Clayton Williams Energy Announces Second Quarter 2013 Financial Results
Clayton Williams Energy Announces Second Quarter 2013 Financial Results
Financial Results for the Second Quarter of 2013
Net loss attributable to Company stockholders for the second quarter of 2013 ("2Q13") was $1 million, or $0.08 per share, as compared to net income of $32.8 million, or $2.70 per share, for the second quarter of 2012 ("2Q12"). Cash flow from operations for 2Q13 was $38.6 million as compared to $44.9 million for 2Q12. As discussed below, the 2Q13 results included a non-cash, pre-tax charge of $19.6 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 $11.7 million.
For the six-months ended June 30, 2013, net loss attributable to Company stockholders was $42.2 million, or $3.47 per share, as compared to net income of $40.6 million, or $3.34 per share, for the same period in 2012. Cash flow from operations for the six-month period in 2013 was $82.9 million as compared to $97.3 million during the same period in 2012. The 2013 period included non-cash, pre-tax charges totaling $89.1 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 $15.7 million.
The key factors affecting the comparability of financial results for 2Q13 versus 2Q12 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 six months ended June 30, 2013 are not comparable to reported amounts for periods in 2012.
- Oil and gas sales, excluding amortized deferred revenues, decreased $5.4 million in 2Q13 versus 2Q12. Production variances accounted for a $9.5 million decrease, and price variances accounted for a $4.1 million increase. Average realized oil prices were $93.71 per barrel in 2Q13 versus $88.06 per barrel in 2Q12, and average realized gas prices were $3.89 per Mcf in 2Q13 versus $3.25 per Mcf in 2Q12. Oil and gas sales in 2Q13 also includes $2.2 million of amortized deferred revenue versus $2.5 million in 2Q12 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 10% in 2Q13 as compared to 2Q12, with oil production decreasing 10% to 9,527 barrels per day, gas production decreasing 25% to 17,582 Mcf per day, and NGL production increasing 45% to 1,418 barrels per day. Oil and NGL production accounted for approximately 80% of the Company's total BOE production in 2Q13 versus 75% in 2Q12. 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 8% in 2Q13 as compared to 2Q12, with oil production increasing 945 barrels per day, gas production decreasing 4,341 Mcf per day and NGL increasing 836 barrels per day.
- Production costs decreased 19% to $26.1 million in 2Q13 from $32.3 million in 2Q12. After giving effect to the Andrews sale, production costs declined $1.1 million, or 4%, due primarily to infrastructure improvements in our Reeves County Wolfbone area.
- An impairment of proved properties of $19.6 million was recorded in 2Q13 primarily related to the write down of certain non-core Permian Basin properties to their estimated fair value. Impairment of a proved property group is recognized when the estimated undiscounted future net cash flows of the property group are less than its carrying value.
- Gain on derivatives for 2Q13 was $4.9 million ($5.4 million non-cash mark-to-market gain and $464,000 realized loss on settled contracts) versus a gain in 2Q12 of $38.7 million ($37.8 million non-cash mark-to-market gain and $845,000 realized gain on settled contracts). See accompanying tables for additional information about the Company's accounting for derivatives.
- General and administrative ("G&A") expenses were $2.8 million in 2Q13 versus $4.3 million in 2Q12. Most of the decrease was attributable to non-cash reversals of previously accrued compensation expense from the Company's APO reward plans in both periods. The 2013 credits to G&A expense were offset by cash payments to participants in plans associated with the Andrews County properties.
Scheduled Conference Call
The Company will host a conference call to discuss these results and other forward-looking items today, July 25th at 1:30 p.m. CT (2:30 p.m. ET). The dial-in conference number is: 877-868-1835, passcode 18210133. The replay will be available for one week at 855-859-2056, passcode 18210133.
To access the conference call via Internet webcast, please go to the Investor Relations section of the Company's website at www.claytonwilliams.com and click on "Live Webcast." Following the live webcast, the call will be archived for a period of 30 days on the Company's website.
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 natural gas and liquids 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 recession 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.|
|CONSOLIDATED STATEMENTS OF OPERATIONS|
|(In thousands, except per share)|
|Three Months Ended||Six Months Ended|
|June 30,||June 30,|
|Oil and gas sales||$||93,778||$||99,448||$||192,142||$||206,478|
|Drilling rig services||3,535||4,578||8,852||6,130|
|Other operating revenues||272||300||2,562||437|
|COSTS AND EXPENSES|
|Abandonments and impairments||1,561||646||2,371||1,986|
|Seismic and other||777||723||3,364||2,735|
|Drilling rig services||4,397||4,399||9,465||6,829|
|Depreciation, depletion and amortization||35,872||34,593||74,935||65,825|
|Impairment of property and equipment||19,565||5,711||89,102||5,711|
|Accretion of asset retirement obligations||1,052||860||2,120||1,559|
|General and administrative||2,783||4,288||10,371||19,303|
|Other operating expenses||1,273||45||1,406||278|
|Total costs and expenses||93,913||83,773||251,663||166,047|
|Operating income (loss)||5,003||20,837||(45,880||)||47,632|
|OTHER INCOME (EXPENSE)|
|Gain (loss) on derivatives||4,894||38,666||(1,641||)||31,757|
|Total other income (expense)||(5,795||)||29,796||(20,952||)||15,024|
|Income (loss) before income taxes||(792||)||50,633||(66,832||)||62,656|
|Income tax (expense) benefit||(237||)||(17,811||)||24,594||(22,055||)|
|NET INCOME (LOSS)||$||(1,029||)||$||32,822||$||(42,238||)||$||40,601|
|Net income (loss) per common share:|
|Weighted average common shares outstanding:|
|CLAYTON WILLIAMS ENERGY, INC.|
|CONSOLIDATED BALANCE SHEETS|
|June 30,||December 31,|
|Cash and cash equivalents||$||16,197||$||10,726|
|Oil and gas sales||35,057||32,371|
|Joint interest and other, net||9,482||16,767|
|Deferred income taxes||11,046||8,560|
|Fair value of derivatives||7,836||7,495|
|Prepaids and other||7,289||6,495|
|PROPERTY AND EQUIPMENT|
|Oil and gas properties, successful efforts method||2,301,588||2,570,803|
|Pipelines and other midstream facilities||51,765||49,839|
|Contract drilling equipment||92,766||91,163|
|Less accumulated depreciation, depletion and amortization||(1,297,882||)||(1,311,692||)|
|Property and equipment, net||1,168,677||1,420,358|
|Debt issue costs, net||8,548||10,259|
|Fair value of derivatives||3,164||4,236|
|Investments and other||16,131||15,261|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Oil and gas sales||33,736||32,146|
|Accrued liabilities and other||14,698||15,578|
|Deferred income taxes||133,724||155,830|
|Asset retirement obligations||50,872||51,477|
|Deferred revenue from volumetric production payment||33,437||37,184|
|Accrued compensation under non-equity award plans||12,230||20,058|
|Preferred stock, par value $.10 per share||-||-|
|Common stock, par value $.10 per share||1,216|