Clayton Williams Offers FY13 Outlook

From Clayton Williams

release: Estimated Ranges Year Ending December 31, 2013     (Dollars in thousands, except per unit data) Average Daily Production: Oil (Bbls) 10,300 to 10,500 Gas (Mcf) 20,000 to 22,000 Natural gas liquids (Bbls) 1,300 to 1,400 Total oil equivalents (BOE) ^ (a) 14,933 to 15,567   Price Differentials to NYMEX: Oil ^(b) 95% to 97% Gas 110% to 130% Natural gas liquids (based on oil) 40% to 50%   Other Costs and Expenses: Production expenses: Direct costs ($/BOE) $ 18.00 to 19.00 Production taxes (% of sales) 5% to 6%   General and Administrative: Excluding non-cash compensation $ 26,000 to 28,000 Non-cash compensation $ 2,000 to 4,000   DD&A: Oil and gas ($/BOE) $ 21.00 to 23.00 Other $ 5,000 to 7,000   Exploration costs: Abandonments and impairments $ 2,000 to 4,000 Seismic and other $ 5,000 to 7,000   Interest expense (cash rates): $350 million Senior Notes due 2019 7.75% Bank credit facility LIBOR plus (175 to 275 bps)   Effective Federal and State Income Tax Rate: Current 0% Deferred 36% ____________ (a) The lower end of the range for 2013 production on a BOE basis is comparable to our estimated production of 15,000 BOE per day for the fourth quarter of 2012. (b) The estimated price differential for oil assumes a Midland-Cushing basis differential of approximately $12 per barrel for the first half of 2013 and approximately $2 per barrel for the last half of 2013. However, the estimated range in our guidance gives effect to the terms of an oil sales contract that we entered into with a purchaser effective December 1, 2012 that eliminates the Midland-Cushing differential on approximately 70% of our 2013 Permian Basin oil production in exchange for a flat price per barrel of approximately $1.75. Capital Expenditures The following table sets forth, by area, our planned capital expenditures for the year ending December 31, 2013.     Planned Expenditures 2013 Year Ending Percentage December 31, 2013 of Total (In thousands) Drilling and Completion: Permian Basin Area: Delaware Basin $ 80,200 35 % Other 28,400 12 % Austin Chalk/Eagle Ford Shale 71,300 31 % Other   11,700 5 % 191,600 83 % Leasing and seismic   34,000 15 % Exploration and development 225,600 98 % Facilities and other   3,600 2 % Total capital expenditures $ 229,200 100 %   We currently plan to spend approximately $225.6 million on exploration and development activities during fiscal 2013 as compared to approximately $430 million during fiscal 2012. Our actual expenditures during 2013 may vary significantly from these estimates since our plans for exploration and development activities may change during the remainder of 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 2013. Accounting for Derivatives The following summarizes information concerning our net positions in open commodity derivatives applicable to periods subsequent to December 31, 2012. The settlement prices of commodity derivatives are based on NYMEX futures prices. Swaps:   Oil   Gas Bbls   Price MMBtu ^(a)   Price Production Period: 1^st Quarter 2013 665,000 $ 93.70 400,000 $ 3.34 2^nd Quarter 2013 648,000 $ 93.94 390,000 $ 3.34 3^rd Quarter 2013 300,000 $ 104.60 360,000 $ 3.34 4^th Quarter 2013 300,000 $ 104.60 330,000 $ 3.34 2014 600,000 $ 99.30 - $ - 2,513,000 1,480,000   (a) One MMBtu equals one Mcf at a Btu factor of 1,000.   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. 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. The scheduled remaining volumes for production months from January 2013 through December 2019 are shown below.     Oil   Gas Bbls Mcf Production Period: 1^st Quarter 2013 30,488 7,533 2^nd Quarter 2013 29,616 7,506 3^rd Quarter 2013 28,793 8,550 4^th Quarter 2013 28,045 10,030 2014 102,011 45,392 2015 88,954 60,218 2016 64,808 112,928 2017 56,785 96,792 2018 49,455 84,734 2019 43,820 72,874 522,775 506,557