Clayton Williams Energy, Inc. (the “Company”) (NASDAQ: CWEI)
today reported its financial results for the three months ended
March 31, 2010.
Financial Results for the First Quarter of 2010
Net income attributable to Company stockholders for the first
quarter of 2010 (“1Q10”) was $16.7 million, or $1.37 per share, as
compared to a net loss of $22.3 million, or $1.84 per share, for
the first quarter of 2009 (“1Q09”). Cash flow from operations for
1Q10 was $30.4 million as compared to $13.3 million for 1Q09.
The key factors affecting the comparability of the two quarters
were:
- Oil and gas sales increased
$28.2 million in 1Q10 versus 1Q09. Price variances accounted for a
$34.5 million increase, and production variances accounted for a
$6.3 million decrease. Oil production was relatively constant
compared to 1Q09 while gas production declined 28% in 1Q10 versus
1Q09. Average realized oil prices were $76.00 per barrel in 1Q10
versus $37.09 per barrel in 1Q09, and average realized gas prices
were $5.76 per Mcf in 1Q10 versus $4.60 per Mcf in 1Q09.
- Oil and gas production (per
barrel of oil equivalent) declined by 13% in 1Q10 as compared to
1Q09. Oil production remained relatively constant at 752,000
barrels, or 8,356 barrels per day, as compared to 751,000 barrels,
or 8,344 barrels per day, while gas production declined to 3.3 Bcf,
or 36,978 Mcf per day as compared to 4.6 Bcf or 51,256 Mcf per day
for 1Q09. Since the Company’s current drilling emphasis is on the
development of oil reserves, normal declines in gas production from
existing wells is not being replaced with production from new
drilling.
- Gain on derivatives for 1Q10 was
$10.3 million ($8.6 million non-cash mark-to-market gain and a $1.7
million realized gain on settled contracts) versus a gain in 1Q09
of $2.5 million ($1.4 million non-cash mark-to-market gain and a
$1.1 million realized gain on settled contracts). See accompanying
tables for additional information about the Company’s accounting
for derivatives.
- Exploration charges decreased
$12.2 million in 1Q10 to $4.5 million compared to $16.7 million in
1Q09 due primarily to the Company’s current emphasis on
developmental drilling.
Scheduled Conference Call
The Company will host a conference call to discuss these results
and other forward-looking items today, May 4th at 1:30 pm CT (2:30
pm ET). The dial-in conference number is: 800-901-5213, passcode
40784916. The replay will be available for one week at
888-286-8010, passcode 57045526.
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.
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 natural gas and liquids
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 recession 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.
TABLES AND SUPPLEMENTAL
INFORMATION FOLLOW . . .
CLAYTON WILLIAMS ENERGY, INC. CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited) (In thousands, except per
share) Three Months Ended March 31,
2010 2009 REVENUES Oil and gas sales $ 79,042 $
50,796 Natural gas services 503 1,584 Drilling rig services
- 5,219 Gain on sales of assets 286 183
Total revenues 79,831 57,782
COSTS AND EXPENSES Production 20,927 19,063 Exploration:
Abandonments and impairments 2,878 12,412 Seismic and other 1,660
4,270 Natural gas services 348 1,411 Drilling rig services 662
7,086 Depreciation, depletion and amortization 25,612 36,465
Accretion of abandonment obligations 647 718 General and
administrative 6,224 4,528 Loss on sales of assets and impairment
of inventory - 3,449 Total costs and
expenses 58,958 89,402 Operating income
(loss) 20,873 (31,620 ) OTHER INCOME
(EXPENSE) Interest expense (6,109 ) (5,438 ) Gain on
derivatives 10,301 2,510 Other 828 901 Total other
income (expense) 5,020 (2,027 ) Income
(loss) before income taxes 25,893 (33,647 ) Income tax
(expense) benefit (9,218 ) 12,378 NET INCOME (LOSS)
16,675 (21,269 ) Less income attributable to noncontrolling
interest, net of tax - (1,046 ) NET INCOME
(LOSS) attributable to Clayton Williams Energy, Inc. $ 16,675
$ (22,315 )
Net income (loss) per common share
attributable toClayton Williams Energy, Inc. stockholders:
Basic $ 1.37 $ (1.84 ) Diluted $ 1.37 $ (1.84 )
Weighted average common shares outstanding: Basic
12,146 12,122 Diluted 12,146
12,122
CLAYTON WILLIAMS ENERGY, INC.
CONSOLIDATED BALANCE SHEETS (In thousands)
ASSETS March 31, December 31,
2010 2009 (Unaudited) CURRENT ASSETS Cash and
cash equivalents $ 14,949 $ 14,013 Accounts receivable: Oil and gas
sales 31,736 28,721 Joint interest and other, net 5,397 6,669
Affiliates 349 624 Inventory 39,972 43,068 Deferred income taxes
915 1,362 Fair value of derivatives 16,245 - Assets held for sale
7,411 7,411 Prepaids and other 5,766 1,729
122,740 103,597 PROPERTY AND
EQUIPMENT Oil and gas properties, successful efforts method
1,631,207 1,579,664 Natural gas gathering and processing systems
17,891 17,816 Contract drilling equipment 44,186 41,533 Other
17,703 16,550 1,710,987 1,655,563 Less
accumulated depreciation, depletion and amortization
(1,012,613 ) (985,517 ) Property and equipment, net
698,374 670,046 OTHER ASSETS Debt issue
costs, net 4,539 4,874 Fair value of derivatives 8,049 4,427 Other
1,774 1,660 14,362
10,961 $ 835,476 $ 784,604
LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES
Accounts payable: Trade $ 38,047 $ 47,211 Oil and gas sales 16,281
18,063 Affiliates 1,377 1,097 Fair value of derivatives 14,915
5,907 Accrued liabilities and other 9,649
11,995 80,269 84,273
NON-CURRENT LIABILITIES Long-term debt 421,000 395,000 Deferred
income taxes 62,797 54,065 Fair value of derivatives 2,257 - Other
40,203 38,991 526,257
488,056 STOCKHOLDERS' EQUITY Preferred stock,
par value $.10 per share - - Common stock, par value $.10 per share
1,215 1,215 Additional paid-in capital 152,051 152,051 Retained
earnings 75,684 59,009 Total
stockholders' equity 228,950 212,275
$ 835,476 $ 784,604
CLAYTON WILLIAMS
ENERGY, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited) (In thousands)
Three Months Ended March 31, 2010
2009 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss)
$ 16,675 $ (21,269 )
Adjustments to reconcile net
income (loss) to cashprovided by operating activities:
Depreciation, depletion and amortization 25,612 36,465 Exploration
costs 2,878 12,412 (Gain) loss on sales of assets and impairment of
inventory, net (286 ) 3,266 Deferred income tax expense (benefit)
9,218 (12,382 ) Non-cash employee compensation 2,010 383 Unrealized
gain on derivatives (8,602 ) (1,379 ) Amortization of debt issue
costs 335 308 Accretion of abandonment obligations 647 718
Changes in operating working capital: Accounts receivable (1,468 )
10,104 Accounts payable (8,989 ) (13,407 ) Other (7,654 )
(1,928 ) Net cash provided by operating activities
30,376 13,291 CASH FLOWS FROM INVESTING
ACTIVITIES Additions to property and equipment (58,276 ) (42,626 )
Proceeds from sales of assets 479 259 Change in equipment inventory
2,452 (6,017 ) Other (95 ) (110 ) Net cash used in
investing activities (55,440 ) (48,494 ) CASH
FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term debt 26,000
14,400 Repayments of long-term debt of Desta Drilling - (4,687 )
Proceeds from exercise of stock options - 107
Net cash provided by financing activities 26,000
9,820
NET INCREASE (DECREASE) IN CASHAND
CASH EQUIVALENTS
936 (25,383 ) CASH AND CASH EQUIVALENTS Beginning of period
14,013 41,199 End of period $ 14,949 $ 15,816
CLAYTON WILLIAMS ENERGY,
INC.
COMPUTATION OF EBITDAX
EBITDAX is presented as a supplemental non-GAAP financial
measure because of its wide acceptance by financial analysts,
investors, debt holders, banks, rating agencies and other financial
statement users as an indication of an entity's ability to meet its
debt service obligations and to internally fund its exploration and
development activities.
The Company defines EBITDAX as net income (loss) before interest
expense, income taxes, exploration costs, (gain)/loss on sales of
assets and impairment of inventory and all non-cash items in the
Company's statements of operations, including depreciation,
depletion and amortization, impairment of property and equipment,
accretion of abandonment obligations, certain employee compensation
and changes in fair value of derivatives. EBITDAX is not an
alternative to net income (loss) or cash flow from operating
activities, or any other measure of financial performance presented
in conformity with GAAP.
The following table reconciles net income (loss) to EBITDAX:
Three Months Ended March 31, 2010
2009 (Unaudited and in thousands) Net income
(loss) $ 16,675 $ (21,269 ) Interest expense 6,109 5,438 Income tax
(benefit) expense 9,218 (12,378 ) Exploration: Abandonments and
impairments 2,878 12,412 Seismic and other 1,660 4,270 (Gain) loss
on sales of assets and impairment of inventory (286 ) 3,266
Depreciation, depletion and amortization 25,612 36,465 Accretion of
abandonment obligations 647 718 Non-cash employee compensation
2,010 383 Non-cash changes in fair value of derivatives (8,602 )
(1,379 ) $ 55,921 $ 27,926
Clayton
Williams Energy, Inc. Summary Production and Price Data
(Unaudited) Three Months Ended March 31,
2010
2009 Average Daily Production: Oil (Bbls):
Permian Basin 4,909 4,456 Austin Chalk (Trend) 2,595 3,142 North
Louisiana 148 270 South Louisiana 627 391 Other 77
85 Total 8,356 8,344
Natural Gas (Mcf): Permian Basin 13,911 15,674 Austin Chalk (Trend)
2,531 3,030 North Louisiana 8,718 14,550 South Louisiana 7,513
12,592 Cotton Valley Reef Complex 3,529 4,274 Other 776
1,136 Total 36,978 51,256
Natural gas liquids (Bbls): Permian Basin 272 225 Austin
Chalk (Trend) 271 307 North Louisiana 5 1 South Louisiana 79 45
Other 6 11 Total 633
589
Total Production: Oil (MBbls) 752 751
Natural Gas (MMcf) 3,328 4,613 Natural gas liquids (MBbls)
57 53 Total (MBOE) 1,364 1,573
Average
Realized Prices (a): Oil ($/Bbl) $ 76.00 $ 37.09
Gas ($/Mcf) $ 5.76 $ 4.60 Natural gas liquids ($/Bbl)
$ 46.18 $ 22.94
Gain (Loss) on settled derivative
contracts (a): ($ in thousands, except per unit) Oil: Net
realized loss $ (1,621 ) $ (267 ) Per unit produced ($/Bbl) $ (2.16
) $ (0.36 ) Gas: Net realized gain $ 3,320 $ 1,398 Per unit
produced ($/Mcf) $ 1.00 $ 0.30
(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 2010 or 2009 derivative contracts as cash flow hedges. This
means that the Company's derivatives for 2010 and 2009 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/expense instead of as a component of oil and gas sales.
Clayton Williams Energy, Inc. Summary of Open Commodity
Derivatives (Unaudited) The
following summarizes information concerning the Company’s net
positions in open commodity derivatives applicable to periods
subsequent to March 31, 2010.
Oil
Gas Swaps: Bbls Price
MMBtu (a) Price Production Period:
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 1,656,000 $ 84.38 6,420,000 $ 7.07 3,232,000 11,680,000
(a) One MMBtu equals one Mcf at a
Btu factor of 1,000.
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