A team of corporate leaders from Exxon Mobile (XOM) met with the president of Guyana this week as the oil companies try to elbow and box out their competitors. It is expected border disputes with neighboring Suriname will be cleared up by the UN shortly, and this will clear the way for companies to invest in off shore drilling.
Audio Podcast:
An audio podcast of this article is available at: poweropt.com/podcasts/2007_09_08_XOM.mp3
“The companies want to be prepared for the ruling and to be able to hit the ground running when it is announced,” Newell Dennison, petroleum director at the state’s geology and mines commission, said Tuesday. “They are coming to Guyana in anticipation of the ruling.”
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It is expected the offshore deposits in Guyana contain as many as 15 million barrels of oil and huge natural gas deposits.
The Wall Street Journal also reported today the Chief Executive of Exxon Mobile met last month with the controversial Col Moammar Gadhafi on the prospect of tapping the Lybia’s oil fields.
The management at Exxon Mobile has announced their plan to invest in nearly two-dozen projects over the next three years. The company plans to spend $20 billion a year on projects they hope will result in an increase in their oil production capabilities.
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The CEO of Exxon has stated he feels oil prices are about $20 a barrel greater than they should be. He made the statement, “With the price today and over the last years, what the market is saying is they’re uncomfortable with the reliability of supply.” This could mean long-term profits from a company with an already well-padded balance sheet.
Previous Articles:
PowerOptions weblog has previously covered Exxon Mobile in the articles entitled “2%-12% Returns In Less Than 1 Month” and “Politics and Options Investing”.
Potential Trades:
All of the following option trades have 44 days until expiration. Exxon Mobile is currently trading at $71.80. These trades were discovered using the powerful suite of option search tools found at PowerOptions.
| Covered Call – Exxon Mobile (XOM) $ 71.80 (44) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OPTION | Strike Info |
Opt Bid |
% Dnsd. Prot. |
% If Unch. |
% If Asgnd |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| XOMDN | 07 APR $70.0 | $3.30 | 4.60% | 2.20% | 2.20% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| XOMDX | 07 APR $72.5 | $1.80 | 2.50% | 2.60% | 3.60% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The first covered call trade, an in the money covered call, offers 4.6% downside protection and a potential profit of 2.2% if the stock remains above $70 or rises. The break-even price of this trade is $68.54. The net cost of this trade, per 100 options, is $6,857.00.
The second covered call trade, an out of the money covered call, offers 2.5% downside protection and a potential profit of 2.6% if the stock remains unchanged. If the stock rises above the $72.50 strike price, the potential profit becomes 3.6%. The break-even price of this trade is $70.08. The net cost of this trade, per 100 options, is $7,008.00.
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[tags] Guyana, Suriname, UN, Newell Dennison, Wall Street Journal, Moammar Gadhafi, Lybia, XOM, Exxon Mobil Corp., covered call investment strategy, investment strategy, iron condor, poweroptions, stock option trading, stock options [/tags]