Creating a List
I am going to start populating a list of candidates for the expected end of summer demand drop. When the time comes everyone will already know who we are watching and why. I am also mentioning Husky Energy as a breakout play given its current performance and relation to CEO. Unfortunately it does not have options so everybody might want to consider it for an IRA play.
I am adding CEO this week to the future entry list. That is the CNOOC Limited or commonly known as China National Offshore Oil Company. Husky just discovered oil in 5000 ft of water 150 miles south of Hong Kong in the Liwan 3-1-1 field. This is the first discovery in that block, which covers 3900 square kilometers. The current discovery in that block was indicated by 2D seismic suggesting this particular oil deposit covered 61 square kilometers. Besides oil Husky thinks there of 4-6 trillion cubic feet of extractable gas. It would be one of the largest natural gas discoveries offshore China. This entire block is being compared to the Gulf of Mexico for China and that puts Husky and CNOOC in the right place at the right time.
CNOOC has the rights to 51% of the Husky find. This means CNOOC struck black gold at the same time Husky did and they have options. You will note in the play descriptions below that Husky is involved in many areas of energy exploration and production. Sure wish they had options. Until then we will have to console ourselves with CEO as a potential play.
Current Watch List
Husky Energy - Toronto Exchange (TSX:HSE)
Husky Energy Inc. is a Canadian integrated energy and energy-related company with operations in upstream, midstream and refined products. The upstream business includes the exploration for and development and production of crude oil, natural gas, natural gas liquids and sulfur located throughout the Western Canada Sedimentary Basin in the provinces of Alberta, Saskatchewan, British Columbia, offshore the Canadian East Coast, in the South and East China Seas, offshore Indonesia and other international areas. The midstream operations include the upgrading of heavy crude oil into premium synthetic crude oil, pipeline transportation, gas storage, cogeneration, and the marketing of crude oil, natural gas, natural gas liquids, sulfur and petroleum coke. Refined products comprises the refining, marketing and distribution of gasoline, diesel, asphalt, ethanol and ancillary services in Canada and the United States and a network of retail outlets from Ontario to British Columbia and the Yukon.
No options but suitable for an IRA.
CEO - CNOOC Limited
CNOOC Limited is a producer of offshore crude oil and natural gas and an independent oil and gas exploration and production company. It mainly engages in oil and natural gas exploration, development, production and sales. The Company has four major oil production areas offshore China, which are Bohai Bay, Western South China Sea, Eastern South China Sea and East China Sea. It is an offshore oil producer in Indonesia. The Company also has certain upstream assets in regions, such as Africa and Australia. As of December 31, 2005, it owned net proved reserves of approximately 2.36 billion barrels-of-oil equivalent (BOE) and its annual average net production was 424,108 barrels-of-oil equivalent per day (BOEPD).
CEO has been rather volatile over the last year but the 50-week moving average currently at $75 has been decent support. The June drop in oil prices saw CEO trade as low as $70. I want to target the $70 level on any future dip.
CEO does not have LEAPS so I am going to email everyone the play particulars depending on when that $70 level is hit. Currently December is the longest option series available. I am hoping before $70 is hit a new series in 2007 will be added.
I repeat, we will buy the dip sometime in August. Details to follow at that