Clayton Williams Energy Provides Financial Guidance for Second 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)--May 22, 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 ending June June: see month. 30, 2002 and to update guidance for the 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
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 of estimates. Otherwise, each range of values
provided represents the expected low and high estimates for such
financial or operating factor.
Year Ending Dec. 31, 2002
----------------------------------------------
Actual
First Quarter Second Quarter
------------- ------------------
Dollars in thousands, except per unit data
Average Daily Production:
Gas (Mcf) 33,878 34,000 to 38,000
Oil (Bbls) 4,744 3,900 to 4,100
Natural gas liquids (Bbls) 556 400 to 500
Total gas equivalents (Mcfe) 65,678 59,800 to 65,600
Differentials:
Gas ($/Mcf) $ (.15) $ (.10) to $ (.30)
Oil ($/Bbl) $ (1.45) $(1.25) to $ (1.75)
Natural gas liquids ($/Bbl) $ (10.74) $(9.00) to $(13.00)
Costs Variable by Production ($/Mcfe):
Lease operating expenses
(including production taxes) $ .88 $ .85 to $1.02
DD&A - Oil and gas properties $ 1.15 $1.15 to $1.32
Other Revenues (Expenses):
Natural gas services:
Revenues $ 1,199 $ 1,150 to $ 1,250
Operating costs $ (994) $(1,050) to $(1,150)
Exploration costs:
Abandonments and
impairments $ (6,229) $ (500) to $(1,500)
Seismic and other $ (1,708) $ (250) to $ (750)
DD&A - Other $ (338) $ (325) to $ (375)
General and administrative $ (1,875) $(2,100) to $(2,400)
Interest expense $ (961) $(1,000) to $(1,200)
Income Tax Rate:
Current 0% 0%
Deferred 36% 35%
Weighted Average Shares
Outstanding (in thousands):
Basic 9,211 9,200 to 9,400
Diluted 9,335 9,300 to 9,750
Third Quarter Fourth Quarter
------------------ ------------------
Dollars in thousands, except per unit data
Average Daily Production:
Gas (Mcf) 48,500 to 52,500 52,000 to 56,000
Oil (Bbls) 3,700 to 3,900 3,600 to 3,800
Natural gas liquids (Bbls) 375 to 475 350 to 450
Total gas equivalents (Mcfe 72,950 to 78,750 75,700 to 81,500
Differentials:
Gas ($/Mcf) $ (.10) to $ (.30) $ (.10) to $ (.30)
Oil ($/Bbl) $(1.25) to $ (1.75) $(1.25) to $ (1.75)
Natural gas liquids ($/Bbl) $(9.00) to $(13.00) $(9.00) to $(13.00)
Costs Variable by Production ($/Mcfe):
Lease operating expenses
(including production taxes) $ .71 to $ .88 $ .71 to $ .88
DD&A - Oil and gas properties $1.19 to $1.36 $1.21 to $1.38
Other Revenues (Expenses):
Natural gas services:
Revenues $ 1,150 to $ 1,250 $ 1,150 to $ 1,250
Operating costs $(1,050) to $(1,150) $(1,050) to $(1,150)
Exploration costs:
Abandonments and
impairments $ (500) to $(1,500) $ (500) to $(1,500)
Seismic and other $ (250) to $ (750) $ (250) to $ (750)
DD&A - Other $ (325) to $ (375) $ (325) to $ (375)
General and administrative $(1,900) to $(2,200) $(2,200) to $(2,500)
Interest expense $(1,100) to $(1,300) $(1,150) to $(1,350)
Income Tax Rate:
Current 0% 0%
Deferred 35% 35%
Weighted Average Shares
Outstanding (in thousands):
Basic 9,200 to 9,400 9,200 to 9,400
Diluted 9,300 to 9,750 9,300 to 9,750
Capital Expenditures
The Company presently plans to spend approximately $59.9 million
on exploration and development activities during 2002, substantially
all of which relate to exploratory prospects. The following summarizes
the Company's planned expenditures by area for 2002.
Actual Planned
Expenditures Expenditures
Three Months Ended Year Ended Percentage
March 31, 2002 Dec. 31, 2002 of Total
-------- ------- -------
(In thousands)
South Louisiana $ 6,800 $41,700 70%
Cotton Valley Reef Complex 3,300 10,800 18%
Austin Chalk (Trend) 200 2,400 4%
West Texas 700 2,100 3%
Other Areas 100 2,900 5%
------- ------- -------
$11,100 $59,900 100%
======= ======= =======
Actual expenditures during 2002 may be substantially higher than
these estimates as the Company's exploration and development plans
change throughout the year. The Company does not attempt to forecast
its success rate on exploratory drilling. Accordingly, these current
estimates do not include any costs that may be incurred to complete
successful exploratory wells and construct the required production
facilities for such wells. In addition, the Company is actively
searching for other opportunities to grow its oil and gas reserve
base, 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 adequate capital resources, may also have an
impact on the ultimate level of expenditures during 2002. To the
extent the Company completes successful exploratory wells, commits to
additional exploratory and developmental prospects, and acquires
proved oil and gas properties, the Company's capital expenditures for
2002 will increase.
Supplementary Information
Oil and Gas Production
The following table summarizes, by area, the approximate mid-point
of the estimated range of daily net production for each quarter during
the year ending Dec. 31, 2002.
Estimated Daily Net Production for 2002
---------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
------ ------ ------ ------
(Actual)
Gas (Mcf):
Austin Chalk (Trend) 4,008 3,527 3,239 3,054
Cotton Valley Reef Complex 21,941 24,901 25,119 22,891
Louisiana 2,006 2,055 16,446 22,783
New Mexico/West Texas 1,631 1,385 1,283 1,207
Other 4,292 4,132 4,413 4,065
------ ------ ------ ------
33,878 36,000 50,500 54,000
====== ====== ====== ======
Oil (Bbls):
Austin Chalk (Trend) 3,776 3,077 2,801 2,526
Louisiana 83 66 43 261
New Mexico/West Texas 822 681 630 598
Other 63 176 326 315
------ ------ ------ ------
4,744 4,000 3,800 3,700
====== ====== ====== ======
Natural Gas Liquids (Bbls):
Austin Chalk (Trend) 418 351 327 302
New Mexico/West Texas 138 99 98 98
------ ------ ------ ------
556 450 425 400
====== ====== ====== ======
Oil and gas production includes net production from all south
Louisiana wells which are either producing or are being completed as
of the date of this filing. Five of these wells are presently shut-in
while waiting on pipeline and production facilities to be constructed
and have been projected to commence production, as follows:
Projected
Well Production Date
-------------------------- --------------------------
Delta Duck No. 2 July 2002
Timolot No. 1 July 2002
State Lease 16850 No. 1 October 2002
State Lease 16710 No. 1 January 2003
Calvin Encalade No. 1 January 2003
Accounting for Derivatives
The following summarizes information concerning the Company's net
positions in open commodity derivatives as of March 31, 2002, plus
positions entered into subsequent to March 31, 2002.
Oil Swaps Gas Swaps
------------------- ---------------------
Average Average
Bbls Price MMBtu Price
------- --------- ---------- --------
Production Period:
2nd Quarter 2002 60,000 $ 25.15 4,030,000 $ 2.95
3rd Quarter 2002 90,000 $ 25.15 3,880,000 $ 3.05
4th Quarter 2002 90,000 $ 25.15 2,550,000 $ 3.43
1st Quarter 2003 90,000 $ 25.15 1,305,000 $ 3.32
2nd Quarter 2003 30,000 $ 25.15 1,195,000 $ 3.03
------- ----------
360,000 $ 25.15 12,960,000 $ 3.12
======= ==========
In May 2002, the Company terminated its position in the oil swaps
shown in the preceding table at a fixed price of $26.70 per barrel.
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"); and (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. Currently, the Company plans to spend approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $59.9 million on exploration and development activities during 2002, of which, $11.1 million was spent during the three months ended March 31, 2002. Substantially all (approximately 95%) of the 2002 projected expenditures relate to exploratory prospects, including $41.7 million in South Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. and $10.8 million in the Cotton Valley Reef Complex.
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.
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