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Energy 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.

To see the last full commentary on each current position click here: http://tinyurl.com/yest3l

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DVN - $67.39 +$2.65 - Devon Energy

Something is up with Devon. More than 50,000 calls were purchased over the last week pushing open interest in call options to near 100,000. This contrasts to less than 10,000 OI two weeks ago. Puts total only 34,000 so it is definitely bullish ahead of their November 1st earnings. Oil and gas explorer Devon Energy Corp. said Monday it signed a long-term contract worth at least $690 million for a semi-submersible drilling rig capable of drilling up to 37,500 feet in up to 10,000 feet of water. This is a four-year contract with a six-year option. This is the second rig Devon has contracted and it will be put to work in the Gulf.

Insurance put:
Buy Jan-2007 $55 Put DVN-MK only if DVN trades at $60 again.

Earnings schedule: Nov 1st

LEAP Position: 10/03/06
Position: 2009 $70 LEAP Call VVH-AN @ $9.00

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RIG - $70.28 +0.05 - Transocean Inc

No additional news and no change in play.

Their rig report released Oct-2nd: http://tinyurl.com/ho3mt

Insurance put:
Buy Jan $60 PUT RIG-ML only if RIG trades at $65.

Earnings schedule: Nov 2nd

LEAP Position: 10/03/06
Position: 2009 $80 LEAP Call VOI-AP @ $12.90

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TSO - $64.57 +$1.15 - Tesoro Corporation

TSO said its refinery in Kapolei, Hawaii had resumed gas, diesel and jet fuel production after losing power during the earthquake. No other news and no change in play.

Insurance put:
Buy Feb $50 PUT TSO-NJ only if TSO trades at $54

Earnings schedule: Nov 2nd

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

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APC - $45.65 +1.85 Anadarko Petroleum

APC commenced production from a new field in Bohai Bay, China. They expect to have 10 wells online and producing 15,000 bpd by the end of October with production expected to ramp up to 22,000 bpd from 22 wells by mid-2007. Anadarko has a 29.18% interest, CNOOC (CEO) 51%, Newfield (NFX) 12% and Ultra Petroleum (UPL) 7.82%. Anadarko has more than 2.45 billion bbls of proved reserves.

No change in play.

Earnings schedule: Nov 7th

LEAP Position: 9/20
Position: 2009 $50 LEAP Call OCP-AJ @ $6.90

Insurance put: 9/25
Position: Jan $40 PUT APC-MH @ $2.35, profit stop @ $35.00

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CEO $83.36 +$0.42 Cnooc Ltd

Flat for the week after a sharp spike higher on the 13th. CEO announced the start of production in Bohai Bay, China with a 51% interest in the field. Initial production of 11,000 bpd ramping to 22,000 bpd in mid-2007.

No insurance put

Earnings schedule: March 2007

Position: March $90 Call CEO-CS @ $2.40 (no leaps)

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SU $75.16 +2.74 Suncor Energy

Suncor continued its winning ways on no news. Earnings next Thursday.

Earnings schedule: Oct 26th

LEAP Position: 9/11/06
Position: 2009 $80 LEAP Call OYX-AP @ $14.30

Insurance put: 9/18
Position: Dec $60 Put SU-XL @ $2.10, no stop

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SLB $60.10 +1.37 Schlumberger

SLB announced earnings on Oct-20th of 81 cents compared to analyst's estimates of 77 cents. The stock rallied to just over $63 but slipped on comments that drilling services could decline if gas prices failed to hold the current levels. SLB warned that current high gas inventories could slow drilling if gas demand did not return to normal winter weather. They said it has not yet impacted their activity but were only cautioning about future possibilities. They expected service activity to grow elsewhere as exploration and production companies fought the decline curve to bring in new reserves. I repeat, they said they had seen no weakness to date but were simply providing a cautionary statement.

Earnings schedule: Oct 20th: 81 cents vs est of 77.

LEAP Position: 1/2 9/11 @ $8.60, 1/2 9/12 @ $8.00
Position: 2009 $70 LEAP Call VWY-AN @ $8.30

Insurance Put: 9/18
Position: Jan $50 Put SLB-MJ @ $2.00, no stop

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NBR $30.64 +$0.00 Nabors Industries

Dead calm. Earnings on Wednesday.

Link to recent presentation: http://tinyurl.com/o5jmy

Earnings schedule: Oct 25th

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

No insurance

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UPL $52.70 +3.95 Ultra Petroleum

UPL continues to extend its gains now that gas prices are rising again. Ultra announced the Bohai Bay, China project as well with 1,200 bpd net to Ultra initially rising to 1,700 net to Ultra by mid-2007. UPL bought back 2.1 million shares in Q3 and announced completion of 21 new wells in Wyoming since Sept 8th with 35 more completions expected by year-end. Each well as an initial production rate of 10.5 million cubic feet per day.

UPL said recently that their profit margins at $4 gas were +30%, $6 gas 50% and $8 gas 100%. They have a 16-year inventory of wells to be drilled.

OGIS Investment Conference on Oct-4th. http://tinyurl.com/y6xsq3
Enercom Oil and Gas presentation: http://tinyurl.com/kn5cb

Earnings schedule: Oct 31st

LEAP Position: 9/12/06
Position: 2009 $60 LEAP Call OZH-AL @ $10.60

Insurance Put:
9/18 Position: JAN $40 Put UPL-MH @ $2.85, no stop

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SUN $65.58 -$0.07 Sunoco

SUN continued to hold its gains from the prior week. No news and no change in play.

Earnings schedule: Nov 1st

LEAP Position: 9/12/06
Position: 2009 $70 LEAP Call VUN-AN @ $13.50

Insurance Put:
Position: Jan $55 Put SUN-MK @ $2.40, no stop

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PXP $42.39 +0.40 Plains Exploration

PXP continued to creep slowly higher. No change in play.

Maintain $35 profit stop on Jan $40 insurance put.

OGIS Investment Conference on Oct-4th: http://tinyurl.com/y7vn2w

Earnings schedule: Nov 2nd

LEAP Position: 9/12/06
Position: 2009 $50 LEAP Call ZXL-AJ @ 7.50

Insurance Put:
9/25 Jan $40 Put PXP-MH @ $1.90

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FST $32.33 +$0.02 Forest Oil

FST is holding the big gains from the last two weeks. No news. No change in play.

Enercom conference presentation: http://tinyurl.com/ggzmv

No insurance due to cheap LEAP

Earnings schedule: N/A

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

No insurance

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XTO $44.41 +$1.21 - XTO Energy

XTO moved over $44 and held its gains with absolutely no movement the rest of the week. No other news, no change in play.

OGIS conference presentation on Oct 4th: http://tinyurl.com/v6ram
Enercom presentation: http://tinyurl.com/qorbr

Earnings schedule: Oct 24th

LEAP Position: 9/12/06
Position: 2009 $50 LEAP Call OUO-AJ @ $6.50

Insurance Put: Feb $35 Put XTO-NG @ $1.40, no stop

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VLO $52.06 -$1.53 Valero Energy

Valero gave back half its gains for the prior week. Valero will probably not begin to rally until current stockpiles of distillates begin to dwindle. Crude oil inventories soared +5.1 mb last week but distillates fell -4.5 mb and gasoline fell -5.2 mb. U.S. refinery utilization fell -3% for the week as refiners continue to take advantage of the surplus to schedule down time. There were also unscheduled outages at several refineries for various reasons. No change in play.

Earnings schedule: Oct 31st

LEAP Position: 9/24/06
Position: 2009 $60 LEAP Call VHB-AL @ $7.70

Insurance Put:
Position: 9/25 Jan $45 Put VLO-MI @ $2.25, no stop

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PBR - $85.56 -$0.37 - Petroleo Brasileiro

Petrobras held +$4 of its gains for the prior week. No complaints there. PBR is still facing an Oct-28th deadline for agreement to the nationalism of their assets in Bolivia. So far they are resisting. This is the only negative to the PBR play.

Earnings schedule: Nov 10th

LEAP Position: 9/08/06
Position: 2009 $100 LEAP Call VDW-AT @ $14.90

Insurance put:
9/11 January $70 PBR-MN @ $1.80, no stop

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DO - $67.34 -$0.48 - Diamond Offshore

No movement, no news. Earnings on Thursday.

Earnings schedule: Oct 27th.


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

Insurance Put:
Position: 10/08 Dec $60 Put DO-XL @ $2.40, no stop

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

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CSX - $35.98 +$1.17 - CSX Corp

CSX beat the street with a +50% jump in earnings over Q3-2005 and predicted a similar gain in the future. CSX is raising prices up to +6% and they expect to repeat it in 2007. We are well covered by the $30 put with the stock price at $30. No change in play.

Earnings schedule: Oct 17th, 54 cents

LEAP Position: 9/03/06
Position: 2009 $35 LEAP Call OBC-AG @ $4.90

Insurance put:
9/11 November $30 Put CSX-WF @ $1.40, stop $25

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ATPG - $41.01 +$1.40 - ATP Oil and Gas Corp ** No Stop **

ATP continued to extend its gains off the October lows. No news. No change in play.

OGIS Investment Conference on Oct 5th. http://tinyurl.com/y5jod2

Earnings schedule: N/A

LEAP Position: 8/20/06
Position: 2009 $40 LEAP Call VCL-AH @ $11.70

Insurance put:
9/06 Position Dec $35 PUT HKU-XG @ $1.50, stop at $30

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PTR - $109.83 +$1.26 - Petrochina

PTR held its massive gains from last week and actually tacked on a few more. News from China said Petrochina's oil and gas production rose +8% in Q3 to 260.7 million bbls. Prices received for this oil rose +30% to $61.50 per BOE. Gas production jumped +25%.

Current recommendation: Buy under $105

Earnings: August 24th, $10.1 billion, +29%

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

Insurance put: (9/11)
Position: December $100 Put PTR-XT @ $2.20, stop $90

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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CCJ - $38.11 +$0.72 - Cameco ** No stop **

CCJ continued to creep higher as a flurry of articles made the rounds about the shortage of uranium. Uranium goes up daily and has not fallen in price since 2001. There is not enough to go around and CCJ owns more than 20% of the worlds supply.

Current recommendation: Buy under $35

Earnings schedule: Nov 1st

LEAP Position: 2/25/2006
Position: 2008 $40 LEAP LTA-AH @ $9.00

No insurance put
 

Non-Energy Plays

DHI - $23.23 -$0.55 - DR Horton

After spiking up last week it was straight back to support this week. CTX has earnings this week so look for sector feedback. Initial support at $23, strong support at $20. No change in play.

Earnings schedule: Nov 14th

LEAP Position: 9/24/06
Position: 2009 $25 LEAP Call VEI-AE @ $5.10

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