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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. Each play has a link back to either its last full commentary or its initial description.

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BHP - $42.63 +.27 - BHP Billiton

BHP announced a discovery in 200 feet of water at a depth of 5,750 feet of the coast of Trinidad. The well was drilled beginning in the first week of September and tested last week at 5,000 bpd. The well is only five miles from the central processing platform for the Greater Angostura Field operated by BHP. Since we bought BHP for its uranium reserves it is a bonus to have active oil exploration as well. BHP did not show the same rebound as the rest of the sector so I am adding a cheap insurance put.

To see the initial commentary on this position click here:
http://tinyurl.com/ykl8ka

Insurance Put:
Buy Feb $40 Put BHP-NH currently $1.50

Position:
10/29/06 2009 $40 LEAP Call ZPK-AH @ $11.10

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BTU - $41.95 -1.10 - Peabody Energy

No news. No change in play.

To see the initial commentary on this position click here:
http://tinyurl.com/yy2ysv

Earnings: Oct 19th .53 cents, up +26%

Position:
10/22/06 Jan-2009 $50 LEAP Call ZZT-AJ @ $8.70

No insurance put at this time.

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DVN - $68.73 +1.34 - Devon Energy

Devon beat the street by +14 cents with earnings of $1.66 per share or $705 million. Devon's quarter was highlighted by the drilling of their 4th significant discovery in the lower Tertiary trend in the Gulf. The Kaskida prospect was the 4th well and appears to be the most successful of those already drilled. Devon is buying up leases and increasing its working interests in the Tertiary trend. They drilled 740 wells in Q3 of which 731 were successful. Oil production reached 600,000 bpd.

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

Insurance put:
Buy Apr-2007 $60 Put DVN-PL only if DVN trades at $64 again.

Earnings schedule: Nov 1st, $1.66, beat by +14 cents

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

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RIG - $75.10 +2.97 - Transocean Inc

RIG hit a new three-month high on Friday at $75.59. RIG reported earnings that rose +81% in Q3 thinks to higher day rates and improved utilization of its drilling rigs. RIG reported a net profit of $309 million or 83 cents after items. Analysts had expected 71 cents. RIG also announced it repurchased $1.75 billion in stock or 24.4 million shares through the quarter. RIG was very positive about new rig construction opportunities with multi-year contract extensions for its deepwater operations. Contract backlogs grew to a record of $20.2 billion as of Oct 31st.

I told everyone back in August and September that RIG was very positive, which was contrary to the prevailing attitude at the time. We endured the depression around $65 while we waited for the good news to break and now at $75 we are reaping the benefits.

Their rig report released Oct-31st: http://tinyurl.com/vkwuv

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

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

Earnings schedule: Nov 2nd, 83 cents, 12 cent beat

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

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TSO - $64.47 +$0.86 - Tesoro Corporation

TSO reported earnings of $3.92 per share or a +21% jump. Analysts had expected only $3.26. TSO refineries processed 574,000 bpd for the quarter. TSO was hammered on Thursday despite the good results due to lowered expectations for refinery runs in Q4. A 45,000 bpd catalytic cracking unit is being overhauled at the Washington refinery. Elsewhere runs would be reduced as TSO implements upgrades and improvements. TSO shook off the weakness by Friday and began to recover. Heck, they beat estimates by +66 cents on record throughput in Q3. They need to rest.

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

Insurance put:
Buy Feb $55 PUT TSO-NK only if TSO trades at $59

Earnings schedule: Nov 2nd, $3.92, 66 cent beat

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

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APC - $47.45 +0.92 Anadarko Petroleum

APC hit a new two-month high on Friday at $48.33 after announcing the swap of some Canadian assets and offshore/onshore properties with Chevron and Canadian Natural Resources (CNQ). This swap allowed APC to reduce debt by about -$4 billion. APC took on additional debt to acquire Kerr-McGee and Western Gas Resources earlier this year. They are selling off non-core assets to reduce that debt. This is a very positive transition and APC will be much stronger after it is completed.

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

No change in play.

Earnings schedule: Nov 7th

LEAP Position:
9/20/06 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 $84.72 +$0.16 Cnooc Ltd

CEO reported earnings that rose +25% on a +25% rise in revenue and a +7.5% increase in production. Daily production rose to 459,460 bpd. Gas production rose +23.7% to 386 million CF per day. They announced two new discoveries in the quarter and three new projects went into production.

CEO is wedging up to $85 and could make a break any day now.

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

No insurance put

Earnings schedule: Oct-31st, $2.33B rev, +25%, no EPS given

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

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SU $77.11 +0.17 Suncor Energy

A little post earnings depression settled in on Suncor but it appears to be shaking it off with a +2.24 rise on Friday. October oil sands production rose to 261,000 bpd from its average of 258,000 and target of 255,000 bpd. Suncor took a hit with the change in Canadian tax laws but they really are not a trust. It was a case of being painted with the broad brush or guilt by association. Nothing by good news from Suncor and no change in play.

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

Earnings schedule: Oct 26th, $1.48 vs $0.57 year ago qtr

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 $63.49 +0.68 Schlumberger

SLB shook off its post earnings depression and added small gain to its +2.70 gain from the prior week. No news, no change in play.

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

Earnings schedule: Oct 20th: 81 cents vs 44 in Y.A.Q.

LEAP Position:
1/2 9/11/06 @ $8.60
1/2 9/12/06 @ $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 $31.32 +$0.24 Nabors Industries

No news, minor post earnings depression, no change in play.

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

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

Earnings schedule: Oct 25th, $1.02 vs 0.55 in YAQ

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

No insurance

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UPL $51.84 -2.98 Ultra Petroleum

UPL posted increases in production in year over year, ytd and qtr to qtr and still was knocked for a loss. Earnings slipped slightly to 33 cents due to lower prices received for gas and a special profits tax for crude profits over $40 per bbl in China. They repurchased 2 million shares and incurred an extra tax of $5.2 million on the share repurchase. Rig deliveries were delayed slowing their drilling progress. Rig backlogs continue to be a problem for the industry. I have complete faith in UPL despite the -$3 loss for the week. They are the lowest cost gas producer in the US and prices will be going higher.

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

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

Earnings schedule: Oct 31st, +33 cents

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 $67.19 +$0.79 Sunoco

SUN was all over the map this week but ended the week with a +2.65 gain on Friday. This put it back into the black and close to a new two month high. SUN posted a profit of $2.76 per share compared to $2.39 in the year ago quarter. SUN took advantage of the October lull to do some major maintenance but that project is over and SUN should be at full capacity for the rest of the season. Throughput dropped -3 million bbls during October due to the maintenance. YTD SUN has repurchases 10 million shares with another $536 million in Q3. SUN is very positive about their future profits and there are no ghosts lurking in their closet.

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

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 $42.20 -0.70 Plains Exploration

PXP went dormant as investors waited on their earnings. They changed their earnings date to the 9th and the conference call is 9:AM Central on Wednesday. Investors wishing to participate in the conference call may dial 1-800-567-9836. No change in play.

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

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

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

Earnings schedule: Nov 9th

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 $33.39 +$0.65 Forest Oil

FST has flat lined between $32-$34 ahead of earnings now scheduled for Nov-8th. A conference call is scheduled for Thursday, November 9, 2006, at 12:00 pm MT to discuss the release. You may access the call by dialing toll free 800.399.6298 and request the Forest Oil teleconference (ID # 9784416). A Q&A period will follow. I have heard their recent presentations and I think there will be positive news. No change in play.

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

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

Earnings schedule: Nov-8th

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

No insurance due to cheap LEAP

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XTO $46.70 +$0.19 - XTO Energy

XTO saw minor post earnings depression but is holding near its recent highs. No news. No change in play.

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

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

Earnings schedule: Oct 24th, $0.99 vs $0.85 in YAQ

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 $51.92 -$1.20 Valero Energy

Valero reported earnings on Tuesday that jumped +86% but there was a $132 million asset sale. VLO earned +$2.42 a share after items compared to analyst estimates of $2.30. Operating income rose +17% to $2.3 billion from $1.9 billion in Q3-2005. The CEO said the margin crush was over and they expected very strong margins in Q4. They will have a -275,000 bpd drop in output as they perform maintenance on the various refineries. VLO is electing to upgrade refineries to greater capacities instead of buying existing refiners at the current rate of $20,000 per bpd. Valero paid $14,000 per bbl when it bought Premcor but purchased numerous refineries before that for rates well below that at effectively pennies on the dollar. They were cheap because upgrades were needed and VLO had the cash to do the work. Now they are the premier refiner in the US with assets worth well more than what they paid for them. VLO saw a sharp drop after earnings as the -275,000 bpd maintenance comments made the rounds. Friday saw a gain of +1.39 to overcome two days of declines.

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

Earnings schedule: Oct 31st, +$2.42 vs $2.30

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 - $88.91 -$0.10 - Petroleo Brasileiro

PBR finally agreed to the nationalism contract with Bolivia and agreed to invest additional funds into Bolivian infrastructure. It was not a deal made in heaven but it die get them past the roadblock and back into business. Private companies will now receive 30% of the profits but future investments can increase that return to 50% until those investments are recovered. PBR waffled as the details were slow to come but it gained +1.96 on Friday to recover the losses for the week. Remember, PBR rallied about +$8 off the lows the prior week so any gain this week is gravy.

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

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 - $70.98 +$0.05 - Diamond Offshore

DO recovered from a severe bout of post earnings depression with a +$3.13 gain on Friday after an upgrade to "buy" from Deutsche Securities. The RIG earnings did not hurt either. Drillers are in hot demand and once over resistance at $73 it should be clear sailing.

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

Earnings schedule: Oct 27th. $1.19 vs $0.60 in YAQ

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 - $35.70 -$0.76 - CSX Corp

CSX flat lined after last week's drop and was starting to show new life later in the week. The strong jobs numbers suggested possible stronger economic strength and that was good for an early morning pop. CSX is holding its $6 in gains from the Sept lows so we can't complain. No other news, no change in play.

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

Earnings schedule: Oct 17th, 54 cents, +50%

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 - $42.81 -$0.54 - ATP Oil and Gas Corp ** No Stop **

ATP reported earnings on Friday of +4 cents compared to a loss of -36 cents in Q3-2005. Excluding charges ATPG posted a profit of +43 cents. The street was looking for +44 cents but the stock only closed down -16 cents so there was no real disappointment. Revenue rose to $133 million from $26 million in Q3-2005. Six new wells came online in Q3 and nine more are scheduled for production between now and mid 2007. Production increased +144% during first nine months of 2006. No change in play.

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

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 - $112.26 +$1.56 - Petrochina

PTR finally made a new two month high at $113.15 on Friday before suffering a late day bout of profit taking. We have waited for a breakout here for many weeks and I believe it is about to happen. The high was +$4 off the lows for the week. No change in play.

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

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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Non Energy Positions
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CAT - $60.43 -0.87 - Caterpillar

CAT seems determined to talk down expectations with the CEO out making nasty comments about engine demand and housing demand in 2007. At the same time he raised estimates for the full year. Something is not clicking and investors appear overly cautious. We only gave back -87 cents but it is the perception of a new trend that is important.

To see the initial commentary on this position click here:
http://tinyurl.com/yy2ysv

Position:
10/22/06 JAN-2009 $70 LEAP Call VKT-AN @ $7.20

Insurance Put: Buy Feb $55 Put CAT-NK if CAT trades at $58.50

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TEX - $51.01 -0.21 - Terex Corp

Terex declined on the warnings by IR and the continued warnings by CAT despite posting great earnings and raising guidance. This is simple post earnings depression aggravated by CAT. As long as we hang over $50 everything is OK.

To see the initial commentary on this position click here:
http://tinyurl.com/yy2ysv

Earnings: Oct 25th, $0.98 vs $0.51 in YAQ

Position:
10/23/06 Jan-2009 $60 LEAP VXQ-AL @ $10.90

Insurance Put:
10/23/06 Jan-$45 PUT TEX-MI only is TEX trades at $48.

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DHI - $22.77 -$0.98 - DR Horton

If CAT would quit whining about the housing sector the builders would probably find some buyers. The strong jobs numbers mean there will be plenty of buyers of homes but the worry over potential future Fed rate hikes could keep the stocks in the cellar. Initial support at $23 is being tested, strong support at $20. No change in play.

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

Earnings schedule: Nov 14th

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

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