Clayton Williams Energy Issues Q3 Results
Clayton Williams Energy, Inc. reported net income for the third quarter of 2006 of $5.3 million, or $.48 per share, as compared to a net loss of $2 million, or $.19 per share, for the third quarter of 2005. Cash flow from operations for the third quarter of 2006 was $39.4 million, as compared to $50.4 million during the same period in 2005.
For the nine months ended September 30, 2006, the Company reported net income of $26.7 million, or $2.38 per share, as compared to a net loss of $1.1 million, or $.10 per share, for the same period in 2005. Cash flow from operations for the nine-month period in 2006 was $116.5 million, as compared to $126.6 million during the same period in 2005.
Oil and gas sales for the third quarter of 2006 totaled $61.5 million compared to $65.7 million for the same quarter in 2005. Of the $4.2 million decrease in oil and gas sales, lower oil and gas prices accounted for a decrease of $2.2 million and lower oil and gas production volumes accounted for the remaining $2 million decrease. Oil production for the third quarter of 2006 dropped slightly to 532,000 barrels, or 5,783 barrels per day, from 537,000 barrels, or 5,837 barrels per day in the 2005 quarter. Gas production decreased 4% to 3.7 Bcf, or 40,630 Mcf per day, from 3.9 Bcf, or 42,359 Mcf per day in the 2005 quarter. Average realized oil prices in the third quarter of 2006 increased 12% from $59.95 to $67.27 per barrel, while gas prices decreased 22% from $7.98 to $6.26 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 third quarter of 2006, the Company reported a $26.7 million net gain on derivatives, consisting of a $28.4 million non-cash gain to mark the Company's derivative positions to their fair value on September 30, 2006 and a $1.7 million charge for cash settlements during the quarter. For the same period in 2005, the Company reported a $28.8 million net loss on derivatives, consisting of a $20.8 million non-cash mark-to-market loss and an $8 million charge for cash settlements.
Exploration costs related to abandonments and impairments were $19.7 million during the third quarter of 2006, of which $8.1 million was attributable to the Apache Louisiana Minerals 73-1 (Abigail) in South Louisiana, $5.9 million was attributable to two exploratory wells on the Focus Ranch unit in Colorado, $2.9 million was primarily due to acreage impairments in West Texas and $2.1 million was attributable to the Weyerhaeuser #1 (Frazier Creek) in North Louisiana. The Company's exploration costs were $13.9 million in the third quarter of 2005.
The Company recorded a non-cash charge during the third quarter of 2006 of $12.9 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 two areas in West Texas and one area in South Louisiana, was required to reduce the carrying value of these proved properties to their estimated fair market value.
Clayton Williams Energy, Inc. is an independent energy company located in Midland, Texas.
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