CWEI Clayton Williams Energy, Inc.

Clayton Williams Energy, Inc. (NASDAQ-NMS: CWEI) today filed a Form 8-K with the Securities and Exchange Commission to provide financial guidance disclosures for the year ending December 31, 2011. 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.

CLAYTON WILLIAMS ENERGY, INC.

FINANCIAL GUIDANCE DISCLOSURES FOR 2011

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, 2011. 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, outcomes and other matters that we plan, expect, intend, assume, believe, budget, predict, forecast, project, estimate or anticipate (and other similar expressions) will, should, could or may occur in the future, including such matters as production of oil and gas, product prices, oil and gas reserves, drilling and completion results, capital expenditures, operating costs 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 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 actual and certain estimates being used by us to model our anticipated results of operations for each quarter during the fiscal year ending December 31, 2011. 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, 2011 Actual   Estimated   Estimated   Estimated First Quarter Second Quarter Third Quarter Fourth Quarter (Dollars in thousands, except per unit data) Average Daily Production: Oil (Bbls) 9,989 10,400 to 10,600 11,500 to 11,700 13,000 to 13,200 Gas (Mcf) 23,478 22,000 to 26,000 21,000 to 25,000 21,500 to 25,500 Natural gas liquids (Bbls) 922 825 to 925 800 to 900 750 to 850 Total oil equivalents (BOE) 14,824 14,892 to 15,858 15,800 to 16,767 17,333 to 18,300   Differentials: Oil (Bbls) $ (5.17 ) $(4.50) to $(5.50) $(4.50) to $(5.50) $(4.50) to $(5.50) Gas (Mcf) $ 1.04 $0.15 to $0.45 $0.15 to $0.45 $0.15 to $0.45 Natural gas liquids (Bbls) $ (45.76 ) $(42.00) to $(48.00) $(42.00) to $(48.00) $(42.00) to $(48.00)   Costs Variable by Production ($/BOE): Production expenses (excluding production taxes) (a) $ 14.67 $14.00 to $15.00 $13.75 to $14.75 $13.00 to $14.00 DD&A – Oil and gas properties $ 17.46 $17.50 to $18.50 $17.50 to $18.50 $17.50 to $18.50   Other Revenues (Expenses): Natural gas services: Revenues $ 409 $450 to $550 $450 to $550 $450 to $550 Operating costs $ (263 ) $(300) to $(500) $(300) to $(500) $(300) to $(500) Exploration costs: Abandonments and impairments $ (877 ) $(500) to $(2,500) $(500) to $(2,500) $(500) to $(2,500) Seismic and other $ (1,278 ) $(250) to $(750) $(250) to $(750) $(250) to $(750) DD&A – Other (b) $ (193 ) $(250) to $(350) $(250) to $(350) $(250) to $(350) General and administrative (b) (c) $ (5,025 ) $(7,800) to $(8,000) $(7,300) to $(7,500) $(7,350) to $(7,550) Interest expense $ (6,412 ) $(8,900) to $(9,100) $(9,400) to $(9,600) $(8,600) to $(8,800) Other income (expense) $ 1,087 $450 to $550 $450 to $550 $450 to $550 Gain (loss) on sales of assets, net $ 13,376 - - -     Effective Federal and State Income Tax Rate: Current 0 % 0% 0% 0% Deferred 36 % 36% 36% 36%   Weighted Average Shares Outstanding (In thousands): Basic 12,156 12,163 12,163 12,163 Diluted 12,156 12,163 12,163 12,163   (a) Our current guidance for production expenses excludes production taxes. Historically, production taxes have ranged from 5% to 6 % of oil and gas sales. (b) Excludes amounts derived from Desta Drilling, L.P. (c) Excludes non-cash employee compensation.  

Capital Expenditures

The following table sets forth, by area, our actual expenditures for exploration and development activities for the first three months of 2011 and our planned expenditures for the year ending December 31, 2011.

  Actual   Planned   Expenditures Expenditures 2011 Three Months Ended Year Ended Percentage March 31, 2011 December 31, 2011 of Total (In thousands) Permian Basin $ 68,500 $ 337,900 83 % Giddings Area: Austin Chalk/Eagle Ford Shale 14,200 50,100 12 % Deep Bossier 200 13,900 3 % South Louisiana 1,800 4,200 1 % Other   3,100   3,800 1 % $ 87,800 $ 409,900 100 %  

We currently plan to spend approximately $409.9 million on exploration and development activities in fiscal 2011, as compared to our previous estimate of $381.8 million. Most of the increase is due to additional drilling within the Permian Basin. Our actual expenditures during fiscal 2011 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 2011. Based on these current estimates, approximately 95% of our planned expenditures for exploration and development activities for fiscal 2011 will relate to developmental prospects, as compared to approximately 95% in fiscal 2010.

In April 2011, we committed to purchase two drilling rigs for our Desta Drilling fleet at a cost of approximately $15.3 million.

Supplementary Information

Oil and Gas Production

The following table summarizes, by area, our actual and estimated daily net production for each quarter during the year ending December 31, 2011. These estimates represent the approximate mid-point of the estimated production range.

  Daily Net Production for 2011 Actual   Estimated   Estimated   Estimated First Quarter Second Quarter Third Quarter Fourth Quarter Oil (Bbls): Permian Basin 6,177 6,703 7,917 9,405 Austin Chalk/Eagle Ford Shale 3,329 3,258 3,217 3,424 South Louisiana 414 484 412 217 Other 69 55 54 54 Total 9,989 10,500 11,600 13,100   Gas (Mcf): Permian Basin 13,920 13,901 13,967 15,293 Giddings Area: Austin Chalk/Eagle Ford Shale 1,940 1,934 1,837 1,772 Cotton Valley Reef Complex 2,953 2,593 2,446 2,315 South Louisiana 3,149 3,396 2,837 2,391 Other 1,516 2,176 1,913 1,729 Total 23,478 24,000 23,000 23,500   Natural Gas Liquids (Bbls): Permian Basin 618 611 589 539 Austin Chalk/Eagle Ford Shale 226 198 196 196 Other 78 66 65 65 Total 922 875 850 800  

Accounting for Derivatives

The following summarizes information concerning our net positions in open commodity derivatives applicable to periods subsequent to March 31, 2011. The settlement prices of commodity derivatives are based on NYMEX futures prices.

Swaps:

    Oil   Gas Bbls   Price MMBtu (a)   Price

Production Period:

2nd Quarter 2011 632,000 $ 83.71 1,650,000 $ 7.07 3rd Quarter 2011 547,000 $ 83.78 1,560,000 $ 7.07 4th Quarter 2011 540,000 $ 83.78 1,500,000 $ 7.07

2012

1,864,000 $ 93.65 - $ - 2013 480,000 $ 96.70 - $ - 4,063,000 4,710,000   (a) One MMBtu equals one Mcf at a Btu factor of 1,000.

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.