Michael,
Rodman, Renshaw, whose estimate is $1.13, is using $19.75/barrel in their calculations (oil is presently selling at $26+/barrel). Rodman, Renshaw only had $1.00 estimated for CWEI in 1996 (as recently as 4 mos. ago). 1997 is going to be a year of exploration for CWEI--and there will be additional costs absorbed for the 3-D seismic shoot ($3.1M), and the pinnacle reef wells they will be drilling for, as a result of the 3-D shhoot, will cost $4M (15-16K deep) compared to $1M for the "normal" Austin Chalk well(5-6K deep). The cost of the new wells are commensurate with their rewards. CWEI has also very recently brought on a third drilling rig in the Austin Chalk play which should ultimately produce more oil. Morgan Keegan, who left their 1997 estimate at 0.80, is supposed to do a write-up of CWEI (re-evaluation) in the not too distant future---and in my opinion only--they opened the door to come in with a higher estimate and a recommendation. Paine Webber's estimate is $1.29, which is a major increase of their previous 1997 estimate. Independent oil companies are selling on average at: 27X earnings and 7.5X Cash Flow. CWEI is selling for 10.5X (estimated 1996) earnings and 3.4X Cash Flow (very close to $5). Should oil prices completely collapse, in my opinion only, there is much less downside risk in CWEI, compared to any other independent oil that I am aware of. Please do your own due diligence on CWEI--we have placed the URLs in the Intro paragraph and gathered as much info on CWEI as available. Please also take the time to read through all of the posts--there is good information contained therein.
Buzz Mills |
