Clayton Williams Energy (CWEI) Drilled More Oil Wells This Year, Boosting Asset Value Significantly
Analyst Jason Wangler of Wunderlich Securities maintains his "buy" rating on Clayton Williams Energy Inc (NASDAQ: CWEI). The target price for CWEI is set to $50.
According to Wunderlich Securities, “Clayton Williams Energy’s (CWEI) reported 4Q09 results looked a bit disappointing at first glance due to the negative reported EPS and reserve revisions, but, based on the cash flows, EBITDA, and expected future activity, we remain positive on the name. Production rates also came in higher than expected, a good sign for 2010. We remain optimistic on the shares, with our forecasted numbers moving slightly on 4Q09 results, primarily in non-cash depreciation adjustments… Clayton Williams has increased its CAPEX budget to $274.4 million from $237.4 million in response to strong oil prices and positive well results. Production was ahead of our 4Q09 estimates and we believe is ahead of 1Q10 guidance, meaning we could see an increase in expected results with the more active drilling and positive well performance.”
Wunderlich Securities says CWEI announced drilling of “the first horizontal well, which is currently producing.” “Clayton Williams is testing the production and economic viability of the play for potential future development. We believe we could see a few more wells drilled this year to further evaluate its 200,000 prospective Eagle Ford acres, which would boost the asset value significantly if the oil results are nearly the same on an equivalent basis to other Eagle Ford gas plays,” the analysts add.
