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Clayton Williams Energy Provides Financial Guidance for 2010

MIDLAND, Texas, Nov 12, 2010 (BUSINESS WIRE) -- Clayton Williams Energy, Inc.

(NASDAQ-NMS: CWEI) today filed a Form 8-K with the Securities and Exchange Commission to provide financial guidance disclosures for the year ending December 31, 2010. This guidance was furnished to provide public disclosure of the estimates being used by the Company to model its anticipated results of operations for the periods presented.

A copy of these disclosures accompanies this release or may be obtained electronically by accessing the Company's website at www.claytonwilliams.com.

Clayton Williams Energy, Inc. is an independent energy company located in Midland, Texas.

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical or current facts, that address activities, events, outcomes and other matters that we plan, expect, intend, assume, believe, budget, predict, forecast, project, estimate or anticipate (and other similar expressions) will, should or may occur in the future are forward-looking statements. These forward-looking statements are based on management's current belief, based on currently available information, as to the outcome and timing of future events. The Company cautions that its future oil and natural gas production, revenues, cash flows, liquidity, plans for future operations, expenses, outlook for oil and natural gas prices, timing of capital expenditures and other forward-looking statements are subject to all of the risks and uncertainties, many of which are beyond our control, incident to the exploration for and development, production and marketing of oil and gas.

These risks include, but are not limited to, the possibility of unsuccessful exploration and development drilling activities, our ability to replace and sustain production, commodity price volatility, domestic and worldwide economic conditions, the availability of capital on economic terms to fund our capital expenditures and acquisitions, our level of indebtedness, the impact of the current economic environment on our business operations, financial condition and ability to raise capital, declines in the value of our oil and gas properties resulting in a decrease in our borrowing base under our credit facility and impairments, the ability of financial counterparties to perform or fulfill their obligations under existing agreements, the uncertainty inherent in estimating proved oil and gas reserves and in projecting future rates of production and timing of development expenditures, drilling and other operating risks, lack of availability of goods and services, regulatory and environmental risks associated with drilling and production activities, the adverse effects of changes in applicable tax, environmental and other regulatory legislation, and other risks and uncertainties are described in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements.

Financial Guidance Disclosures Follow CLAYTON WILLIAMS ENERGY, INC.

FINANCIAL GUIDANCE DISCLOSURES FOR 2010 Overview Clayton Williams Energy, Inc. and its subsidiaries have prepared this document to provide public disclosure of certain financial and operating estimates in order to permit the preparation of models to forecast our operating results for each quarter during the year ending December 31, 2010. These estimates are based on information available to us as of the date of this filing, and actual results may vary materially from these estimates. We do not undertake any obligation to update these estimates as conditions change or as additional information becomes available.

The estimates provided in this document are based on assumptions that we believe are reasonable. Until our actual results of operations for these periods have been compiled and released, all of the estimates and assumptions set forth herein constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this document that address activities, events or developments that we expect, project, believe or anticipate will or may occur in the future, or may have occurred through the date of this filing, including such matters as production of oil and gas, product prices, oil and gas reserves, drilling and completion results, capital expenditures and other such matters, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the results, performance, or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: the volatility of oil and gas prices; the unpredictable nature of our exploratory drilling results; the reliance upon estimates of proved reserves; operating hazards and uninsured risks; competition; government regulation; and other factors referenced in filings made by us with the Securities and Exchange Commission.

As a matter of policy, we generally do not attempt to provide guidance on: (a) production which may be obtained through future exploratory drilling; (b) dry hole and abandonment costs that may result from future exploratory drilling; (c) the effects of Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" superseded by topic 815-10 of the Financial Accounting Standards Board Accounting Standards Codification; (d) gains or losses from sales of property and equipment unless the sale has been consummated prior to the filing of financial guidance; (e) capital expenditures related to completion activities on exploratory wells or acquisitions of proved properties until the expenditures are estimable and likely to occur; and (f) revenues and expenses related to Desta Drilling, L.P., a wholly-owned subsidiary of the Company which provides contract drilling services for the Company. Summary of Estimates The following table sets forth actual and certain estimates being used by us to model our anticipated results of operations for each quarter during the fiscal year ending December 31, 2010. When a single value is provided, such value represents the mid-point of the approximate range of estimates. Otherwise, each range of values provided represents the expected low and high estimates for such financial or operating factor. See "Supplementary Information." Year Ending December 31, 2010 ------------------------------------------------------------------------------ Actual Actual Actual Estimated First Quarter Second Quarter Third Quarter Fourth Quarter -------------------- ----------------- ----------------- --------------------- (Dollars in thousands, except per unit data) Average Daily Production: Oil (Bbls) 8,356 8,879 9,946 10,200 to 10,400 Gas (Mcf) 36,978 30,846 27,500 24,500 to 28,500 Natural gas liquids (Bbls) 633 659 978 950 to 1,050 Total oil equivalents (BOE) 15,152 14,679 15,507 15,233 to 16,200 Differentials: Oil (Bbls) $ (2.72 ) $ (3.77 ) $ (3.02 ) $(2.75) to $(3.25) Gas (Mcf) $ 0.72 $ 0.80 $ 0.28 $0.05 to $0.35 Natural gas liquids (Bbls) $ (32.54 ) $ (37.91 ) $ (39.32 ) $(35.00) to $(41.00) Costs Variable by Production ($/BOE): Production expenses (including production taxes) $ 15.34 $ 15.39 $ 14.38 $14.00 to $15.00 DD&A - Oil and gas properties $ 18.03 $ 18.57 $ 17.27 $17.00 to $18.00 Other Revenues (Expenses): Natural gas services: Revenues $ 503 $ 452 $ 397 $450 to $550 Operating costs $ (348 ) $ (306 ) $ (297 ) $(300) to $(500) Exploration costs: Abandonments and impairments $ (2,878 ) $ (2,891 ) $ (364 ) $(500) to $(2,500) Seismic and other $ (1,660 ) $ (974 ) $ (1,361 ) $(750) to $(1,250) DD&A - Other (a) $ (171 ) $ (170 ) $ (183 ) $(150) to $(250) $ (4,156 ) $ (4,714 ) $ (5,696 ) $(6,000) to $(6,200) General and administrative (a)(b) Interest expense (a) $ (6,108 ) $ (6,242 ) $ (6,039 ) $(5,900) to $(6,100) Other income (expense) $ 828 $ 1,016 $ 972 $500 to $700 Gain (loss) on sales of assets, net $ 286 $ (1,330 ) $ 2,777 - Effective Federal and State Income Tax Rate: Current 0 % 0 % 0 % 0 % Deferred 36 % 35 % 36 % 36 % Weighted Average Shares Outstanding (In thousands): Basic 12,146 12,146 12,146 12,146 Diluted 12,146 12,146 12,146 12,146 ____________ (a) Excludes amounts derived from Desta Drilling, L.P. (b) Excludes non-cash employee compensation. Capital Expenditures The following table sets forth, by area, our actual expenditures for exploration and development activities for the nine months of 2010 and our planned expenditures for the year ending December 31, 2010.

Actual Planned Expenditures Expenditures 2010 Nine Months Ended Year Ended Percentage September 30, 2010 December 31, 2010 of Total ------------------ ---------------- --------- (In thousands) Permian Basin $ 143,400 $ 213,100 70 % Austin Chalk (Trend)/ Eagle Ford Shale 53,300 77,100 25 % South Louisiana 6,400 7,000 3 % Other 5,900 6,900 2 % --------- -------- ----- ---- $ 209,000 $ 304,100 100 % ========= ========= ======== ======== ===== ==== We currently plan to spend approximately $304.1 million on exploration and development activities in fiscal 2010, $209 million of which was incurred during the first nine months of 2010. Our actual expenditures during fiscal 2010 may be substantially higher or lower than these estimates since our plans for exploration and development activities may change during the year. Other factors, such as prevailing product prices and the availability of capital resources, could also increase or decrease the ultimate level of expenditures during fiscal 2010.

Based on these current estimates, approximately 96% of our planned expenditures for exploration and development activities for fiscal 2010 will relate to developmental prospects, as compared to approximately 60% in fiscal 2009.

Supplementary Information Oil and Gas Production The following table summarizes, by area, our actual and estimated daily net production for each quarter during the year ending December 31, 2010. These estimates represent the approximate mid-point of the estimated production range.

Daily Net Production for 2010 ------------------------------------------------------------- Actual Actual Actual Estimated First Quarter Second Quarter Third Quarter Fourth Quarter ------------- -------------- ------------- -------------- Oil (Bbls): Permian Basin 4,909 5,390 6,092 6,451 Austin Chalk (Trend)/Eagle Ford Shale 2,595 2,835 3,044 3,240 North Louisiana 148 137 - - South Louisiana 627 435 727 576 Other 77 82 83 33 ------------- -------------- ------------- -------------- Total 8,356 8,879 9,946 10,300 ============= ============== ============= ============== Gas (Mcf): Permian Basin 13,911 13,263 13,931 14,239 Austin Chalk (Trend)/Eagle Ford Shale 2,531 1,810 2,325 2,152 North Louisiana 8,718 5,747 - - South Louisiana 7,513 4,930 5,650 5,370 Cotton Valley Reef Complex 3,529 4,072 3,708 3,826 Other 776 1,024 1,886 913 ------------- -------------- ------------- -------------- Total 36,978 30,846 27,500 26,500 ============= ============== ============= ============== Natural Gas Liquids (Bbls): Permian Basin 272 356 535 609 Austin Chalk (Trend)/Eagle Ford Shale 271 185 258 228 Other 90 118 185 163 ------------- -------------- ------------- -------------- Total 633 659 978 1,000 ============= ============== ============= ============== Accounting for Derivatives The following summarizes information concerning our net positions in open commodity derivatives applicable to periods subsequent to September 30, 2010.

The settlement prices of commodity derivatives are based on NYMEX futures prices.

Swaps: Oil Gas ---------------------- --------------------- Bbls Price MMBtu(a) Price --------- --------- --------- -------- Production Period: 480,000 $ 76.24 1,680,000 $ 6.80 4th Quarter 2010 2,376,000 $ 83.75 6,420,000 $ 7.07 2011 570,000 $ 87.60 - $ - 2012 --------- --------- 3,426,000 8,100,000 ========= ========= ___________ (a) One MMBtu equals one Mcf at a Btu factor of 1,000. In March 2009, we terminated certain fixed-priced oil swaps covering 77,000 barrels at a price of $57.35 from October 2010 through December 2010, resulting in an aggregate loss of approximately $312,000, which will be paid to the counterparty monthly as the applicable contracts are settled.

We did not designate any of the derivatives shown in the preceding table as cash flow hedges; therefore, all changes in the fair value of these contracts prior to maturity, plus any realized gains or losses at maturity, will be recorded as other income (expense) in our statement of operations.

SOURCE: Clayton Williams Energy, Inc.

CONTACT: Clayton Williams Energy, Inc. Patti Hollums, 432-688-3419 Director of Investor Relations cwei@claytonwilliams.com www.claytonwilliams.com or Mel G. Riggs, 432-688-3431 Chief Financial Officer Copyright Business Wire 2010 -0- KEYWORD: United States

North America

Texas INDUSTRY KEYWORD: Energy

Oil/Gas SUBJECT CODE: Earnings

Filing