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I hesitated to add more entries to the watch list with expectations that oil prices will fall next week. However, we are getting closer to the calendar period where we could see a market bottom and a rebound into year-end. I don't want to be caught flat-footed and wishing we had bought the dip. I tried to add companies that are not directly impacted by the fluctuations in oil prices.

Dropped Entries


New Watch List Entries
NE Noble Corp
NOV National Oilwell
PBR Petrobras
FTK Flotek
MDR McDermott
JEC Jacobs Engineering
FLR Fluor

Current Watch List

NOV - National Oilwell Varco

Company Info:

National Oilwell Varco, Inc. is a provider of equipment and components used in oil and gas drilling and production operations, oilfield services, and supply chain integration services to the upstream oil and gas industry. It has three segments: Rig Technology, Petroleum Services & Supplies, and Distribution Services. The Rig Technology segment designs, manufactures, sells and services systems for the drilling, completion and servicing of oil and gas wells. The Petroleum Services & Supplies segment provides consumable goods and services used to drill, complete, remediate and workover oil and gas wells, service pipelines, flowlines and other oilfield tubular goods. The Distribution Services segment provides maintenance, repair and operating supplies, and spare parts to drill site and production locations worldwide. In July 2007, NOV acquired, through a wholly owned subsidiary, a 76% stake in Sara Services and Engineers Private Limited. In April 2008, it acquired Grant Prideco, Inc.


Breakdown trigger: $53

Buy FEB $60 Call NOV-BL

Breakout trigger: $65

Buy FEB $70 Call NOV-BN


NE - Noble Corp

Company Info:

Noble Corporation (Noble) is engaged in contract drilling services worldwide. It performs contract drilling services with its fleet of 62 offshore drilling units located worldwide. This fleet consists of 13 semi-submersibles, three drillships, 43 jackups and three submersibles. The fleet count includes two F&G JU-2000E jackups and three deepwater dynamically positioned semisubmersibles under construction. As of December 31, 2007, approximately 85% of its fleet was deployed internationally. Its other operations include labor contract drilling services, and through November 2007, engineering and consulting services. Its operations are conducted principally in the Middle East, India, United States, Gulf of Mexico, Mexico, the North Sea, Brazil, West Africa and Canada. During the year ended December 31, 2007, Noble completed the rationalization of its technology services division with the sale of the rotary steerable system assets of its Noble Downhole Technology Ltd. subsidiary.

Breakdown trigger: $44

Buy 2010 $50 LEAP Call YVJ-AJ

Breakout trigger: $54

Buy 2010 $60 LEAP Call YVJ-AL


PBR - Petrobras

I am still leery of Petrobras because of possible government intervention but they just discovered another 5-8 billion barrel field in early September. Estimates on costs to build out the Tupi field range from $600 billion to $1.2 trillion. Brazil does not have that kind of money and may be deciding it is best to leave Petrobras intact and able to raise the money through the market.

Company Info:

Petroleo Brasileiro SA - Petrobras (Petrobras) is a Brazil-based holding company is engaged in the exploration, exploitation and production of oil from reservoir wells, shale and other rocks, and in the refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy related activities. Petrobras has 109 production platforms and 15 refineries. It operates 31,089 kilometers of pipelines. The Company has various subsidiaries: Petrobras Distribuidora SA - BR, which is involved in the distribution and commercialization of oil products and natural gas, and Petrobras Netherlands BV - PNBV, which is active in the purchase, sale and rent of equipment and platforms for the production of oil and gas. Petrobras operates in Brazil, Argentina, Mexico, Portugal, the United States, Peru and Turkey, among others.

Breakdown trigger: $40

Buy 2010 $50 LEAP Call YMO-AJ

Breakout trigger: $49

Buy 2010 $60 LEAP Call YMO-AL


FTK - Flotek

Company Info:

Flotek Industries, Inc. is a global supplier of drilling and production related products and services to the energy and mining industries. Its core focus is oilfield specialty chemicals and logistics, downhole drilling tools and downhole production tools. Flotek offers its products primarily through its sales organizations, as well as through independent distributors and agents. The customers for its products and services include oil and natural gas companies, independent oil and natural gas companies, pressure pumping service companies and state-owned national oil companies. Five customers accounted for approximately 34% of its consolidated revenue during the year ended December 31, 2007. The Company's reportable segments are Chemical and Logistics, Drilling Products and Artificial Lift. All three segments market products domestically and internationally.

Breakdown trigger: $11

Buy 2010 $15 LEAP Call YVB-AC

Breakout trigger: $13.50

Buy 2010 $15 LEAP Call YVB-AC


MDR - McDermott Intl

Company Info:

McDermott International, Inc. is an engineering and construction company with specialty manufacturing and service capabilities and is the parent company of the McDermott group of companies, including J. Ray McDermott, S.A. (JRMSA) and The Babcock & Wilcox Company (B&W). The Company operates in three business segments: Offshore Oil and Gas Construction, Government Operations and Power Generation Systems. On July 27, 2007, the Company acquired Secunda International Limited. On May 1, 2007, it acquired Marine Mechanical Corporation.

Breakdown trigger: $27

Buy 2010 $35 LEAP Call YAE-AG

Breakout trigger: $38

Buy 2010 $50 LEAP Call YAE-AJ


JEC - Jacobs Engineering

Company Info:

Jacobs Engineering Group Inc. (Jacobs) is a professional services firm in the United States. The Companys business focuses on providing a range of technical, professional and construction services to industrial, commercial, and governmental clients around the world. Jacobs provides four categories of services: Project Services (which include engineering, design, architectural, and similar services); Process, Scientific and Systems Consulting services (which includes services performed in connection with a variety of scientific testing, analysis and consulting activities); Construction services (which encompasses traditional field construction services, as well as modular construction activities, and includes direct-hire construction and construction management services), and Operations and Maintenance services (which includes services performed in connection with operating large, complex facilities on behalf of clients, as well as services involving process plant maintenance).

Breakdown trigger: $60

Buy 2010 $80 LEAP Call WEU-AP (No $70 LEAP listed)

Breakout trigger: $68

Buy 2010 $80 LEAP Call WEU-AP


FLR - Fluor

Company Info:

Fluor Corporation is a holding company that, through its subsidiaries, provides engineering, procurement and construction management (EPCM) and project management services. Fluor serves a number of industries worldwide, including oil and gas, chemical and petrochemicals, transportation, mining and metals, power, life sciences and manufacturing. Fluor is also a primary service provider to the United States Federal Government. It performs operations and maintenance activities for major industrial clients, and also operates and maintains their equipment fleet. The Company is aligned into five principal operating segments: Oil and Gas, Industrial and Infrastructure, Government, Global Services and Power. Fluor Constructors International, Inc., which is organized and operates separately from its business segments, provides unionized management, construction and management services in the United States and Canada, both independently and as a subcontractor on projects to its segments

Breakdown trigger: $60

Buy 2010 $70 LEAP Call LLF-AZ

Breakout trigger: $72

Buy 2010 $80 LEAP Call LLF-AP

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