We got slaughtered like the rest of you and continue to lick our wounds! We have not run for cover! WE have continued to average down on select Oil investments and have created "new" positions in others. We are in the game and if you are a player then one must anticipate that certain things in that game are out of your control. It is quite obvious to us that the current World leadership is very weak and is having a hard time getting a handle on their huge debts and little to no growth within their economies.. Europe must be solved or the rest of us will be sucked down the rabbit hole. Our President, is totally worthless & actually will remain a "lameduck" for the balance of his tenure! His "tax the rich" & take money from everyone else and continue to re-distribute it is almost criminal! Luckily for us he is finished and America can be reborn! (Personally, I favor Herman Cain) The EU must and I believe will somehow weather this hurricane~ I also think that Greece will get a temporary fix and eventually be "boxed" off from the rest of the EU! The most disgusting elements of this whole dilemma are the rating agency's Moody's, S&P & Fitch, which continue to make things even worse by their continued downgrades of foreign debt & banks, which compound the severity of this crisis.

As the flock have flocked towards the US Dollar all commodities have suffered~ a flight from any kind of risk has in our opinion created opportunity~ It has been a panic and there are buckets of blood in the street and it is not Halloween ! IT IS ALL ABOUT EUROPE! If they get a handle on it; then we likely dodge the recession- if not -we will have created it because of the uncertainty of the fall out of the EU implosion!

We remain optimistic and assume much of the damage is built into the market. From April 2011 to Sept 30, 2011 the DOW has dropped around 20%, while the broader market is littered with 50-80% drops in most industrial segments. It feels like March of 2009~ this is when we loaded up the boat and borrowed money from credit cards and plowed it into beaten down equities.

We are entering the best season for stocks, employment will inch up because of Xmas hiring, 4th quarter GDP will expand because of holiday shoppers, lower fuel and borrowing costs & less debt on US credit cards all will fuel a better economic environment during the next 4-6 months!

I believe that we have seen a bottom to this market for the time being and hedge funds will start to put money back into the market for the next leg upward ( even if it is short lived)!

As we move into the first Q of 2012 and the drums of NO MORE OBAMA start to get louder we believe that the market will react in a positive manner ( EU panic button is still a "click" away).

The formula: lower dollar yields greater equity investment + higher crude prices which yields higher prices for Oil stocks. Most likely bounce around $77-$87 WTI.
******OIL AND GAS DRILLING PROGRAMS***

AS YOU KNOW: WE HAVE BEEN INVESTING IN OIL AND GAS DRILLING PROGRAMS DURING THE PAST 6 MONTHS WITH ENERGY EQUITIES ( TEXAS BASED FIRM). WE HAVE KNOWN THE PRINCIPAL OF THE FIRM FOR 25 YEARS .

The first project:

So Lissie - checks are being sent out Nov 5, 2011 to all partners.

2. MR-1- waiting on rig, but anticipate "spud" within the next days.

3. "NEW" project~~Dos Arroys H5

This anticipated well is strictly Oil and "spud" date is within the next 30 days. The most interesting aspect of this project is that CHK (Chesapeake Energy) completely circles their property and has "rights" to the Eagle Ford Formation~ We are drilling above that zone! The area that we are drilling is oil saturated and we anticipate a successful well. We are told that typical production is around 70-80 bopd and the EUR is around 132k. The life of these wells are around 20 years. At 80 bopd and WTI @ $80 pay out in 8.6 months~ at 75 bopd and WTI @ $80 pay out is estimated @ 9 months.

The current cost/1 point is $11,000 ( this includes completion costs). There may be 1/2 percentage points available( mention www.saadvisory.com subscription) ! Keep in mind that most of drilling costs are a tax write-off during the first year. We like this project and intend to participate in a 1% interest in this project!

IF YOU HAVE NEVER INVESTED IN A DRILLING PROGRAM WHERE YOU ARE ACTUALLY A PARTNER- THIS PROJECT IS FOR YOU!

For more information please call Mr. Buck @ Energy Equities 281-751 8624 or 1-800-811-2694
Our #1 favorite oil stock remains Coastal Energy ( cen.to, ceo.l or cenjf.pk) . As you know we first recommended cenjf.pk during Dec of 2010 @ around $5.40 and has traded as high as $11.54~ from our Aug 29th 2011 email alert cenjf.pk was trading toward its high of $11.54 with production of around 17,000 bopd (actually 15,000 bopd and 2000 boepd). Current production in most recent press release has reached 17,500 bopd (actually 15,500 bopd and 2000 boepd) and the share price has drifted to a low of $9.20~ Currently, we have at least 2 wells waiting to be hooked up and the A 06 appears to be a "monster"~ additional wells are being drilled and we believe that the exit rate for 2011 will be in the range of 22,000-25,000 bopd. Brokerage firms continue to raise estimated valuations to $21.50/sh~ a far cry from current depressed levels. On Friday Oct 7th 2011- management released their insider buying log and at least 3 officers and directors have been buyers~ actually the President bought 53,500 shares @ $9.64 for a total of $515k~ extremely BULLISH!!!!!

Please review the current press and also review the Sept 2011 presentation.

Coastal remains our largest stock holding in the oil patch and we believe that the potential in 12 months is $30( assuming that crude prices don't collapse and current success rate doesn't change). Again, read the Sept 2011 presentation and you will see that there is not a Bakken, Niobrara or Eagle Ford shale play that compares! We rate cenjf.pk with a Super Strong Buy rating @ current depressed levels.

www.coastalenergy.com

2. Skywest Energy ( skw.v or skwef.pk) .236

We believe that skw.v or skwef.pk is the cheapest "penny" oil within our portfolio. We are currently down around 50% and have been averaging down at current levels because it is the smart thing to do! Current production is around 1800 boepd and from current press it looks like that they will exit 2011 with around 2000 boepd and show a profit! The stated book is over .30 and if you take into account reserves and land valuation the management team gives skwef.pk an NAV of .65. Skywest is a Canadian junior driller focused on the Cardium. This company has an A+ management team, sweet spot acreage, growing production, very depressed share price and actually looks like a takeover candidate at these levels.

Read the August 25th 2011 press release and review the Sept 2011 presentation~ you will agree that Skywest Energy should not be avoided at current levels.


3. Complete Production Services, Inc.-CPX $20.38~~New Buy Recommendation

CPX -specialized completion and production services for oil and gas companies in North America.

80 million shares outstanding with a 10 million share short~ could be very bullish if the trend reverses.

The Beta is over 3- very active with major market moves and the institutions own some 88% of the issue- the bunch can be very irrational at times - it can feel like hell or paradise. We like it and own it @ current levels

52 week range~ $16.46- $42.62

Harold Hamm~ President of CLR is a director and owns over 1 million shares of cpx

Rev est. for 2011~$2.3 billion and $2.88 net- rev est. for 2012 $2.85 billion and $4.13 net income/sh

Recent presentation~ Oct 5th 2011 @ Johnson Rice Conference- listen to webcast and review presentation- excellent !

The stock has acted as if a recession has already happened within the Oil patch! CPX is trading @ 7X 2011 estimates and 5X 2012 numbers~ Current stock price is built for disaster~ Stock has a very high Beta so if you have a bad heart have a cocktail first!

www.completeproduction.com
4. Continental Resources CLR $49.88

52 week range-- $42.43- $73.48

The powerhouse Bakken driller~ The king of the Oil play in ND.

We believe this is a good entry point for purchase of the lead player in North America's hottest oil and gas play since Alaska. Please read the Oct 7th 2011 press release ~ 24 rigs operating in the Bakken, 5 dedicated frac crews, complete 45 wells in the 3rd Q, has 49 wells in completion, 24 waiting on completion and 25 waiting to produce~~~ GET THE PICTURE!

CLR estimates that at the end of the 3rd Q production reached 70,000 beopd vs 55,000 boepd at the end of 2nd Q of 2011.

For the year ending Dec 2011 rev est. of $1.55 billion and net income/sh of $2.53 and rev est. for 2012 of $2.07 billion and $3.29 net income/sh.

Harold Hamm ( founder and President) recently bought (100k shares) $5 million worth or CLR from the open market.

Has a huge $500 million pre-tax unrealized gain related to derivative instruments in the 3rd Q.

www.contres.com

Magnum Hunter Resources Corp. MHR $3.34

Oil and Gas E & P in North America~ a player in all of the Hottest areas~ Bakken, Eagle Ford, Marcellus Shale.

52 week range--$2.33-$8.66

Continues to "crow" that MHR will have an exit rate of 10,000 boepd for 2011 and 13,000 boepd exit rate for 2012.

The jockey of the company, Mr. Evan is a winner- very successful in growing Oil and Gas companies.

The shorts have had a heyday with this stock- 125 million outstanding with a monster short of 27 million~MHR has been blasted during the past few weeks- Sept 20th 2011 the stock was $5.00--recent trading as low as $2.33 on Oct 4th 2011 during the stock market melt-down!

At one point MHR had a market cap of $1 billion; now it has imploded to only $400 million-- now this is a haircut!

You have to go with the jockey~He also made three acquisition during during the past 12 months that got equity instead of cash and those transaction happened between $6-$8/sh- I believe buying MHR down at these levels is a gift- we grabbed additional shares trading in the low 2's to the very low 3's- See very little risk at current levels- As mentioned in recent presentations- all funding is secured for E & P through 2012 and beyond somewhat! If you own it @ higher prices i would suggest averaging down. ( downside of course is that EU turns out the lights).

Review presentation from Oct 5th ~ very impressive- I like it and own it and have built a respectable position for a trade and for a long term commitment!

www.magnumhunterresources.com