Clayton Williams Energy Provides Financial Guidance for Fourth Quarter 2002.Business Editors & Energy Writers MIDLAND Midland, town, Canada Midland, town (1991 pop. 13,865), S Ont., Canada, on Georgian Bay, NW of Toronto. Midland is a port and has grain elevators and plants that manufacture textiles, cameras, optical goods, and other products. , Texas--(BUSINESS WIRE)--Nov. 21, 2002 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:CWEI CWEI Combat Warfare Electronic Intelligence ) today filed a Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. with the Securities and Exchange Commission to provide financial guidance disclosures for the quarter and year ending Dec. 31, 2002. This guidance was furnished fur·nish tr.v. fur·nished, fur·nish·ing, fur·nish·es 1. To equip with what is needed, especially to provide furniture for. 2. 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 accompany To go along with; to go with or to attend as a companion or associate. A motor vehicle statute may require beginning drivers or drivers under a certain age to be accompanied by a licensed adult driver whenever operating an automobile. this release or may be obtained electronically by accessing the Company's Web site at www.claytonwilliams.com. Clayton Williams Energy Inc. is an independent energy company located in 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. . Certain statements contained herein constitute "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 the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 (the "Reform Act"). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward-looking statements. Such factors include, among others, the following: the 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 Company's drilling results, the Company's ability to replace short-lived reserves, the availability of capital resources, the reliance upon estimates of 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. , operating hazards
Hazards is an independent, union-friendly magazine based in Sheffield, England, which has won major international awards. and uninsured risks, competition, government regulation, the ability of the Company to implement its business strategy and other factors referenced in the Company's public filings with the Securities and Exchange Commission. Financial Guidance Disclosures Follow CLAYTON WILLIAMS ENERGY INC. FINANCIAL GUIDANCE DISCLOSURES FOR 2002 Overview Clayton Williams Energy Inc. and its subsidiaries (the "Company") has prepared this document to provide public disclosure of certain financial and operating estimates in order to permit the preparation of models to forecast the Company's operating results for each quarter during the Company's fiscal year ending Dec. 31, 2002. These estimates are based on information available to the Company as of the date of this filing, and actual results may vary materially from these estimates. The Company does 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 the Company believes are reasonable. Until the Company's results of operations for this period have been finally 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 a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , 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 the Company expects, projects, believes or anticipates 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 the actual results, performance or achievements of the Company 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 the Company's 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 the Company with the Securities and Exchange Commission. As a matter of policy, the Company does not attempt to predict: (a) production which may be obtained through future exploratory drilling; (b) dry hole and 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). costs that may result from future exploratory drilling; (c) the effects of Statement of Financial Accounting Standards No 133 "Accounting for Derivative Instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. and 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. Activities" ("SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 133"); (d) gains or losses from sales of property and equipment unless the sale has been consummated con·sum·mate tr.v. con·sum·mat·ed, con·sum·mat·ing, con·sum·mates 1. a. To bring to completion or fruition; conclude: consummate a business transaction. b. prior to the filing of financial guidance; and (e) capital expenditures related to completion activities on exploratory wells or acquisitions of proved properties until the expenditures are estimable es·ti·ma·ble adj. 1. Possible to estimate: estimable assets; an estimable distance. 2. Deserving of esteem; admirable: an estimable young professor. and likely to occur. As discussed in "Capital Expenditures," substantially all of the Company's 2002 planned exploration and development expenditures relate to exploratory prospects. Exploratory prospects involve a higher degree of risk than development prospects, but may also offer a higher reserve potential and rate of return on investment. Actual levels of oil and gas production and exploration costs, when ultimately reported, may be materially affected by future exploratory drilling results. Summary of Estimates The following table sets forth certain estimates being used by the Company to model its anticipated results of operations for each quarter during the fiscal year ending Dec. 31, 2002. When a single value is provided, such value represents the mid-point of the approximate range Noun 1. approximate range - near to the scope or range of something; "his answer wasn't even in the right ballpark" ballpark ambit, range, scope, reach, compass, orbit - an area in which something acts or operates or has power or control: "the range of a of estimates. Otherwise, each range of values provided represents the expected low and high estimates for such financial or operating factor.
Year Ending December 31, 2002
-----------------------------
Actual Actual Actual Estimated
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
(Dollars in thousands, except per unit data)
Average Daily
Production:
Gas (Mcf) 33,456 37,099 48,217 50,000 to 54,000
Oil (Bbls) 4,711 4,330 4,217 3,900 to 4,100
Natural gas liquids 550 to 650
(Bbls) 556 692 641
Total gas 76,700 to 82,500
equivalents (Mcfe) 65,058 67,231 77,365
Differentials:
Gas ($/Mcf) $ (.15) $ (.21) $ (.23) $(.20) to $(.40)
Oil ($/Bbl) $ (1.45) $ (1.50) $ (.78) $(.75) to $(1.50)
Natural gas liquids $(13.00) to $(17.00)
($/Bbl) $(10.74) $(12.57) $(14.85)
Costs Variable by
Production ($/Mcfe):
Lease operating
expenses (including
production taxes)$ .88 $ .79 $ .72 $.77 to $.94
DD&A -- Oil and gas
properties $ 1.15 $ 1.05 $ 1.03 $1.08 to $1.25
Other Revenues
(Expenses):
Natural gas
services:
Revenues $ 1,199 $ 1,418 $ 1,151 $1,150 to $1,250
Operating costs $ (994) $(1,181) $(1,115) $(1,050) to $(1,150)
Exploration costs:
Abandonments and
impairments $(6,229) $(2,514) $(6,565) $(500) to $(1,500)
Seismic and $(1,600) to $(2,100)
other $(1,708) $(1,902) $(2,242)
DD&A -- Other $ (338) $ (337) $ (344) $(325) to $(375)
General and $(2,300) to $(2,500)
administrative $(1,875) $(1,948) $(2,076)
Interest expense $ (961) $ (891) $(1,082) $(1,000) to $(1,200)
Income Tax Rate:
Current 0% 0% 0% 0%
Deferred 36% 33% 35% 35%
Weighted Average Shares
Outstanding (in thousands):
Basic 9,211 9,236 9,255 9,250 to 9,350
Diluted 9,211 9,375 9,255 9,350 to 9,650
Capital Expenditures The Company presently plans to spend approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $58.6 million on exploration and development activities during 2002, of which $37.5 million has been incurred through Sept. 30, 2002. The following table sets forth, by area, certain information about our actual and planned exploration and development activities for 2002.
Actual Planned
Expenditures Expenditures
Nine Months Ended Year Ended Percentage
September 30, 2002 December 31, 2002 of Total
------------------ ----------------- ----------
(In thousands)
South Louisiana $ 17,900 $ 26,900 46%
Cotton Valley Reef
Complex 5,100 13,500 23%
Mississippi 7,300 8,100 14%
Austin Chalk (Trend) 1,900 3,000 5%
West Texas 2,000 2,600 4%
Other 3,300 4,500 8%
------------------ ----------------- ----------
$ 37,500 $ 58,600 100%
================== ================= ==========
The Company has made changes in its estimates of planned exploration and development expenditures since the previous guidance report. Current estimates were revised upward 13% from $51.8 million to $58.6 million due primarily to the addition of a Cotton Valley Reef Complex well, the Scamardo Gas Unit Re-entry RE-ENTRY, estates. The resuming or retaking possession of land which the party lately had. 2. Ground rent deeds and leases frequently contain a clause authorizing the landlord to reenter on the non-payment of rent, or the breach of some covenant, when the . Approximately 95% of the actual and planned expenditures shown in the preceding table relate to exploratory prospects. Exploratory prospects involve a higher degree of risk than developmental prospects, but may also offer a higher reserve potential and rate of return on investment. In addition to the exploration and development expenditures set forth above, the Company incurred capital expenditures totaling approximately $21.5 million in July July: see month. 2002 to acquire proved properties in the Romere Pass Unit in Plaquemines Parish, La. The purchase price consisted of $17 million cash and the assumption of non-current liabilities totaling $4.5 million. The Company has no planned expenditures for proved properties for the fourth quarter of 2002. Actual capital expenditures during the fourth quarter of 2002 may differ significantly from these estimates as our plans for exploration and development activities change. We do not attempt to forecast our success rate on exploratory drilling. Accordingly, these current estimates do not include any costs we may incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. to complete our successful exploratory wells and construct the required production facilities for these wells. Also, we are actively searching for other opportunities to increase our oil and gas reserves, including the evaluation of new prospects for exploratory and developmental drilling activities and potential acquisitions of proved oil and gas reserves. Other factors, such as prevailing product prices and the availability of capital resources, could also increase or decrease the ultimate level of expenditures during 2002. Supplementary Information Oil and Gas Production The following table summarizes, by area, the Company's actual and estimated daily net production for each quarter during the year ending Dec. 31, 2002. Estimates for the fourth quarter of 2002 represent the approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. mid-point of the estimated production range.
Daily Net Production for 2002
-----------------------------
Actual Actual Actual Estimated
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
Gas (Mcf):
Austin Chalk (Trend) 4,008 3,820 2,923 2,500
Cotton Valley Reef Complex 21,941 23,029 29,831 30,588
Louisiana 2,006 4,545 9,948 16,727
New Mexico/West Texas 1,631 2,029 1,727 1,402
Other 3,870 3,676 3,788 2,783
------- ------- ------- -------
33,456 37,099 48,217 54,000
======= ======= ======= =======
Oil (Bbls):
Austin Chalk (Trend) 3,776 3,435 3,195 2,919
Louisiana 83 87 283 435
New Mexico/West Texas 822 756 685 565
Other 30 52 54 81
------- ------- ------- -------
4,711 4,330 4,217 4,000
======= ======= ======= =======
Natural Gas Liquids (Bbls):
Austin Chalk (Trend) 418 532 500 480
New Mexico/West Texas 138 151 130 120
Other -- 9 11 --
------- ------- ------- -------
556 692 641 600
======= ======= ======= =======
Since the last guidance report, we have revised the fourth quarter gas production estimates, as follows: Cotton Valley Reef Complex. We increased the projected gas volumes by 3,900 Mcf per day based on higher expected production rates on the Lee Fazzino No. 2. This well continues to perform above expectations. Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. . We decreased the projected gas volumes by 8,300 Mcf per
day due primarily to the net effect of (i) production curtailments due
to mechanical problems on the production facilities for the Timolat No.
1, the State Lease 16849 No. 1 and the Romere Pass Unit, (ii) production
curtailments in October October: see month. related to a hurricane hurricane, tropical cyclone in which winds attain speeds greater than 74 mi (119 km) per hr. Wind speeds reach over 190 mi (289 km) per hr in some hurricanes. in the Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of MexicoGolfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east , (iii) the abandonment of one zone in the Delta Duck duck, common name for wild and domestic waterfowl of the family Anatidae, which also includes geese and swans. It is hunted and bred for its meat, eggs, and feathers. Strictly speaking, duck refers to the female and drake to the male. No. 2 which watered out sooner than expected, and (iv) production increases due to the early completion of production facilities on the Calvin Encalade No. 1 and the State Lease 16710 No. 1. In addition, the Louisiana volumes set forth above include net daily production from the recently acquired Romere Pass Unit, as follows:
Actual Estimated
Third Fourth
Quarter Quarter
------- -------
Gas (Mcf) 2,370 2,870
Oil (Bbls) 217 315
Accounting for 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. The following summarizes information concerning the Company's net positions in open commodity derivatives as of Sept. 30, 2002.
Oil Swaps Gas Swaps
--------- ---------
Average Average
Bbls Price MMBtu Price
---- ----- ----- -----
Production Period:
4th Quarter 2002 165,000 $26.12 3,950,000 $3.43
1st Quarter 2003 160,000 $25.27 2,275,000 $3.55
2nd Quarter 2003 240,000 $24.67 1,545,000 $3.51
3rd Quarter 2003 120,000 $24.20 1,810,000 $3.58
4th Quarter 2003 80,000 $24.20 1,720,000 $3.80
------- ----------
765,000 $24.99 11,300,000 $3.55
======= ==========
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