Meredith,
The reason for the "estimated earnings being down next year", is that at least R&R, if not all of the analysts, are using $19.75 as the price per barrel of oil in their calculations. During the first quarter of '96, CWEI earned 0.19 and they received $18.78 per barrel for their oil and $2.29 for their natural gas. Oil is now at $24.47 and natural gas is at $3.43. CWEI will be expending funds to conduct the 3-D seismic survey of 20K acres, perform analysis, and hopefully start drilling in the third quarter of '97. The Pinnacle Reef wells, if discovered, have tremendous potential for large quantities of both gas and oil. The average independent oil is selling at 27X earnings at this time. CWEI, mainly because they presently have a negative P/E (see the first URL in the Intro paragraph) hasn't enjoyed this multiple. CWEI will have a positive P/E after the fourth quarter. One thing you have to consider is that Rodman, Renshaw's estimate for '96 was $1.00 (on 07-01-96), and I think it may have been the highest of all of the estimates, and now CWEI is going to earn $1.70. So if one was to think of it that way then the $1.13 estimate for '97 looks very good and $1.29 (PW) looks excellent.
Buzz Mills |
