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XLE $70.26 +0.43 - Energy Spyder *** PUT *** Stop Loss $72 ***

The XLE Put play was not stopped out on Thursday. There was a bad tick at the open and the high for the day showed as $72.25 but the XLE never traded there. You can check on any intraday chart and see the actual opening high was $71.98. Just in case there was any confusion I sent everyone an email Thursday afternoon affirming that we wanted to keep the XLE put and anyone who exited on the bad tick should consider reentering the play.

Target $66 for an exit.

Breakout Trigger: $69.50 Hit 8/31

Position:
Dec $67 Put XBT-XO @ $2.55
Dec $67 Put GQQ-XO @ $2.70

GQQ-XO is a quarterly strike listed by mistake.

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UPL $53.69 +0.29 - Ultra Petroleum *** Stop Loss $48 ***

No change in UPL with gas prices holding at $5.50 they are still highly profitable. Their all in costs are $2.65 Mcfe where the industry average is $5.02 Mcfe. This makes Ultra highly profitable even at $5 gas. Plans by some producers to cut production until prices rise should also help UPL. Support at $53 is holding.

Prior comments:

They have identified three more producing zones at their Pinedale field that could substantially increase production. They also expect to receive some further downsizing on well placement allowing them to drill 2-4 times as many wells. They also expect to receive permission from the State of Wyoming to drill during the winter months effectively giving them an extra quarter or more of production per year. Now, we just need winter to show with some teeth this year and deplete the 3 tcf of gas currently in storage.

Ultra Petroleum presentation

Breakdown target: $52.50 Hit 8/30

Position: Jan 2009 $60 LEAP Call OZH-AL @ $8.00

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CHK $33.99 +1.73 Chesapeake Energy

CHK experienced a nice bounce early in the week when they announced they were going to cut back on production and slow down on drilling until gas prices recovered from their current lows. CHK also said it was going to sell off five sets of proven reserves and create a separate master limited partnership to hold its midstream gas-gathering and processing operations. These moves should raise about $3.5 billion and enable them to raise additional capital without going to the equity markets.

CHK was recently upgraded to 5 stars by Morningstar.

Link to Enercom presentation

Position: 2010 $35 LEAP Call WZY-AG @ $6.60 ** No Stop on LEAP **

Insurance put:
Oct $30 Put CHK-VF @ 90 cents. Profit stop $28

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HP $31.83 +0.34 Helmerich & Payne *** Stop Loss $27.50 ***

HP had a good week going until the market started turning weaker. We saw a slight dip after the overhead collision with the 100-day average. No news other than a great looking chart.

Enercom presentation here

Position: Jan 2009 $35 LEAP Call ZQA-AG @ $4.50

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HERO $25.49 +.05 Hercules Offshore ** Stop Loss $24.00 **

Hercules is struggling to hold above $25 and news of a director purchase of 20,000 shares at $25.30 did not help. I don't know why HERO is having such a hard time when the other service stocks are doing so well. Maintain the stop and we will take our chances.

Enercom presentation

Position: 2008 April $30 Call HIQ-DF @ $3.00

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GLBL $24.45 +0.27 Global Industries ** Stop Loss $18.50 **

Global finally moved over the 100-day average and is now using it as support. Somebody had been sitting on the price for the last 3-weeks and it appeared on Thursday morning they ran out of shares. There was no news.

Enercom presentation

Position: 2008 March $25 Call GQO-CE @ $3.30

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BHP - $64.18 +1.03 BHP Billiton ** Stop Loss $47.50 **

BHP was moving up nicely until rumors of a potential takeover of Rio Tinto (RTP) surfaced. The unconfirmed rumors suggested that either BHP or RIO would make a bid for RTP. BHP declined to comment on the rumor and the stock lost -$2 on Friday.

Breakdown target: $55 hit 8/15/07

Position: 2010 $70 LEAP Call LPH-AN @ $9.00

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NOV - $129.89 +1.89 National Oilwell ** Stop Loss 127.00 **

NOV hit a new high on Thursday but gave back nearly $5 on Friday in profit taking. There was no news but given the strong gains it is about time to exit ahead of their split. I am raising the stop to $127 to take us out on any continued weakness.

2:1 split date: Sept 28th. Exit before the split

Breakdown target: $100 hit 8/16/07

Position: FEB $110 Calls NOV-BB @ $9.70

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CCJ - $40.57 +0.19 Cameco ** Stop Loss $30 **

CCJ rallied on Thursday on news of a stock buyback and a progress report on the Cigar Lake Mine. The remedial efforts to repair the mine after a flood are nearly complete and progress is moving faster than previously expected. CCJ said it was going to buy back 5% of its outstanding shares or 17.7 million shares.

Breakdown target: $35 Hit 8/16/077

PPosition: 2010 $50 LEAP Call LTA-AJ @ $7.20


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Non-Energy Positions
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RIMM - $80.48 -4.93 - Research in Motion

Lots of news on RIMM and all positive but the stock still took a $3 hit on Friday. RIMM is holding near its high set on Tuesday but it deserves a rest.

For initial commentary see the July 1st newsletter.

Earnings schedule: Sept 27th.

Breakdown trigger: $56.00 hit 6/25

Call spread pre-split:
Position: LONG 2009 $180 LEAP Call VHO-AP @ $32.60
Position: SHORT 2009 $230 LEAP Call VHO-AF @ $10.47

Call spread post-split:
Position: LONG (3) 2009 $60 LEAP Call VHO-AL @ $10.87
Position: SHORT (3) 2009 $76 LEAP Call VHO-AU @ $ 3.62

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BSC $105.37 -3.29 - Bear Stearns *** Stop Loss $97 ***

BSC was extremely volatile last week soaring to $115.71 on Tuesday only to be sold hard all week on earnings worries and subprime news. They will report earnings on the 13th. Continue to keep the faith and we could be rewarded if they are better than the disaster everyone is expecting.

Earnings are Sept-13th.

Breakdown target $100 hit 8/06/07

Position: 2010 $120 LEAP Call YBO-AD @ $25.60

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CFC - $18.21 -1.64 Countrywide Financial ** Stop Loss $15 **

Countrywide can't get a break and they declined to near where Bank America bought their option several weeks ago. CFC announced after the close on Friday they were laying off 12,000 workers or 20% of their workforce. This should be no surprise to anyone that a company with 61,000 employees and only 50% of the business they had six months ago would need to cut payroll. They rebounded after the bell on Friday but I believe there is still some weakness to ahead.

Breakdown target $20.00 hit 8/15/07

Position: 2010 $30 LEAP Call YJD-AF @ $7.00
 

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