Option Investor
Play Updates

In Play Updates and Reviews

HAVING TROUBLE PRINTING?
Printer friendly version

ECA - $58.31 Encana ** Stop Loss $54.75 **

No stopping this rocket as natural gas prices continue to rise. ECA rose +$4 this week and closed at a new all time high on Friday. The rise in gas prices is reflected almost dollar for dollar in ECA stock. This is one of the largest pure play gas companies in the U.S. (Canadian actually) and continues to sell off non core assets to pay for premium gas properties. S&P just raised them to four-stars (buy) and an initial price target of $70.

Earnings Schedule: Oct-26th

Company Info:

EnCana Corporation is an independent crude oil and natural gas exploration and production company. Its key landholdings are in western Canada, the United States Rocky Mountains, Ecuador, the United Kingdom central North Sea, offshore Canada's East Coast and the Gulf of Mexico. EnCana explores for, produces and markets natural gas, crude oil and natural gas liquids (NGLs) in Canada and the United States. EnCana is also engaged in exploration and production activities internationally including production from Ecuador and the United Kingdom central North Sea. EnCana has interests in midstream operations and assets, including natural gas storage, NGLs gathering and processing facilities, power plants and pipelines.

JAN 2007 $50 CALL ZBM-AJ @ $7.10

Alternate short-term entry:
Jan-06 $50 Call ECA-AJ @ $2.50

Entry @ $46 (8/29)

BTU - $84.32 Peabody Energy ** Stop Loss $78.00 **

Another stellar week for BTU with a new high hit on Friday. The demand for coal is growing as the prices for gas are rising. This is the stealth play of the energy market.

BTU recently announced the opening of an office in China. BTU now claims to fuel 10% of U.S. electricity production and 3% of world electricity production. China is funding a $15 billion coal to gas/oil conversion project and BTU is the leader in the field. Power shortages in China require daily blackout periods and limit production shifts in factories to times when demand is weaker. Add to BTU positions on any dip above $79.00.

Company Info:

Peabody Energy Corporation (Peabody) is a private-sector coal company in the world. During the year ended December 31, 2004, the Company sold 227.2 million tons of coal. It sells coal to over 300 electricity generating and industrial plants in 16 countries. The Company owns, through its subsidiaries, majority interests in 32 coal operations located throughout all the United States coal producing regions and in Australia. Most of the production in the western United States is low-sulfur coal from the Powder River Basin. In the West, it owns and operates mines in Arizona, Colorado, New Mexico and Wyoming. In the East, it owns and operates mines in Illinois, Indiana, Kentucky and West Virginia. The Company owns four mines in Queensland, Australia. Most of the Australian production is low-sulfur, metallurgical coal. In addition to the mining operations, the Company markets, brokers and trades coal.

MAR 2006 $70 CALL BTU-CN @ $6.50
(no leaps)

Entry $67.25 (8/29)

UPL $56.85 Ultra Petroleum ** Stop loss $51.00 **

Ultra continued to lead the sector higher with a new high at $57.89 on Friday. This is a very strong gas play and while I expected it to rest this week, especially on Friday the end of the quarter, it soared once again. Eventually there will be some profit taking but I consider it a buying opportunity.

Earnings Schedule: Oct-25th

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 - $68.93 Marathon Oil ** Stop loss $67.50 **

Marathon can't find any love with oil prices holding in the $65 range and problems with its refineries and pipeline business. Marathon has reopened its refinery on the Gulf and is accepting 550,000 bbls of crude from the SPR. Marathon is also facing a 50-day outage of its refinery near Detroit as it upgrades to the low sulfur fuels required in 2006. The outage was scheduled to begin soon and be completed in November. The outage will impact 74,000 bbls per day of capacity.

Marathon also operates the Centennial Pipeline to be back in operation next week at reduced capacity. The pipeline is expected to carry reduced capacity of 210,000 bpd until power is fully restored which could be 6-8 weeks from now. The pipeline runs from Beaumont TX to Illinois.

I tightened up the stop just in case the problems cause a continued drop in the stock.

Earnings Schedule: Oct-27th

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 - $69.92 Conoco Phillips ** Stop loss $67.50 **

Conoco tried to set a new high on Friday but only came close at 70.25. Refinery outages in the hurricane zone is keeping COP on a short leash. We will continue to hold the play since an announcement of a return to operations should release the stock once again.

Earnings Schedule: Oct-26th

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 - $38.24 Chesapeake Energy ** Stop loss $34.50 **

CHK rebounded off the 100/130 averages and never looked back until Friday. CHK saw some decent profit taking from its $39 high but found support at $38. Continue to buy the dips on this gas play. CHK gets 90% of its income from natural gas and its average sales price in Q2 was in the $7 range. With prices nearly double CHK could reap a windfall depending on how much they hedged.

Earnings Schedule: Nov-4th (approx)

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)

XLE - $53.69 Energy SPDR ** Stop Loss $52.25 **

The XLE gave up ground on Friday as profit taking appeared from the week long gains. The index diversity took us to very near a new high on Thursday so no damage done.

The XLE is a slave to oil prices given the makeup of the 27 component stocks. The biggest is XOM and it is a pure oil price play. The index has exposure to damage in the Gulf but also to companies that would repair the damage. That is the problem with indexes, you get the good, bad and ugly all rolled into one.

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)

 

Leaps Trader Update Archives