Clayton Williams Energy Provides Financial Guidance for Second Quarter 2003.

Energy Editors/Business Editors

MIDLAND, Texas--(BUSINESS WIRE)--May 13, 2003

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 quarter ending June 30, 2003 and to update guidance for the year ending December 31, 2003.

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 accompany 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.

Certain statements contained herein constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act 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 by such forward-looking statements. Such factors include, among others, the following: the volatility 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, operating hazards 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 2003

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, 2003. 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 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, 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 do not attempt to predict:

(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";

(d) gains or losses from sales of property and equipment unless the sale has been consummated 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 and likely to occur.

As discussed in "Capital Expenditures," a significant portion of our 2003 planned 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, 2003. 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.

                     Year Ending December 31, 2003
                     -----------------------------
                                     Actual           Estimated
                                 First Quarter      Second  Quarter
                                 -------------      -----------------
              (Dollars in thousands,except per unit data)


Average Daily Production:
   Gas (Mcf)                           76,622     65,250 to 71,250
   Oil (Bbls)                           4,144      3,850 to 4,050
   Natural gas liquids (Bbls)             544        450 to 550
   Total gas equivalents (Mcfe)       104,750     91,050 to 98,850

Differentials:
   Gas ($/Mcf)                       $   (.36)    $(.20) to $(.40)
   Oil ($/Bbl)                       $  (1.24)    $(.75) to $(1.25)
   Natural gas liquids ($/Bbl)       $  (9.06)   $(8.00) to $(12.00)

Costs Variable by Production
 ($/Mcfe):
   Lease operating expenses
     (including production taxes)    $    .80       $.75 to $1.00
   DD&A - Oil and gas properties     $   1.08      $1.10 to $1.30

Other Revenues (Expenses):
   Natural gas services:
       Revenues                      $  2,048     $1,450 to $1,550
       Operating costs               $ (1,940)  $(1,350) to $(1,450)
   Exploration costs:
       Abandonments and
         impairments                 $ (4,462)    $(500) to $(1,500)
       Seismic and other             $ (2,352)  $(1,600) to $(2,400)
   DD&A - Other                      $   (347)    $(325) to $(375)
   General and administrative        $ (1,740)  $(2,100) to $(2,300)
   Interest expense                  $   (992)    $(900) to $(1,000)

Income Tax Rate:
   Current                                1%             1%
   Deferred                              34%            34%

Weighted Average Shares
  Outstanding (in thousands):
   Basic                                9,303      9,300 to 9,400
   Diluted                              9,433      9,400 to 9,500


                     Year Ending December 31, 2003
                     -----------------------------
                              Estimated               Estimated
                            Third Quarter           Fourth Quarter
                            -------------           -----------------
              (Dollars in thousands,except per unit data)


Average Daily Production:
   Gas (Mcf)                51,750 to 57,750      44,000 to 50,000
   Oil (Bbls)                3,625 to 3,825        3,400 to 3,600
   Natural gas liquids
    (Bbls)                     430 to 530            400 to 500
   Total gas equivalents
    (Mcfe)                  76,080 to 83,880      66,800 to 74,600

Differentials:
   Gas ($/Mcf)              $(.20) to $(.40)      $(.20) to $(.40)
   Oil ($/Bbl)              $(.75) to $(1.25)     $(.75) to $(1.25)
   Natural gas liquids
    ($/Bbl)                $(8.00) to $(12.00)   $(8.00) to $(12.00)

Costs Variable by
 Production ($/Mcfe):
   Lease operating
    expenses (including
     production taxes)        $.85 to $1.10         $.90 to $1.20
   DD&A - Oil and gas
    properties               $1.10 to $1.30        $1.10 to $1.30

Other Revenues (Expenses):
   Natural gas services:
       Revenues             $1,450 to $1,550      $1,450 to $1,550
       Operating costs    $(1,350) to $(1,450)  $(1,350) to $(1,450)
   Exploration costs:
       Abandonments and
         impairments        $(500) to $(1,500)    $(500) to $(1,500)
       Seismic and other  $(1,600) to $(2,400)  $(1,600) to $(2,400)
   DD&A - Other             $(325) to $(375)      $(325) to $(375)
   General and
    administrative        $(2,100) to $(2,300)  $(2,300) to $(2,500)
   Interest expense         $(700) to $(800)      $(600) to $(700)

Income Tax Rate:
   Current                         1%                    1%
   Deferred                       34%                   34%

Weighted Average Shares
  Outstanding
  (in thousands):
   Basic                     9,300 to 9,400        9,300 to 9,400
   Diluted                   9,400 to 9,500        9,400 to 9,500

Capital Expenditures

We presently plan to spend approximately $62.6 million on exploration and development activities during 2003, of which $15.9 million has been incurred through March 31, 2003. The following table sets forth, by area, certain information about our planned exploration and development activities for 2003.

                                              Total
                          Actual             Planned
                       Expenditures       Expenditures
                    Three Months Ended     Year Ended      Percentage
                      March 31, 2003    December 31, 2003   of Total
                    ------------------  -----------------  ----------
                                     (In thousands)

South Louisiana     $           8,000   $         36,900          59%
Cotton Valley Reef
 Complex                        6,100             13,200          21%
Mississippi                     1,100              4,600           7%
Other                             700              7,900          13%
                     -----------------   ----------------  ----------
                    $          15,900   $         62,600         100%
                     =================   ================  ==========

We have decided to accelerate the repayment of our bank debt by slowing the pace of our drilling activity. By reducing our level of bank debt, we will improve our debt-to-equity ratio and may preserve our capital resources for future exploration activities. Since our last financial guidance in February 2003, we have reduced our estimates of planned expenditures for 2003 by a net of $11.1 million, consisting primarily of (i) reductions of $11.7 million in south Louisiana and $5 million in Mississippi, and (ii) additions of $3.9 million in the Cotton Valley Reef Complex area, as follows:

    --  South Louisiana. Since south Louisiana comprises the majority
        of our discretionary exploration drilling, we have reduced
        drilling in this area by $11.7 million. Even with this
        reduction, south Louisiana will still account for 59% of our
        planned exploration and development activities for 2003.

    --  Mississippi. Under the terms of an exploration agreement we
        signed with an industry participant in 2002, we paid $5.3
        million to acquire 21,500 net acres in the Black Warrior Basin
        of Mississippi and obtained an option to pay an additional $5
        million in 2003 to retain our interest in the acreage. In
        March 2003, we amended the agreement to exchange a firm
        commitment to pay $3.8 million for the $5 million option
        payment. For financial reporting purposes, we reported the
        firm commitment of $3.8 million as a liability at December 31,
        2002 and reflected the cost as a capital expenditure in 2002.
        Accordingly, we have reduced our 2003 estimates of capital
        expenditures by $5 million.

    --  Cotton Valley Reef Complex. We have increased our planned
        expenditures by $3.9 million in this area to provide for
        estimated completion costs on the Muse-Patranella Gas Unit #1
        and costs to increase the capacity of the gas plant that
        processes most of our Cotton Valley Reef Complex gas
        production.

Approximately 80% 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. To offset the higher risk, we generally strive to achieve a higher reserve potential and rate of return on investments in exploratory prospects. You need to be aware that actual expenditures during 2003 may be substantially higher or lower than these estimates as our plans for exploration and development activities change during the year. 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 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 2003.

Recent Drilling Activities

The following table summarizes certain information concerning our drilling activities from January 1, 2003 through the date of this report. This information excludes immaterial drilling activities, such as wells drilled in non-core areas and small interests in non-operated properties.

     Spud                                            County or
     Date               Well Name                     Parish
----------------------- ---------------------------- ----------------
 Cotton Valley Reef
  Complex
   Jan 2003             Muse-Patranella Gas Unit #1     Robertson, TX

 South Louisiana
   March 2003           State Lease 17521 #1          Plaquemines, LA
   March 2003           State Lease 17569 #1          Plaquemines, LA
   April 2003           State Lease 3279 #1           Plaquemines, LA


     Spud                    Approximate
     Date                          Depth        Current Status
-------------------------    ---------------    ---------------------
 Cotton Valley Reef
   Complex
    Jan 2003                      17,000        Attempting completion

 South Louisiana
   March 2003                      2,000        Dry
   March 2003                     12,500        Dry
   April 2003                     13,400        In progress

   Supplementary Information

   Oil and Gas Production
   -----------------------

The following table summarizes, by area, our estimated daily net
production for each quarter during the year ending December 31, 2003.
These estimates represent the approximate mid-point of the estimated
production range.

                                  Daily Net Production for 2003
                                  ----------------------------
                                Actual   Estimated Estimated Estimated
                                First    Second    Third     Fourth
                                Quarter  Quarter   Quarter   Quarter
                                -------  -------   -------   -------


Gas (Mcf):
  Austin Chalk (Trend)            4,210    3,417     2,914      2,449
  Cotton Valley Reef Complex     51,400   45,970    35,595     29,911
  Louisiana                      17,488   14,969    13,166     11,828
  New Mexico/West Texas           1,700    1,963     1,425      1,315
  Other                           1,824    1,931     1,650      1,497
                               ---------  -------  --------  ---------
                                 76,622   68,250    54,750     47,000
                               =========  =======  ========  =========

Oil (Bbls):
  Austin Chalk (Trend)            2,817    2,663     2,494      2,359
  Louisiana                         621      573       508        463
  New Mexico/West Texas             654      649       659        614
  Other                              52       65        64         64
                               ---------  -------  --------  ---------
                                  4,144    3,950     3,725      3,500
                               =========  =======  ========  =========

Natural Gas Liquids (Bbls):
  Austin Chalk (Trend)              262      255       243        240
  New Mexico/West Texas             136      184       177        150
  Other                             146       61        60         60
                               ---------  -------  --------  ---------
                                    544      500       480        450
                               =========  =======  ========  =========

   Accounting for Derivatives
   --------------------------

The following summarizes information concerning our net positions in
open commodity derivatives as of March 31, 2003.

                             Oil Swaps           Gas Swaps
                         ------------------  ------------------
                                   Average              Average
                           Bbls    Price     MMBtu (a)  Price
                         --------- --------  ---------- -------
Production Period:
       2nd Quarter 2003   240,000  $ 24.67   1,010,000  $ 3.52
       3rd Quarter 2003   120,000  $ 24.20   1,810,000  $ 3.58
       4th Quarter 2003    80,000  $ 24.20   1,720,000  $ 3.80
                         ---------           ----------
       Year 2003 (b)      440,000  $ 24.46   4,540,000  $ 3.65
                         =========           ==========

(a) One MMBtu equals one Mcf at a Btu factor of 1,000.

(b) Based on current estimates, approximately 45% and 30% of our oil
    and gas production, respectively, for the remainder of 2003 is
    subject to commodity derivatives.

In addition, we have terminated our positions in certain other derivatives contracts at a net loss of $2.3 million, net of tax, that will be realized into earnings in the second quarter of 2003, as amounts are reclassified out of accumulated other comprehensive income. In April 2003, we also terminated fixed-price gas contracts that will result in a $2.4 million loss to be recorded as other expense in the second quarter of 2003.