Clayton Williams Energy, Inc. (NASDAQ: 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 815-10-05 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 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 Estimated
Estimated Estimated Estimated
First Quarter Second Quarter Third Quarter
Fourth Quarter (Dollars in thousands, except per unit
data) Average Daily Production: Oil (Bbls) 8,150 to
8,350 8,450 to 8,650 9,225 to 9,425 9,625 to 9,825 Gas (Mcf) 36,000
to 40,000 33,700 to 37,700 32,000 to 36,000 30,750 to 34,750
Natural gas liquids (Bbls) 650 to 700 625 to 675 550 to 600 550 to
600 Total oil equivalents (BOE) 14,800 to 15,717 14,692 to 15,608
15,108 to 16,025 15,300 to 16,217
Differentials: Oil
(Bbls) $(2.75) to $(3.25) $(2.75) to $(3.25) $(2.75) to $(3.25)
$(2.75) to $(3.25) Gas (Mcf) $(0.05) to $0.25 $(0.05) to $0.25
$(0.05) to $0.25 $(0.05) to $0.25 Natural gas liquids (Bbls)
$(27.00) to $(33.00) $(27.00) to $(33.00) $(27.00) to $(33.00)
$(27.00) to $(33.00)
Costs Variable by Production
($/BOE): Production expenses (including production taxes)
$13.75 to $14.75 $13.75 to $14.75 $13.50 to $14.50 $13.60 to $14.60
DD&A – Oil and gas properties $20.40 to $22.40 $20.45 to $22.45
$20.45 to $22.45 $20.45 to $22.45
Other Revenues
(Expenses): Natural gas services: Revenues $1,700 to $1,900
$1,700 to $1,900 $1,700 to $1,900 $1,700 to $1,900 Operating costs
$(1,600) to $(1,800) $(1,600) to $(1,800) $(1,600) to $(1,800)
$(1,600) to $(1,800) Exploration costs: Abandonments and
impairments $(1,000) to $(3,000) $(1,000) to $(3,000) $(1,000) to
$(3,000) $(1,000) to $(3,000) Seismic and other $(250) to $(750)
$(250) to $(750) $(250) to $(750) $(250) to $(750) DD&A – Other
(a) $(250) to $(350) $(250) to $(350) $(250) to $(350) $(250) to
$(350) General and administrative (a) $(4,050) to $(4,250) $(5,550)
to $(5,750) $(4,050) to $(4,250) $(5,550) to $(5,750) Interest
expense $(6,500) to $(6,700) $(6,700) to $(6,900) $(6,800) to
$(7,000) $(6,800) to $(7,000) Other income (expense) $250 to $350
$250 to $350 $250 to $350 $250 to $350
Effective Federal
and State Income Tax Rate: Current 0% 0% 0% 0% Deferred
37% 37% 37% 37%
Weighted Average Shares Outstanding
(In thousands): Basic 12,100 12,100 12,100 12,100 Diluted
12,150 12,150 12,150 12,150
(a) Excludes amounts derived from
Desta Drilling.
Capital Expenditures
The following table sets forth, by area, certain information
about our planned exploration and development activities for
2010.
Planned Expenditures Year 2010
Year Ending Percentage December 31, 2010 of
Total (In thousands) Permian Basin $ 154,500 65 %
Austin Chalk (Trend) 68,800 29 % South Louisiana 8,800 4 %
Utah/California 2,600 1 % Other 2,700 1 % $ 237,400 100 %
We currently plan to spend approximately $237.4 million on
exploration and development activities in fiscal 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 95% of our
planned expenditures for exploration and development activities for
fiscal 2010 will relate to developmental prospects, as compared to
approximately 75% in fiscal 2009.
Supplementary Information
Oil and Gas Production
The following table summarizes, by area, our 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 Estimated
Estimated Estimated Estimated
First Quarter Second Quarter Third Quarter
Fourth Quarter Oil (Bbls): Permian Basin 4,759 5,076
5,793 6,211
Austin Chalk (Trend)
2,646
2,858
3,076
3,111
North Louisiana 156 132 130 98 South Louisiana 633 418 293 272
Other 56 66 33 33 Total 8,250 8,550 9,325 9,725
Gas
(Mcf): Permian Basin 13,012 12,601 12,631 12,560
Austin Chalk (Trend)
2,344
2,385
2,446
2,424
North Louisiana 8,578 7,758 7,130 6,650 South Louisiana 7,700 6,780
6,109 5,487 Cotton Valley Reef Complex 3,944 3,692 3,467 3,281
Other 2,422 2,484 2,217 2,348 Total 38,000 35,700 34,000 32,750
Natural Gas Liquids (Bbls): Permian Basin 200 198 195
194 Austin Chalk (Trend) 254 265 228 218 Other 221 187 152 163
Total 675 650 575 575
Accounting for
Derivatives
The following summarizes information concerning our net
positions in open commodity derivatives applicable to periods
subsequent to December 31, 2009. The settlement prices of commodity
derivatives are based on NYMEX futures prices.
Swaps:
Oil Gas Bbls
Price MMBtu (a) Price
Production Period: 1st Quarter 2010 628,000 $ 76.70 2,280,000 $
6.80 2nd Quarter 2010 574,000 $ 76.60 1,830,000 $ 6.80 3rd Quarter
2010 522,000 $ 76.40 1,750,000 $ 6.80 4th Quarter 2010 480,000 $
76.24 1,680,000 $ 6.80 2011 - $ - 6,420,000 $ 7.07 2,204,000
13,960,000 (a) One MMBtu equals one Mcf at a Btu factor of
1,000.
In March 2009, we terminated certain fixed-priced oil swaps
covering 332,000 barrels at a price of $57.35 from January 2010
through December 2010, resulting in an aggregate loss of
approximately $1.3 million, 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.
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