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UNITED
STATES
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SECURITIES
AND EXCHANGE COMMISSION
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Washington,
D.C. 20549
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(Mark
One)
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x
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ANNUAL
REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the fiscal year ended December 31, 2007
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¨
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TRANSITION
REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the transition period from
to
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Commission
File Number 001-10924
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A.
Full title of the
plan and the address of the plan, if different from that of the issuer
named below:
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Clayton
Williams Energy, Inc. 401(k) Plan & Trust
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Six
Desta Drive - Suite 6500
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Midland,
Texas 79705
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B.
Name of the issuer
of the securities held pursuant to the plan and the address of its
principal executive office:
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Clayton
Williams Energy, Inc.
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Six
Desta Drive - Suite 6500
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Midland,
Texas 79705
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CLAYTON
WILLIAMS ENERGY, INC.
401(k)
PLAN AND TRUST
Table
of Contents
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Page
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1
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2
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3
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4
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Supplemental
Schedule:
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S-1
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REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The Plan
Administrator
Clayton
Williams Energy, Inc.
401(k)
Plan and Trust
We have
audited the accompanying statements of net assets available for benefits of the
Clayton Williams Energy, Inc. 401(k) Plan and Trust (the Plan) as of December
31, 2007 and 2006, and the related statement of changes in net assets available
for benefits for the year ended December 31, 2007. These financial
statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We
conducted our audits in accordance with the auditing standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the net assets available for benefits of the Clayton Williams
Energy, Inc. 401(k) Plan and Trust as of December 31, 2007 and 2006, and the
changes in net assets available for benefits for the year ended December 31,
2007, in conformity with accounting principles generally accepted in the United
States of America.
Our
audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule H,
Line 4i, schedule of assets held for investment purposes as of December 31,
2007, is presented for the purpose of additional analysis and is not a required
part of the basic financial statements, but is supplementary information
required by the United States Department of Labor Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected
to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
HEIN
& ASSOCIATES
LLP
Dallas,
Texas
June 25,
2008
CLAYTON
WILLIAMS ENERGY, INC.
401(k)
PLAN AND TRUST
STATEMENTS OF NET
ASSETS AVAILABLE FOR BENEFITS
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December
31,
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2007
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2006
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ASSETS:
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Investments,
at fair value:
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Stable
value fund
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$
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720,393
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$
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615,114
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Mutual
funds
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12,473,630
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11,267,628
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CWEI
common stock
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2,946,329
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3,010,090
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Participant
loans
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27,612
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37,257
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16,167,964
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14,930,089
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Contributions
receivable:
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Participant
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36,791
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38,500
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Company
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47,548
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44,108
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84,339
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82,608
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Total
assets
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16,252,303
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15,012,697
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LIABILITIES:
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-
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-
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Net
assets available for benefits
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$
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16,252,303
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$
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15,012,697
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See
accompanying notes to these financial statements.
CLAYTON
WILLIAMS ENERGY, INC.
401(k)
PLAN AND TRUST
STATEMENT
OF CHANGES
IN NET ASSETS AVAILABLE FOR
BENEFITS
Year
Ended December 31, 2007
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ADDITIONS
TO NET ASSETS ATTRIBUTABLE TO:
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Investment
income:
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Net
depreciation in fair value of investments
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$
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(1,276,419
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Dividends
and interest
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1,466,640
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Net
investment income
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190,221
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Contributions:
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Participant
contributions
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1,149,272
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Company
contributions
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485,695
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Total
contributions
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1,634,967
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Total
additions
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1,825,188
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DEDUCTIONS
FROM NET ASSETS ATTRIBUTABLE TO:
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Benefits
paid directly to participants
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585,582
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NET
INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS
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1,239,606
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NET
ASSETS AVAILABLE FOR BENEFITS:
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Beginning
of year
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15,012,697
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End
of year
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$
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16,252,303
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See
accompanying notes to these financial statements.
C
LAYTON
WILLIAMS ENERGY, INC.
401(k)
PLAN AND TRUST
NOTES
TO FINANCIAL STATEMENTS
The
following description of the Clayton Williams Energy, Inc. (the “Company”)
401(k) Plan and Trust (the “Plan”) is provided for general information purposes
only. Participants should refer to the Plan agreement for a more
complete description of the Plan’s provisions.
General
The Plan,
as amended and restated, is a defined contribution plan established by Clayton
Williams Energy, Inc. (the “Company” or “CWEI”) under the provisions of Section
401(a) of the Internal Revenue Code (“IRC”), which includes a qualified deferred
arrangement as described in Section 401(k) of the IRC, for the benefit of
eligible employees of the Company who become entitled to participate in the
Plan. Employees who have 90 days of service and are age 21 or older
are eligible to participate in the Plan. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”). The Plan was amended effective January 1, 2001 to provide
that a participant shall be fully vested in his or her salary deferral
contribution account, after-tax contribution account, matching employer
contribution account, discretionary employer contribution account, and rollover
contribution account. The Plan was amended effective August 2, 2004
to include the terms and conditions of the DWS Trust Company prototype 401(k)
plan document as supplemented and modified. The Plan was amended December 6,
2007, effective January 1, 2008, to auto enroll employees upon becoming
eligible, to add a Roth 401(k) feature, which allows after-tax contributions,
and to increase the limit on matching contributions from 4% to 6% of
compensation.
Plan
Administration
The Plan
is administered by the Company. ADP Retirement Service, Inc. is the
Plan’s recordkeeper. DWS Scudder holds the Plan’s assets, and DWS
Trust Company is the Trustee.
Contributions
The Plan
requires that the amounts of all participant and Company contributions comply
with limitations established by the IRC. Subject to these
limitations, participants may contribute to the Plan up to 100% of pre-tax
annual compensation, as defined by the Plan, and the Company, in its sole
discretion, may provide a matching contribution equal to a percentage of
participants’ contributions. The Company makes matching contributions
equal to 100% of participants’ contributions, limited to 4% of
compensation. The Company may also make discretionary profit-sharing
contributions to the Plan which are allocated to participants’ accounts based on
each participant’s compensation as a percentage of total
compensation.
Vesting
Participants
are fully vested in their contributions and the earnings thereon. The
Plan has been established as a safe-harbor plan, therefore, participants are
fully vested in Company matching and discretionary contributions upon entry into
the Plan.
Benefits
Upon
termination of service due to death, disability or retirement, participants may
request and receive a lump-sum distribution in an amount equal to the value of
the vested interest in their respective accounts. Any undistributed
amounts will be distributed when participants reach 70½ years of
age. Participants may also receive hardship withdrawals of their
accounts, subject to certain limitations, as defined in the Plan
document.
CLAYTON
WILLIAMS ENERGY, INC.
401(k)
PLAN AND TRUST
NOTES
TO FINANCIAL STATEMENTS
Participant
Accounts
Individual
accounts are maintained to reflect each participant’s allocated share of the
Plan’s income, the Plan’s administrative expenses, the Company’s contributions,
and the participant’s contributions. Allocations of investment income and
forfeitures are based on participant account balances.
Investment
Options
As
directed by participants, the Plan purchases units of participation in
sixteen distinct investment portfolios administered by DWS Trust Company,
the Plan Trustee. In addition, the Plan makes participant-directed investments
and matching contributions in the Company’s common stock. Under the Plan,
participants are allowed to transfer funds between any investment option
including the Company stock fund.
Participant
Loans
The Plan
does not allow for participant loans. The participant loans at December 31, 2007
and 2006 are the remaining balances of loans brought over from another Plan
merged in a prior year.
Administrative
Expenses
At its
discretion, the Company may pay all or any portion of administrative expenses on
behalf of the Plan. During 2007, the Company paid administrative expenses
totaling $16,521.
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2.
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Summary
of Significant Accounting Policies
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Basis of
Accounting
The
financial statements and supplemental schedule are prepared on the accrual basis
of accounting in accordance with U.S. generally accepted accounting principles
(“GAAP”).
Payment of
Benefits
Benefit
payments are recognized when paid. Benefits due to participants who
have elected to withdraw from the Plan but have not been paid are deducted from
net assets available for benefits. At December 31, 2007 there were no
amounts allocated to withdrawing participants.
Investment Valuation and
Income Recognition
Investments
of the Plan are stated at fair value. Securities traded in public markets are
valued at their quoted market prices. Purchases and sales of securities are
reflected on a trade-date basis. Changes in the market value of investments from
one period to the next, combined with realized gains and losses based on
differences between revalued costs and market value of investments on the trade
date, are recognized as net appreciation (depreciation) in fair value of
investments in the accompanying statement of changes in net assets available for
benefits.
Interest
income is recorded as earned on the accrual basis. Dividend income is recorded
on the ex-dividend date. Reinvested income is reflected as additions to the cost
basis of investments.
CLAYTON
WILLIAMS ENERGY, INC.
401(k)
PLAN AND TRUST
NOTES
TO FINANCIAL STATEMENTS
Estimates and
Assumptions
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires the Plan
Administrator to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of changes in net
assets available for benefits during the reporting periods. Actual results could
differ from those estimates.
Recent Accounting
Pronouncements
In
September 2006, the FASB issued SFAS 157, “
Fair Value Measurements
”
(“SFAS 157”), which will become effective for financial assets and liabilities
of the Plan on January 1, 2008 and non-financial assets and liabilities of the
Plan on January 1, 2009. This standard defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. SFAS 157 does not require any new fair value measurements but
would apply to assets and liabilities that are required to be recorded at fair
value under other accounting standards. The effect of adopting SFAS 157 is not
expected to have a significant effect on the Plan’s financial
statements.
Reclassifications
Certain
2006 balances have been reclassified to conform to the 2007 basis of
presentation.
The
following presents investments (all party-in-interest, note 4) that
represent 5% or more of the Plan’s net assets as of December 31, 2007
and 2006:
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2007
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2006
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DWS
Scudder:
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DWS
Scudder Flag Inv Bal Builder-A
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$
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1,052,896
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$
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1,140,188
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Baron
Growth Fund
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1,374,089
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1,065,634
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Growth
Fund of America-R3
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2,407,345
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2,083,258
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DWS
Scudder Large Cap Value-A
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-
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2,692,987
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Oppenheimer
Value Fund-N
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2,775,189
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-
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Templeton
Foreign-A
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1,550,331
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1,360,686
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Clayton
Williams Energy Inc. Common Stock
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(94,555
and 90,322 shares, respectively)
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2,946,329
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3,010,090
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During
2007, the Plan’s investments (including gains and losses on investments bought
and sold, as well as held during the year) realized a net appreciation
(depreciation) as follows:
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Common
and commingled trust funds
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$
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(893,273
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)
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CWEI
common stock
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(383,146
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)
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$
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(1,276,419
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)
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CLAYTON
WILLIAMS ENERGY, INC.
401(k)
PLAN AND TRUST
NOTES
TO FINANCIAL STATEMENTS
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4.
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Party-in-Interest
Transactions
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All of
the Plan’s assets are invested either in portfolios administered by DWS Trust
Company at December 31, 2007 and 2006, or in common stock of
CWEI. Since DWS Trust Company is the Plan Trustee, and since CWEI is
the Plan Sponsor, all transactions with these parties qualify as
party-in-interest transactions.
DWS Trust
Company obtained a favorable determination letter from the Internal Revenue
Service on September 11, 2001, stating that the prototype plan, which was
adopted by the Plan in 2004, is a qualified plan under the Internal Revenue
Code. Management has not received a determination letter specifically
for the Plan but believes the Plan is in compliance with the applicable
requirements of the Internal Revenue Code.
Although
it has not expressed any intent to do so, the Company has the right under the
Plan to terminate the Plan subject to the provisions of the ERISA.
SUPPLEMENTAL
SCHEDULE
CLAYTON WILLIAMS
ENERGY, INC.
401(k)
PLAN AND TRUST
Schedule
H, Line 4i - Schedule of Assets (Held at End of Year)
EIN:
75-2396863
December
31, 2007
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Identity
of Issuer
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Description
of Investment
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Cost
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Current Value
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* DWS
Scudder
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DWS
Scudder Stable Value – A
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**
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$
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720,393
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* American
Funds Distributors, Inc.
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American
High-Income Trust-R3
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**
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151,080
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* DWS
Scudder
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DWS
Scudder Fixed Income Fund-A
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**
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479,874
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* DWS
Scudder
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DWS
Scudder Flag Inv Bal Builder-A
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**
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1,052,896
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* DWS
Scudder
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DWS
Scudder Pathway Conservative-A
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**
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115,351
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* DWS
Scudder
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DWS
Scudder Pathway Growth-A
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**
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214,068
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* DWS
Scudder
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DWS
Scudder Pathway Moderate-A
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**
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579,067
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* Baron
Capital, Inc.
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Baron
Growth Fund
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**
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1,374,089
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* American
funds Distributors, Inc.
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Growth
Fund of America-R3
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**
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2,407,345
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* Allianz
Global Investors Distributors, Inc.
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Allianz
NFJ Small Cap Value-R
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**
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302,104
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* Oppenheimer
funds
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Oppenheimer
Value Fund-N
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**
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2,775,189
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* DWS
Scudder
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DWS
Scudder Mid Cap Growth-A
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**
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445,232
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* DWS
Scudder
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DWS
Scudder RREEF Real Est Secur-A
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**
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410,881
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* DWS
Scudder
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DWS
Scudder S&P 500 Index-S
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**
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251,134
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* T.
Rowe Price Investment Service, Inc.
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T.
Rowe Price Mid Cap Value-R
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**
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361,122
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* Franklin
Templeton Investments
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Templeton
Foreign-A
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**
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1,550,331
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* DWS
Scudder
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DWS
Scudder Lifecompass 2040-A
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**
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32
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* DWS
Scudder
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DWS
Scudder Lifecompass 2030-A
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**
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3,835
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* Clayton
Williams Energy Inc.
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|
Company
Stock
|
|
|
**
|
|
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|
2,946,329
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|
|
* Clayton
Williams Energy Inc. 401(k) Plan
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|
Plan
Loan Fund (Interest rates ranging
|
|
|
|
|
|
|
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|
|
|
|
from
5 to 10.5%)
|
|
|
**
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|
|
|
27,612
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|
|
Total
Investments
|
|
|
|
|
|
|
|
$
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16,167,964
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|
*
Indicates each identified person/entity known to be a party-in-interest for the
year ended December 31, 2007.
**
Historical cost information is omitted as permitted for participant-directed
transactions under an individual account plan.
See
Report of Independent Registered Public Accounting Firm
S-1
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the trustees (or
other persons who administer the Plan) have duly caused this annual report to be
signed on its behalf by the undersigned hereunto duly authorized.
|
|
|
CLAYTON
WILLIAMS ENERGY, INC.
|
|
|
|
401(k)
Plan & Trust
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|
|
|
(Name
of Plan)
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|
|
|
By:
|
Clayton
Williams Energy, Inc.
|
|
|
|
|
Plan
Administrator
|
|
|
|
|
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|
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|
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|
|
Date:
|
June
27, 2008
|
By:
|
/s/
L. Paul Latham
|
|
|
|
|
L.
Paul Latham
|
|
|
|
|
Executive
Vice President and Chief
|
|
|
|
|
Operating
Officer
|
CLAYTON
WILLIAMS ENERGY, INC.
EXHIBIT
INDEX
|
Exhibit
|
|
|
|
Number
|
|
Description
of Exhibit
|
|
|
|
|
|
23
|
|
Consent
of Independent Registered Public Accounting
Firm
|
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