EXHIBIT 99.1
Clayton Williams Energy Announces Third Quarter 2007 Financial Results
and Operations Update
MIDLAND, Texas--(BUSINESS WIRE)--Nov. 7, 2007--Clayton Williams
Energy, Inc. (NASDAQ:CWEI) reported net income for the third quarter
of 2007 of $986,000, or $.09 per share, as compared to net income of
$5.3 million, or $.48 per share, for the third quarter of 2006. Cash
flow from operations for the third quarter of 2007 was $72.4 million,
as compared to $39.4 million during the same period in 2006.
For the nine months ended September 30, 2007, the Company reported
a net loss of $2.5 million, or $.22 per share, as compared to net
income of $26.7 million, or $2.38 per share, for the same period in
2006. Cash flow from operations for the nine-month period in 2007 was
$162.3 million, as compared to $116.5 million during the same period
in 2006.
Oil and gas sales increased 38% from $61.5 million for the third
quarter of 2006 to $84.6 million for the same quarter in 2007 due
primarily to higher production volumes. Gas production increased 54%
to 5.8 Bcf, or 62,500 Mcf per day, from 3.7 Bcf, or 40,630 Mcf per
day, in the 2006 quarter. Oil production for the third quarter of 2007
increased 9% to 582,000 barrels, or 6,326 barrels per day, compared to
532,000 barrels, or 5,783 barrels per day, in the 2006 quarter. The
increase in gas production was attributable primarily to recent
drilling activity in North and South Louisiana. For the third quarter
of 2007, average realized gas prices increased 8% to $6.77 per Mcf
from $6.26 per Mcf in the same quarter of 2006, while oil prices
increased 7% to $72.10 per barrel from $67.27 per barrel in the 2006
period. Average realized prices for 2007 and 2006 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 third quarter of 2007, the Company reported a $2.3 million
net loss on derivatives, consisting of a $1.6 million realized gain on
settled contracts and a $3.9 million non-cash loss to mark the
Company's derivative positions to their fair value on September 30,
2007. For the same period in 2006, the Company reported a $26.7
million net gain on derivatives, consisting of a $1.7 million realized
loss on settled contracts and a $28.4 million non-cash gain due to
changes in mark-to-market valuations.
Exploration costs related to abandonments and impairments were
$18.8 million during the third quarter of 2007 compared to $19.7
million in the third quarter of 2006. The 2007 costs included $3.8
million for the abandonment of the CL&F #1 (Vanessa) in South
Louisiana, $2.6 million for the partial abandonment of the Margarita
No. 1 in our East Texas Bossier exploration program and leasehold
impairments of $11 million in North and South Louisiana.
The Company reported that it incurred expenditures for exploration
and development activities of $184.3 million during the nine months
ended September 30, 2007 and has increased its estimates for capital
expenditures in fiscal 2007 from $235.1 million to $251.4 million.
Most of the $16.3 million increase relates to developmental drilling
in the oil-prone regions of the Austin Chalk (Trend) and the Permian
Basin. Based on these revised estimates, developmental drilling for
fiscal 2007 will account for approximately 48% of the Company's
capital spending, as compared to 16% in fiscal 2006.
The Company recorded a non-cash charge during the third quarter of
2007 of $8 million for impairments pursuant to Statement of Financial
Accounting Standards No. 144 "Accounting for Impairment or Disposal of
Long-Lived Assets," of which $5.1 million related to the write-down of
two 2,000 horsepower drilling rigs and related components to their
estimated fair market value. The remaining $2.9 million impairment
related to producing properties in West Texas.
Operationally, the Company reported that it was currently fishing
for a downhole motor in the wellbore of the Big Bill Simpson No. 1, a
Bossier wildcat test in Leon County, Texas. Once the motor is removed
from the wellbore, the Company plans to continue with completion
operations. To date, the Company has incurred approximately $10.7
million of drilling and completion costs, net to its 70% working
interest.
The Company is currently waiting on a rig to begin completion
operations on the Margarita No. 1 in Robertson County, Texas in the
upper Bossier formation. As previously announced, the targeted middle
Bossier formation was not productive in this well. To date, the
Company has incurred $11.9 million in drilling costs, net of $2.6
million of costs which were charged to expense in the third quarter
related to the abandonment of the middle Bossier formation. The
Company owns 100% of the working interest in this well.
The Company is continuing to negotiate with prospective buyers for
the sale of some or all of its assets in South Louisiana. If no
acceptable offers are received, the Company plans to retain the assets
and continue selling the related production in the ordinary course of
business.
The Company will host a conference call to discuss these results
and other forward-looking items today, November 7th at 12:00 p.m. CT
(1:00 p.m. ET). The dial-in conference number is: 800-901-5213,
passcode 59844895. The replay will be available for one week at
888-286-8010, passcode 82383961.
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 Nine Months Ended
September 30, September 30,
------------------ -------------------
2007 2006 2007 2006
--------- -------- --------- ---------
REVENUES
Oil and gas sales $84,639 $61,519 $220,712 $188,143
Natural gas services 2,268 2,905 7,831 8,890
Drilling rig services 14,806 1,801 37,451 2,175
Gain on sales of assets 126 164 910 916
--------- -------- --------- ---------
Total revenues 101,839 66,389 266,904 200,124
--------- -------- --------- ---------
COSTS AND EXPENSES
Production 20,851 16,467 55,969 47,363
Exploration:
Abandonments and impairments 18,802 19,650 53,426 35,822
Seismic and other 1,236 3,678 3,706 9,366
Natural gas services 2,121 2,730 7,438 7,820
Drilling rig services 9,075 1,157 22,514 1,373
Depreciation, depletion and
amortization 23,018 17,686 56,736 48,378
Impairment of property and
equipment 7,979 12,914 9,023 12,914
Accretion of abandonment
obligations 627 428 1,864 1,224
General and administrative 4,289 3,086 13,124 11,405
Loss on sales of assets 92 69 9,415 82
--------- -------- --------- ---------
Total costs and expenses 88,090 77,865 233,215 175,747
--------- -------- --------- ---------
Operating income (loss) 13,749 (11,476) 33,689 24,377
--------- -------- --------- ---------
OTHER INCOME (EXPENSE)
Interest expense (8,448) (5,328) (24,063) (14,628)
Gain (loss) on derivatives (2,284) 26,734 (13,023) 25,407
Other 366 (1,583) 4,693 (515)
--------- -------- --------- ---------
Total other income (expense) (10,366) 19,823 (32,393) 10,264
--------- -------- --------- ---------
Income before income taxes 3,383 8,347 1,296 34,641
Income tax expense (1,173) (2,842) (450) (7,754)
Minority interest, net of tax (1,224) (156) (3,360) (196)
--------- -------- --------- ---------
NET INCOME (LOSS) $986 $5,349 $(2,514) $26,691
========= ======== ========= =========
Net income (loss) per common
share:
Basic $0.09 $0.49 $(0.22) $2.46
========= ======== ========= =========
Diluted $0.09 $0.48 $(0.22) $2.38
========= ======== ========= =========
Weighted average common shares
outstanding:
Basic 11,352 10,850 11,286 10,847
========= ======== ========= =========
Diluted 11,521 11,205 11,286 11,220
========= ======== ========= =========
CLAYTON WILLIAMS ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
ASSETS
September 30, December 31,
2007 2006
------------- ------------
CURRENT ASSETS
Cash and cash equivalents $9,522 $13,840
Accounts receivable:
Oil and gas sales, net 37,691 23,398
Joint interest and other, net 20,219 17,810
Affiliates 823 2,436
Inventory 15,578 40,392
Deferred income taxes 505 505
Fair value of derivatives 4,872 23,729
Assets held for sale 25,484 -
Prepaids and other 6,829 3,888
------------- ------------
121,523 125,998
------------- ------------
PROPERTY AND EQUIPMENT
Oil and gas properties, successful efforts
method 1,342,377 1,226,761
Natural gas gathering and processing
systems 18,140 18,068
Contract drilling equipment 88,742 66,418
Other 16,919 15,848
------------- ------------
1,466,178 1,327,095
Less accumulated depreciation, depletion
and amortization (738,146) (682,286)
------------- ------------
Property and equipment, net 728,032 644,809
------------- ------------
OTHER ASSETS
Debt issue costs 7,312 8,104
Fair value of derivatives 51 1,785
Other 6,483 14,737
------------- ------------
13,846 24,626
------------- ------------
$863,401 $795,433
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable:
Trade $82,435 $75,815
Oil and gas sales 26,969 14,222
Affiliates 2,218 1,407
Current maturities of long-term debt 24,375 17,397
Fair value of derivatives 41,205 29,722
Accrued liabilities and other 5,299 10,503
------------- ------------
182,501 149,066
------------- ------------
NON-CURRENT LIABILITIES
Long-term debt 457,063 413,876
Deferred income taxes 35,274 36,409
Fair value of derivatives 4,370 21,281
Other 35,647 29,821
------------- ------------
532,354 501,387
------------- ------------
STOCKHOLDERS' EQUITY:
Preferred stock, par value $.10 per share - -
Common stock, par value $.10 per share 1,135 1,115
Additional paid-in capital 120,025 113,965
Retained earnings 27,386 29,900
------------- ------------
148,546 144,980
------------- ------------
$863,401 $795,433
============= ============
CLAYTON WILLIAMS ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -------------------
2007 2006 2007 2006
--------- -------- --------- ---------
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income (loss) $986 $5,349 $(2,514) $26,691
Adjustments to reconcile net
income (loss) to cash
provided by operating
activities:
Depreciation, depletion and
amortization 23,018 17,686 56,736 48,378
Impairment of proved
properties 7,979 12,914 9,023 12,914
Exploration costs 18,802 19,650 53,426 35,822
(Gain) loss on sales of
assets, net (34) (95) 8,505 (834)
Deferred income taxes 1,173 2,842 450 7,754
Non-cash employee
compensation 500 500 1,610 1,651
Unrealized (gain) loss on
derivatives 3,927 (28,401) 15,163 (42,684)
Settlements on derivatives
with financing elements 6,945 7,803 18,950 23,311
Amortization of debt issue
costs 328 287 953 1,022
Accretion of abandonment
obligations 627 428 1,864 1,224
Minority interest, net of
tax 1,224 156 3,360 196
Changes in operating working
capital:
Accounts receivable (4,432) 30 (15,089) 116
Accounts payable 16,881 2,930 15,876 3,073
Other (5,549) (2,645) (6,002) (2,152)
--------- -------- --------- ---------
Net cash provided by
operating activities 72,375 39,434 162,311 116,482
--------- -------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES
Additions to property and
equipment (59,677) (53,749) (180,112) (188,606)
Additions to equipment of
Larclay JV (3,988) (14,519) (27,403) (46,126)
Proceeds from sales of assets 51 399 1,653 1,083
Change in equipment inventory 4,430 2,740 16,265 1,039
Other (5,948) 1,811 (14,217) 2,626
--------- -------- --------- ---------
Net cash used in
investing activities (65,132) (63,318) (203,814) (229,984)
--------- -------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from long-term debt 7,500 14,000 48,000 93,700
Proceeds from long-term debt
of Larclay JV - 9,564 8,727 45,761
Repayments of long-term debt - - - (12)
Repayments of long-term debt
of Larclay JV (6,562) - (6,562) -
Proceeds from sale of common
stock - - 5,970 175
Settlements on derivatives
with financing elements (6,945) (7,803) (18,950) (23,311)
--------- -------- --------- ---------
Net cash provided by
(used in) financing
activities (6,007) 15,761 37,185 116,313
--------- -------- --------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 1,236 (8,123) (4,318) 2,811
CASH AND CASH EQUIVALENTS
Beginning of period 8,286 16,869 13,840 5,935
--------- -------- --------- ---------
End of period $9,522 $8,746 $9,522 $8,746
========= ======== ========= =========
Clayton Williams Energy, Inc.
Summary Production and Price Data
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2007 2006 2007 2006
--------- -------- -------- ---------
Average Daily Production:
Natural Gas (Mcf):
Permian Basin 15,469 13,804 14,861 14,455
Louisiana 37,523 15,059 30,884 13,339
Austin Chalk (Trend) 2,176 2,102 2,211 2,704
Cotton Valley Reef Complex 6,811 9,083 7,383 10,073
Other 521 582 441 517
--------- -------- -------- ---------
Total 62,500 40,630 55,780 41,088
========= ======== ======== =========
Oil (Bbls):
Permian Basin 3,291 3,102 3,174 3,196
Louisiana 1,357 899 1,350 975
Austin Chalk (Trend) 1,589 1,719 1,628 1,789
Other 89 63 82 55
--------- -------- -------- ---------
Total 6,326 5,783 6,234 6,015
========= ======== ======== =========
Natural gas liquids (Bbls):
Permian Basin 200 230 207 238
Austin Chalk (Trend) 229 260 250 271
Other 201 64 133 44
--------- -------- -------- ---------
Total 630 554 590 553
========= ======== ======== =========
Total Production:
Natural Gas (MMcf) 5,750 3,738 15,228 11,217
Oil (MBbls) 582 532 1,702 1,642
Natural gas liquids (MBbls) 58 51 161 151
--------- -------- -------- ---------
Gas Equivalents (MMcfe) 9,590 7,236 26,406 21,975
Average Realized Prices (a):
Gas ($/Mcf): $6.77 $6.26 $6.96 $6.74
========= ======== ======== =========
Oil ($/Bbl): $72.10 $67.27 $63.56 $64.70
========= ======== ======== =========
Natural gas liquids ($/Bbl) $45.64 $43.79 $41.12 $40.15
========= ======== ======== =========
Gains (Losses) on settled
derivative contracts (a):
($ in thousands, except per
unit)
Gas:
Net realized gain $4,802 $5,543 $9,784 $2,478
Per unit produced ($/Mcf) $0.84 $1.48 $0.64 $0.22
Oil:
Net realized loss $(3,180) $(7,328) $(7,710) $(19,923)
Per unit produced ($/Bbl) $(5.46) $(13.77) $(4.53) $(12.13)
Clayton Williams Energy, Inc.
Summary of Capital Expenditures
(Unaudited)
Actual Planned
Expenditures Expenditures Year 2007
Nine Months Year Ending Percentage
9/30/2007 12/31/2007 of Total
------------ ------------ ----------
(In thousands)
North Louisiana $60,700 $81,200 32%
South Louisiana 61,900 64,800 26%
East Texas Bossier 27,200 39,900 16%
Permian Basin 21,700 35,000 14%
Austin Chalk (Trend) 8,000 22,900 9%
Utah/California 4,200 7,000 3%
Other 600 600 0
------------ ------------ ----------
$184,300 $251,400 100%
============ ============ ==========
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 2007
or 2006 derivative contracts as cash flow hedges. This means that the
Company's derivatives for 2007 and 2006 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
Patti Hollums, 432-688-3419
Director of Investor Relations
or
Mel G. Riggs, 432-688-3431
Chief Financial Officer
cwei@claytonwilliams.com
www.claytonwilliams.com