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Gold/Mining/Energy : Clayton Williams Energy (CWEI) OIL
CWEI 131.900.0%Apr 25 5:00 PM EST
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To: Don Sherrill who wrote (501)3/19/1997 3:21:00 PM
From: Buzz Mills   of 1017
 
Don/All--I received a message from the Rodman, Renshaw broker --apparently shortly after I spoke with him this morning regarding the Energy Analyst Paul Ferretti situation--he received a news release stating that ABN AMRO/Chicago, the firm that Paul Ferretti left Rodman to go to, initiated coverage of CWEI with a Hold--basing their opinion on the possibility of low oil prices creating lackluster earnings for CWEI over the next few quarters. They estimated 0.27 for the first quarter 1997.

CWEI will incur expenses as a result of their 3-D seismic survey over the next two quarters and that will affect the earnings. How good the earnings will be are directly dependent on oil prices. Oil prices are up sharply again today--after being up over $1.00 yesterday.

Whatever can go wrong will go wrong. The timing of this release is causing another selloff of the stock. I spoke with Lajuanda Holder and she is going to check into the Hold recommendation more thoroughly. Rather than looking like a time to sell the stock, at this price, it looks like the time to buy--but CWEI stock is no doubt having a rough time on the market. The average oil stock is selling at 18 times earnings--if CWEI only earned $1.00 this year--they would be at 12 times earnings at today's price. Paine Webber is estimating $1.27 and Hanifen's is estimating $1.25 for the year.

Buzz
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