Clayton Williams Suspends Drilling Operations at Margarita #1

Clayton Williams Energy has suspended drilling operations on the Margarita #1, the 2nd well in its E. Texas Bossier exploration program, at a vertical depth of 18,300 feet after failing to encounter the target sands in the deep Bossier formation. The Company has identified a secondary objective in the upper Bossier formation and currently plans to attempt to complete the well at a vertical depth of approximately 14,900 feet. The Company is currently evaluating the geological data obtained in drilling the Margarita #1 to determine the impact of this result on other drilling opportunities in the Robertson County area.

To date, the Company has incurred drilling costs of approximately $13 million and expects to spend an additional $1.5 million to attempt completion in the upper Bossier formation. The Company will record a pretax charge to exploration expense of approximately $3 million in the third quarter of 2007 related to the partial abandonment of the Margarita #1 below the interval identified for the completion attempt. Depending on the results of the planned completion attempt in the upper Bossier formation, additional charges to exploration expense may be necessary.

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


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