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UPL $43.65 Ultra Petroleum ** Stop loss $40.00 **

Ultra set a new high at $45.60 on Thursday and retreated to close at $43.65 on no news. Simple profit taking in my opinion since all energy stocks had exactly the same pattern. UPL retreated to the 100/130 ema on the 30 min chart which is a buy signal for me. Strong support in the $42 range provides a safety zone.

Company info:

Ultra Petroleum Corp. 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 in the Green River Basin of southwest Wyoming and Bohai Bay, offshore China. During the year ended December 31, 2004, it owns interests in approximately 166,974 gross (92,997 net) acres in Wyoming covering approximately 260 square miles. The Company owns working interests in approximately 241 gross productive wells in this area and is operator of 41.5% of the 241 gross wells. Through Pendaries Petroleum Ltd., it is active in oil and gas exploration and development in Bohai Bay, China. The Company also owns interests in 15,518 gross (14,652 net) acres in Pennsylvania, as well as interest in approximately 720 gross (320 net) acres and interests in three productive wells in Texas.

Jan 2007 $45 LEAP CALL OZH-AI @ $8.40

Alternate short-term entry:
March $45 Call UPL-CI @ $4.40

Entry $40.00(8.22)

MRO - $65.06 Marathon Oil ** Stop loss $61.00 **

Marathon rebounded from $59 to $67 for a killer week and like the other stocks retreated only slightly on Friday. Marathon was seen to be at risk in the wake of Katrina but recent reports indicate there was little damage. If I was going to look for a new entry I would want it to be closer to $63.50 but any move over $66 could be the train leaving the station again.

Company Info

Marathon Oil Corporation (Marathon) is engaged in worldwide exploration and production of crude oil and natural gas. It operates through three segments: exploration and production (E&P), which explores for and produces crude oil and natural gas; refining, marketing and transportation (RM&T), which refines, markets and transports crude oil and petroleum products, and integrated gas (IG), which markets and transports natural gas and products manufactured from natural gas, such as liquefied natural gas (LNG) and methanol. The Company's principal operating subsidiaries are Marathon Oil Company and Marathon Ashland Petroleum LLC (MAP). During the year ended December 31, 2004, the Company's worldwide liquid hydrocarbon production averaged 170,000 barrels per day (bpd) and sales of natural gas production, including gas acquired for injection and subsequent resale, averaged 999 million cubic feet per day (mmcfd).

JAN-2008 $65 LEAP Call WXM-AN @ $6.50

Alternate short-term entry:
Jan-06 $65 Call MRO-AM @ $2.90

Entry $61 (8/22)

COP - $66.77 Conoco Phillips ** Stop loss $63.50 **

A midweek upgrade gave Conoco a +$3 boost on Thursday but profit taking snatched -$2 back on Friday. COP ended up +4.77 for the week and we definitely can't complain. Support is just over $65 and I would look to enter new positions in that range. Conoco's 247,000 bbl Alliance refinery is still without power and could take an additional two weeks to restart. No date can be set until power can be restored.

Company Info:

ConocoPhillips is an integrated energy company. The Company's business is organized into six operating segments. The Exploration and Production segment primarily explores for, produces and markets crude oil, natural gas, and natural gas liquids on a worldwide basis. The Midstream segment gathers and processes natural gas produced by ConocoPhillips and others, and fractionates and markets natural gas liquids. The Refining and Marketing segment purchases, refines, markets and transports crude oil and petroleum products. The LUKOIL Investment segment consists of the Company's equity investment in LUKOIL, an international, integrated oil and gas company. The Chemicals segment manufactures and markets petrochemicals and plastics on a worldwide basis. The Emerging Businesses segment encompasses the development of new businesses, including new technologies related to natural gas conversion into clean fuels and related products, technology solutions, power generation and emerging technologies.

JAN-2007 $65 LEAP CALL OJP-AM @ $7.50

Alternate short-term entry:
Jan-06 $65 Call COP-AM @ $4.40

Entry $63.50 (8/22)

CHK - $31.78 Chesapeake Energy ** Stop loss $29.00 **

Chesapeake rallied of the Katrina news as a gas producer completely isolated from the storm. The dramatically higher price of natural gas is a plus for CHK and their very low cost structure. Initial support in the $30 range would make a nice entry on a pullback. Stronger secondary support is very strong in the $28 range. S&P raised earnings targets on CHK because of their increased earnings potential as gas moves higher.

Company Info

Chesapeake Energy Corporation is an oil and natural gas exploration and production company engaged in the acquisition, exploration and development of properties for the production of crude oil and natural gas from underground reservoirs and the marketing of natural gas and oil for other working interest owners in properties that it operates. The Company's properties are located in Oklahoma, Texas, Arkansas, Louisiana, Kansas, Montana, Colorado, North Dakota and New Mexico. The proved oil and natural gas reserves as of December 31, 2004 were approximately 4.9 trillion cubic feet of gas equivalent (tcfe). At December 31, 2004, approximately 89% of the Company's proved reserves (by volume) were natural gas, and approximately 70% of its proved oil and natural gas reserves were located in the primary operating area, the Mid-Continent region of the United States, which includes Oklahoma, western Arkansas, southwestern Kansas and the Texas Panhandle.

JAN 2007 $30 LEAP CALL VEC-AF @ 4.90

Alternate short-term entry:
Jan-06 $30 Call CHK-AE @ $2.25

Entry $28.11 (8/28)

VLO - $108.43 Valero Energy ** Stop Loss $102.50 **

Unbelievable! When refiners started dropping like flies in Louisiana Valero literally took off like a rocket. The stock gained +25 points for the week with only a minor decline on Friday. For those looking for an entry point ANY decline should be targeted. Valero will be reaping huge profit margins from the lack of competition and ability to process sour crude. The lack of ANY material pullback after a +25 point sprint should be an indication of its relative strength.

Valero completed its acquisition of Premcor on Monday giving it an even stronger position in the market. Premcor shareholders who elected to receive stock received a combination of cas and stock worth $90.13 on Thursday in exchange for their PCO stock at $81.77. The VLO stock hit $113 on Thursday. Pretty good deal for those shareholders!

Company info:

Valero Energy Corporation (Valero) owns and operates 15 refineries having a combined throughput capacity, including crude oil and other feedstocks, of approximately 2.5 million barrels per day. Valero produces environmentally clean refined products, such as reformulated gasoline (RFG), gasoline meeting the specifications of the California Air Resources Board (CARB), CARB diesel fuel, low-sulfur diesel fuel and oxygenates (liquid hydrocarbon compounds containing oxygen). It also produces conventional gasolines, distillates, jet fuel, asphalt and petrochemicals. Valero 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 more than 4,700 retail and wholesale branded outlets in the United States, Canada and Aruba. Valero's retail operations include approximately 1,500 company-operated sites that sell transportation fuels and convenience store merchandise.

JAN 2007 $100 LEAP CALL VHB-AT @ $12.10

Alternate short-term entry:
Mar-06 $100 Call VLO-CT @ $6.40

Insurance put: October $80 Put VLO-VP @ $1.50

Entry $89 (8/22)

XLE - $50.95 Energy SPDR ** Stop Loss $49.00 **

The XLE broke out to a new high after the sharpest jump in over a year. Support is in the $50 range for those looking for a new entry. The combination of drillers, service companies and integrated oils overcame the XOM cloud.

SPDR Description:

The XLE SPDR is composed of 27 energy stocks and represents about 9% of the SPX. This is the 9% that helped push the SPX to the current levels with the rise in oil over the last year. In fact the XLE has far exceeded the SPX in performance over the past year.

List of XLE components: XLE List

JAN 2007 $55 LEAP CALL OJW-AC @ $3.50

Alternate short-term entry:
Jan-06 $50 Call XBT-AX @ $2.45

Entry $49 (8/22)

MEE - $49.75 Massey Energy ** Stop Loss $46.50 **

Massey tried very hard to break $51 after the Monday ramp but could not muster the energy. The drop on Friday back to the 100 ema (30min) appears to be another buying opportunity but confirm upward movement before taking the bait.

Massey is a favorite of Boone Pickens and one of the stocks he recommends. They have a high demand low sulphur coal with reserves of 3.2 billion tons.

Company info:

Massey Energy Company (Massey) produces, processes and sells bituminous coal of steam and metallurgical grades of a low-sulfur content through its 22 processing and shipping centers, called resource groups, many of which receive coal from multiple coal mines. Massey operates 34 underground mines (four of which employ both room and pillar and longwall mining) and 15 surface mines (with seven highwall miners in operation) in West Virginia, Kentucky, and Virginia. Its steam coal is purchased by utilities and industrial clients as fuel for power plants. Its metallurgical coal is used to make coke for use in the manufacture of steel.

JAN 2007 $50 LEAP CALL VHK-AJ @ $9.00

Alternate short-term entry:
Jan-06 $55 Call MEE-AK @ $2.95

Entry $49 (8/22)

TLM $49.13 Talisman Energy ** Stop $45.50 **

Talisman rallied with the rest of the sector but failed to give back as much closing only about a buck under Thursday's levels. I would look to enter new positions in the $48 range. TLM is not involved in the Katrina disaster. The breakout over $48 puts TLM into a new range and the next break over $50 could run to $55 before slowing.

Company info:

Talisman Energy Inc. (Talisman) is an independent international upstream oil and gas company whose main business activities include exploration, development, production, transporting and marketing of crude oil, natural gas and natural gas liquids. The Company's operations, during the year ended December 31, 2004, were conducted principally in four geographic segments: North America, the North Sea, Southeast Asia and Algeria. The Trinidad Angostura project began production in January 2005. Exploration is being advanced in other areas outside the principal geographic segments, including Alaska, Colombia, Qatar and Peru. During 2004, total production averaged 438 million barrels of oil equivalent per day (mboe/d) and the Company exited the year producing 452 mboe/d in December. In 2004, the Company drilled 641 successful wells.

Jan 2006 $50 CALL TLM-AJ @ $2.10
(no leaps)

No insurance put due to cheap option

Entry (8/17) $45.00

HP - $58.30 Helmerich Payne ** Stop Loss $55.00 **

HP suffered severe damage to one of its eight rigs operating in the Gulf. The damage probably kept HP from breaking out over $60 on the week long run. HP weakened sooner than the other stocks as news of this damage surfaced. I would look to enter new positions on any dip to support just above $57. That makes its present level at $58 still inviting. Nearly all companies working in the Gulf have suffered some damage so HP should not suffer more than others.

Company Info:

Helmerich & Payne, Inc. is primarily engaged in contract drilling of oil and gas wells for others. It is also engaged in the ownership, development and operation of commercial real estate. The Company is organized into two separate operating entities: contract drilling and real estate. The Company's contract drilling business is composed of three business segments: United States land drilling, United States offshore platform drilling and international drilling. The Company's United States land drilling is conducted primarily in Oklahoma, Texas, Wyoming, Colorado, and Louisiana, and offshore from platforms in the Gulf of Mexico and California. The Company also operated in eight international locations during the fiscal year ended September 30, 2004: Venezuela, Ecuador, Colombia, Argentina, Bolivia, Equatorial Guinea, Chad and Hungary. In addition, the Company is providing drilling consulting services for one customer in Russia. Its real estate investments are located in Tulsa, Oklahoma.

MAR 2006 $60 CALL HP-CL @ $3.20
(no leaps)

No insurance due to cheap option

Entry (8/17) $54.00

NOV - $58.30 National Oilwell Varco ** Stop loss $57.00 **

NOV benefited from several comments from analysts that the damage in the Gulf would provide additional profit opportunities for NOV. NOV makes rig components and equipment. Could be a real gold mine for NOV. Look for new entries in the $60 range with support at $58.

This company is very strong with revenue doubling in their most recent earnings report on Aug-5th. Their guidance was very strong for 2H-2005 and beyond. The company merged with Varco back in March and the synergies are very good. After a period of post merger consolidation over the spring the trend has picked up substantially.

Company info:

National-Oilwell Varco Inc., formerly National-Oilwell, Inc. designs, manufactures and sells systems, components and products used in oil and gas drilling and production, as well as distributes products and provides services to the exploration and production segment of the oil and gas industry. The Company's Products and Technology segment designs and manufactures complete land drilling and work over rigs, as well as drilling-related systems on offshore rigs. Non-capital revenue sources within its Products and Technology segment include drilling motors and specialized down hole tools that are sold or rented, spare parts and service on the large installed base of its equipment, expendable parts for mud pumps and other equipment and smaller down hole, progressive cavity and transfer pumps. Company's Distribution Services segment provides maintenance, repair and operating supplies and spare parts to drill site and production locations throughout North America and to offshore contractors.

FEB 2006 $60 CALL NOV-BL @ $6.00
(no leaps)

Entry $59.50 (8/10)

 

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