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EOG $69.07 EOG Resources ** Stopped $70.00 **

EOG lost -12 points in the sell off and only recovered +3 from its lows. I elected to pass on adding it back into the lineup until some strength returned.

Earnings Scheduled: Nov-2nd

Company Info:

EOG Resources, Inc. (EOG) explores for, develops, produces and markets natural gas and crude oil primarily in major producing basins in the United States, Canada, offshore Trinidad, the United Kingdom North Sea and, from time to time, select other international areas. At December 31, 2004, EOG's total estimated net proved reserves were 5,647 billion cubic feet equivalent (Bcfe), of which 5,047 billion cubic feet (Bcf) were natural gas reserves and 100 million barrels (MMBbl), or 600 Bcfe, were crude oil, condensate and natural gas liquids reserves. At such date, approximately 50% of EOG's reserves (on a natural gas equivalent basis) were located in the United States, 25% in Trinidad, 24% in Canada and 1% in the United Kingdom North Sea. EOG's operations are all natural gas and crude oil exploration and production related.

April 2006 $80 Call EOG-DP @ $6.60, 10/6 exit 4.70, -1.90

Entry $74.90 (10/02)

TSO - $61.36 Tesoro ** Stopped $62.00 **

Tesoro retreated back to uptrend support at $58 before finding buyers. The +2.92 rebound on Friday was encouraging but without oil to refine there could be some earnings weakness. I still like it but don't want to carry refiners until the picture clears.

Earnings Schedule: Nov-4th (approx)

Company Info:

Tesoro Corporation (Tesoro), formerly Tesoro Petroleum Corporation, is an independent refiner and marketer of petroleum products with two major operating segments, Refining and Retail. Through its refining segment, the Company manufactures products, primarily gasoline and gasoline blendstocks, jet fuel, diesel fuel and heavy fuel oils for sale to a variety of commercial customers principally in the mid-continental and western United States. It operates six refineries in the United States with a combined rated crude oil capacity of 558,000 barrels per day. During the year ended December 31, 2004, approximately 50% of the Company's total refining throughput was heavy crude oil. Its retail segment distributes motor fuels through a network of branded gas stations, primarily trading under the Tesoro and Mirastar brands. The Company markets its products to wholesale and retail customers, as well as commercial end users. On November 8, 2004, the Company changed its name to Tesoro Corporation.

Feb 2006 $70 CALL TSO-BN @ $6.10, 10/5 exit 5.10, -1.00
(LEAPs too expensive)

Entry $65.00 (9/26)

PBR - $63.90 Petroleo Brasileiro ** Stopped $66.00 **

PBR has no hurricane exposure but still retreated -12 with the rest of the group. The +2.50 rebound on Friday was encouraging but I would like to see a trend develop again before going back into this position.

Earnings Schedule: Nov-11th

Company Info:

Petroleo Brasileiro engages in the exploration for oil and gas and in the production, refining, purchasing and transportation of oil and gas products. For the last quarter reported, net revenues increased 35% to $10.73B. Net income increased 53% to $2.05B.

Petroleo Brasileiro S.A. - Petrobras (Petrobras) is a wholly owned government enterprise responsible for all hydrocarbon activities in Brazil. The Company also has oil and gas operations in international locations, with the significant international operations being in Latin American countries. Petrobras is engaged in a range of oil and gas activities, which include segments like exploration and production; refining, transportation and marketing; distribution; natural gas and power; international, and corporate. During the year ended December 31, 2004, the Company had estimated proved developed and undeveloped crude oil and natural gas reserves of approximately 11.82 billion barrels of oil equivalent in Brazil and other countries.

JAN 2007 $75 LEAP CALL VDW-AO @ 8.10, exit 10/5 $7.30, -0.80

Entry $68.50 (9/26)

ECA - $50.54 Encana ** Stopped $54.75 **

The strong gains in ECA over the past month probably held it back on Friday. There may be some sellers left just waiting for a bounce to unload more. I watched it on a five min chart all day along with several others and ECA was the least impressive. If a trend returns we will play it then.

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, exit 10/5 $13.80 +6.70

Alternate short-term entry:
Jan-06 $50 Call ECA-AJ @ $2.50, exit $8.20, +5.70

Entry @ $46 (8/29)

BTU - $74.65 Peabody Energy ** Stopped $78.00 **

BTU took a serious hit and it is not even an oil stock. It just proves that the selling was pure profit taking and not stock specific. Those with large accumulations of profit were hit the hardest. BTU had been very kind to us and we escaped with a nice profit despite giving back $6 before being stopped out. Yes, $6 of profit. The call traded at $19.30 at the open on the 4th and we exited for $13.80 on the 5th. Dang, I hate that! I reinstated BTU as an active play.

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, exit 10/5 $13.80, +7.30
(no leaps)

Entry $67.25 (8/29)

UPL $52.39 Ultra Petroleum ** Stopped $51.00 **

Ultra gave up the required -$10 along with the other stocks in the sector and then followed up with a nice +2.84 gain on Friday. I reinstated UPL as an active play.

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, exit 10/6 $15.10, +6.70

Alternate short-term entry:
March $45 Call UPL-CI @ $4.40, exit $10.60, +6.20

Entry $40.00(8/22)

MRO - $62.34 Marathon Oil ** Stopped $67.50 **

Marathon also lost -$10 in three days and had a nice +2.40 rebound. However, Marathon did have some refinery problems and some hurricane issues. I am avoiding this play again until the fog clears.

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, exit 10/4 12.00, +5.50

Alternate short-term entry:
Jan-06 $65 Call MRO-AM @ $2.90, exit 10/4 $5.80, +2.90

Entry $61 (8/22)

COP - $63.60 Conoco Phillips ** Stopped $67.50 **

Conoco rebounded +1.58 on Friday and started declining before the rest of the sector. I fear refinery outages could produce a nasty earnings surprise. I am putting COP on hold until after earnings.

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, exit 10/4 $10.80, +3.30

Alternate short-term entry:
Jan-06 $65 Call COP-AM @ $4.40, exit $6.80 +2.40

Entry $63.50 (8/22)

CHK - $34.04 Chesapeake Energy ** Stopped $34.50 **

CHK held up very well even after the announcement of their Columbia Resources Acquisition but eventually it buckled under the pressure. However, it appears poised to breakout over $34 and current resistance as long as a new crisis does not develop. I added CHK back as a new position.

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, exit 10/6 8.70, +3.80

Alternate short-term entry:
Jan-06 $30 Call CHK-AE @ $2.25, exit $8.70, +6.55

Entry $28.11 (8/28)

XLE - $49.53 Energy SPDR ** Stopped $52.25 **

The XLE lost an amazing -$7 and shows how broad based the selling really was. I am not adding XLE back as a play because of the potential for a major component to miss estimates due to hurricane damage. Better to be safe than sorry.

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, 10/4 exit $5.60, +2.10

Alternate short-term entry:
Jan-06 $50 Call XBT-AX @ $2.45, exit $4.57, +2.12

Entry $49 (8/22)

 

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