Clayton Williams Energy, Inc. (the “Company”) (NYSE: CWEI) today
provided an update on recent transactions.
Southern Delaware Basin
The Company reported that it had completed a swap of non-producing
acreage in the core of its Southern Delaware position in Reeves County,
Texas with the operating subsidiary of Concho Resources, Inc. (“Concho”)
(NYSE: CXO). Substantially all of the acreage subject to this agreement
was associated with a farm out agreement between the Company and
Chesapeake Energy Corporation through which the Company earned a 75%
interest in certain leases (the “Leases”). Subsequently, Concho acquired
the remaining 25% of the Leases.
The Company and Concho agreed to exchange net acre for net acre across
the Company’s entire Reeves County position. As a result of the
exchange, the Company acquired Concho’s 25% working interest in certain
Leases, and the Company conveyed its 75% working interest in certain
Leases to Concho.
The Company’s acreage position remained at approximately 65,000 net
acres, but its working interest in the Leases increased from 75% to 100%
throughout most of its largely contiguous acreage block.
All lease rights transferred under this agreement were limited to
undrilled acreage and excluded reserves and production attributable to
existing wells. The interest in the existing producing wells will remain
the same.
“This agreement was highly beneficial to both companies,” stated Mel
Riggs, President of the Company. “Each now has a higher degree of
operational control over the development of its respective acreage
positions. This enables us to determine the timing, targets, well design
and approach for development of this very valuable resource in the best
interest of our shareholders.”
Giddings Eagle Ford
The Company also announced that it sold certain acreage in Burleson
County, Texas (the “Acreage”) to an undisclosed buyer for cash
consideration of $21.8 million in December 2015. The Acreage, located
east of the Company’s contiguous acreage block, was sold under a
three-year term assignment that may be extended beyond the stated term
as long as the buyer maintains a 180-day continuous development program
on the Acreage. The Company retained its rights to all depths and
formations other than the Eagle Ford formation and also retained its
interest in acreage and production in all wells currently situated on
the Acreage. The Company also reserved an overriding royalty interest to
the extent the net revenue interest of any assigned lease exceeds 75%.
Proceeds from the sale were used to reduce outstanding borrowings on the
Company’s bank credit facility.
Hedging Activities
On January 6, 2016, the Company entered into a swap agreement covering
the sale of 814,500 barrels of its oil production during the first half
of 2016 at $40.25 per barrel (WTI-NYMEX). In connection with that
agreement, the Company granted the counterparty the option to extend the
agreement to cover an additional 738,500 barrels of oil production
during the second half of 2016 at the same price of $40.25 per barrel.
The option to extend expires on June 30, 2016.
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.
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