Kendell,
I am sure Miller will set us both straight on this but in CWEI's prospectus they refer to the Cotton Valley being a formation, and thus it would be a layer which can exist much deeper than the Austin Chalk formation which in that area is encountered between 5500-7000 feet. It also said that as of June 30, 1996, CWEI had 61.2 producing net wells in the North Giddings Block and 76 additional drilling locations of which 7 are locations to which proven and undeveloped reserves are attributed by the independent engineers. Based on their initial 2-D seismic survey, CWEI believes that a portion of the North Giddings Block is on trend with the Cotton Valley formation 24 miles northeast of them.
Miller, thanks for your comments. As you mentioned, I am sure that a few nervous investors will get out of CWEI as oil and gas prices decline, however based on the fundamentals at least, it is my opinion that CWEI is underpriced with respect to other independent oils, and if anything should definitely increase in price with time. I haven't found another oil selling at 11X estimated earnings. At the opening this morning there were a few sellers who unloaded their shares but good size buys have now pushed the price up to 17 1/2, trading at Bid 17 1/4 X Ask 17 1/2. CWEI seems to have excellent upside potential, and very little, if any, downside. It is my belief, based on existing production, that CWEI, to buy at today's price, can be termed a very good investment. If CWEI comes in with a pinnacle reef well, or two, it will most certainly be a great investment. Bid and Ask are now 17 3/8 X 17 5/8-----17 5/8 is CWEI's historical high set on 11-25-96; it should be just about ready to break that high (closing record high is 17 3/8 set on 12-19-96).
Buzz |
