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BTU $80.31 +2.72 - Peabody Energy

BTU broke out to $86 on Thursday and gave back a couple on Friday. There was no specific news and the weakness was sector wide.

Breakout target: $81 Hit 6/09

Position: 2010 $90 LEAP Call LLW-AR @ $19.92

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BP $67.35 -1.05 - BP PLC

The battle with Russian interests continued for another week but a senior Russian official said a breakthrough might be imminent. On the drilling side BP extended a rig contract with Transocean for $1.2 billion. BP also won a $268 million contract with the Pentagon.

See the June-8th newsletter for news about Russia.

Recent progress announcements on the Thunder Horse platform in the Gulf suggested that BP was going to finally start producing. BP is on track to begin producing 250,000 bpd of oil and 200 million cubic feet of gas per day from Thunder Horse. The platform covers the area of three football fields and sleeps 185 workers. The gas-powered generator could power 80,000 homes. The project cost so far has been $3.5 billion. It will collect oil from 25 wells. I am hoping the Thunder Horse project will offset any further news from Russia.

Breakdown trigger: $68. Hit June 4th.

Position: 2010 $70 LEAP Call WAO-AN @ $7.30

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PDE $45.74 -.06 Pride International

A new 4-week high on Friday morning and ended the day with a gain. No complaints.

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.

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FWLT $72.90 -.67 Foster Wheeler

FWLT has been nothing buy volatile of late with a rebound from $70 to $76 and a decline back to $72 just this week. No specific news.

US Global Investors said FWLT was one of two companies you must have.

Breakout trigger: $71 Hit 5/13

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

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CRR $57.53 +1.82 - Carbo Ceramics

No news but the trend is still higher. Resistance at $58 appears likely to crack as long as the market does not kill the momentum. CRR is a major take over target.

Breakout trigger: $48 Hit 5/12

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

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JEC $87.35 -2.66 Jacobs Engineering

No news but JEC dropped -2.56 on Friday to erase our gain for the week. I suspect it was market related rather than stock specific.

Breakout trigger: $90 Hit May 5th

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

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PBR $65.27 -2.67 Petrobras

No specific news for PBR and the loss but the Latin American markets were all negative for the week on inflation concerns. How a company that is announcing a new discovery nearly every week can decline in a peak oil environment is unknown.

Prior commentary:

Petrobras reportedly made another light oil discovery offshore in block BM-S-9. This is an ultra-deep field like the rest and reportedly it is a large discovery. The government officials continue to get in trouble for spilling confidential data before Petrobras does and that happened again last week. Petrobras said the Tupi field will be operational by 2010 with 100,000 bpd and will be producing 500,000 bpd by 2020. The first actual production test is set for Q1-2009. Lifting costs are expected to be $8.20 per barrel. Tupi reserves are expected to be between 5-8 billion barrels. They have only drilled two wells at Tupi and the first one took 14 months and $240 million. Now they are drilling wells in 2-3 months at $60-$80 million each. Petrobras is going out for bids on the construction of 28 new drilling rigs. They will be Brazilian made and delivered between 2013-2017.

Every dip is a buying opportunity.

Breakout trigger: $125.50 hit 4/28

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

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NE $63.97 -1.22 - Noble Corp

No specific news other than the announcement of July 24th as their earnings day. NE closed -$5 off its Thursday high but right on support at $64.

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.

Breakdown trigger $56.00 hit 4/29

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

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NOV $84.49 +1.33 - National Oilwell Varco

NOV continues to consolidate between $80-$86 as we await the news from Saudi Arabia. On the home front any approval to drill off our coasts would be very bullish for NOV. No specific news.

Breakdown trigger: $67 Hit 4/30

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

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FLS $133.33 -1.43 - Flowserve

Flowserve is having trouble breaking the $140 level but hopefully any quarter end window dressing will favor FLS with some cash. I don't want to give back our gains so I raised the stop to $128.

Breakout trigger: $110 Hit 4/16

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


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Non-Energy Positions
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None

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Covered LEAP Calls
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A reminder: I dropped the AAPL and RIMM positions from the commentary after last week. They were both at max profit and were expected to stay that way until the January LEAP expiration. There was no reason to continue taking up space with them each week. I did not close the position but simply choose not to continually report on a position that has no chance of changing for the next six months.

 

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