Clayton Williams Energy Announces 2005 Financial Results and Reserves.MIDLAND, Texas Midland is the county seat of Midland CountyGR6 located on the Southern Plains of the western area of the U.S. State of Texas. As of the 2006 U.S. Census estimate, the city had a total population of 102,073. -- Clayton Williams Clayton Wheat Williams, Jr. (b. 1931), a businessman from Midland, Texas, was the unsuccessful Republican gubernatorial nominee in 1990 against the Democratic State Treasurer Dorothy Ann Willis Richards even though he initially led in opinion polls by twenty points. Energy, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CWEI CWEI Combat Warfare Electronic Intelligence ) reported net income for the fourth quarter of 2005 of $1.3 million, or $.12 per share, as compared to a net loss of $12.5 million, or $1.16 per share, for the fourth quarter of 2004. Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses for the current quarter was $36.8 million, as compared to $43.8 million during the same period in 2004. For the year ended December December: see month. 31, 2005, the Company reported net income of $257,000, or $.02 per share, as compared to a net loss of $14 million, or $1.37 per share, in 2004. Cash flow from operations for the year 2005 was $163.5 million, as compared to $127 million in 2004. Oil and gas sales for the fourth quarter of 2005 amounted to $62.1 million compared to $63.2 million in the 2004 quarter. Of the $1.1 million decrease in oil and gas sales, lower oil and gas production accounted for a decrease of $19.1 million, which was mostly offset by an $18 million increase related to higher oil and gas prices. Oil production for the fourth quarter of 2005 decreased 23% to 487,000 barrels, or 5,293 barrels per day Barrels per day (abbreviated BPD, bbl/d, bpd, bd or b/d) is a measurement used to describe the amount of crude oil (measured in barrels) produced or consumed by an entity in one day. , from 630,000 barrels, or 6,848 barrels per day. Gas production decreased 38% to 3.2 Bcf, or 34,815 Mcf per day, from 5.1 Bcf, or 55,717 Mcf per day in 2004. The Company attributed approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. half of the decrease in production to the loss of production in Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. as a result of Hurricane Katrina  Editing of this page by unregistered or newly registered users is currently disabled due to vandalism. . Average
realized oil prices in the fourth quarter of 2005 increased 23% from
$46.19 to $56.99 per barrel barrel: see English units of measurement. , while gas prices increased 63% from $6.14
to $10.02 per Mcf. Average realized prices for 2005 and 2004 exclude the
effects of any losses realized on commodity hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. transactions since
the derivatives derivativesIn finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. were not designated as cash flow hedges A cash flow hedge is a hedge of the exposure to the variability of cash flow that
Exploration costs for the fourth quarter of 2005 were $11.6 million, as compared to $40.7 million for the same period in 2004. The current quarter exploration costs include amounts related primarily to the abandonment abandonment, in law, voluntary, intentional, and absolute relinquishment of rights or property without conveying them to any other person. Abandonment also means willfully leaving one's spouse or children, intending not to return (see desertion). of the Leoncita 122 #1 in Pecos Pecos, city, United States Pecos (pā`kəs), city (1990 pop. 12,069), seat of Reeves co., W Tex., on the Pecos River; inc. 1903. County and to the two previously announced dry holes in south Louisiana, the State Lease 17636 #1 (Natalie Natalie may refer to:
ghost returns to the Spanish court to learn of the events that followed his death. [Br. Drama: The Spanish Tragedy in Magill II, 990] See : Ghost ). Production costs for the fourth quarter of 2005 increased slightly to $14 million from $13.7 million in the 2004 quarter. Lower volumes of oil and gas production in the current quarter caused production costs per Mcfe to increase 47% from $1.47 per Mcfe for the 2004 quarter to $2.16 per Mcfe for the current quarter. The Company recorded a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. during the current quarter of $18.3 million for an impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of proved properties pursuant to Statement of Financial Accounting Standards No. 144 "Accounting for Impairment or Disposal of Long-Lived long-lived adj. 1. Having a long life: a long-lived aunt. 2. Lasting a long time; persistent: a long-lived rumor. 3. Assets." The Company's Wolfcamp exploration program in West Texas failed to find oil and gas reserves in sufficient quantities to recover its capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. costs. As a result, the Company recorded an impairment of proved properties in an amount required to reduce the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of this program to its estimated fair market value. For the fourth quarter of 2005, the Company reported a $3.6 million net gain on the change in fair value of derivatives, consisting of a $15.6 million non-cash gain to mark the Company's derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. positions to their fair value on December 31, 2005 and a $12 million charge for cash settlements during the quarter. For the same period in 2004, the net gain on the change in fair value of derivatives was $2.6 million, consisting of a $10.6 million non-cash mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. gain and an $8 million charge for cash settlements. The Company also announced today that its total proved oil and gas reserves as of December 31, 2005 were 293.8 Bcfe, consisting of 27.8 million barrels of oil and NGL NGL - A dialect of IGL. and 126.8 Bcf of natural gas, as estimated by independent petroleum engineers. By comparison, the Company reported proved reserves proved reserves The quantity of minerals expected to be recoverable under current economic and operating conditions. The amount of proved reserves is important in valuing the stock of a company with significant holdings in natural resources. of 299 Bcfe as of December 31, 2004, consisting of 26.8 million barrels of oil and NGL and 138.3 Bcf of natural gas. The pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta present value of estimated future net revenues from these reserves, discounted at 10% and computed in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with SEC guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. , totaled $1.1 billion at December 31, 2005, as compared to $705.3 million at December 31, 2004. The estimates were based on weighted average oil and NGL prices of $57.85 per Bbl in 2005, as compared to $41.48 in 2004, and gas prices of $10.65 per Mcf in 2005, as compared to $5.59 per Mcf in 2004. During 2005, the Company replaced 94% of the 31.4 Bcfe produced in 2005 through purchases, extensions and discoveries and revisions ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. to previous estimates. The following table summarizes the changes in proved reserves during 2005 on a Bcfe basis and as a percentage of 2005 production.
% of 2005
Bcfe Production
---------------- ---------------
Total proved reserves, 12/31/04 299.0
Purchases of minerals-in-place 4.2 13%
Extensions and discoveries 17.7 56%
Net revisions 7.8 25%
Sales of minerals-in-place (3.5)
Production (31.4)
----------------
Total proved reserves, 12/31/05 293.8
================
More than half of the extensions and discoveries for 2005 were attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the Company's exploration program in south Louisiana. Net revisions of 7.8 Bcfe consisted of approximately 17.5 Bcfe of upward revisions attributable to the effects of higher product prices on the estimated quantities of proved reserves, net of downward revisions of approximately 9.7 Bcfe attributable to well performance primarily from properties in west Texas. The Company will host a conference call to discuss these results and other forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. items today, March 7th at 1:30 pm CT (2:30 pm ET). The dial-in conference number is: 800-901-5213, passcode 59083952. The replay will be available for one week at 888-286-8010, passcode 32068987. To access the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the webcast, please go to the Investor Relations Investor relations The process by which the corporation communicates with its investors. 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. Except for historical information, statements made in this release are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on assumptions and estimates that management believes are reasonable based on currently available information; however, management's assumptions and the Company's future performance are subject to a wide range of business risks and uncertainties, and there is no assurance that these goals and projections can or will be met. Any number of factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to, production variance The discrepancy between what a party to a lawsuit alleges will be proved in pleadings and what the party actually proves at trial. In Zoning law, an official permit to use property in a manner that departs from the way in which other property in the same locality from expectations, volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the of oil and gas prices, the need to develop and replace reserves, the substantial capital expenditures required to fund operations, exploration risks, uncertainties about estimates of reserves, competition, government regulation, costs and results of drilling new projects, and mechanical and other inherent risks associated with oil and gas production. These 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.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share)
Three Months Ended Year Ended
December 31, December 31,
--------------------- ----------------------
2005 2004 2005 2004
-------- --------- --------- ---------
REVENUES
Oil and gas sales $62,063 $63,159 $252,599 $193,127
Natural gas services 4,377 2,110 12,080 9,083
Gain on sales of
property and equipment 9 3,966 18,920 4,120
-------- --------- --------- ---------
Total revenues 66,449 69,235 283,599 206,330
-------- --------- --------- ---------
COSTS AND EXPENSES
Production 13,996 13,661 57,404 41,163
Exploration:
Abandonments and
impairments 8,394 38,660 39,957 67,956
Seismic and other 3,204 2,037 10,780 7,124
Natural gas services 3,971 2,009 11,212 8,538
Depreciation, depletion
and amortization 11,361 14,686 47,509 44,040
Accretion of
abandonment
obligations 300 191 1,158 1,044
Impairment of proved
properties 18,266 - 18,266 -
General and
administrative 4,275 3,609 15,410 11,689
Loss on sales of
property and equipment 77 14,181 209 14,337
Other 1,353(a) - 1,353(a) -
-------- --------- --------- ---------
Total costs and
expenses 65,197 89,034 203,258 195,891
-------- --------- --------- ---------
Operating income
(loss) 1,252 (19,799) 80,341 10,439
-------- --------- --------- ---------
OTHER INCOME (EXPENSE)
Interest expense (4,063) (3,162) (14,498) (7,877)
Change in fair value of
derivatives 3,633 2,653 (70,059) (25,329)
Other 1,609 627 4,022 1,354
-------- --------- --------- ---------
Total other income
(expense) 1,179 118 (80,535) (31,852)
-------- --------- --------- ---------
Income (loss) before
income taxes 2,431 (19,681) (194) (21,413)
Income tax expense
(benefit) 1,092 (7,159) (451) (7,385)
-------- --------- --------- ---------
NET INCOME (LOSS) $1,339 $(12,522) $257 $(14,028)
======== ========= ========= =========
Net income (loss) per
common share:
Basic $0.12 $(1.16) $0.02 $(1.37)
======== ========= ========= =========
Diluted $0.12 $(1.16) $0.02 $(1.37)
======== ========= ========= =========
Weighted average common
shares outstanding:
Basic 10,814 10,780 10,804 10,213
======== ========= ========= =========
Diluted 11,254 10,780 11,241 10,213
======== ========= ========= =========
CLAYTON WILLIAMS ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
ASSETS
December 31, December 31,
2005 2004
------------ ------------
CURRENT ASSETS
Cash and cash equivalents $5,935 $16,359
Accounts receivable:
Oil and gas sales, net 28,317 25,573
Joint interest and other, net 6,972 4,653
Affiliates 254 553
Inventory 43,753 5,202
Deferred income taxes 439 625
Fair value of derivatives 191 2,333
Prepaids and other 2,581 1,401
------------ ------------
88,442 56,699
------------ ------------
PROPERTY AND EQUIPMENT
Oil and gas properties, successful efforts
method 1,037,862 909,095
Natural gas gathering and processing
systems 18,034 17,286
Other 12,396 11,839
------------ ------------
1,068,292 938,220
Less accumulated depreciation, depletion
and amortization (594,225) (539,860)
------------ ------------
Property and equipment, net 474,067 398,360
------------ ------------
OTHER ASSETS
Debt issue costs 8,557 3,575
Advances to drilling rig joint venture 10,329 -
Other 5,940 3,601
------------ ------------
24,826 7,176
------------ ------------
$587,335 $462,235
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable:
Trade $59,861 $51,014
Oil and gas sales 18,236 11,223
Affiliates 2,857 2,954
Current maturities of long-term debt 19 31
Fair value of derivatives 33,670 16,026
Accrued liabilities and other 9,611 3,017
------------ ------------
124,254 84,265
------------ ------------
NON-CURRENT LIABILITIES
Long-term debt 235,700 177,519
Deferred income taxes 37,042 36,897
Fair value of derivatives 49,705 28,958
Other 20,343 17,000
------------ ------------
342,790 260,374
------------ ------------
STOCKHOLDERS' EQUITY:
Preferred stock, par value $.10 per share - -
Common stock, par value $.10 per share 1,082 1,078
Additional paid-in capital 107,108 104,674
Retained earnings 12,101 11,844
------------ ------------
120,291 117,596
------------ ------------
$587,335 $462,235
============ ============
CLAYTON WILLIAMS ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended Year Ended
December 31, December 31,
------------------ -------------------
2005 2004 2005 2004
-------- --------- --------- ---------
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income (loss) $1,339 $(12,522) $257 $(14,028)
Adjustments to reconcile net
income (loss) to cash
provided by operating
activities:
Depreciation, depletion
and amortization 11,361 14,686 47,509 44,040
Impairment of proved
properties 18,266 - 18,266 -
Exploration costs 8,394 38,660 39,957 67,956
(Gain) loss on sales of
property and equipment,
net 68 10,215 (18,711) 10,217
Deferred income taxes 939 (6,720) (526) (7,645)
Non-cash employee
compensation 530 264 2,998 536
Change in fair value of
derivatives (15,661) (10,523) 40,406 7,104
Settlements on derivatives
with financing elements 10,303 5,244 27,731 9,890
Amortization of debt issue
costs - - 2,631 -
Accretion of abandonment
obligations 300 191 1,158 1,044
Changes in operating working
capital:
Accounts receivable (1,290) (5,662) (4,764) 581
Accounts payable (1,594) 8,345 1,707 8,881
Other 3,889 1,643 4,856 (1,596)
-------- --------- --------- ---------
Net cash provided by
operating activities 36,844 43,821 163,475 126,980
-------- --------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES
Additions to property and
equipment (46,199) (30,398) (172,987) (123,991)
Investment in SWR - - - (168,204)
Proceeds from sales of
property and equipment - 34,579 23,252 35,020
Inventory (25,730) - (36,519) -
Other (9,864) (85) (10,411) 269
-------- --------- --------- ---------
Net cash provided by
(used in) investing
activities (81,793) 4,096 (196,665) (256,906)
-------- --------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from long-term
debt 10,700 - 235,700 172,500
Repayments of long-term
debt (31) (44,572) (177,531) (60,530)
Proceeds from sale of
common stock 4 10 292 30,018
Settlements on derivatives
with financing elements (10,303) (5,244) (27,731) (9,890)
Payment of debt issue
costs - - (7,964) (4,156)
Other - 2,889 - 2,889
-------- --------- --------- ---------
Net cash provided by
(used in) financing
activities 370 (46,917) 22,766 130,831
-------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (44,579) 1,000 (10,424) 905
CASH AND CASH EQUIVALENTS
Beginning of period 50,514 15,359 16,359 15,454
-------- --------- --------- ---------
End of period $5,935 $16,359 $5,935 $16,359
======== ========= ========= =========
Clayton Williams Energy, Inc.
Summary Production and Price Data
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------------ -------------------
2005 2004 2005 2004
--------- -------- --------- ---------
Average Daily Production:
Natural Gas (Mcf):
Permian Basin 14,067 13,724 15,893 9,458
Louisiana 5,197 18,805 10,865 12,089
Austin Chalk (Trend) 2,393 2,806 2,435 3,155
Cotton Valley Reef Complex 12,731 19,337 15,155 23,131
Other 427 1,045 605 1,312
--------- -------- --------- ---------
Total 34,815 55,717 44,953 49,145
========= ======== ========= =========
Oil (Bbls):
Permian Basin 3,236 3,221 3,245 2,410
Louisiana 215 1,472 994 1,055
Austin Chalk (Trend) 1,785 2,096 1,892 2,215
Other 57 59 55 57
--------- -------- --------- ---------
Total 5,293 6,848 6,186 5,737
========= ======== ========= =========
Natural gas liquids (Bbls):
Permian Basin 304 260 255 213
Austin Chalk (Trend) 339 326 322 284
Other 20 153 97 185
--------- -------- --------- ---------
Total 663 739 674 682
========= ======== ========= =========
Total Production:
Natural Gas (MMcf) 3,203 5,126 16,408 17,938
Oil (MBbls) 487 630 2,258 2,094
Natural gas liquids (MBbls) 61 68 246 249
--------- -------- --------- ---------
Gas Equivalents (MMcfe) 6,491 9,314 31,432 31,996
Average Realized Prices(b):
Gas ($/Mcf): $10.02 $6.14 $7.49 $5.60
========= ======== ========= =========
Oil ($/Bbl): $56.99 $46.19 $53.37 $40.65
========= ======== ========= =========
Natural gas liquids ($/Bbl) $39.25 $33.13 $33.57 $27.90
========= ======== ========= =========
Losses on settled derivative
contracts(b):
($ in thousands, except per
unit)
Gas:
Net realized loss $(4,716) $(1,138) $(7,301) $(5,011)
Per unit produced ($/Mcf) $(1.47) $(0.22) $(0.44) $(0.30)
Oil:
Net realized loss $(7,058) $(6,819) $(21,976) $(13,135)
Per unit produced ($/Bbl) $(14.49) $(10.82) $(9.73) $(4.31)
Clayton Williams Energy, Inc.
Summary of Proved Reserves
December 31, 2005
Proved Proved
Developed Undeveloped Total
----------- ----------- -----------
(Dollars in thousands)
Summary of Oil and Gas Reserves:
Natural gas (MMcf) 91,366 35,392 126,758
Oil and NGL (MBbls) 21,502 6,333 27,835
Natural gas equivalents (MMcfe) 220,378 73,390 293,768
Standardized measure of oil and
gas reserves $753,712
Add: Present value of future
income tax, discounted at 10% 364,174
-----------
Present value of proved reserves,
pre-tax(c) $1,117,886
===========
Natural Gas
Natural Gas Oil and NGL Equivalents
(MMcf) (MBbls) (MMcfe)
----------- ----------- -----------
Total Proved Reserves by Area:
Permian Basin 79,466 18,504 190,490
Louisiana 20,883 1,667 30,885
Austin Chalk (Trend) 6,234 7,467 51,036
Cotton Valley Reef Complex 15,396 - 15,396
Other 4,779 197 5,961
----------- ----------- -----------
126,758 27,835 293,768
=========== =========== ===========
Natural Gas
Natural Gas Oil and NGL Equivalents
(MMcf) (MBbls) (MMcfe)
----------- ----------- -----------
Reconciliation of Proved Reserves:
Proved reserves, December 31,
2004 138,278 26,793 299,036
Purchases 667 586 4,183
Extensions and discoveries 12,476 868 17,684
Net revisions (5,333) 2,193 7,825
Sales (2,922) (101) (3,528)
Production (16,408) (2,504) (31,432)
----------- ----------- -----------
Proved reserves, December 31,
2005 126,758 27,835 293,768
=========== =========== ===========
CLAYTON WILLIAMS ENERGY, INC.
Notes to tables and supplemental information
(a) The Company recorded a loss of $1.4 million during the fourth
quarter of 2005 due to damage caused by Hurricane Katrina.
(b) Hedging gains (losses) are only included in the determination of
our average realized prices if the underlying derivative contracts
are designated as cash flow hedges under applicable accounting
standards. We did not designate any of our 2004 or 2005 derivative
contracts as cash flow hedges. This means that our derivatives for
2004 and 2005 have been marked-to-market through our statement of
operations as other income/expense instead of through accumulated
other comprehensive income on our balance sheet. This also means
that all realized gains/losses on these derivatives are reported
in other income/loss instead of as a component of oil and gas
sales.
(c) Management of the Company believes that pre-tax cash flow amounts
are also useful for evaluative purposes since future income taxes,
that are affected by a company's unique tax position and
strategies, can make after-tax amounts less comparable.
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