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VLO $70.72 +4.07 - Valero Energy

Nice breakout by Valero over the last week. I had emailed investor relations at Valero about the exact processing capability for different kinds of crude. I received a nice email from Andrew Ray, Senior Manager of Investor Relations, stating that, "Valero sources feedstocks from around the world. In general terms, we run about 1/3 heavy sour crudes, 1/3 medium/light sour crudes and 1/3 light sweet crudes." This gives them the capability of having crude supply regardless of what is impacting a particular type or supply. My thanks to Mr. Ray for helping out with our understanding of Valero's position in the industry.

Position: $70 LEAP Call VHB-AN @ $9.20

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FLR $144.80 +.95 - Fluor Corp

Fluor rallied on news they completed negotiations on a $1.4 billion improvement to the Virginia highway system. They will engineer and construct 13 miles of toll way and operate it for the next 80 years with a 10% ownership interest. This is why I like these engineering and construction firms. They have exposure to the oil and gas industry but also to other sectors that provides us with downside protection if the energy sector takes a breather. Technically FLR made a nice bounce off support at $135 on Tuesday and rebounded +$10 to close the week.

Breakdown trigger: $145 Hit 12/13

Position: 2009 $160 LEAP Call XOB-AL @ $22.30

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RIG $143.92 +7.92 - Transocean Inc

Transocean exploded +7 points on Friday alone as shorts raced to cover. Cramer was pounding the table on RIG early in the week and pointing out that the majority of Transocean's rigs were contracted through 2010 with a bunch already contracted through 2012. Those contracts expiring are being resold at higher prices. Now that Nov bought Grant Prideco (GRP) the number of competitors just decreased by one. Friday's close was an all time high. I am canceling the secondary trigger at $120 as no chance in hell of being hit.

Breakdown trigger: Hit 12/4 @ $130

Position: 2009 $140 LEAP Call VOI-AH @ $15.80

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JEC $96.33 +1.02 Jacobs Engineering Group

Still holding the high ground and only a couple bucks from a new high. Jacobs should benefit from markup week since a lot of funds own it and they want to look like wizards when their year-end statements are printed. Expect JEC to find some buying interest before the year is out.

No LEAPS

Breakdown target: $80.00 Hit 11/12

Position: APR 2008 $90 Call JEC-DR @ $6.50

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COP $86.71 +3.42 Conoco Phillips *** Stop Loss $74.00 ***

Moving up to 10-week highs on no news. Warren Buffett must be buying again.

Breakdown target: $80 hit 11/12

Position: 2009 $90 LEAP Call OJP-AR @ $8.60

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CNQ $70.89 +2.51 Canadian Natural Resources

No news but another 4-week high. No complaints.

Entry 11/29: $66

Position 11/29: 2009 $90 LEAP Call OKR-AR @ $6.50

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CLB $123.05 -.27 Core Labs

CLB holding over support on no news. CLB appears to have found a bottom from its recent slide and hopefully that $116 level will be a base to launch a new rally in January.

Breakdown Trigger: $130 11/12

Position: 2009 $140 LEAP Call ZYM-AH @ $21.30

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FTI $56.13 -1.61 FMC Technologies *** Closed ***

FMC is still holding over support at $54 but the momentum is just not returning. I am kicking it out to concentrate on our better positions.

Breakdown Trigger: $57 hit 11/12

Position: APR $65 Call FTI-DM @ $4.75, exit $2.45, -2.30

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PBR $113.20 +5.87 Petrobras *** Stop Loss $92 ***

Outstanding recovery from the Monday market driven low at $100. This is only about $5 from a new high. PBR is getting a lot of positive press from major analysts. Citigroup upgraded them to a buy from hold on Thursday. Petrobras said it was in talks to buy the 50% of Astra Holding's refinery interests in Pasadena Texas that it did not already own. Petrobras currently has 130,000 bpd of refining capacity outside Brazil and it targeting 400,000 bpd by 2012. Petrobras plans to upgrade the Texas refinery to process the heavy crude Petrobras has in excess. Petrobras also bought last month a refinery in southern Japan from Exxon. It is still looking to boost capacity in Europe and the United States. This is a wise move on the part of Petrobras because it provides them a guaranteed outlet for their oil.

LEAPs Alert Entry 11/12 @ $95

Position: 2009 $90 LEAP Call VDW-AR @ $17.10

Position: 2009 $110 LEAP Call XVQ-AB @ $10.00

Alert on 11/2 recommending an immediate entry into the $110 LEAP. The prior recommendation had been calling for an entry into the $90 LEAP on a dip to $80. The correct LEAP for the current position is the $110 LEAP.

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SGR $59.55 -.26 Shaw Group *** Stop Loss $55 ***

Support at $58 failed to hold and Shaw fell all the way to $52 on Tuesday and triggered our stop at $55. I would still be a buyer of this stock and if you were lucky enough not to have your stop set I would continue to hold it with a new stop at $55. The selling was way overdone and due to some insiders selling stock. I suspect there was also some tax selling in progress.

LEAPs Alert Entry 11/12 @ $61

Position: 2010 $70 LEAP Call YCW-AN @ $20.40 exit $14.20 12/18

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FWLT $165.15 +5.35 - Foster Wheeler

Closing in on the highs again with a Friday sprint to $165. There was no news.

The board approved a 2:1 split subject to shareholder approval around January 8th.

Breakdown trigger: $135 hit 11/06

Position: 2009 $150 LEAP Call ZHF-AW @ $29.10

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PTR $179.40 -2.41 - PetroChina *** Stop Loss $170 ***

Please tell me the drop in PTR is over! After losing $30 in a little more than 8-days it appears a bottom has formed at $175. We came very close to being stopped at $170 on Thursday with a dip to $170.73. Friday saw a rebound to nearly $180. Hopefully that +$10 is a start towards the New Year. These stocks could see some end of year selling and I believe that, along with the Asian correction, is what has caused the pain.

Breakdown trigger $194.32 Entered on rebound from $190 on 11/08

Position: 2009 $220 LEAP Call ZJK-AZ @ $32.20

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XOM - $93.43 +2.25 Exxon Mobil

I am amazed by the resilience of Exxon. With no specific news it rambled to a new 6-week high on Friday. This company has 6-billion shares outstanding but it is still moving higher. This proves to me that funds are looking for a safe haven with high liquidity and XOM definitely fills that bill.

Breakdown trigger: $88 Hit 11/01

Position: 2009 $100 LEAP Call ODU-AT @ $7.90

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CAM - $95.00 -.71 Cameron International *** Stop Loss $88 ***

Stock split next Friday and CAM is holding above support. In fact we just saw another perfect example of a support hold at the 100-day average. I dropped the stop price to $88 ahead of the split.

2:1 Stock split 12/28 to holders of record on 12/17

Breakdown target: $95 Hit 10/30

Position: 2009 $100 LEAP Call OKA-AT @ $18

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SLB $94.64 +.07 - Schlumberger *** Stop Loss $87 ***

No specific news but +$5 rebound off the Monday lows. Support at $90 is still holding.

Breakdown target: $95.00 hit Oct-22nd

Position: 2009 $100 LEAP Call VWY-AT @ $15.60

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CVX $94.04 +2.02 - Chevron

No specific news but Chevron broke out to a new 3-month high and is only $2 below an all time high. Somebody thinks oil is going higher.

Breakdown trigger: $87 hit Oct-22nd

Position: 2009 $100 LEAP Call VCH-AT @ $6.40

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OII $68.47 -.95 Oceaneering International *** Closed ***

We had a nice +9 rally and then it gave it all back. The former strength in OII has failed. I am taking my hit now and making room for somebody with momentum. No news or reason for the drop.

Earnings Nov-1st: +40%

Breakdown trigger: $72 hit on Oct-22nd

Position: APR $80 Call OII-DP @ $5.40, exit $3.70

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NOV $72.78 -4.59 - National Oilwell Varco

Monday was a real shock. NOV announced it was buying Grant Prideco (GRP) for $7.5 million. The analysts loved it but like in any acquisition the buyer gets hammered. That $10 drop lasted four days and Friday saw a +3 rebound to $73. NOV said the acquisition would be accretive immediately and the deal should close in Q2. I did see one note that NOV came in dead last in customer satisfaction while GRP came in at or near the top in nearly every category. That suggests NOV is going to get better not worse. The analyst said Smith International (SII) could benefit from the satisfaction play since they are a competitor in drill pipes and bits.

Breakout Trigger: $80, hit 10/11/07

Position: 2008 May $90 Call NON-ER @ $7.20

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MDR - $59.38 +1.84 McDermott Intl *** Stop Loss $45 ***

No news for McDermott but it continues to hold at resistance at $60. A move higher here could trigger additional buying.

Earnings: Nov 8th, +37%

Breakout trigger: $53, hit 9/20

Position: 2009 $60 LEAP Call OYZ-AL @ $9.00

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UPL $68.63 -.81 - Ultra Petroleum *** Closed ***

I like UPL for many reasons but none of them are moving the stock. With gas levels in storage are 9% to 11% over the 5-year average the price on natural gas is at risk. The long range weather forecast called for a warmer than normal winter and we are burning winter days off the calendar at a rapid clip. We have a 100% gain in UPL and I want to take it rather than wait for disaster.

Breakdown target: $52.50 Hit 8/30

Position:
Jan 2009 $60 LEAP Call OZH-AL @ $8.00, exit $16.40, +8.40

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CHK $39.09 +.88 Chesapeake Energy

CHK is the opposite of UPL. CHK is actively trying to buy new acreage and drill new wells in new plays. The CEO is buying stock in the open market almost every week while the directors of UPL are selling. CHK is not setting the world on fire in terms of stock price but there is enough activity under the hood that it could move progressively higher even in the face of weak gas prices.

Earnings: Nov 7th -34%, beat by 3 cents.

Position: 2010 $35 LEAP Call WZY-AG @ $6.60
10/28 Price update: Expired Oct Put +90 cents, $7.50

Insurance put:
Oct $30 Put CHK-VF @ 90 cents. Expired

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HP $39.01 +2.65 Helmerich & Payne *** Stop Loss $29.50 ***

HP closed at a new all time high on Friday. The article below has really energized the stock. This article is about companies using HP rigs to drill 20 wells per pad to cut down on costs.
http://biz.yahoo.com/ap/071214/drilling_advancements.html?.v=1


Earnings: Nov-15th, +18%, beat by +6 cents at 93 cents

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

Insurance put:
Position: Nov $30 HP-WF. @ .50, Stop $28.50

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BHP - $70.69 -.38 BHP Billiton ** Stop Loss $65.00 **

Would somebody please shoot that deal talk in the head and lets get on with business. On the positive side BHP/BP announced that production in the Atlantis field in the Gulf had been increased and additional wells will continue to be brought onstream over the nest 6-12 months. It is expected to reach peak capacity during that period. Peak is expected to be 200,000 bpd of oil and 180 million cubic feet of gas per day. BP owns 56% and BHP 44%. Water depths in the field range from 4,400 ft to 7,100 ft. BHP has overcome many technical challenges associated with Atlantis being the deepest moored oil and gas facility in the world. BHP's cost to get to production start is estimated at $1.63 billion.

Breakdown target: $55 hit 8/15/07

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


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Non-Energy Positions
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None


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Covered LEAP Calls
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RIMM $118.63 +12.65 Research in Motion *** Covered Call ***

Blowout sales of 3.9 million Blackberry phones and a 100% increase in earnings. I seriously doubt we will see $100 again.

Alert entry 11/12 @ $102.60

Covered LEAP Call:

LONG RIMM @ $102.60
SHORT 2009 $150 LEAP Call XTB-AJ @ $18.50

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LVS - $108.00 -9.70 Las Vegas Sands *** Closed ***

Competition in Macau from the new MGM casino and protestors demanding democracy have colored the Sands a dark shade of red in the -$12 loss over the last 7 days. I never expected to be forced to close a covered call play with this kind of metric but this shows how things change.

Covered LEAP Call

LONG: 100 Shares LVS @ $117, exit $107.69, -9.31
SHORT: 2009 $140 LEAP Call ZAU-AY @ $20.00, exit $14.80, +5.20
Net loss -4.11

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ETFC $3.60 -0.27 E*Trade Financial *** Covered Call ***

Etrade said customer cash balances rose 14% in November to $33 billion. Etrade made the announcement as they were touting their "win-back" plan to get customers to come back to Etrade.

LONG: ETFC @ $4.13
SHORT: Jan-2009 $5 LEAP Call OYN-AA @ $1.45

Profit if called: Premium 1.45 + appreciation .87 = $2.32
Cost of entry: $4.13 - 1.45 or $2.68
Profit = $2.32 / $2.68 or 86%
 

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