MIDLAND, Texas--(BUSINESS WIRE)--
Clayton Williams Energy, Inc. (CWEI) today filed a
Form 8-K with the Securities and Exchange Commission to provide
financial guidance disclosures for the year ending December 31, 2015.
A copy of these disclosures accompanies this release or may be obtained
electronically by accessing the Company’s website at www.claytonwilliams.com.
Clayton Williams Energy, Inc. is an independent energy company located
in Midland, Texas.
This release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. All statements, other than statements
of historical or current facts, that address activities, events,
outcomes and other matters that we plan, expect, intend, assume,
believe, budget, predict, forecast, project, estimate or anticipate (and
other similar expressions) will, should or may occur in the future are
forward-looking statements. These forward-looking statements are based
on management’s current belief, based on currently available
information, as to the outcome and timing of future events. The Company
cautions that its future oil and natural gas production, revenues, cash
flows, liquidity, plans for future operations, expenses, outlook for oil
and natural gas prices, timing of capital expenditures and other
forward-looking statements are subject to all of the risks and
uncertainties, many of which are beyond our control, incident to the
exploration for and development, production and marketing of oil and gas.
These risks include, but are not limited to, the possibility of
unsuccessful exploration and development drilling activities, our
ability to replace and sustain production, commodity price volatility,
domestic and worldwide economic conditions, the availability of capital
on economic terms to fund our capital expenditures and acquisitions, our
level of indebtedness, the impact of the current economic environment on
our business operations, financial condition and ability to raise
capital, declines in the value of our oil and gas properties resulting
in a decrease in our borrowing base under our credit facility and
impairments, the ability of financial counterparties to perform or
fulfill their obligations under existing agreements, the uncertainty
inherent in estimating proved oil and gas reserves and in projecting
future rates of production and timing of development expenditures,
drilling and other operating risks, lack of availability of goods and
services, regulatory and environmental risks associated with drilling
and production activities, the adverse effects of changes in applicable
tax, environmental and other regulatory legislation, and other risks and
uncertainties are described in the Company's filings with the Securities
and Exchange Commission. The Company undertakes no obligation to
publicly update or revise any forward-looking statements.
CLAYTON WILLIAMS ENERGY, INC.
FINANCIAL GUIDANCE DISCLOSURES FOR 2015
Overview
Clayton Williams Energy, Inc. and its subsidiaries have prepared this
document to provide public disclosure of certain financial and operating
estimates in order to permit the preparation of models to forecast our
operating results for the year ending December 31, 2015. These estimates
are based on information available to us as of the date of this filing,
and actual results may vary materially from these estimates. We do 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 we
believe are reasonable. Until our actual results of operations for this
period have been 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, 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, outcomes and
other matters that we plan, expect, intend, assume, believe, budget,
predict, forecast, project, estimate or anticipate (and other similar
expressions) will, should, could or may occur in the future, including
such matters as production of oil and gas, product prices, oil and gas
reserves, drilling and completion results, capital expenditures,
operating costs and other such matters, are forward-looking statements.
Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors that may cause our actual results,
performance, or achievements 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 our 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
us with the Securities and Exchange Commission.
As a matter of policy, we generally do not attempt to provide guidance
on:
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(a)
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production which may be obtained through future exploratory drilling;
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(b)
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dry hole and abandonment costs that may result from future
exploratory drilling;
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(c)
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the effects of Statement of Financial Accounting Standards No. 133,
“Accounting for Derivative Instruments and Hedging Activities”
superseded by topic 815-10 of the Financial Accounting Standards
Board Accounting Standards Codification;
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(d)
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gains or losses from sales of property and equipment unless the sale
has been consummated prior to the filing of financial guidance;
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(e)
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capital expenditures related to completion activities on exploratory
wells or acquisitions of proved properties until the expenditures
are estimable and likely to occur; and
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(f)
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revenues and operating expenses related to Drilling Rig or Midstream
Services.
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The accompanying guidance does not include any divestitures, joint
venture arrangements or similar structures that have not been
consummated.
Summary of Estimates
The following table sets forth certain estimates being used to model our
anticipated results of operations for the fiscal year ending December
31, 2015. Each range of values provided represents the expected low and
high estimates for such financial or operating factor.
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Actual
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Actual
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Estimated Ranges
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Estimated Ranges
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Three Months Ended
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Nine Months Ended
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Three Months Ending
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Fiscal Year Ending
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September 30, 2015
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September 30, 2015
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December 31, 2015
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December 31, 2015
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(Dollars in thousands, except per unit data)
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Average Daily Production:
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Oil (Bbls)
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11,152
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12,198
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10,500 to 10,700
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11,700 to 11,900
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Gas (Mcf)
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17,283
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16,330
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14,000 to 15,000
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15,500 to 16,500
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Natural gas liquids (Bbls)
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1,543
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1,531
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1,400 to 1,600
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1,400 to 1,600
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Total oil equivalents (BOE)
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15,576
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16,451
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14,233 to 14,800
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15,683 to 16,250
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Price Differentials to NYMEX:
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Oil
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93
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%
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92
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%
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90% to 95%
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90% to 95%
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Gas
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99
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%
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96
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%
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90% to 100%
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90% to 100%
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Natural gas liquids (based on oil)
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24
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%
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26
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%
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20% to 30%
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20% to 30%
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Other Costs and Expenses:
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Production expenses:
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Direct costs ($/BOE)
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$
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12.68
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$
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12.99
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$
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13.00 to 14.00
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$
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13.00 to 14.00
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Production taxes (% of sales)
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5
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%
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5
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%
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5% to 6%
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5% to 6%
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General and administrative:
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Excluding non-cash compensation
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$
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7,310
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$
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20,697
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$
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7,000 to 9,000
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$
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27,000 to 29,000
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Non-cash compensation
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$
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(2,679
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)
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$
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4,405
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$
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1,000 to 2,000
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$
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5,500 to 6,500
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DD&A:
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Oil and gas ($/BOE)
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$
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23.26
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$
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24.60
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$
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24.00 to 26.00
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$
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24.00 to 26.00
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Other
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$
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3,523
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$
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11,158
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$
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3,000 to 4,000
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$
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14,000 to 15,000
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Exploration costs:
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Abandonments and impairments
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$
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874
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$
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5,005
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$
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2,000 to 4,000
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$
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7,000 to 9,000
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Seismic and other
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$
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239
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$
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1,210
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$
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500 to 1,000
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$
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1,700 to 2,200
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Interest expense (cash rates):
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$600 million Senior Notes due 2019
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7.75%
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7.75%
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7.75%
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7.75%
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Bank credit facility
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LIBOR plus
(175 to 275 bps)
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LIBOR plus
(175 to 275 bps)
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LIBOR plus
(175 to 275 bps)
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LIBOR plus
(175 to 275 bps)
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Effective Federal and State Income Tax Rate:
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Current
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0
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%
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0
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%
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0%
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0%
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Deferred
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34.8
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%
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35.2
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%
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33% to 37%
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33% to 37%
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We drilled two wells in the Eagle Ford and one well in the Delaware
Basin during the third quarter of 2015. We currently do not plan to
drill any more wells in these two core areas during the remainder of
2015. During the third quarter of 2015, we sold substantially all of our
producing properties in South Louisiana.
Following is a summary of the average daily production related to
interests in the properties sold.
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
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2015
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2015
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Average Daily Production:
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Oil (Bbls)
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174
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178
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Natural gas (Mcf)
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2,433
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2,052
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Total (BOE)
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580
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520
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The following table sets forth certain information regarding our model
well economics assuming NYMEX product prices of $60 per barrel of oil
and $3 per MMBtu of natural gas.
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Eagle Ford
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Wolfcamp
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Gross estimated ultimate reserves (EUR) (MBOE)
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250
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750
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Drilling and completion costs (In thousands)
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$
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4,000
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$
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6,000
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Estimated first year gross production (MBOE)
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68
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121
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Undiscounted payout (In years)
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3.0
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2.9
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ROI
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24
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%
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29
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%
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Company estimated WI/NRI %
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100% / 75
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%
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100% / 75
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%
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Capital Expenditures
The following table sets forth, by area, our actual expenditures for the
nine months of 2015 and our planned capital expenditures for the year
ending December 31, 2015.
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Actual
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Planned
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Expenditures
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Expenditures
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2015
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Nine Months Ended
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Year Ending
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Percentage
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September 30, 2015
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December 31, 2015
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of Total
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(In thousands)
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Drilling and Completion:
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Permian Basin Area:
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Delaware Basin
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$
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32,600
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$
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36,000
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30
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%
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Other
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12,300
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15,600
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13
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%
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Austin Chalk/Eagle Ford Shale
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31,600
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35,800
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29
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%
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Other
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7,300
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7,600
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6
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%
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83,800
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95,000
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78
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%
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Leasing and seismic
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21,800
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26,900
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22
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%
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Exploration and development
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$
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105,600
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$
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121,900
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100
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%
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We currently plan to spend approximately $121.9 million on exploration
and development activities during fiscal 2015. Our actual expenditures
during 2015 may vary significantly from these estimates since our plans
for exploration and development activities may change during the year.
Factors, such as changes in operating margins and the availability of
capital resources could increase or decrease our actual expenditures
during the remainder of fiscal 2015.
Accounting for Derivatives
The following summarizes information concerning our net positions in
open commodity derivatives applicable to periods subsequent to September
30, 2015. The settlement prices of commodity derivatives are based on
NYMEX futures prices.
Swaps
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Oil
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MBbls
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Price
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Production Period:
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4th Quarter 2015
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592
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$
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55.65
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592
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We did not designate any of the derivatives shown in the preceding table
as cash flow hedges; therefore, all changes in the fair value of these
contracts prior to maturity, plus any realized gains or losses at
maturity, will be recorded as other income (expense) in our statement of
operations and comprehensive income (loss).
Volumetric Production Payment
In March 2012, we entered into a volumetric production payment (“VPP”)
with a third party. Under the terms of the VPP, we conveyed a term
overriding royalty interest covering approximately 725,000 barrels of
oil equivalents (“BOE”) of estimated future oil and gas production from
certain properties related to production months from March 2012 through
December 2019. In August 2015, we terminated the VPP for approximately
$13.7 million and will recognize the portion of deferred revenue in oil
and gas sales based on the original volumes of BOE per production month.
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