Why Clayton Williams Energy's Shares Popped

Is this meaningful or just another movement?

Travis Hoium
Travis Hoium
Mar 15, 2013 at 5:40PM
Energy, Materials, and Utilities

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Clayton Williams Energy (NYSE:CWEI) were up 10% today after an asset sale took place near its properties.

So what: Rosetta Resources bought 53,306 acres in the West Texas Permian Basin from Comstock Resources today, and with Clayton's big exposure to the area, shares have shot higher. This could at least give Clayton flexibility to sell assets if it feels it can get a good price to pay down debt.  

Now what: Since the news today wasn't specifically about Clayton Williams, I wouldn't change my investment thesis, but it could be a good sign for the company's assets. I'd be more concerned about continued growth and exploiting the existing acreage before speculating on asset sales. I also don't think this suddenly makes the stock a buy, and shares will likely settle down after the euphoria of today's sale wears off.

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