Clayton Williams Energy Provides Financial Guidance for Third 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)--Aug. 20, 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 Sept. 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 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. $51.8 million on exploration and development activities during 2002, of which $25.2 million was spent during the six months ended June June: see month. 30, 2002. Substantially all (approximately 95%) of the 2002 projected expenditures relate to exploratory prospects. The Company has made significant changes in its estimates of planned expenditures since the previous report. Current estimates have been revised downward 14% from $59.9 million to $51.8 million due primarily to delays in scheduled drilling activities 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. . A portion of the $14.2 million decrease
in planned expenditures for south Louisiana was offset by the addition
of $7.2 million related to an exploration program in the Black Warrior Black Warrior, river, United StatesBlack Warrior, navigable river, 178 mi (286 km) long, rising in N central Ala. and flowing generally SW to the Tombigbee River. Basin BASIN Boulder Area Sustainability Information Network (Boulder, Colorado) BASIN Brothers And Sisters In Need of Mississippi Mississippi, state, United States Mississippi (mĭs'əsĭp`ē), one of the Deep South states of the United States. It is bordered by Alabama (E), the Gulf of Mexico (S), Arkansas and Louisiana, with most of the border formed by . 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. In July July: see month. 2002, the Company acquired 100% working interest in the Romere Pass Unit in Plaquemines Parish, La. for total consideration of $22 million. Also, the Company sold its interest in certain producing wells in Wharton County, Texas Wharton County is a county located in the U.S. state of Texas. In 2000, its population was 41,188. Its county seat is Wharton6. Geography According to the U.S. Census Bureau, the county has a total area of 2,835 km² (1,094 mi²). , effective July 1, 2002, for $3.2 million, resulting in a gain of approximately $1.7 million to be realized during the third quarter of 2002. The accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. guidance information gives effect to these transactions. Summary of Estimates The following table sets forth certain estimates being used by the Company to model its anticipated results of operations for each quarter during the fiscal year ending Dec. 31, 2002. When a single value is provided, such value represents the mid-point of the approximate range Noun 1. approximate range - near to the scope or range of something; "his answer wasn't even in the right ballpark" ballpark ambit, range, scope, reach, compass, orbit - an area in which something acts or operates or has power or control: "the range of a of estimates. Otherwise, each range of values provided represents the expected low and high estimates for such financial or operating factor.
Year Ending Dec. 31, 2002
--------------------------------------------
Actual Actual
First Quarter Second Quarter
-------------------- ---------------------
(Dollars in thousands, except per unit data)
Average Daily Production:
Gas (Mcf) 33,456 37,099
Oil (Bbls) 4,711 4,330
Natural gas liquids
(Bbls) 556 692
Total gas equivalents
(Mcfe) 65,058 67,231
Differentials:
Gas ($/Mcf) $(.15) $(.21)
Oil ($/Bbl) $(1.45) $(1.50)
Natural gas liquids
($/Bbl) $(10.74) $(12.57)
Costs Variable by
Production ($/Mcfe):
Lease operating expenses
(including production
taxes) $.88 $.79
DD&A - Oil and gas
properties $1.15 $1.05
Other Revenues (Expenses):
Natural gas services:
Revenues $1,199 $1,418
Operating costs $(994) $(1,181)
Exploration costs:
Abandonments and
impairments $(6,229) $(2,514)
Seismic and other $(1,708) $(1,902)
DD&A - Other $(338) $(337)
General and
administrative $(1,875) $(1,948)
Interest expense $(961) $(891)
Gain of sale of Wharton
County Properties -- --
Income Tax Rate:
Current 0% 0%
Deferred 36% 33%
Weighted Average Shares
Outstanding (in thousands):
Basic 9,211 9,236
Diluted 9,335 9,375
Year Ending Dec. 31, 2002
--------------------------------------------
Estimated Estimated
Third Quarter Fourth Quarter
-------------------- ---------------------
(Dollars in thousands, except per unit data)
Average Daily Production:
Gas (Mcf) 50,000 to 54,000 57,000 to 61,000
Oil (Bbls) 4,250 to 4,450 3,950 to 4,150
Natural gas liquids
(Bbls) 375 to 475 350 to 450
Total gas equivalents
(Mcfe) 77,750 to 83,550 82,800 to 88,600
Differentials:
Gas ($/Mcf) $(.20) $(.20)
Oil ($/Bbl) $(1.50) $(1.50)
Natural gas liquids
($/Bbl) $(12.00) $(12.00)
Costs Variable by
Production ($/Mcfe):
Lease operating expenses
(including production
taxes) $.73 to $.90 $.71 to $.88
DD&A - Oil and gas
properties $1.06 to $1.23 $1.08 to $1.25
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 $(750) to $(1,250) $(750) to $(1,250)
DD&A - Other $(325) to $(375) $(325) to $(375)
General and
administrative $(2,150) to $(2,450) $(2,250) to $(2,450)
Interest expense $(1,100) to $(1,300) $(1,150) to $(1,350)
Gain of sale of Wharton
County Properties $1,700 --
Income Tax Rate:
Current 0% 0%
Deferred 35% 35%
Weighted Average Shares
Outstanding (in thousands):
Basic 9,200 to 9,300 9,200 to 9,300
Diluted 9,350 to 9,550 9,350 to 9,550
Capital Expenditures The Company presently plans to spend approximately $51.8 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
Six Months Ended Year Ended Percentage
June 30, 2002 Dec. 31, 2002 of Total
------------------- ---------------- --------------
(In thousands)
South Louisiana $ 11,100 $ 27,500 53%
Cotton Valley
Reef Complex 4,300 9,200 18%
Mississippi 5,400 7,200 14%
West Texas 2,000 2,500 5%
Austin Chalk
(Trend) 1,100 2,400 4%
Other 1,300 3,000 6%
------------------- ---------------- --------------
$ 25,200 $ 51,800 100%
=================== ================ ==============
In addition to the exploration and development expenditures in the preceding table, the Company purchased a 100% working interest in the Romere Pass Unit in south Louisiana for total consideration of $22 million. Actual expenditures during 2002 may be substantially higher or lower 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 Company's actual and estimated daily net production for each quarter during the year ending Dec. 31, 2002. Estimates for the third and fourth quarters 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
First Quarter Second Quarter
-------------------- ---------------------
Gas (Mcf):
Austin Chalk (Trend) 4,008 3,820
Cotton Valley Reef
Complex 21,941 23,029
Louisiana 2,006 4,545
New Mexico/West Texas 1,631 2,029
Other 3,870 3,676
-------------------- ---------------------
33,456 37,099
==================== =====================
Oil (Bbls):
Austin Chalk (Trend) 3,776 3,435
Louisiana 83 87
New Mexico/West Texas 822 756
Other 30 52
-------------------- ---------------------
4,711 4,330
==================== =====================
Natural Gas Liquids (Bbls):
Austin Chalk (Trend) 418 532
New Mexico/West Texas 138 151
Other -- 9
-------------------- ---------------------
556 692
==================== =====================
Daily Net Production for 2002
--------------------------------------------
Estimated Estimated
Third Quarter Fourth Quarter
-------------------- ---------------------
Gas (Mcf):
Austin Chalk (Trend) 3,163 2,935
Cotton Valley Reef
Complex 28,936 26,696
Louisiana 15,021 25,021
New Mexico/West Texas 1,543 1,435
Other 3,337 2,913
-------------------- ---------------------
52,000 59,000
==================== =====================
Oil (Bbls):
Austin Chalk (Trend) 3,079 2,843
Louisiana 489 511
New Mexico/West Texas 652 598
Other 130 98
-------------------- ---------------------
4,350 4,050
==================== =====================
Natural Gas Liquids (Bbls):
Austin Chalk (Trend) 327 302
New Mexico/West Texas 98 98
Other -- --
-------------------- ---------------------
425 400
==================== =====================
Since the last report, the Company has modified mod·i·fy v. mod·i·fied, mod·i·fy·ing, mod·i·fies v.tr. 1. To change in form or character; alter. 2. its third and fourth quarter production estimates to give effect to well performance and timing of completions. In south Louisiana, 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. #2 commenced production in June 2002. The State Lease 16850 #1 is now expected to commence production in September September: see month. 2002, and the Timalot #1 is expected to commence production in October October: see month. 2002. First production on the State Lease 16710 #1 and the Calvin Encalade #1 continues to be planned for January January: see month. 2003. In addition, the south Louisiana volumes set forth above include net daily production from the recently acquired Romere Pass Unit, as follows:
Third Quarter Fourth Quarter
-------------------- ---------------------
Gas (Mcf) 4,793 4,946
Oil (Bbls) 402 380
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 June 30, 2002, plus positions entered into subsequent to June 30, 2002.
Oil Swaps Gas Swaps
---------------------- ----------------------
Average Average
Bbls Price MMBtu Price
---------------------- ---------- ----------
Production Period:
3rd Quarter 2002 280,000 $ 25.68 3,880,000 $ 3.05
4th Quarter 2002 330,000 $ 25.63 3,950,000 $ 3.43
1st Quarter 2003 240,000 $ 25.33 3,355,000 $ 3.48
2nd Quarter 2003 240,000 $ 24.67 3,165,000 $ 3.33
3rd Quarter 2003 120,000 $ 24.20 1,810,000 $ 3.58
4th Quarter 2003 80,000 $ 24.20 1,720,000 $ 3.80
--------- ----------
1,290,000 $ 25.18 17,880,000 $ 3.39
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