3SOF

HES - Hess Corporation

*** A full trade plan will be given in the next hour or so.***

We will be buying HES today around the open

Hess Corporation (HES)

Profile: Hess Corporation Formerly known as Amerada Hess Corporation. The Group's principal activity is to explore, produce, purchase, transport and sell crude oil and natural gas. It operates in two segments: Exploration and Production and Refining and Marketing. The Exploration and Production segment explores for, produces and sells crude oil and natural gas. The Group's exploration and production activities take place in the United States, United Kingdom, Norway, Denmark, Gabon, Indonesia, Thailand, Azerbaijan, Algeria, Colombia, Equatorial Guinea, Malaysia and other countries. The Refining and Marketing segment manufactures, purchases, trades and markets refined petroleum and other energy products. The Group markets refined petroleum products on the East Coast of the United States to the motoring public, wholesale distributors, industrial and commercial users, other petroleum companies, governmental agencies and public utilities. It also markets natural gas to utilities and other industrial and commercial customers.
Sector: Oil & Gas Refining & Marketing
Market Cap: $40B
Website: http://www.hess.com

Technical Analysis:

HES is bullish in all time frames, both 50-EMA and 200-EMA with a strong positive leaning.
Currently HES is consolidating the most recent breakout, trading near the support levels:
- Ascending support @ $122
- 50-EMA @ $117

Fundamental Analysis:

HES is another big cap with strong fundamentals.

Current 2008FY EPS consensus estimates is $10.33, and 2009FY EPS is $10.77, what makes HES to be trading at just 11.9 times earnings (2008) and just 11.42 times earnings (2009), a bit more overvalued when compared with MUR, but still very attractive at this point.

HES has other developments in play, for example an early exploration success in Australia, and potential explorations in Brazil, Ghana, Libya, etc.

I had the chance to read this recent research note from Merril Lynch:



Analysts at ML have upgraded their price target to $150 and are enjoying these recent developments in Australia, and considering that HES is not reflecting yet all the new exploration prospects in play.

Trading Thesis:
This is another sector play, following pretty much the same line of thought used to pick MUR. HES is also a big cap (much bigger), and has interesting fundamental prospects in play along with a strong technical layout.

Trading Plan:
HOLD HES

Regards,

Update:

Yesterday was not a good day for oil related stocks in general, as the crude oil futures were down more than 3%, with that said our entry timing was a bit compromised, but even so nothing was changed on the current bullish layout.

Also relevant: Goldman Sachs just upgraded their price target for HES to $175 back from $150.

I'm setting a stop level slightly below the 50-EMA and below the last relative low:

The trading plan is:

Trading Plan:
Hold HES with a stop @ $113

Best regards,

Update:

Interesting white candle for HES, reacting positively on the intermediate ascending support.
$130 is the current short term resistance, but with current developments on the Oil futures, I expect this resistance to be broke with no difficulties.

Trading Plan:
Hold HES with a stop @ $113

Best regards,

Update:

Nothing new from the technical front as HES continues to consolidate the recent prices.

Today, Deutsche Bank upgraded HES:

Quote27 Jun 2008 - 02:49:52 AM EDT
Deutsche Bank's Chief Energy Economist Adam Sieminski has changed the
oil price deck from our old long term view of $85/bbl to $100/bbl. For additional
details of the commodity price change please see our note today
entitled, "Oil price upgrade- What worked works and keeps working". We
are raising our 2008 EPS from $8.39 to $11.94, raising the price target from
$120 to $142, and maintain a BUY rating.

Also, JPMorgan made a few updates today:

QuoteRevising estimates on 2Q08, new modeling assumptions

With 2Q08 coming to a close, we have updated our models to reflect commodity
pricing during the quarter. In addition, we have changed our earnings estimates for
subsequent quarters to reflect higher crude oil and natural gas price modeling
assumptions. In particular, we are modeling earnings based on crude oil prices of
$110/bbl for 2008E and 2009E, compared with our prior assumptions of $90/bbl for
2008E and $85/bbl for 2009E. We would stress that this is not an official JPMorgan
price assumption; rather, it reflects an interim view, consistent with 2008 year-todate
prices and the 2009 consensus forecast.
On average, we have increased our 2008 earnings estimates for the integrated oils by
28% for 2008 and 33% for 2009.

Favor HES and OXY on E&P strength, minimal downstream.
In short, we believe 2Q08 earnings will be a mixed bag for the integrated oils. As
such, we favor companies that are minimally exposed to refining, as well as those
that have minimal exposure to PSC-related volume losses, or those that have
provided price-related entitlement volume sensitivity. We believe OW-rated HES
and OW-rated OXY are well positioned, benefiting from commodity price strength in
the E&P segments and facing minimal hindrance from a weak downstream
environment.

Trading Plan:
Hold HES with a stop @ $113

Best regards,

Update:

HES continues to consolidate this 120/130 area, holding above the support with consistent volume. No changes from a technical overview.

Fundamentals look strong, and today JPMorgan issued another note about HES with interesting material:

QuoteHess Corporation

Focused strategy supports outlook beyond current
exploration activity; mgmt meeting insights

Last week's meetings with HES management increase our conviction in
our selection of HES as our top integrated for 2H08. Although the
exploration program has clearly taken center stage as the key source of
catalysts for HES in the coming months, we were most impressed by
management's focus on executing HES's strategy, one of moderate growth
in production and reserves that will sustain the portfolio beyond the near
term. We believe this focus and discipline are essential to bridging the
multi-year gap between exploration discoveries and first production,
supporting the outlook long after the rig has left Brazil.

Management executing a moderated, sustainable growth strategy.
HES's E&P strategy has two key goals: (1) grow production by 3-5%
per year and (2) grow reserves by 5-8% per year. Although seemingly
modest, we believe that this strategy is manageable and possible to
execute organically. More importantly, we believe it is sustainable long
beyond the current set of exploration catalysts.

High-impact exploration program on pace to deliver results in 2H08.
Turning to the near term, we expect the second half of the year to hold
several catalysts from HES's drilling program. We look next for results
from additional drilling in Australia following the Glencoe success in
early June. In 3Q, we expect wells to spud in Libya and Brazil, and we
expect news flow from the Ankobra prospect once drilling begins in 4Q.

Risk-reward balance attractive despite volatility and valuation
premium. We expect continued share price volatility in '08 based on
exploration results and oil price movements, and note that HES trades on
'08 EV/DACF of 8.4x, a 32% premium to its peers. However, we believe
the risk-reward tradeoff is attractive, supporting our OW rating.

Trading Plan:
Hold HES with a stop @ $113

Best regards,