WLL after recently big drop

**xxyygorich** Fri Mar 02, 2007 3:45 pm

WLL after recently big drop
Hi blast,

WLL has been plunged recently. It's at 20% discount after your sales.

Do you reconsider WLL?

In my opinion, WLL is very cheap now. It has 248mmBOE proved reserves, which a 1.4b marcket cap.

Thanks.

XX

**blast_investor** Fri Mar 02, 2007 8:20 pm

Hi xxyygorich:

WLL is very attractive at current price. I believe most oil stocks are pretty cheap.

However, in the whole oil and gas pack, WLL is no longer my favorite pick right now. On after tax basis, the valuation of WLL is not any cheaper than major oils such as Exoon, COP etc.

The main drawback compared to its peer for WLL is the cost and hedging program.

WLL is relatively a high cost driller. It will not stop drilling just because the cost is higher. This cost escalation has hurt or will hurt its earning growth in the long run. WLL does not have a good way to control its cost, and it will not likely to be willing to stop drilling and stop CAPEX spending because of cost.

Second problem is its below-par hedging program. Its hedging program design is not very good comparing to peers. Stopping the hedging program would have helped WLL's earning in the past.

We can tell this from its return on equity ratio: 18.6%, and industry average for this number is around 25%. High cost is hurting this number. Usually, poor return on equity will hurt earning growth in the long run. WLL earning growth has not shown the potential it should have achieved. Its earning growth actually was similar to major oil firms. One advantage for major oils is that major oil can and will stop drilling and stop CAPEX and favor dividend and share buy back, WLL will not likely to stop CAPEX because drilling growth is its main business strategy.

**lzhang** Thu Mar 08, 2007 1:19 pm

WLL insider buys
as of 5-Mar-07, VOLKER JAMES J (CEO) purchased 8,000 WLL @ $36.88 per share

as of 6-Mar-07, MOE PALMER L (Director) purchased 1,000 WLL @ $36.82 per share

WLL is definitely a buy @ this price level

**xxyygorich** Thu Mar 08, 2007 2:27 pm

Re: WLL insider buys
Notice that too.

8000 shs are a lot.

lzhang wrote: as of 5-Mar-07, VOLKER JAMES J (CEO) purchased 8,000 WLL @ $36.88 per share

as of 6-Mar-07, MOE PALMER L (Director) purchased 1,000 WLL @ $36.82 per share

WLL is definitely a buy @ this price level