Clayton Williams Energy Provides Operations Update

Clayton Williams Energy, Inc. on Thursday issued an update on its exploration and development activities by area.

South Louisiana

The Company abandoned the Apache Louisiana Minerals 73-1 (Abigail), a 14,200-foot exploratory well in Terrebonne Parish after determining that the well was nonproductive. The Company will record a pre-tax charge of $8.1 million related to the abandonment of this well in the third quarter of 2006 and an additional pre-tax charge of approximately $3.2 million in the fourth quarter of 2006.

To date, the Company has completed seven productive wells on its Floyd prospect in Plaquemines Parish. Four of the wells are currently producing at combined rates of 290 barrels of oil per day and 16,100 Mcf of gas per day. Three of the wells are expected to begin production in the fourth quarter of 2006 at combined rates of approximately 650 barrels of oil per day and 6,000 Mcf of gas per day, based on available well test data. Completion operations on an eighth well are expected to begin in November pending availability of a completion rig. The Company plans to evaluate production on the existing wells before drilling any further wells. The Company bears 100% of the cost of wells on this prospect to casing point and earns a 75% working interest in the drilled acreage.

The Company currently expects the A. J. Beshel #1, a 12,000-foot exploratory well in Plaquemines Parish, to begin producing during the fourth quarter of 2006 at a rate of approximately 245 barrels of oil per day and 2,000 Mcf of gas per day, based on available well test data. The Company owns 100% of the working interest in this well.

The Company has drilled and logged the Cobena #1 (Boa II), a 15,250-foot exploratory well in Acadia Parish, and has encountered multiple pay zones with encouraging gas shows. The Company bears 50% of the cost of this well to casing point and 62.5% thereafter. To date, the Company has incurred approximately $8 million in drilling and completion costs, net to its interest.

North Louisiana

The Company has drilled two exploratory wells on its Frazier Creek prospect in Claiborne Parish targeting the Hosston/Cotton Valley formations. The Atkins Estate #1 was completed as a marginal producer and the Weyerhaeuser #1 was not productive. The Company will record a pre-tax charge of $2.1 million related to the abandonment of the Weyerhaeuser well in the third quarter of 2006 and an additional pre-tax charge of approximately $1 million in the fourth quarter of 2006. The Company owns a 100% working interest in both wells on this prospect.

On its Terryville prospect in Lincoln Parish, the Company has drilled and logged the Roberson #1 well and has encountered encouraging gas shows in two Cotton Valley sand intervals. Completion operations on this exploratory well are expected to begin in November pending the availability of a completion rig. In addition, the Company is currently drilling the Donald Woodard #1 on this prospect. The Company will own between 71% and 100% of the working interests in these wells, depending on participation elections by other owners.

In addition, the Company has begun drilling the first exploratory well, the P. Benoit #1, on its Serapta prospect in Webster Parish targeting the Hosston/Cotton Valley formations.

The Company reported that the start of its Bossier exploration program in North Louisiana has been delayed until the first quarter of 2007 due to rig scheduling. To date, the Company has leased approximately 165,000 net acres in this area for potential Bossier drilling activities.

Colorado

The Company has drilled two exploratory wells on its Focus Ranch unit in Routt County, Colorado. Based on initial evaluations of the drilling results, the Company has temporarily abandoned both wells and has dropped all plans to drill additional wells on this unit. The Company will record a pre-tax charge of $5.9 million related to the abandonment of these wells in the third quarter of 2006 and an additional pre-tax charge of approximately $1.4 million in the fourth quarter of 2006.

East Texas

The Company also announced that the start of its Bossier exploration program in East Texas has been delayed until the first quarter of 2007 due to rig scheduling. To date, the Company has leased approximately 47,000 net acres in this area for potential Bossier drilling activities.

Clayton Williams Energy, Inc. is an independent energy company located in Midland, Texas.

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