fun night in the oil world!

The key really appears to be Iran. Each day brings us closer to a confrontation with Iran or at least a blockade of Iranian oil. At least that is the perception in the markets. We all know in trading it is the perception that matters most. In this case investors may eventually be right about the conflict but it remains to be seen if they can stay invested until proven right.
According to Mr. Westfall hedge fund speculators betting on the geopolitical concerns are driving up the prices by investing billions in the futures. He felt this was a quarterly event and once oil prices stalled we could be in for a sharp decline as these funds jam the exits to capture their profits.

You may have noticed that despite the +$12 spike in crude over the last three weeks that some oil companies have not followed the price higher. Crude took off on Oct-11th and Exxon hit a high of $94.25 that day. Since then XOM has declined to 89.67 early last week and then rebounded slightly to 91.92. Oil went up +$12 and XOM fell -2.25 over the same period. Chevron hit a high of $92.25 on the 11th and then declined to trigger our entry at $87 on the 22nd despite crude exploding higher.

The problem here is the shrinking crack spreads and some poor earnings guidance from several energy companies that already reported. Oil hit $92 on Friday but refined gasoline was selling for $95.50. The $15-$20 crack spreads from early in the summer have declined to only a couple dollars today. Refiners are making relatively little money at the current price. One analyst said on Friday that refiners will slow production eventually rather than sell gasoline for a loss. The problem is the lack of demand for gasoline. This may already be happening since gasoline inventories fell by 2 million barrels last week.

Crude imports fell a whopping 1.3 mbpd over the last week suggesting refiners are cutting back on their purchases until the price imbalance corrects. Capacity utilization fell back to 87.1% last week. The refiner market and the inventory levels are trying to tell us there is an artificial imbalance in progress. Gasoline inventories are 7.1% below 2006 levels but gasoline prices are only about 20 cents higher. Crude was $66 this time last year and at $92 today that is a 40% increase or $26. You would think a $26 increase in crude prices would produce more than a 20-cent increase in gasoline prices. Under normal supply and demand conditions the ratio between crude prices and gasoline would be relatively constant. These are not normal markets. Using the same ratio as in October 2006 gasoline futures should be about $3.20 now instead of $2.27.

On Friday Kirk Kerkorian announced a bid to buy 20% of Tesoro at $64 a share. Either captain Kirk has finally gone senile or he knows something we don't. Does Kerkorian think gasoline is going to $3.20 to reinflate the crack spreads? Several analysts spoke in unkind words about his bid while a lone Goldman Sachs analyst agreed with Kerkorian that refiners were undervalued. Something smells here and I am not downwind from a refinery. I removed TSO from the watch list.

Earnings from several companies produced a drag on individual stocks. Grant Prideco reported earnings that missed estimates due to charges for consolidation of production into a new facility. Earnings were 96 cents compared to 95 cents in Q3-2006 and analyst estimates of $1.01. Revenue rose 43% and offset most of the consolidation charges. They raised estimates for Q4 to $1.10 compared to analyst's estimates of $1.01. The stock was pummeled to a new 7-month low at $48. This might be a buying opportunity but I would rather not catch a falling knife today.

Baker Hughes hit a high just over $100 on the initial oil price spike but fell to $88 on Friday after just "meeting" analyst estimates for earnings. Various analysts said rising costs at BHI and in the industry were going to be a problem and criticized the 21.8% operating margin at BHI. Revenue was up +16% and profits +9%. Analysts better get used to rising costs since everything in the oilfield is going up. Rigs cost more, pipe costs more, labor is more expensive and much of the equipment is on backorder. This is not a recipe for decreasing costs. It is also another reason oil companies in general are not surging on the spikes in oil. Lots of earnings warnings and misses and the quarter is still young.

We were successful in entering three new positions last week. The drop in crude on the 22nd was only -$3 and short lived but the drop in energy stocks was worse in some cases. The Schlumberger earnings the prior week weakened the service sector and the drop in crude pushed SLB and OII to our targets. The shrinking crack spreads pushed Chevron to $87 and our entry at the same time. I was hoping the drop would continue so we could capture a couple more but it was not to be. I am still trying to avoid chasing these stocks. If we ever do get a correction in crude it could be a monster and the individual stocks could be hammered. We just need to bide our time and wait. Missed profits are better than lost money every time.


December Crude Futures Chart - Daily

November Natural Gas Futures Chart - Daily

November Gasoline Futures Chart - RBOB Daily

 


Changes in Portfolio

New Energy Plays
WHQ W-H Energy Services

New Non-Energy Plays

None


Dropped Plays
GLBL $23.61 Global Industries ** Closed **

New Watch List Plays Triggered
SLB $99.58 Schlumberger
CVX $91.65 Chevron
OII $78.55 Oceaneering International

Portfolio Listing & Top Picks


New Plays

Most Recent Plays

W-H Energy Services

W-H (WHQ) warned back on Oct-11th and was severely beaten with an $18 drop. Their earnings are Tuesday. I think the damage was overdone and we could see an improvement in the outlook. I am suggesting this as a short term trade that could turn into a long term position.

Company Info:

W-H Energy Services, Inc. (W-H) is a diversified oilfield service company that provides products and services used in connection with the drilling and completion of oil and natural gas wells and the production of oil and natural gas. The Company has operations in North America and select areas internationally. The business operations include drilling related products and services, which include logging-while-drilling, measurement-while-drilling, directional drilling, down-hole drilling motors, drilling fluids and rental tools, and completion and workover related products and services, which include cased-hole wireline logging, perforating, tubing conveyed perforating and associated rental equipment, coiled tubing, completion fluids and rental tools. The customers include independent oil and natural gas companies, drilling contractors and other oilfield service companies.

Buy April $65 Call WHQ-DM currently $5.10


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New Watch List Plays Triggered
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SLB $99.58 - Schlumberger

SLB posted earnings that rose +35% but the stock was hammered on worries about slowing gas drilling in North America. American revenue was off -3% from the prior year while other areas were up strongly. SLB shares fell from the prior week's high near $114 to $94.79 after earnings. That triggered our entry at $95. I think this is an excellent entry right at the 100-day average and without any further surprises in service sector earnings SLB should move up from here. No stop until we see what next week brings.

Company Info:

Schlumberger Limited (Schlumberger) is an oilfield service company supplying a range of technology services and solutions to the international petroleum industry. It consists of two business segments: Schlumberger Oilfield Services and WesternGeco. Schlumberger Oilfield Services is an oilfield services company supplying a range of technology services and solutions to the international oil and gas industry. WesternGeco, owned by Schlumberger and Baker Hughes, is an advanced surface seismic company. Schlumberger's products and services include the evaluation and development of oil reservoirs (controlled digging, pumping and testing services), well construction and production consulting, and sale of software programs. The Company also offers storage tank and seismic monitoring services. Schlumberger Limited is headquartered in Paris, France.

Breakdown target: $95.00 hit Oct-22nd

Position: 2009 $100 LEAP Call VWY-AT @ $15.60

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CVX $91.65 - Chevron

Another outstanding entry thanks to the Schlumberger earnings. Chevron fell more than $7 over 2 days on the SLB news to a low of $86.72 triggering our entry at $87. This was right on the 100-day average and strong support. No stop today.

Earnings are Nov-2nd

Company Info:

Chevron Corp. (Chevron), manages its investments in subsidiaries and affiliates, and provides administrative, financial, management and technology support to the United States and foreign subsidiaries that engage in fully integrated petroleum operations, chemicals operations, mining operations of coal and other minerals, power generation and energy services. Exploration and production (upstream) operations consist of exploring for, developing and producing crude oil and natural gas, and also marketing natural gas. Refining, marketing and transportation (downstream) operations relate to refining crude oil into finished petroleum products; marketing crude oil and the many products derived from petroleum, and transporting crude oil, natural gas and petroleum products by pipeline, marine vessel, motor equipment and rail car. Chemical operations include the manufacture and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant oil additives.

Breakdown trigger: $87 hit Oct-22nd

Position: 2009 $100 LEAP Call VCH-AT @ $6.40

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OII $78.55 - Oceaneering International

Absolutely no news on OII but the service company collapsed -$18 on the SLB news. Once again, thank you SLB. No stop

Earnings Nov-1st

Company Info:

Oceaneering International, Inc. is a global oilfield provider of engineered services and products primarily to the offshore oil and gas industry, with a focus on deepwater applications. Through the use of its applied technology capabilities, the Company also serves the defense and aerospace industries. The services and products the Company provides to the oil and gas industry include remotely operated vehicles, mobile offshore production systems, built-to-order specialty hardware, engineering and project management, subsea intervention services, nondestructive testing and inspection, and manned diving. Oceaneering International, Inc s business segments are contained within two businesses: services and products provided to the oil and gas industry (Oil and Gas) and all other services and products (Advanced Technologies). In July 2007, the Company announced the acquisition of Ifokus Engineering AS, a Norwegian designer and manufacturer of specialty sub-sea products.

Breakdown trigger: $72 hit on Oct-22nd

Position: APR $80 Call OII-DP @ $5.40

 


Play Updates

Existing Plays

NOV $72.50 +2.65 - National Oilwell Varco

NOV reported earnings on Wednesday that doubled to $1.02 per share. Analysts were expecting 94 cents. The backlog of orders rose to $8 billion from $7.2 billion in the prior quarter. NOV shares sagged slightly as they confirmed that North American activity was continuing to drift down slightly as spending on new rigs slowed. However they were very upbeat about the Gulf and deep water saying activity there should pickup significantly over the next 12-18 months. Sales were up +45% with their rig technology segment up +72%. Operating profits jumped +91%. I believe the weakness in the stock due to slowing North American activity is incorrect. NOV gets 89% of its revenue from international firms and with the pickup in activity in the Gulf I think NOV will return to its highs before too long.

Breakout Trigger: $80, hit 10/11/07

Position: 2008 May $90 Call NON-ER @ $7.20

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MDR - $60.34 -.53 McDermott International

No further news on MDR but the stop recovered from its $51 low on Monday to within 50 cents of its $62 high on Friday. An $11 rebound is definitely nothing to complain about. That shows buyers were eager to buy this dip.

Earnings schedule: Nov 8th

Breakout trigger: $53, hit 9/20

Position: 2009 $60 LEAP Call OYZ-AL @ $9.00

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UPL $67.39 +0.90 - Ultra Petroleum *** Stop Loss $52 ***

Ultra dipped on Monday but recovered most of the drop by Friday's close. They completed their sale of the China leases and announced their earnings call for next Wednesday.

Earnings scheduled for Oct-31st.

Ultra Petroleum presentation

Breakdown target: $52.50 Hit 8/30

Position: Jan 2009 $60 LEAP Call OZH-AL @ $8.00

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CHK $38.81 +1.32 Chesapeake Energy

CHK shook off the early week weakness in gas prices and rebounded to close at another new high on Friday. No complaints and no news.

Earnings schedule: Nov 7th

Link to Enercom presentation

Position: 2010 $35 LEAP Call WZY-AG @ $6.60
10/28 Price update: Expired Oct Put +90 cents, $7.50

Insurance put:
Oct $30 Put CHK-VF @ 90 cents. Expired

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HP $30.65 -2.33 Helmerich & Payne *** Stop Loss $27.50 ***

No news and a continued drop on the weak North American rig market. We still have the insurance put so we are covered against any further declines. No earnings announcement yet.

Enercom presentation here

Position: Jan 2009 $35 LEAP Call ZQA-AG @ $4.50

Insurance put:
Position: Nov $30 HP-WF. @ .50, Stop $28.50

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HERO $25.04 -.11 Hercules Offshore ** Stop Loss $24.00 **

HERO held its ground all week ahead of its earnings scheduled for next Tuesday. No news. Maintain the stop at $24.

Earnings are scheduled for Oct-30th.

Enercom presentation

Position: 2008 April $30 Call HIQ-DF @ $3.00

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GLBL $23.61 -1.50 Global Industries ** Closed **

The rate of decline on no news has soured me on this position. We are only down a buck so I am exiting before it gets worse.

Earnings schedule: Nov-1st

Enercom presentation

Position: 2008 March $25 Call GQO-CE @ $3.30, exit 2.15, -1.15

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BHP - $86.16 +3.58 BHP Billiton ** Stop Loss $60.00 **

Another new closing high after a very volatile week. Definitely no complaints! Surging oil, gold and copper prices powered BHP but it was a rocky ride! No earnings date yet.

Breakdown target: $55 hit 8/15/07

Position: 2010 $70 LEAP Call LPH-AN @ $9.00

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CCJ - $50.57 +5.38 Cameco ** No Stop **

All the news about the shortage of uranium has built a nuclear reaction under CCJ with a $5 gain. The 439 reactors currently operating around the world will soon be joined by 31 under construction, 86 planned and 223 proposed. The amount of uranium currently consumed each year is 80,000 tons. Mine production is 42,000 tons. Obsolete nuclear weapons being decommissioned makes up the difference but those will be used up in the next couple of years. Uranium is going higher and CCJ is the largest producer in the world. No news and no change in play.

Earnings schedule: Oct-31st

Breakdown target: $35 Hit 8/16/07

Position: 2010 $50 LEAP Call LTA-AJ @ $7.20


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Non-Energy Positions
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None
 


Leaps Trader Watch List

I keep thinking there is a correction coming for the Chinese markets and I would hate to miss a couple entries on these strong stocks. We may have to wait months for an entry but I want to be ready when it happens.

I am revising some of the targets to compensate for the upward moves. I do not want to get too aggressive in case we really have a decent correction in crude. We saw three nice entries last week and there are a bunch of earnings reports next week. We could easily see another Schlumberger type event that knocks selected stocks back into range. Be patient.

Dropped Entries
TSO Tesoro Good luck Captain Kirk!

New Watch List Entries
PTR
PetroChina
FXI FTSE China 25

Current Watch List

JEC - Jacobs Engineering Group

Jacobs relative strength is making it very hard to target for an entry.

Company Info:

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.

No LEAPS

Breakdown target: $75.00 *** New Trigger ***

Buy APR 2008 $85 Call JEC-DQ *** New Strike ***

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VLO - Valero Energy

Looking to buy Valero cheap on the fall dip.

Company Info:

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 *** New Trigger ***

BUY 2009 $75 LEAP Call VHB-AO *** New Strike ***

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COP - Conoco Phillips

I hesitate to add Conoco because of its Russian LUKOIL exposure but the company is doing everything else right. Now that it is out of Venezuela it should be more aggressive with other opportunities. COP announced a new $15 billion buyback at the end of September.

Company Info:

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

Buy 2009 $90 LEAP Call OJP-AR

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MRO - Marathon Oil

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%.

Company Info:

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: $54 *** New trigger ***

Buy 2009 $60 LEAP Call VXM-AL

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XOM - ExxonMobil

Earnings are next week!

Company Info:

Exxon Mobil Corporation (ExxonMobil) is an international oil and gas company. ExxonMobil operates facilities or market products in many countries, and explores for oil and natural gas on six continents. ExxonMobil is involved in the exploration and production of crude oil and natural gas; the manufacture of petroleum products, and the transportation and sale of crude oil, natural gas and petroleum products. ExxonMobil is a manufacturer and marketer of commodity and specialty petrochemicals, and also has interests in electric power generation facilities. In addition, the Company conducts research programs in support of these businesses.

Breakdown trigger: $88 *** New trigger ***

Buy 2009 $100 LEAP Call ODU-AT *** New Strike ***

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CNQ - Canadian Natural Resources

Company Info:

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: $73.00 *** New Trigger ***

Buy 2009 $80 LEAP Call OKR-AP *** New Strike ***

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PBR - Petrobras

Company Info:

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.

Breakdown Trigger: $80 *** New Trigger ***

Buy 2009 $90 LEAP Call VDW-AR *** New Strike ***

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DO - Diamond Offshore

Company Info:

Diamond Offshore Drilling, Inc. (Diamond Offshore) provides contract drilling services to the energy industry worldwide and is also engaged in deepwater drilling with a fleet of 44 offshore drilling rigs. The Company's fleet consists of 30 semisubmersibles, 13 jack-ups and one drillship. The Company offers a range of services worldwide in various markets, including the deep water, harsh environment, conventional semisubmersible and jack-up markets. The Company provides offshore drilling services to a customer base that includes independent oil and gas companies and government-owned oil companies.

Breakdown Trigger: $105 *** New trigger ***

Buy 2009 $110 LEAP Call VCT-AB *** New Strike ***

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CLB - Core Labs

We may have missed CLB for good. They reported blowout earnings and raised guidance on 10/24.

Company Info:

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 *** New Trigger ***

Buy 2009 $140 LEAP Call ZYM-AH *** New Strike ***

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APA - Apache Corporation

Apache was upgraded to 5 stars by Morningstar in late August.

Company Info:

Enercom presentation

Apache Corporation is an independent energy company that explores for, develops and produces natural gas, crude oil and natural gas liquids. In North America, the Company's exploration and production interests are focused in the Gulf of Mexico, the Gulf Coast, East Texas, the Permian Basin, the Anadarko Basin and the Western Sedimentary Basin of Canada. It has interests in onshore Egypt, offshore Western Australia, offshore the United Kingdom in the North Sea (North Sea), and onshore Argentina. Its segments are the United States, Canada, Egypt, Australia, the North Sea and Other International. The Company also holds interests in many of its United States, Canadian and other international properties through operating subsidiaries, such as Apache Canada Ltd., DEK Energy Company (DEKALB), Apache Energy Limited (AEL), Apache International, Inc. and Apache Overseas, Inc. On January 6, 2006, the Company completed the sale of its 55% interest in the deepwater section of Egypt's West Mediterranean.

Breakdown trigger: $85

Buy 2009 $90 LEAP Call OWF-AR

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FWLT - Foster Wheeler

This is a long shot but a great entry if we can get it.

Company Info:

Foster Wheeler Ltd. operates through two business groups, which also constitute its segments: Global Engineering and Construction Group (E&C Group), and Global Power Group. The Global E&C Group designs, engineers and constructs onshore and offshore upstream oil and gas processing facilities, natural gas liquefaction facilities and receiving terminals, gas-to-liquids facilities, oil refining, and chemical and petrochemical, pharmaceutical, biotechnology and healthcare facilities and related infrastructure, including power generation and distribution facilities. Global Power Group designs, manufactures, and erects steam generating and auxiliary equipment for electric power generating stations and industrial facilities worldwide. On April 7, 2006, the Company completed the purchase of the remaining 51% interest in MF Power S.r.L., a joint venture that was 49% owned by the Company's Global E&C Group prior to the acquisition.

Breakdown trigger: $135 *** New trigger ***

BUY 2009 $150 LEAP Call ZHF-AW *** New Strike ***

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FTI - FMC Technologies

Company Info:

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 *** New Trigger ***

Buy APR $65 Call FTI-DM *** New Strike ***

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CAM - Cameron International

Company Info:

Cameron International Corp., formerly Cooper Cameron Corporation, is an international manufacturer of oil and gas pressure control and separation equipment, including valves, wellheads, controls, chokes, blowout preventers and assembled systems for oil and gas drilling, production and transmission used in onshore, offshore and subsea applications and provides oil and gas separation, metering and flow measurement equipment. It is also a manufacturer of centrifugal air compressors, integral and separable gas compressors and turbochargers. The Company's operations are organized into three separate business segments: Drilling & Production Systems (DPS), formerly the Cameron segment; Valves & Measurement (V&M), formerly the Cooper Cameron Valves segment, and Compression Systems (CS), formerly the Cooper Compression segment. In January 2006, the Company acquired the assets and liabilities of Caldon Company.

Breakdown target: $95 *** New Trigger ***

Buy 2009 $100 LEAP Call OKA-AT *** New Strike ***

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FXI - iShares FTSE/Xinhua China 25 Index Fund

ETF Info

iShares FTSE/Xinhua China 25 Index Fund (the Fund) seeks investment results that correspond generally to the price and yield performance of the FTSE/Xinhua China 25 Index (the Index). The Index is designed to represent the performance of the largest companies in the China equity market that are available to international investors. The Index consists of Class H and Red Chip shares of 25 of the largest and most liquid Chinese companies. Securities in the Index are weighted based on the total market value of their shares. Each security in the Index is a constituent of the FTSE All-World Index. All of the securities in the Index trade on the Hong Kong Stock Exchange. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. The Fund s investment advisor is Barclays Global Fund Advisors.

Breakdown trigger: $190

Buy 2009 $210 LEAP Call VHF-AA

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PTR - PetroChina

I can't stand not being in PTR so I brought it back into the watch list. Eventually there is going to be a correction and I want to capture it when it happens. We may have to wait months but it will come.

Company Info

PetroChina Company Limited (PetroChina) is engaged in a range of activities related to petroleum and natural gas through its four business segments: Exploration and Production, Refining and Marketing, Chemicals and Marketing, and Natural Gas and Pipeline. The activities include the exploration, development and production of crude oil and natural gas; the refining, transportation, storage and marketing of crude oil and petroleum products; the production and sales of chemical products, and the transmission, marketing and sales of natural gas. PetroChina Company Limited was established as a joint stock company as part of the restructuring of the China National Petroleum Corporation (CNPC). CNPC is the controlling shareholder of the Company with 88.21% shares.

Breakdown trigger $190

Buy 2009 $220 LEAP Call ZJK-AZ
 


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