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If Dennis misses the oil belt in the Gulf there is a good chance we could see a sizeable dip in oil prices and oil stocks. That means I need to add some new candidates since two of our three watch list stocks were triggered last week, EOG and ECA.

I am leaving BP on the list but raising the breakdown entry point. BP spiked +$4 last week on news they were selling two older tankers to XOM. If Dennis misses us we might get an entry on the back draft. Remember that we missed the BP entry by -25 cents the prior week at $62.25. Today it is $66.30. Dang it!

I was hoping for a pullback in AHC after last Friday's spike but instead it soared another $5. Still going to pass because option prices are out of sight. I know, you get what you pay for but I want to be cheap this close to Q4. The same goes for SUN, which has failed to slow down its advance.

I keep mentioning Talisman as they surge higher but they have no leaps. I am going to bite the bullet this week and add them as a candidate on the hopes of a dip and a cheap entry with the Jan-06 options. I plan on being out of all our oil positions before December so a cheap call may be worth it.

When I added EOG last week I mentioned that UPL was the slower mover of the two. UPL jumped +10% this week. UPL is definitely a candidate for a dip this week.

Stocks I think everyone needs to keep on their personal watch list including those listed above.

DO - Diamond Offshore
RIG - Transocean
DVN - Devon Energy
SWN - Southwestern Energy
XTO - XTO Energy
APA - Apache
COG - Cabot
KWK - Quicksilver
RRC - Range Resource Corp
SUN - Sunoco
AHC - Amerada Hess
 

Dropped Entries

None


New Watch List Entries
UPL
$34.00
Ultra Petroleum
KWK $45.00 Quicksilver
RRC $29.00 Range Resources
TLM $41.00 Talisman Energy
APA $69.00 Apache

Current Watch List

UPL - $33.80 Ultra Petroleum

** Breakdown Target $31.00 **
** Breakout Target - none **

Ultra Petroleum Corp. is an oil and gas company engaged in the development, production, operation, exploration and acquisition of oil and gas properties. The Company's operations are focused in the Green River Basin of southwest Wyoming and Bohai Bay, offshore China. During the year ended December 31, 2004, it owns interests in approximately 166,974 gross (92,997 net) acres in Wyoming covering approximately 260 square miles. The Company owns working interests in approximately 241 gross productive wells in this area and is operator of 41.5% of the 241 gross wells. Through Pendaries Petroleum Ltd., it is active in oil and gas exploration and development in Bohai Bay, China. The Company also owns interests in 15,518 gross (14,652 net) acres in Pennsylvania, as well as interest in approximately 720 gross (320 net) acres and interests in three productive wells in Texas.

Breakdown Target
BUY DEC $32.50 Call UPL-LZ currently $4.30

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BP - $66.30 BP, PLC

** Breakdown Target $63.50 **

BP p.l.c. produces & markets crude oil & petroleum products worldwide. It is involved in exploration and field development throughout the world and is engaged in the manufacture and sale of petroleum-based chemical products. For the 3 months ended 3/31/05, revenues rose 15% to $81.01B. Net income rose 34% to $6.60B. Results reflect increased sales from all the business segments, higher marketing & refining margins and inventory gains


Breakdown Target
BUY 2007 $65 LEAP CALL WAO-AM currently $8.80

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TLM $41.50 Talisman Energy

** Breakout target - None **
** Breakdown target $38.50 **

Company info:

Talisman Energy Inc. (Talisman) is an independent international upstream oil and gas company whose main business activities include exploration, development, production, transporting and marketing of crude oil, natural gas and natural gas liquids. The Company's operations, during the year ended December 31, 2004, were conducted principally in four geographic segments: North America, the North Sea, Southeast Asia and Algeria. The Trinidad Angostura project began production in January 2005. Exploration is being advanced in other areas outside the principal geographic segments, including Alaska, Colombia, Qatar and Peru. During 2004, total production averaged 438 million barrels of oil equivalent per day (mboe/d) and the Company exited the year producing 452 mboe/d in December. In 2004, the Company drilled 641 successful wells.

Breakdown Target
BUY Jan 2006 $40 CALL TLM-AH currently $5.30

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KWK $44.89 Quicksilver

** Breakout target $46.75 **
** Breakdown target $42.50 **

Company info:

Quicksilver Resources Inc. (Quicksilver) is an independent oil and gas company engaged in the exploration, acquisition, development, production and sale of natural gas, crude oil and natural gas liquids (NGLs) primarily from unconventional reservoirs, such as fractured shales, coal beds and tight sands. Quicksilver's operations are concentrated in Michigan, Indiana/Kentucky, Texas, the Rocky Mountains, and the Canadian province of Alberta. At December 31, 2004, Quicksilver had estimated proved reserves of 968 billions of cubic feet of natural gas equivalent (Bcfe). Approximately 92% of its reserves were natural gas, 77% were classified as proved developed. Approximately 62% of the estimated proved reserves are located in Michigan.

Breakdown Target
BUY Dec 2005 $45 CALL KWK-LI currently $5.10

Breakout Target
BUY Dec 2005 $47.50 CALL KWK-LW currently $3.90

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RRC - $29.42 - Range Resources

** Breakout target $30.50 **
** Breakdown target $27.50 **

Company info:

Range Resources Corporation (RRC) is an independent natural gas and oil company engaged in the exploration, development and acquisition of oil and gas properties, primarily in the Southwestern, Appalachian and Gulf Coast regions of the United States. As of December 31, 2004, RRC has proved reserves of 1.18 trillion cubic feet (Tcfe) of natural gas equivalent, of which 81% natural gas; 64% is proved developed reserves, and 77% operated with a reserve life of 14.9 years. The Company owns 2,428,000 gross (1,890,000 net) acres of leasehold plus over 400,000 royalty acres. RRC has a multi-year inventory of drilling projects that includes over 5,000 identified drilling locations. On June 23, 2004, RRC purchased the 50% of the remaining Great Lakes that it did not own. In December 2004, RRC also purchased additional Appalachian properties through the purchase of PMOG Holdings, Inc, a private company, or Pine Mountain.

Breakdown Target
BUY Dec 2005 $30 CALL RRC-LF currently $2.75

Breakout Target (same)
BUY Dec 2005 $30 CALL RRC-LF currently $2.75

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APA - $69.40 - Apache

** Breakout target $70.50 **
** Breakdown target $66.00 **

Company info:

Apache Corporation is an independent energy company that explores for, develops and produces natural gas, crude oil and natural gas liquids. In North America, the exploration and production interests are focused in the Gulf of Mexico, the Gulf Coast, the Permian Basin, the Anadarko Basin and the Western Sedimentary Basin of Canada. The Company has interests in seven countries, such as the United States, Canada, Egypt, Australia, the United Kingdom, China and Argentina. Its segments are the United States, Canada, Egypt, Australia, North Sea and Other International. On August 20, 2004, Apache signed a definitive agreement to acquire all of Anadarko's Gulf of Mexico-Outer Continental Shelf properties (excluding certain deepwater properties). During the year ended December 31, 2004, the Company participated in drilling 1,913 gross wells, with 1,735 (90.7%) completed as producers.

Breakdown Target
BUY JAN 2007 $70 LEAP CALL OWF-AN currently $11.60

Breakout Target
BUY JAN 2008 $75 LEAP CALL YWA-AO currently $13.20
(no 2007 $75 or $80 LEAP)
 

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