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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: Ridemhigher who wrote (307)1/20/1997 12:26:00 PM
From: Buzz Mills   of 1017
 
John,

CWEI's Secondary Offering on Nov. 14, 1996 was in the amount of 1.25M shares. The Underwriters of the Secondary Offering had an option, which they exercised in the amount of 177,500 shares. That brought the total of new shares to 1.425M, not 2M+ shares as you alluded to in your post.

The Secondary Offering was necessary to raise the capital that would allow CWEI to embark on the pinnacle reef well exploration program.
The siesmic survey (initial cost $3.1M) and the cost of each deep well ($4M) was more than CWEI could contend with, based on their financial status, at the time that the offering was planned and executed.

Since the time of the planning of the Secondary Offering CWEI has had an excellent third quarter. Since the time of execution of the Secondary Offering, CWEI has had a banner fourth quarter, and now CWEI is well on their way to, what appears to be, a great 1997 first quarter. This has put CWEI in the enviable position of having more money on hand than is required to meet the planned financial expenditures of the forseeable future. What better use of this money than to buy back their own stock which is underpriced relative to other oil stocks, and whose price does not include any premium for the Cotton Valley pinnacle reef well potential? I am all for it too.

Buzz Mills
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