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, 2012.
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
2012
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 the year ending
December 31, 2012. 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 this period 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
and third parties.
Summary of Estimates
The following table sets forth certain estimates being used to
model our anticipated results of operations for the fiscal year
ending December 31, 2012. Each range of values provided represents
the expected low and high estimates for such financial or operating
factor.
Estimated Ranges Year Ending December 31,
2012 (Dollars in thousands, except per unit
data) Average Daily Production: Oil (Bbls) 11,250 to
11,650 Gas (Mcf) 22,000 to 24,000 Natural gas liquids (Bbls) 750 to
850 Total oil equivalents (BOE) 15,667 to 16,500
Price
Differentials to NYMEX: Oil 92% to 94% Gas 120% to 140% Natural
gas liquids (based on oil) 50% to 60%
Other Costs and
Expenses: Production expenses: Direct costs ($/BOE) $15.00 to
16.00 Production taxes (% of sales) 5% to 6% General and
Administrative: Excluding non-cash compensation $24,000 to 26,000
Non-cash compensation $15,000 to 17,000 DD&A: Oil and
gas ($/BOE) $19.00 to 21.00 Other $3,700 to 4,300
Exploration costs: Abandonments and impairments $1,000 to 3,000
Seismic and other $5,000 to 7,000 Interest expense (cash
rates): $350 million Senior Notes due 2019 7.75% Bank credit
facility LIBOR plus (175 to 275 bps)
Effective Federal
and State Income Tax Rate: Current 0% Deferred 36%
Capital Expenditures
The following table sets forth, by area, our planned capital
expenditures for the year ending December 31, 2012.
Planned Expenditures 2012
Year Ending Percentage December 31, 2012 of
Total (In thousands) Drilling and Completion: Permian
Basin Area: Reeves $ 219,500 56 % Other 46,500 12 % Austin
Chalk/Eagle Ford Shale 32,200 9 % Other
5,600
1 % 303,800 78 % Leasing and seismic 66,700 17 % Exploration
and development 370,500 95 % Facilities and other 20,600 5 %
Total capital expenditures $ 391,100 100 %
We currently plan to spend approximately $370.5 million on
exploration and development activities in fiscal 2012, including
$303.8 million for drilling and completion and $66.7 million for
leasing and seismic activities. Our actual expenditures during
fiscal 2012 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 2012. Based on these current estimates,
approximately 93% of our planned expenditures for exploration and
development activities for fiscal 2012 will relate to developmental
prospects, as compared to approximately 92% in fiscal 2011.
Accounting for Derivatives
The following summarizes information concerning our net
positions in open commodity derivatives applicable to periods
subsequent to December 31, 2011. The settlement prices of commodity
derivatives are based on NYMEX futures prices.
Swaps:
Oil Bbls (a)
Price Production Period: 1st Quarter 2012 444,000 $ 95.70
2nd Quarter 2012 410,000 $ 95.70 3rd Quarter 2012 384,000 $ 95.70
4th Quarter 2012 362,000 $ 95.70 1,600,000
_________
(a) Excludes oil hedges covering
393,863 barrels of oil for production months from January 2012
through May 2016 at a price of $91.15 per barrel. These hedges
cover production related to a volumetric production payment
expected to be granted in connection with the proposed acquisition
by our wholly owned subsidiary, Southwest Royalties, Inc., of 24
limited partnerships of which it is the general partner.
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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