Clayton Williams Energy Announces 2005 First Quarter Results; Rising Oil and Gas Prices Result in $31.5 Million Non-Cash Charge.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 a net loss for the first quarter of 2005 of $9 million, or $.83 per share, as compared to net income of $4.8 million, or $.50 per share, for the first 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 quarter was $29.9 million, as compared to $21.6 million during the same period in 2004. For the first quarter of 2005, the Company reported a $35.1 million expense for the change in fair value of derivatives derivatives In 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. , $31.5 million of which was 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. to record 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 at their fair value on March 31, 2005. Rising oil and gas prices had a material negative impact on the fair value of the Company's commodity derivatives, most of which were assumed in connection with the acquisition of Southwest Southwest or south west is the ordinal direction halfway between south and west, the opposite of northeast. Southwest or south west may also refer to:
Royalties (sometimes, running royalties) are usage-based payments made by one party (the "licensee") to another (the "licensor") for ongoing use of an asset, most typically an intellectual property (IP) right. , Inc., in May 2004. Exploration costs for the first quarter of 2005 were $12.1 million, as compared to $6.6 million for the same period in 2004. As previously announced, exploration costs for the current quarter included a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charge of $7.2 million related 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 Catherine Destefano #1 well in Robertson County, Texas Robertson County is a county located in the U.S. state of Texas. It forms part of the College Station-Bryan Metropolitan Statistical Area. In 2000, its population was 16,000. Its seat is Franklin6. The county is named for Sterling C. . Oil and gas sales for the first quarter of 2005 increased $25.2 million (69%) to $61.5 million from $36.3 million in the 2004 quarter. Higher oil and gas prices resulted in $13.9 million of the increase, and higher oil and gas production accounted for the remaining $11.3 million. Average realized oil prices in the first quarter of 2005 increased 41% from $34.04 to $47.83 per barrel barrel: see English units of measurement. while gas prices increased 20% from $5.17 to $6.22 per Mcf. Oil production for the first quarter of 2005 increased 65% to 619,000 barrels, or 6,878 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 375,000 barrels, or 4,121 barrels per day. Gas production increased 14% to 4.8 Bcf, or 52,900 Mcf per day, from 4.2 Bcf, or 45,901 Mcf per day in 2004. Incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. production from the Southwest Royalties acquisition and from recently completed wells in Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. accounted for most of the increase
in production.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, May 4th at 1:30 pm CT (2:30 pm ET). The dial-in conference number is: 800-901-5213, passcode 12745692. The replay will be available for one week at 888-286-8010, passcode 87875609. 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 or 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
March 31,
--------------------
2005 2004
---------- ---------
REVENUES
Oil and gas sales $61,496 $36,332
Natural gas services 2,581 2,527
Gain on sales of property and equipment 1,612 5
---------- ---------
Total revenues 65,689 38,864
---------- ---------
COSTS AND EXPENSES
Production 12,571 6,955
Exploration:
Abandonments and impairments 11,270 4,632
Seismic and other 788 1,925
Natural gas services 2,417 2,352
Depreciation, depletion and amortization 12,292 8,524
Accretion of abandonment obligations 279 175
General and administrative 2,518 3,301
Loss on sales of property and equipment 32 -
---------- ---------
Total costs and expenses 42,167 27,864
---------- ---------
Operating income 23,522 11,000
---------- ---------
OTHER INCOME (EXPENSE)
Interest expense (2,366) (460)
Change in fair value of derivatives (35,089) (3,093)
Other 446 (124)
---------- ---------
Total other income (expense) (37,009) (3,677)
---------- ---------
Income (loss) before income taxes (13,487) 7,323
Income tax expense (benefit) (4,495) 2,510
---------- ---------
NET INCOME (LOSS) $(8,992) $4,813
========== =========
Net income (loss) per common share:
Basic:
Income (loss) before extraordinary items $(0.83) $0.51
========== =========
Net income (loss) $(0.83) $0.51
========== =========
Diluted:
Income (loss) before extraordinary items $(0.83) $0.50
========== =========
Net income (loss) $(0.83) $0.50
========== =========
Weighted average common shares outstanding:
Basic 10,792 9,371
========== =========
Diluted 10,792 9,720
========== =========
CLAYTON WILLIAMS ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
ASSETS
March 31, December 31,
2005 2004
----------- ------------
CURRENT ASSETS
Cash and cash equivalents $10,902 $16,359
Accounts receivable:
Oil and gas sales, net 27,651 25,573
Joint interest and other, net 6,754 4,653
Affiliates 841 553
Inventory 5,569 5,202
Deferred income taxes 648 625
Fair value of derivatives 126 2,333
Prepaids and other 1,670 1,401
----------- ------------
54,161 56,699
----------- ------------
PROPERTY AND EQUIPMENT
Oil and gas properties, successful efforts
method 925,063 909,095
Natural gas gathering and processing systems 17,311 17,286
Other 11,859 11,839
----------- ------------
954,233 938,220
Less accumulated depreciation, depletion and
amortization (542,851) (539,860)
----------- ------------
Property and equipment, net 411,382 398,360
----------- ------------
OTHER ASSETS 7,172 7,176
----------- ------------
$472,715 $462,235
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable:
Trade $42,361 $51,014
Oil and gas sales 8,666 11,223
Affiliates 2,206 2,954
Current maturities of long-term debt 30 31
Fair value of derivatives 28,119 16,026
Accrued liabilities and other 3,045 3,017
----------- ------------
84,427 84,265
----------- ------------
NON-CURRENT LIABILITIES
Long-term debt 183,712 177,519
Deferred income taxes 32,270 36,897
Fair value of derivatives 46,136 28,958
Other 17,351 17,000
----------- ------------
279,469 260,374
----------- ------------
STOCKHOLDERS' EQUITY:
Preferred stock, par value $.10 per share - -
Common stock, par value $.10 per share 1,079 1,078
Additional paid-in capital 104,888 104,674
Retained earnings 2,852 11,844
----------- ------------
108,819 117,596
----------- ------------
$472,715 $462,235
=========== ============
CLAYTON WILLIAMS ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended
March 31,
-------------------
2005 2004
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(8,992) $4,813
Adjustments to reconcile net income (loss) to
cash provided by operating activities:
Depreciation, depletion and amortization 12,292 8,524
Exploration costs 11,270 4,632
(Gain) loss on sales of property and
equipment (1,580) (5)
Deferred income taxes (4,651) 2,510
Non-cash employee compensation 333 752
Change in fair value of derivatives 31,452 2,945
Settlements on derivatives with financing
elements 4,205 -
Accretion of abandonment obligations 279 175
Changes in operating working capital:
Accounts receivable (4,467) 1,613
Accounts payable (10,166) (3,544)
Other (29) (771)
--------- ---------
Net cash provided by operating activities 29,946 21,644
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (38,814) (28,604)
Proceeds from sales of property and equipment 1,694 5
Other (278) 137
--------- ---------
Net cash used in investing activities (37,398) (28,462)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt 6,200 -
Repayments of long-term debt - (641)
Settlements on derivatives with financing
elements (4,205) -
--------- ---------
Net cash provided by (used in) financing
activities 1,995 (641)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (5,457) (7,459)
CASH AND CASH EQUIVALENTS
Beginning of period 16,359 15,454
--------- ---------
End of period $10,902 $7,995
========= =========
Clayton Williams Energy, Inc.
Summary Production and Price Data
(Unaudited)
Three Months Ended
March 31,
---------------------
2005 2004
----------- ---------
Average Daily Production:
Natural Gas (Mcf):
Austin Chalk (Trend) 2,558 3,669
Cotton Valley Reef Complex 18,014 28,119
Louisiana 15,272 10,739
Permian Basin 16,156 1,866
Other 900 1,508
----------- ---------
Total 52,900 45,901
=========== =========
Oil (Bbls):
Austin Chalk (Trend) 2,033 2,393
Louisiana 1,474 738
Permian Basin 3,332 940
Other 39 50
----------- ---------
Total 6,878 4,121
=========== =========
Natural gas liquids (Bbls):
Austin Chalk (Trend) 337 371
Permian Basin 233 186
Other 163 201
----------- ---------
Total 733 758
=========== =========
Total Production:
Natural Gas (MMcf) 4,761 4,177
Oil (MBbls) 619 375
Natural gas liquids (MBbls) 66 69
----------- ---------
Gas Equivalents (MMcfe) 8,871 6,841
Average Realized Prices (a):
Gas ($/Mcf): $6.22 $5.17
=========== =========
Oil ($/Bbl): $47.83 $34.04
=========== =========
Natural gas liquids ($/Bbl) $27.50 $24.57
=========== =========
CLAYTON WILLIAMS ENERGY, INC.
Notes to tables and supplemental information
(a) The Company did not designate any of its 2004 or 2005 derivatives
as cash flow hedges under Statement of Financial Accounting
Standards No. 133, as amended. All changes in the fair value of
these contracts prior to maturity, plus any realized gains or
losses at maturity, are recorded as other income (expense) in the
Company's statements of operations and are excluded from the
computation of average realized prices from oil and gas sales.
Actual losses on settled contracts totaled $3.5 million in the
first quarter of 2005 and $149,000 in the first quarter of 2004.
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