After a week of really nasty selling you would think there would be a dozen attractive targets for new positions. Unfortunately most of the potential candidates have hurricane damage of some sort. With earnings only two weeks away the risk is too great to add a company with exposure to the Gulf. This knocks out the refiners and the major oils as well as a bunch of little guys.
The only plays I feel comfortable owning now are the gas plays and maybe Tesoro as a refiner. Valero had two refineries out and that makes it too risky. PBR would probably be a great add but its success is tied to the price of oil. Those other oil stocks who are slaves to oil prices are also on the do not disturb list until a new trend in oil develops.
That leaves us with the remaining gas plays I did not put on as regular plays this weekend. I am cautious about them until we see a new trend develop as well and the price of gas begin to firm.
Be cautious and limit your position sizes on any watch list entry.
Current Watch List
ECA - $50.54 - Encana
** Breakdown Target - $48.50 **
EnCana Corporation is an independent crude oil and natural gas exploration and production company. Its key landholdings are in western Canada, the United States Rocky Mountains, Ecuador, the United Kingdom central North Sea, offshore Canada's East Coast and the Gulf of Mexico. EnCana explores for, produces and markets natural gas, crude oil and natural gas liquids (NGLs) in Canada and the United States. EnCana is also engaged in exploration and production activities internationally including production from Ecuador and the United Kingdom central North Sea. EnCana has interests in midstream operations and assets, including natural gas storage, NGLs gathering and processing facilities, power plants and pipelines.
Breakdown Target @ $48.50
Breakout Target @ $52.50
EOG - $69.05 - EOG Resources
Breakdown Target $66.50 **
EOG Resources, Inc. (EOG) explores for, develops, produces and markets natural gas and crude oil primarily in major producing basins in the United States, Canada, offshore Trinidad, the United Kingdom North Sea and, from time to time, select other international areas. At December 31, 2004, EOG's total estimated net proved reserves were 5,647 billion cubic feet equivalent (Bcfe), of which 5,047 billion cubic feet (Bcf) were natural gas reserves and 100 million barrels (MMBbl), or 600 Bcfe, were crude oil, condensate and natural gas liquids reserves. At such date, approximately 50% of EOG's reserves (on a natural gas equivalent basis) were located in the United States, 25% in Trinidad, 24% in Canada and 1% in the United Kingdom North Sea. EOG's operations are all natural gas and crude oil exploration and production related.
Breakdown Target @ $66.50
Breakout Target @ $70.50
DVN - $63.44 - Devon Energy
** Breakdown Target $60.50 **
Devon Energy Corporation (Devon) is an independent energy company engaged primarily in oil and gas exploration, development and production, the acquisition of producing properties, the transportation of oil, gas and natural gas liquids (NGLs) and the processing of natural gas. Devon operates oil and gas properties in the United States, Canada and various regions located outside North America. Devon's North American properties are concentrated within five geographic areas. Operations in the United States are focused in the Permian Basin, the Mid-Continent, the Rocky Mountains and onshore and offshore Gulf Coast. Canadian properties are focused in the Western Canadian Sedimentary Basin in Alberta and British Columbia. Properties outside North America are located primarily in Azerbaijan, China, Egypt, and areas in West Africa, including Equatorial Guinea, Gabon and Cote d'Ivoire.
Breakdown Target @ $60.50
Breakout Target @ $64.50
TSO - $61.36 - Tesoro Corp
** Breakdown Target $58.50 **
Tesoro Corporation, is an independent refiner and marketer of petroleum products with two major operating segments, Refining and Retail. Through its refining segment, the Company manufactures products, primarily gasoline and gasoline blendstocks, jet fuel, diesel fuel and heavy fuel oils for sale to a variety of commercial customers principally in the mid-continental and western United States. It operates six refineries in the United States with a combined rated crude oil capacity of 558,000 barrels per day. During the year ended December 31, 2004, approximately 50% of the Company's total refining throughput was heavy crude oil. Its retail segment distributes motor fuels through a network of branded gas stations, primarily trading under the Tesoro and Mirastar brands. The Company markets its products to wholesale and retail customers, as well as commercial end users. On November 8, 2004, the Company changed its name to Tesoro Corporation.
Breakout Target @ $63.50
NOV - $59.29 - National Oilwell Varco
** Breakdown Target $57.50 **
National-Oilwell Varco Inc., formerly National-Oilwell, Inc. designs, manufactures and sells systems, components and products used in oil and gas drilling and production, as well as distributes products and provides services to the exploration and production segment of the oil and gas industry. The Company's Products and Technology segment designs and manufactures complete land drilling and workover rigs, as well as drilling-related systems on offshore rigs. Non-capital revenue sources within its Products and Technology segment include drilling motors and specialized downhole tools that are sold or rented, spare parts and service on the large installed base of its equipment, expendable parts for mud pumps and other equipment and smaller downhole, progressive cavity and transfer pumps. Company's Distribution Services segment provides maintenance, repair and operating supplies and spare parts to drill site and production locations throughout North America and to offshore contractors.
Breakdown Target @ $57.50
Breakout Target @ $62.50