Clayton Williams Energy Provides Financial Guidance for 2009

http://www.businesswire.com/news/home/20091112005140/en

MIDLAND, Texas--(Business Wire)--
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, 2009. 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 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.

Financial Guidance Disclosures Follow

CLAYTON WILLIAMS ENERGY, INC.

FINANCIAL GUIDANCE DISCLOSURES FOR 2009

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, 2009. 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, expenses and noncontrolling interest related to our investment in Desta Drilling (formerly Larclay JV).

As discussed in "Capital Expenditures", approximately 40% of our planned 2009
exploration and development expenditures relate to exploratory prospects.
Exploratory prospects involve a higher degree of risk than development
prospects. To offset the higher risk, we generally strive to achieve a higher
reserve potential and rate of return on investments in exploratory prospects.
Actual results from our exploratory drilling activities, when ultimately
reported, may have a material impact on the estimates of oil and gas production
and exploration costs stated in this guidance.

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, 2009. 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, 2009
Actual Actual Actual Estimated
First Quarter Second Quarter Third Quarter Fourth Quarter
(Dollars in thousands, except per unit data)
Average Daily Production:
Gas (Mcf) 51,526 42,374 42,391 39,750 to 43,750
Oil (Bbls) 8,344 7,868 7,196 8,325 to 8,525
Natural gas liquids (Bbls) 589 648 685 525 to 575
Total oil equivalents (BOE) 17,476 15,578 14,946 15,475 to 16,392

Differentials:
Gas (Mcf) $ (.57 ) $ - $ .16 $(.35) to $(.65)
Oil (Bbls) $ (5.99 ) $ (3.13 ) $ (3.70 ) $(2.85) to $(3.35)
Natural gas liquids (Bbls) $ (20.14 ) $ (34.93 ) $ (36.41 ) $(27.00) to $(33.00)

Costs Variable by Production ($/BOE):
Production expenses (including
production taxes) $ 12.12 $ 12.90 $ 14.01 $13.00 to $14.00
DD&A - Oil and gas properties $ 22.10 $ 18.10 $ 21.44 $21.00 to $22.00

Other Revenues (Expenses):
Natural gas services:
Revenues $ 1,584 $ 1,355 $ 1,639 $1,500 to $1,700
Operating costs $ (1,411 ) $ (1,211 ) $ (1,344 ) $(1,300) to $(1,500)
Exploration costs:
Abandonments and impairments $ (12,412 ) $ (4,505 ) $ (24,149 ) $(1,000) to $(3,000)
Seismic and other $ (4,270 ) $ (1,388 ) $ (898 ) $(1,200) to $(1,400)
DD&A - Other (a) $ (229 ) $ (210 ) $ (180 ) $(250) to $(350)
General and administrative (a) $ (4,386 ) $ (6,110 ) $ (3,936 ) $(5,000) to $(5,200)
Interest expense (a) $ (5,016 ) $ (5,433 ) $ (6,634 ) $(5,600) to $(5,800)
Other income (expense) $ 901 $ 826 $ (76 ) $250 to $350
Gain (loss) on sales of assets and
inventory write-downs, net $ (3,266 ) $ 84 $ 796 -

Effective Federal and State Income
Tax Rate:
Current 0 % 0 % 0 % 0%
Deferred 37 % 37 % 37 % 37%

Weighted Average Shares Outstanding
(In thousands):
Basic and Diluted 12,122 12,142 12,144 12,144

(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 2009.

Actual Planned
Expenditures Expenditures Year 2009
Nine Months Ended Year Ending Percentage
September 30, 2009 December 31, 2009 of Total
(In thousands)
Permian Basin $ 33,900 $ 62,300 48 %
South Louisiana 24,500 25,400 19 %
East Texas Bossier 15,000 15,400 12 %
Austin Chalk (Trend) 4,600 13,300 10 %
Utah/California 5,500 6,200 5 %
North Louisiana 4,400 5,100 4 %
Other 2,000 3,400 2 %
$ 89,900 $ 131,100 100 %

During the second quarter of 2009, operating margins on oil-prone properties
improved somewhat due to a combination of higher oil prices and lower rates for
field services caused by decreased demand for those services. Since most of our
developmental drilling locations are oil-prone, we have elected to resume
drilling developmental oil wells in the Permian Basin and the Austin Chalk
(Trend) during the remainder of 2009. As a result, we now plan to spend
approximately $131.1 million on exploration and development activities in fiscal
2009, an increase of $17.3 million over our previous estimate. Our actual
expenditures during fiscal 2009 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 2009.

Based on these current estimates, approximately 40% of our planned expenditures
for exploration and development activities for fiscal 2009 will relate to
exploratory prospects, as compared to approximately 30% in fiscal 2008.

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, 2009. These
estimates represent the approximate mid-point of the estimated production
range.

Daily Net Production for 2009
Actual Actual Actual Estimated
First Quarter Second Quarter Third Quarter Fourth Quarter
Gas (Mcf):
Permian Basin 15,674 15,432 14,374 14,955
North Louisiana 14,550 11,445 10,076 9,120
South Louisiana 12,592 7,699 10,755 10,511
Austin Chalk (Trend) 3,030 2,412 2,306 2,207
Cotton Valley Reef Complex 4,274 3,781 3,916 4,098
Other 1,136 1,605 964 859
Total 51,256 42,374 42,391 41,750

Oil (Bbls):
Permian Basin 4,456 4,058 3,526 4,882
North Louisiana 270 273 230 163
South Louisiana 391 701 773 826
Austin Chalk (Trend) 3,142 2,742 2,585 2,489
Other 85 94 82 65
Total 8,344 7,868 7,196 8,425

Natural Gas Liquids (Bbls):
Permian Basin 225 248 246 229
Austin Chalk (Trend) 307 290 288 256
Other 57 110 151 65
Total 589 648 685 550

Accounting for Derivatives

The following summarizes information concerning our net positions in open
commodity derivatives applicable to periods subsequent to September 30, 2009.
The settlement prices of commodity derivatives are based on NYMEX futures
prices.

Swaps:

Gas Oil
MMBtu (a) Price Bbls Price
Production Period:
4th Quarter 2009 1,850,000 $ 5.47 400,000 $ 46.15
2010 7,540,000 $ 6.80 2,204,000 $ 76.50
2011 6,420,000 $ 7.07 - $ -
15,810,000 2,604,000

(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 under SFAS 133; 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.

Clayton Williams Energy, Inc.
Patti Hollums, 432-688-3419
Director of Investor Relations
cwei@claytonwilliams.com
www.claytonwilliams.com
or
Mel G. Riggs, 432-688-3431
Chief Financial Officer

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