Clayton Williams Posts Q4 Loss, Profit for the Full Year
Clayton Williams Energy, Inc. reported a net loss for the fourth quarter of 2006 of $8.9 million, or $.81 per share, as compared to net income of $1.3 million, or $.12 per share, for the fourth quarter of 2005. Cash flow from operations for the fourth quarter of 2006 was $29.5 million, as compared to $36.8 million during the same period in 2005.
For the year ended December 31, 2006, the Company reported net income of $17.8 million, or $1.58 per share, as compared to net income of $257,000, or $.02 per share, for 2005. Cash flow from operations for the year 2006 was $146 million, as compared to $163.5 million for 2005.
Oil and gas sales for the fourth quarter of 2006 totaled $57.8 million compared to $62.1 million for the same quarter in 2005. Of the $4.2 million decrease in oil and gas sales, product prices accounted for a decrease of $14.1 million and higher production volumes accounted for a $9.9 million increase. Oil production for the fourth quarter of 2006 increased to 529,000 barrels, or 5,750 barrels per day, up from 487,000 barrels, or 5,293 barrels per day in the 2005 quarter. Gas production increased 24% to 4 Bcf, or 43,272 Mcf per day, from 3.2 Bcf, or 34,815 Mcf per day in the 2005 quarter. Average realized oil prices in the fourth quarter of 2006 remained relatively flat at $57.41 compared to $56.99 per barrel in the 2005 period, while gas prices decreased 35% from $10.02 to $6.49 per Mcf. Average realized prices for 2006 and 2005 exclude the effects of any gains or losses realized on commodity hedging transactions since those derivatives were not designated as cash flow hedges and have been reported in the Company's statements of operations as gain/loss on derivatives under applicable accounting standards.
For the fourth quarter of 2006, the Company reported an $11.9 million net gain on derivatives, consisting of a $14.9 million non-cash gain to mark the Company's derivative positions to their fair value on December 31, 2006 and a $3 million charge for cash settlements during the quarter. For the same period in 2005, the Company reported a $3.6 million net loss on derivatives, consisting of a $15.6 million non-cash mark-to-market loss and a $12 million charge for cash settlements.
Exploration costs related to abandonments and impairments were $29.4 million during the fourth quarter of 2006, which included $5.7 million for the abandonment of the Roberson et al #1 (Terryville) in North Louisiana, $4.1 million for acreage impairments in Montana, $1.8 million for the abandonment of the Rose Chouest #1 (South Empire) in South Louisiana, and $17.1 million for previously announced dry holes in Louisiana and Colorado. The Company's exploration costs were $8.4 million in the fourth quarter of 2005.
The Company recorded a non-cash charge during the fourth quarter of 2006 of $8.9 million for an impairment of proved properties pursuant to Statement of Financial Accounting Standards No. 144 "Accounting for Impairment or Disposal of Long-Lived Assets." The impairment, which applied to one area in West Texas and one area in New Mexico, was required to reduce the carrying value of these proved properties to their estimated fair market value.
The Company also announced today that its total proved oil and gas reserves as of December 31, 2006 were 271.5 Bcfe, consisting of 25.4 million barrels of oil and NGL and 119.2 Bcf of natural gas. By comparison, the Company reported proved reserves of 293.8 Bcfe as of December 31, 2005, consisting of 27.8 million barrels of oil and NGL and 126.8 Bcf of natural gas. The pre-tax present value of estimated future net revenues from these reserves, discounted at 10% and computed in accordance with SEC guidelines, totaled $712.4 million at December 31, 2006, as compared to $1.1 billion at December 31, 2005. The estimates were based on weighted average oil and NGL prices of $57.18 per Bbl in 2006, as compared to $57.85 in 2005, and gas prices of $5.24 per Mcf in 2006, as compared to $10.65 per Mcf in 2005.
During 2006, the Company replaced 100% of the 29.4 Bcfe produced in 2006 through extensions and discoveries, excluding purchases and downward revisions to previous estimates. The following table summarizes the changes in proved reserves during 2006 on a Bcfe basis and as a percentage of 2006 production.
% of 2006 Bcfe Production ------ ----------- Total proved reserves, 12/31/05 293.8 Extensions and discoveries 29.4 100% Purchases of minerals-in-place 6.4 22% Revisions (28.7) (98)% Production (29.4) ------ Total proved reserves, 12/31/06 271.5 ======
Net downward revisions of 28.7 Bcfe consisted of approximately 22 Bcfe of downward revisions attributable to the effects of lower natural gas prices on the estimated quantities of proved reserves and approximately 6.7 Bcfe of downward revisions attributable to well performance primarily from properties in the Permian Basin.
Clayton Williams Energy, Inc. is an independent energy company located in Midland, Texas.
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