This post was just published on ZYX Buy Change Alert.
The position is long with an average price of $2.55. Currently, 50% of the full core position size is being held. Profits have been taken as high as $6.00.
In addition, there are profits in the amount of $1.19 per share allocable to this position from the hedging program started on July 13, 2011 and ended per post dated December 2, 2011 on the Real Time Feed. There are also realized profits allocable to this position from the hedging program initiated on March 5, 2012 and ended on January 18, 2013 in the amount of $0.82. There is a slight loss due to the current hedging program.
The stock was trading at $7.96, approaching the lower band of our target of $8, when the news hit on the 23rd that an offshore drilling platform in the Gulf of Mexico experienced a blowout.
The platform is a jackup drilling rig Hercules 265, a 250′ mat-supported cantilevered unit, operating for Walter Oil & Gas Corporation in the U.S. Gulf of Mexico OCS lease block South Timbalier 220. The company said, “Late yesterday evening, the natural gas flowing from the well ignited which spread to the rig. The extent of the damage to the rig is currently unknown. The company is currently working with its customer, Walter Oil & Gas, and regulatory authorities to determine the cause of the incident, but our immediate focus is on stopping the flow of natural gas from the well. All parties involved are working with third-party experts to develop a plan to regain control over the natural gas well, which could include the drilling of a relief well. The company is awaiting daylight to assess any potential environmental incident.” As previously reported, all 44 personnel aboard the jackup rig were safely evacuated during the afternoon of July 23 and there have been no injuries sustained.
What to do now?
Those in the stock may continue to hold.
Those not in the stock may consider initiating a position on a dip into the buy zone.
Buy Zone: $5.10 – $6.36.
Target Zone: $8.00 – $10.00
Stop Zone: $3.00 – $3.33
Most of the accumulation should take place under $6.00 is the stock is hit further.
