Clayton Williams Energy, Inc. (the “Company”) (NASDAQ:CWEI) today reported its financial results for the first quarter of 2012.
Financial Results for the First Quarter of 2012
Net income attributable to Company stockholders for the first quarter of 2012 (“1Q12”) was $7.8 million, or $0.64 per share, as compared to a net loss of $7.9 million, or ($0.65) per share, for the first quarter of 2011 (“1Q11”). Cash flow from operations for 1Q12 was $52.3 million as compared to $33.3 million for 1Q11.
The key factors affecting the comparability of financial results for 1Q12 versus 1Q11 were:
- Oil and gas sales increased $12.1 million in 1Q12 versus 1Q11. Price variances accounted for $8 million of the increase and production variances accounted for $3.3 million. Average realized oil prices were $100.76 per barrel in 1Q12 versus $88.93 per barrel in 1Q11, and average realized gas prices were $3.86 per Mcf in 1Q12 versus $5.24 per Mcf in 1Q11. In addition, oil and gas sales in 1Q12 include $864,000 of amortized deferred revenue attributable to a volumetric production payment (“VPP”) granted effective March 1, 2012 in connection with the previously announced mergers of 24 Southwest Royalties, Inc. limited partnerships (“SWR Mergers”). Reported production and related average realized sales prices exclude volumes associated with the VPP.
- Oil and gas production per barrel of oil equivalent (“BOE”) increased 2% in 1Q12 as compared to 1Q11, with oil production increasing 3% and gas production declining 5%. Oil production increased to 929,000 barrels, or 10,209 barrels per day, as compared to 899,000 barrels, or 9,989 barrels per day, while gas production declined to 2 Bcf, or 22,121 Mcf per day as compared to 2.1 Bcf or 23,478 Mcf per day for 1Q11. Oil and natural gas liquids comprised 75% of the Company’s BOE production in 1Q12.
- Production costs increased 17% from $24.8 million in 1Q11 to $29.1 million in 1Q12 due to a combination of more producing wells and rising costs of field services.
- Loss on derivatives for 1Q12 was $6.9 million ($4.4 million realized loss on settled contracts and a $2.5 million non-cash mark-to-market loss) versus a loss in 1Q11 of $46.3 million ($1.7 million realized loss on settled contracts and a $44.6 million non-cash mark-to-market loss). See accompanying tables for additional information about the Company’s accounting for derivatives.
- Depreciation, depletion and amortization expense increased 32% to $31.2 million in 1Q12 versus $23.7 million in 1Q11 due primarily to a 25% increase in the average depletion rate per BOE of production. Most of the increase related to the Company’s emerging Wolfbone play in Reeves County, Texas.
- General & Administrative ("G&A") expenses were $15 million in 1Q12 versus $12.5 million in 1Q11. Non-cash employee compensation expense from incentive compensation plans accounted for $6.2 million in 1Q12 versus $7.4 million in 1Q11. Cash G&A expenses, excluding non-cash employee compensation expense, increased to $8.8 million in 1Q12 from $5.1 million in 1Q11 due primarily to transaction costs of $1.2 million related to the SWR Mergers and charitable contributions of $1 million.
- Interest expense increased to $8.8 million in 1Q12 from $6.4 million in 1Q11 due primarily to the increase in the total aggregate principal amount of the Senior Notes from $225 million to $350 million.
- The Company recorded a gain of $13.2 million in 1Q11 on the sale of two 2,000 horsepower rigs and related equipment for total consideration of $22 million, consisting of $11 million cash and a promissory note for $11 million. No significant gains or losses were reported in 1Q12.