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Clayton Williams Energy Announces Third Quarter 2013 Financial Results And Operations Update

Stocks in this article: CWEI

Clayton Williams Energy, Inc. (the “Company”) (NASDAQ:CWEI) today reported its financial results for the third quarter 2013.

Financial Results for the Third Quarter of 2013

Net income attributable to Company stockholders for the third quarter of 2013 (“3Q13”) was $11 million, or $0.90 per share, as compared to a net loss of $7.2 million, or $0.59 per share, for the third quarter of 2012 (“3Q12”). Cash flow from operations for 3Q13 was $71 million as compared to $60.6 million for 3Q12.

For the nine-months ended September 30, 2013, net loss attributable to Company stockholders was $31.3 million, or $2.57 per share, as compared to net income of $33.4 million, or $2.75 per share, for the same period in 2012. Cash flow from operations for the nine-month period in 2013 was $153.9 million as compared to $157.9 million during the same period in 2012. The 2013 period included non-cash, pre-tax charges totaling $89.8 million to write down the carrying value of certain proved properties to their estimated fair value. The Company's adjusted net income, excluding the non-recurring charge, was $27.1 million.

The key factors affecting the comparability of financial results for 3Q13 versus 3Q12 were:

  • In April 2013, the Company sold 95% of its oil and gas reserves, leasehold interests and facilities located in Andrews County, Texas for $215.2 million, subject to customary closing adjustments, with $26.5 million being placed in escrow pending resolution of certain title requirements which the Company believes will be cured. As a result, reported oil and gas production, revenues and operating costs for the quarter and nine months ended September 30, 2013 are not comparable to reported amounts for periods in 2012.
  • Oil and gas sales, excluding amortized deferred revenues, increased $2.7 million in 3Q13 versus 3Q12. Price variances accounted for a $13.3 million increase, and production variances accounted for a $10.6 million decrease. Average realized oil prices were $103.75 per barrel in 3Q13 versus $89.48 per barrel in 3Q12, and average realized gas prices were $3.49 per Mcf in 3Q13 versus $3.29 per Mcf in 3Q12. Oil and gas sales in 3Q13 also include $2.2 million of amortized deferred revenue versus $2.5 million in 3Q12 attributable to a volumetric production payment ("VPP"). Reported production and related average realized sales prices exclude volumes associated with the VPP.
  • Oil, gas and natural gas liquids ("NGL") production per barrel of oil equivalent ("BOE") declined 12% in 3Q13 as compared to 3Q12, with oil production decreasing 10% to 9,674 barrels per day, gas production decreasing 24% to 16,598 Mcf per day, and NGL production increasing 9% to 1,359 barrels per day. Oil and NGL production accounted for approximately 80% of the Company's total BOE production in 3Q13 versus 77% in 3Q12. See accompanying tables for additional information about the Company's oil and gas production.
  • After giving effect to the Andrews sale discussed above, oil and gas production per BOE increased 4% in 3Q13 as compared to 3Q12, with oil production increasing 587 barrels per day, gas production decreasing 3,511 Mcf per day and NGL production increasing 500 barrels per day.
  • Production costs decreased 21% to $25.7 million in 3Q13 from $32.6 million in 3Q12. After giving effect to the Andrews sale, production costs declined $1.8 million, or 6%, due primarily to lower salt water disposal costs and other cost savings resulting from infrastructure improvements in the Reeves County Wolfbone area.
  • Loss on derivatives for 3Q13 was $8.3 million ($7.8 million non-cash mark-to-market loss and $455,000 realized loss on settled contracts) versus a loss in 3Q12 of $21.9 million ($20.5 million non-cash mark-to-market loss and $1.4 million realized loss on settled contracts). See accompanying tables for additional information about the Company's accounting for derivatives.
  • General and administrative ("G&A") expenses were $10 million in 3Q13 versus $5.8 million in 3Q12. G&A expenses in 3Q12 related to accrued compensation expense from the Company's APO reward plans included a non-cash reversal of previously accrued compensation expense totaling $2.2 million as compared to a charge of $1.2 million in 3Q13.

Capitalization and Liquidity

In September 2013, we issued an additional $250 million of aggregate principal amount of 7.75% Senior Notes due 2019. The notes were sold at 100% of par to yield 7.75% to maturity. The offering closed on October 1, 2013. The new notes and the 7.75% Senior Notes due 2019 originally issued on March 16, 2011 and April 29, 2011 will be treated as a single class of debt securities under the same indenture. The net proceeds from the offering was used to repay borrowings under our revolving credit facility.

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