Clayton Williams Energy (CWEI) 8-K Clayton Williams Energy Announces First Quarter 2008 Financial Results

Exhibit 99.1

Clayton Williams Energy Announces First Quarter 2008 Financial Results

MIDLAND, Texas--(BUSINESS WIRE)--Clayton Williams Energy, Inc. (NASDAQ:CWEI) reported net income for the first quarter of 2008 of $7.2 million, or $.62 per share, as compared to a net loss of $12.3 million, or $1.09 per share, for the first quarter of 2007. Cash flow from operations for the first quarter of 2008 was $78 million, as compared to $36.2 million during the same period in 2007.

Oil and gas sales increased 94% from $61.2 million for the first quarter of 2007 to $118.9 million for the same quarter in 2008 due to a combination of higher prices and incremental production volumes. Gas production increased 28% to 5.5 Bcf, or 60,967 Mcf per day, from 4.3 Bcf, or 48,078 Mcf per day, in the 2007 quarter. Oil production for the first quarter of 2008 increased 26% to 684,000 barrels, or 7,516 barrels per day, compared to 543,000 barrels, or 6,033 barrels per day, in the 2007 quarter. The increase in gas production was attributable primarily to recent drilling activity in North and South Louisiana. The increase in oil production was due primarily to in-fill drilling and secondary water frac operations on existing wells in the Austin Chalk (Trend) and increased drilling activities in the Permian Basin. For the first quarter of 2008, average realized gas prices increased 28% to $8.86 per Mcf from $6.91 per Mcf in the same quarter of 2007, while oil prices increased 75% to $96.37 per barrel from $55.21 per barrel in the 2007 period. Average realized prices for 2008 and 2007 exclude the effects of any gains or losses realized on commodity hedging transactions since those derivatives were not designated as cash flow hedges and have been reported in the Company’s statements of operations as gain/loss on derivatives under applicable accounting standards.

For the first quarter of 2008, the Company reported a $46.1 million net loss on derivatives, consisting of a $32 million non-cash loss to mark the Company’s derivative positions to their fair value on March 31, 2008 and a $14.1 million realized loss on settled contracts. For the same period in 2007, the Company reported a $16.8 million net loss on derivatives, consisting of a $18.8 million non-cash loss due to changes in mark-to-market valuations and a $2 million realized gain on settled contracts.

The Company recorded exploration costs during the first quarter of 2008 of $4 million compared to $12 million for the first quarter of 2007. The 2008 quarter related primarily to seismic expense. Although write-offs related to abandonments and impairments were minimal during the current quarter, completion operations remain in-progress on two exploratory wells in the Company’s East Texas Bossier prospect, the Big Bill Simpson #1 and the Margarita #1. If the Company is unable to establish sufficient production levels from either or both of these wells, results of operations in subsequent quarters may be adversely affected by the outcome of those wells.

The Company has increased its estimates for planned exploration and development expenditures for fiscal 2008 by $88 million from $256.5 million to $344.5 million. Strong cash flow from operations resulting from higher commodity prices and rising oil and gas production have afforded the Company the opportunity to make this upward change. The increase in capital spending relates primarily to activities in the Permian Basin and North Louisiana, including an exploratory well on the Winnsboro prospect to test the pressured Bossier interval in this area.

The Company will host a conference call to discuss these results and other forward-looking items today, May 6th at 1:30 pm CT (2:30 pm ET). The dial-in conference number is: 800-901-5213, passcode 26036272. The replay will be available for one week at 888-286-8010, passcode 33611138.

To access the conference call via Internet webcast, please go to the Investor Relations section of the Company’s website at www.claytonwilliams.com and click on “Live Webcast.” Following the live webcast, the call will be archived for a period of 90 days on the Company’s website.

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

Except for historical information, statements made in this release are 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. These statements are based on assumptions and estimates that management believes are reasonable based on currently available information; however, management's assumptions and the Company's future performance are subject to a wide range of business risks and uncertainties, and there is no assurance that these goals and projections can or will be met. Any number of factors could cause actual results to differ materially from expectations, volatility of oil and gas prices, the need to develop and replace reserves, the substantial capital expenditures required to fund operations, exploration risks, uncertainties about estimates of reserves, competition, government regulation, costs and results of drilling new projects, and mechanical and other inherent risks associated with oil and gas production. These 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.

TABLES AND SUPPLEMENTAL INFORMATION FOLLOW . . .

CLAYTON WILLIAMS ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share)
			Three Months Ended
			March 31,
				2008			2007
REVENUES
	Oil and gas sales		$	118,919		$	61,180
	Natural gas services			2,538			2,654
	Drilling rig services			14,832			8,417
	Gain on sales of property and equipment			569			259
		Total revenues		136,858			72,510
COSTS AND EXPENSES
	Production			20,579			17,278
	Exploration:
		Abandonments and impairments		297			11,105
		Seismic and other		3,675			890
	Natural gas services			2,515			2,413
	Drilling rig services			11,117			4,933
	Depreciation, depletion and amortization			30,273			15,231
	Impairment of property and equipment			-			565
	Accretion of abandonment obligations			530			618
	General and administrative			3,448			3,903
	Loss on sales of property and equipment			9			9,332
		Total costs and expenses		72,443			66,268
		Operating income		64,415			6,242
OTHER INCOME (EXPENSE)
	Interest expense			(7,446	)		(7,629	)
	Loss on derivatives			(46,109	)		(16,849	)
	Other			655			713
		Total other income (expense)		(52,900	)		(23,765	)
Income (loss) before income taxes and minority interest				11,515			(17,523	)
Income tax (expense) benefit				(4,222	)		6,080
Minority interest, net of tax				(114	)		(867	)
NET INCOME (LOSS)			$	7,179		$	(12,310	)
Net income (loss) per common share:
	Basic		$	0.63		$	(1.09	)
	Diluted		$	0.62		$	(1.09	)
Weighted average common shares outstanding:
	Basic			11,387			11,290
	Diluted			11,643			11,290

CLAYTON WILLIAMS ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
ASSETS
			March 31,			December 31,
				2008			2007
CURRENT ASSETS
	Cash and cash equivalents		$	18,523		$	12,344
	Accounts receivable:
		Oil and gas sales, net		48,991			36,698
		Joint interest and other, net		18,241			16,666
		Affiliates		9,608			308
	Inventory			14,896			14,348
	Deferred income taxes			3,581			3,581
	Fair value of derivatives			-			7,191
	Assets held for sale			72,135			17,281
	Prepaids and other			3,583			3,962
				189,558			112,379
PROPERTY AND EQUIPMENT
	Oil and gas properties, successful efforts method			1,313,786			1,374,090
	Natural gas gathering and processing systems			18,604			18,404
	Contract drilling equipment			89,965			89,956
	Other			14,536			14,505
				1,436,891			1,496,955
	Less accumulated depreciation, depletion and amortization			(736,153	)		(765,877	)
		Property and equipment, net		700,738			731,078
OTHER ASSETS
	Debt issue costs, net			6,615			6,963
	Fair value of derivatives			72			-
	Other			11,059			10,676
				17,746			17,639
			$	908,042		$	861,096
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
	Accounts payable:
		Trade	$	84,602		$	72,477
		Oil and gas sales		27,954			24,806
		Affiliates		2,190			1,747
	Current maturities of long-term debt			20,625			22,500
	Fair value of derivatives			71,646			56,929
	Accrued liabilities and other			5,884			10,308
				212,901			188,767
NON-CURRENT LIABILITIES
	Long-term debt			414,688			430,175
	Deferred income taxes			48,633			44,302
	Fair value of derivatives			10,192			-
	Other			37,371			37,046
				510,884			511,523
STOCKHOLDERS' EQUITY:
	Preferred stock, par value $.10 per share			-			-
	Common stock, par value $.10 per share			1,210			1,135
	Additional paid-in capital			136,831			121,063
	Retained earnings			43,069			35,890
	Accumulated other comprehensive income, net of tax			3,147			2,718
				184,257			160,806
			$	908,042		$	861,096

	CLAYTON WILLIAMS ENERGY, INC.
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	(Unaudited)
	(In thousands)
		Three Months Ended
		March 31,
			2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES
	Net income (loss)	$	7,179		$	(12,310	)
	Adjustments to reconcile net income (loss) to cash provided by operating activities:
	Depreciation, depletion and amortization		30,273			15,231
	Impairment of proved properties		-			565
	Exploration costs		297			11,105
	Gain on sales of property and equipment, net		(565	)		(128	)
	Deferred income taxes		4,100			(6,080	)
	Non-cash employee compensation		342			610
	Unrealized loss on derivatives		32,028			18,822
	Settlements on derivatives with financing elements		10,415			5,593
	Amortization of debt issue costs		346			309
	Accretion of abandonment obligations		530			618
	Minority interest, net of tax		114			867
	Changes in operating working capital:
	Accounts receivable		(13,869	)		(286	)
	Accounts payable		11,985			(3,703	)
	Other		(5,130	)		5,016
	Net cash provided by operating activities		78,045			36,229
CASH FLOWS FROM INVESTING ACTIVITIES
	Additions to property and equipment		(49,610	)		(55,749	)
	Additions to equipment of Larclay JV		(9	)		(19,316	)
	Proceeds from sales of property and equipment		629			645
	Change in equipment inventory		(1,620	)		3,896
	Other		69			(2,970	)
	Net cash used in investing activities		(50,541	)		(73,494	)
CASH FLOWS FROM FINANCING ACTIVITIES
	Proceeds from long-term debt		-			25,000
	Proceeds from long-term debt of Larclay JV		-			8,727
	Repayments of long-term debt		(10,800	)		-
	Repayments of long-term debt of Larclay JV		(6,562	)		-
	Proceeds from sale of common stock		6,452			5,962
	Settlements on derivatives with financing elements		(10,415	)		(5,593	)
	Net cash provided by (used in) financing activities		(21,325	)		34,096
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			6,179			(3,169	)
CASH AND CASH EQUIVALENTS
	Beginning of period		12,344			13,840
	End of period	$	18,523		$	10,671

Clayton Williams Energy, Inc.
Summary Production and Price Data
(Unaudited)
				Three Months Ended
				March 31,
					2008			2007
Average Daily Production:
	Natural Gas (Mcf):
		Permian Basin			15,562			15,389
		North Louisiana			13,596			2,409
		South Louisiana			23,552			20,121
		Austin Chalk (Trend)			2,460			2,011
		Cotton Valley Reef Complex			5,270			7,697
		Other			527			451
			Total		60,967			48,078
	Oil (Bbls):
		Permian Basin			3,494			3,096
		North Louisiana			343			29
		South Louisiana			985			1,172
		Austin Chalk (Trend)			2,635			1,672
		Other			59			64
			Total		7,516			6,033
	Natural gas liquids (Bbls):
		Permian Basin			215			199
		Austin Chalk (Trend)			272			265
		Other			150			47
			Total		637			511
Total Production:
	Natural Gas (MMcf)				5,548			4,327
	Oil (MBbls)				684			543
	Natural gas liquids (MBbls)				58			46
	Gas Equivalents (MMcfe)				10,000			7,861
Average Realized Prices (a):
	Gas ($/Mcf):			$	8.86		$	6.91
	Oil ($/Bbl):			$	96.37		$	55.21
	Natural gas liquids ($/Bbl)			$	54.83		$	33.30
Gains (Losses) on settled derivative contracts (a):
	($ in thousands, except per unit)
	Gas:
	Net realized gain (loss)			$	(884	)	$	4,509
	Per unit produced ($/Mcf)			$	(0.16	)	$	1.04
	Oil:
	Net realized loss			$	(12,906	)	$	(2,559	)
	Per unit produced ($/Bbl)			$	(18.87	)	$	(4.71	)

Clayton Williams Energy, Inc.
Summary of Capital Expenditures
(Unaudited)
	Planned
	Expenditures
	Year Ending		Percentage
	12/31/2008		of Total
Permian Basin	$	168,000	49	%
North Louisiana		62,600	18	%
Austin Chalk (Trend)		55,400	16	%
East Texas Bossier		28,600	8	%
South Louisiana		18,700	6	%
Utah/California		10,900	3	%
Other		300	-
	$	344,500	100	%

CLAYTON WILLIAMS ENERGY, INC.
Notes to tables and supplemental information
(a)	Hedging gains (losses) are only included in the determination of the Company's average realized prices if the underlying derivative contracts are designated as cash flow hedges under applicable accounting standards. The Company did not designate any of its 2008 or 2007 derivative contracts as cash flow hedges. This means that the Company's derivatives for 2008 and 2007 have been marked-to-market through its statement of operations as other income/expense instead of through accumulated other comprehensive income on the Company's balance sheet. This also means that all realized gains/losses on these derivatives are reported in other income/loss instead of as a component of oil and gas sales.
Certain reclassifications of prior period financial statement amounts have been made to conform to current period presentations.

CONTACT:
Clayton Williams Energy, Inc., Midland,TX
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