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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: Kendell Phillips who wrote (49)11/21/1996 8:22:00 PM
From: Buzz Mills   of 1017
 
Kendell,

CWEI sells their oil at a discount to the market price--the buyer absorbs the cost of the transporting the oil from CWEI--they say the discount is from $1-$2 a barrel, but from the numbers in the third quarter, the discount appears to be much less. Regardless, CWEI is still commanding an oil price so far this quarter that is more than 10% over their their third quarter numbers. Another factor is: roughly 10% of the oil they sold in the third quarter was prior sales of futures (hedging=discounted); there weren't any hedging contracts, or collars, going into the fourth quarter, although CWEI reserved the right to implement the use of them, if they deemed it prudent. The price of Natural Gas has gone through the roof, $3.90; another fact is that CWEI gets a premium for their Natural Gas because of the condensates (very pure liquids) it contains. See if you can obtain an estimate of the average Natural Gas price during the months of the third quarter--it won't be $2.62--it will give us an idea of the premium they received. It might be a good practice for us to start pasting in the URL web address--so others who are reading this thread can get to the information. For oil and gas prices go to:
ino.com

Buzz
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