Clayton Williams Energy, Inc. (the “Company”) (NASDAQ:CWEI) today reported its financial results for the third quarter of 2012.
Financial Results for the Third Quarter of 2012
Net loss attributable to Company stockholders for the third quarter of 2012 (“3Q12”) was $7.2 million, or $0.59 per share, as compared to net income of $74.5 million, or $6.13 per share, for the third quarter of 2011 (“3Q11”). Cash flow from operations for 3Q12 was $60.6 million as compared to $55.6 million for 3Q11.
For the nine-months ended September 30, 2012, net income attributable to Company stockholders was $33.4 million, or $2.75 per share, as compared to net income of $109.3 million, or $8.99 per share, for the same period in 2011. Cash flow from operations for the nine-month period in 2012 was $157.9 million as compared to $175.3 million during the same period in 2011.The key factors affecting the comparability of financial results for 3Q12 versus 3Q11 were:
- Oil and gas sales increased $1.9 million in 3Q12 versus 3Q11. Production variances accounted for a $6.3 million increase, and price variances accounted for a $6.9 million decrease. Average realized oil prices were $89.48 per barrel in 3Q12 versus $89.36 per barrel in 3Q11, and average realized gas prices were $3.29 per Mcf in 3Q12 versus $5.46 per Mcf in 3Q11. In addition, oil and gas sales in 3Q12 includes $2.5 million of amortized deferred revenue attributable to a volumetric production payment (“VPP”) granted effective March 1, 2012 in connection with the mergers of 24 Southwest Royalties, Inc. limited partnerships. 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 5% in 3Q12 as compared to 3Q11, with oil production increasing 5% and gas production declining 8%. Oil production increased to 993,000 barrels, or 10,793 barrels per day, as compared to 945,000 barrels, or 10,272 barrels per day, while gas production declined to 2 Bcf, or 21,848 Mcf per day as compared to 2.2 Bcf or 23,859 Mcf per day for 3Q11. Oil and natural gas liquids comprised 77% of the Company's BOE production in 3Q12.
- Production costs increased 34% from $24.3 million in 3Q11 to $32.6 million in 3Q12 due to a combination of more producing wells and rising costs of field services including salt water disposal costs.
- Loss on derivatives for 3Q12 was $21.9 million ($20.5 million non-cash mark-to-market loss and $1.4 million realized loss on settled contracts) versus a gain in 3Q11 of $92.3 million ($91.1 million non-cash mark-to-market gain and $1.2 million realized gain on settled contracts). See accompanying tables for additional information about the Company's accounting for derivatives.
- Depreciation, depletion and amortization expense increased 45% to $37.7 million in 3Q12 versus $25.9 million in 3Q11 due primarily to a 33% increase in the average depletion rate per BOE of production. Most of the increase related to the Company's Wolfbone play in Reeves County, Texas.
- General and administrative (“G&A”) expenses were $5.8 million in 3Q12 versus $7.1 million in 3Q11. Non-cash employee compensation expense from incentive compensation plans accounted for a $2.2 million credit to expense in 3Q12 versus $1.1 million expense in 3Q11. Cash G&A expenses, excluding non-cash employee compensation expense, increased to $8 million in 3Q12 from $6 million in 3Q11 due primarily to higher personnel costs and a $1 million contribution to a 527 organization.
- No provision for non-cash impairments of property and equipment was made in 3Q12 as compared to $5 million in 3Q11.