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Energy Play Updates

PDE $43.94 -0.99 Pride International

Pride announced on Tuesday the completion of the $66 million sale of its platform rig fleet to Blake International LLC.

Zacks recently reiterated a buy rating on PDE on Friday based on their $9.4 billion backlog and their emergence as a pure play deepwater driller. They have sold off their non-core assets to leverage the deepwater play. The market is still valuing them as a shallow water jackup play and they are no longer in that sector. They are a strong takeover target given their small size and sector.

Position: Jan 2009 $50 Call PDE-AJ @ $3.70

I went with a Jan call instead of a LEAP because an acquisition would limit LEAP appreciation. I wanted to be close to the current price with a cheap option.


FWLT $76.17 +1.87 Foster Wheeler

Nice rebound after a -$5 loss the prior week. Lots of news on FWLT but nothing specific on the investment front.

Breakout trigger: $71 Hit 5/13

Position: 2010 $80 LEAP Call LWM-AP @ $16.80


CRR $47.69 -0.31 - Carbo Ceramics

Carbo had no news and no movement. It appears to have hit a plateau and nothing is happening. I will give it another week. I hate holding a stock that is doing nothing in a volatile market.

Breakout trigger: $48 Hit 5/12

Position: Dec $50 Call CRR-LJ @ $5.80


JEC $94.78 +3.13 Jacobs Engineering

Excellent rebound led by Fluor. At this point I don't care who caused it but just thankful it happened.

Breakout trigger: $90 Hit May 5th

Position: 2010 $100 LEAP Call WEU-AT @ $16


PBR $70.50 -1.88 Petrobras

I am surprised Petrobras declined any this week. There was so much positive news it should have been up +10. PBR expects to be a net exporter by year-end. On Wednesday PBR confirmed plans to build a 4th new refinery similar to a planned 600,000 bpd plant. The initial refinery is expected to be completed by 2014. When all plants are complete Petrobras will nearly double its refining capacity to 3.6 mbpd from its current 1.9 mbpd.

** See portfolio listing for any stop loss **

Breakout trigger: $125.50 hit 4/28

Position: 2010 $150 LEAP Call YMO-AV @ $22.10


NE $63.14 +.27 - Noble Corp

Noble has also gone dormant just above support at $62. It is as though traders don't know what to do with all the prosperity in the sector. There are no available rigs and those under contract are busy for years to come. Noble will present at the RBC Energy Conference on June 3rd. Hopefully the service/drilling sector will take flight from all the good news presented there.

Noble recently won a $4 billion contract to drill for Petrobras off the coast of Brazil. This is a monster payday and just one area of exploration for Noble.

** See portfolio listing for any stop loss **

Breakdown trigger $56.00 hit 4/29

Position: 2010 $70 LEAP Call YVJ-AN @ $8.10


RIG $150.19 -1.82 - Transocean

I don't get the decline in these drillers. Business is so good they are printing money on a daily basis. RIG closed at the low for the week. RIG will present at the RBC Energy Conference on the 3rd at 10:50 AM. The webcast will be available here: http://www.deepwater.com

RIG is the premier deep-water driller and there is no scenario where they don't continue to make money.

** See portfolio listing for any stop loss **

Breakdown trigger: $150 Hit 4/29

Long 2010 $170 LEAP Call YDR-AN @ $24.00
Shrt 2010 $230 LEAP Call YDR-AW @ $8.50


NOV $83.32 +1.97 - National Oilwell Varco

For every dormant stock there is another stock making new highs. NOV is very close to a new high after a strong week. NOV is Cramers best pick (this week).

** See portfolio listing for any stop loss **

Breakdown trigger: $67 Hit 4/30

Position: NOV $80 Call NOV-KP @ $5.40


FLS $138.52 +8.41 - Flowserve

Absolutely outstanding! Flowserve continues to amaze and broke out to another new high. They declared a dividend of 25 cents on Friday to cap off a perfect week.

** See portfolio listing for any stop loss **

Breakout trigger: $110 Hit 4/16

Position: OCT $120 Call FLS-JD @ $10.40

Non-Energy Positions


Covered LEAP Calls

AAPL $188.75 +7.58 Apple Inc *** Covered LEAP Call ***

Apple is back on a roll again as the hype over the 3G iPhone continues to build. Steve Jobs is expected to unveil the 3G model on June 9th at the Apple Developers Conference in San Francisco. The iPhone has captured 19.2% of the U.S. market for smart phone sales in Q1 according to IDC. That was down from 26.7% in Q4. The BlackBerry captured 35.1% in Q4 and then surged to 44.5% in Q1.

No change. Over $150 we are at max profits.

Long: AAPL @ open of $177.52 (Jan-14th open)
Short: 2009 $150 LEAP Call VAA-AW (APV-AJ) @ $20.80
Breakeven: AAPL @ $136.12

Position changes:
Closed $200 LEAP Short @ $9.40 ($30.00 - 9.40 = gain +20.60)
Replaced with $150 LEAP short @ $20.80
AAPL cost basis $177.52 - $41.40 (20.60 + 20.80) = 136.12
Breakeven: AAPL @ $136.12


RIMM $138.87 +7.23 Research in Motion

The IDC news that RIMM captured 44% of the Q1 smart phone market compared to Apple's 19% failed to crimp Apple's stock and RIMM rebounded to resistance at $140 on the news.

No change. We are at max profits over $110.

If we continue holding the position until January and let it get called away your profit will be $34.80 when the stock is called away for $110.

Alert entry 11/12 @ $102.60

Covered LEAP Call:

LONG RIMM @ $102.60 (cost $102.60 -9.10 $150 LEAP = 93.50)
SHORT 2009 $110 LEAP Call VHO-AB @ $18.30 on 1/14/08

Closed: 1/14
SHORT 2009 $150 LEAP Call XTB-AJ @ $18.50, close $9.40 +9.10

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