CWEI closed @ 18 5/8, -1/8, Bid 18 1/2 X Ask 18 3/4....Vol 34.2K
It doesn't appear to be good business to have a Secondary Offering of 1.425M shares sell at $13 and then two months later begin buying back stock back at $19, or more. In defense of CWEI, when they began planning the Secondary Offering prior to the end of the second quarter, neither CWEI, or anyone else for that matter, had any idea that oil and gas were going to rise to the high prices we have seen them at for almost four months now. When the offering was planned they knew how much money would be needed to accomplish the pinnacle reef exploration and the size of the offering was based on those numbers. At the end of the third quarter, when the Secondary Offering was announced--the stock was selling for $10/share, and although CWEI had a good third quarter, they couldn't at that time, or a month later when the offering was held, predict that things would work the way they have. You could have gotten really long odds on oil maintaining these high prices over the last four months. CWEI had to be certain the funds were in place to carry out the planned exploration--that was the absolute first priority. There is far too much at stake here to have allowed it to be a game of chance. Any of us can sit here now after the fact, after the cards have been dealt face-up and say--hey with all of the money we are making--maybe we don't need to have a secondary offering of 1.425M shares--maybe we could have a secondary offering of a lot less shares, but hind-sight is always close to 100%. Because good fortune has smiled down on CWEI, as well as the rest of us, in the form of extremely high oil and gas prices for the last four months, CWEI now has extra cash on hand. They have used the offering money to pay down debt which makes their balance sheet a lot more attactive. I think CWEI, as I mentioned earlier, is in an enviable position, and I have a hard time being critical of a company whose stock has done very well for me so far, and should this exploration be successful, will provide even more for all of us in the near future.
Feb Oil $25.23, down 0.18 (CWEI received $21.19 in Q3)
Feb Gas $3.07, down 0.18 (CWEI received $2.62 in Q3)
Take a look at the chart using 5, 10, and 20 day moving averages and see what you think:
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