Clayton Williams Reports Snags, Successes in S. Louisiana

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

South Louisiana

The Company continues to attempt to complete the Cobena #1, a 15,250-foot exploratory well in Acadia Parish in the Boa II prospect on which drilling operations began in April 2006. The Company temporarily abandoned the Discorbis 3 sand due to mechanical difficulties, and is currently testing the Discorbis 2 sand to which the Company had attributed approximately 2.3 Bcfe of net gas reserves at December 31, 2006. Based on these recent test results, the Company currently plans to abandon the Discorbis 2 sand and will eliminate all proved reserve estimates previously assigned to this sand. The Company and its partners in this well are currently evaluating well completion data in the Discorbis 3 sand to determine if the potential for proved reserves from this sand justifies a second completion attempt. If the Company decides to abandon the well, it will record exploration expense for cumulative well costs, plus any impaired acreage cost, at the time of determination. To date, the Company has incurred approximately $9.8 million in drilling and completion costs on this well, net to its interest, and has $1 million of acreage cost subject to impairment.

In the Floyd prospect, the Company has drilled ten wells to date, of which eight are currently producing. The remaining two wells have been completed and are waiting on pipeline construction. Currently, the eight wells are producing at combined rates of 6,700 Mcf of gas per day and 450 barrels of oil per day, net to the Company's interest. However, due to production facility constraints, this current level of combined production is significantly less than the combined rates at which the wells are capable of producing. In order to fully resolve these capacity issues, the Company plans to build its own plant and production facilities in 2007 to process and market gas production from all the wells in the prospect. Generally, 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 drilled and abandoned the Bowie Lumber Co. #1, a 13,150-foot exploratory well in Lafourche Parish in the Bayou Boeuf prospect, after it was determined that the well was non-productive. The Company recorded a $3.8 million pre-tax charge related to the abandonment of the well in the first quarter of 2007. The Company owns a 100% working interest in this well.

The Company drilled and completed the Orleans Levee District #2, the second well in the American Bay prospect in Plaquemines Parish. This development well, which was completed in the Tex "W" sand at 13,986 feet, has been tested and is currently waiting on a pipeline connection. Initial gross production from the well is expected to be 5,200 Mcf of gas per day and 260 barrels of oil per day, based on available well test data. The Company owns a 45% working interest in this well.

The Company also drilled and abandoned the Pivach Agency #1, a 3,500-foot exploratory well in the Elsa prospect in Plaquemines Parish, when it was determined to be incapable of producing hydrocarbons in economic quantities. The Company recorded a pre-tax charge in the first quarter of 2007 of approximately $200,000, and expects to record an additional charge of $1 million in the second quarter for the abandonment of this well. The company owns a 94% working interest in this well.

North Louisiana

The Company drilled and completed two wells in the Terryville prospect in Lincoln Parish during the first quarter of 2007. The J.L. Hood #1 and the J. Huey #1 were both completed as gas wells in the Cotton Valley interval, and are currently producing, on a combined basis, approximately 2,500 Mcf of gas per day and 150 barrels of oil per day, net to the Company's interest. The Company also began drilling operations on the C.M. Bice #1, an 11,500-foot exploratory well in April 2007. The Company owns an 86% working interest in these wells.

In the Sarepta prospect in Webster Parish, the Company drilled the P. Benoit #1, an exploratory well that targeted a hydrocarbon formation in the Gray sand, but that zone was non-productive. The Company is waiting on availability of a completion rig to attempt completion in the Cotton Valley interval. The Company owns a 91% working interest in this well. The Company also drilled the George Staton #1, a 12,200-foot exploratory well in the Sarepta prospect, and is waiting on completion operations to commence. The Company owns a 70% working interest in this well.

The Company is currently drilling the David Barton #1, a 17,000-foot exploratory well in its Winnsboro prospect in Richland Parish, targeting the Bossier sands. The Company owns a 100% working interest in this well. The Company currently has 188,000 acres leased for Bossier drilling in North Louisiana.

East Texas

The Company has acquired a significant acreage position in East Texas in the Bossier formation. To date, the Company has acquired approximately 54,000 net acres and holds up to 50,000 additional acres in the area of its Austin Chalk (Trend) production primarily in Burleson, Robertson, Brazos and Milam Counties, Texas. Utah

The Company is participating in a joint exploration program with industry partners in the Overthrust play in central Utah, in which it owns a 33% interest. The Vonda Christensen 35A31, a 13,500-foot non-operated exploratory well in Sanpete County, was drilled and abandoned. The Company recorded a pre-tax charge of $3.6 million in the first quarter of 2007 related to the abandonment of this well. The Company expects to participate in the drilling of a second exploratory well in 2008 to further evaluate this acreage.

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


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