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The drop was sharper than I expected and considering almost every stock in the sector dropped by the same amount I suspect there was some options activity as well.

We were triggered on the APA and RRC entries and that leaves us with four possibles and a very full portfolio.

I am not adding any new entries this week and we will play the cards we are holding.

The severity of the drop left me with a bad feeling and I want to see some new highs before we get too aggressive again.

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
COG - Cabot
KWK - Quicksilver
SUN - Sunoco
AHC - Amerada Hess

Dropped Entries


New Watch List Entries


Current Watch List

UPL - $33.47 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


BP - $65.03 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


TLM $39.99 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


KWK $43.01 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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