Clayton Williams Closes Private Placement

Clayton Williams Energy Inc. (Nasdaq:CWEI) has closed the previously announced sale of 1,380,869 million shares of its common stock to certain institutional investors at a price of $23.00 per share in a private placement that raised $31,760,000 in gross proceeds. After the payment of typical transaction expenses, net proceeds will be used to partially repay debt incurred to finance the acquisition of Southwest Royalties Inc., which was finalized on Friday, May 21, 2004. JP Morgan Securities Inc. served as the sole placement agent for the transaction.

The shares of common stock sold in the private placement were not registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act. The Company has agreed to file a registration statement with the SEC covering resales of the shares sold in the private placement. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.