Quick Win by the Algorithm: CWEI Skyrockets After Buyout

Quick Win by the Algorithm

On March 6, 2016, the I Know First algorithm had predicted a bullish forecast for Clayton Williams Energy, Inc. (CWEI). CWEI had a signal of 229.59 and a predictability of 3.96. In accordance with the algorithm, the company reported gains of 646.04% experiencing a quick win by the algorithm.

Quick Win By the AlgorithmClayton Williams Energy, Inc. (CWEI), is an independent oil and gas company, explores for, and develops and produces oil and natural gas primarily in Texas and New Mexico. The company also owns interests in and operates oil, natural gas, and water service facilities. Clayton Williams Energy, Inc. was founded in 1991 and is headquartered in Midland, Texas.

Clayton Williams Energy, Inc. had revenues for the full year 2016 of 289.41m and revenues of 161.46 million for 2016 4th quarter. This was 24.55% above the prior year’s results and 299.49% above the prior year’s 4th quarter results.

Although end of year results were positive, Clayton Williams Energy had a dramatic transformation over the past year. The company spent all last year working on efforts to survive the oil market downturn so that it could thrive when conditions improved. It entered the year with limited financial resources, which restricted its ability to drill. This situation forced the company to obtain outside funding from a private equity fund. Clayton Williams would go on to sell assets to improve its financial position. CWEI sold its East Central Texas assets for $400 million. At that time, the company also hired on a new chief operating officer, who was previously the head of Delaware basin assets for Noble Energy. These efforts paid off, enabling the company to restart its growth and catching the eye of Noble Energy.

On Monday, Clayton Williams Energy agreed to a buyout offer from Noble Energy, for $3.2 billion ($2 billion in stock, $700 million cash, $500 million assumed debt). Noble gets 120,000 acres in the coveted southern Delaware region of the Permian basin in west Texas, which should give them enough running room for 4,200 drilling locations. For Noble Energy, this transaction marks its second major deal during the oil market downturn.

This bullish forecast on CWEI was sent to current I Know First subscribers on February 27, 2017. 

Before making any trading decisions, consult the latest forecast as the algorithm constantly updates predictions daily. While the algorithm can be used for intra-day trading the predictability tends to become stronger with forecasts over longer time-horizons such as the 1-month, 3-month and 1-year forecasts.