CWEI closed @ 17 1/4, +1/8, Bid 17 1/4 X Ask 17 1/2..Volume 14.3K
The weekly Oil Report will be released today and both oil and gas prices slipped on speculation of the report being bearish and overall warmer weather throughout the U.S. The "Spot Price" of oil is now under $26 per barrel and gas is under $4.00. CWEI received $21.19 for oil and $2.62 for gas in the third quarter.
The total number of shares outstanding for CWEI at this time is 8,925,716. This number includes the 1.25M sold during the Secondary Offering of Nov. 14, 1996 and 177,500 shares sold through the exercise of an option, by the Underwriters of the Secondary Offering, on Dec. 10, 1996. For calculations of earnings per share, the weighted number of shares for the fourth quarter will be approximately 8.3M. Using the 8.925716M shares, the capitalization of CWEI would be $154M at a stock price of $17.25.
Kendell, the Austin Chalk area where they are drilling now, and the Cotton Valley play are one and the same area. Where the Austin Chalk wells are in the 5-6K depth, I see that some of the pinnacle reef wells drilled by other companies, are as deep as 18.5K feet, with the average being 15-16K. Miller, could provide us with his expertise on the feasibility of CWEI using a rig with 12.5K capability to drill to 12.5K and bringing in a heavier rig to finish the task. I don't know if it would work that way or they would just have the heavier (4th) rig do the whole job??? But, until they are ready to begin drilling for pinnacle reef wells along about the third quarter, they will have three rigs cranking up production on Austin Chalk wells.
Everything I have read, states that CWEI has a very good chance of "discovering pinnacle reef wells", this based on their large amount of property being "on trend" with the successful pinnacle reef play to the northeast of them, and also, where early speculation by analysts was that CWEI would take on partners to defray the cost, CWEI is choosing to go it alone. Should they be successful, and the odds on any given pinnacle reef well is over 40%, we, as stockholders, will be well rewarded. |
