Clayton Williams Energy Finds Gas on Floretta Prospect

Clayton Williams Energy reported that the State Lease 3279 #1, an exploratory well drilled on the Floretta prospect in Plaquemines Parish, Louisiana, is in the process of being tested and completed. The well was drilled to a total depth of 14,330 feet to test a deep sand identified by 3-D seismic. This deep sand was nonproductive, and the well was plugged back to 12,800 feet. The well has been completed in one sand at this interval, and has been flow tested at a daily rate of 1,297 Mcf of gas and 940 Bbls of water on a 14/64 inch choke with 3,474 psi. Two additional sands, which the Company believes will be productive, remain behind pipe. Production equipment is currently being installed, and sales are expected to begin late in the third quarter. Beginning with first production, the Company will own a 70% working interest in this well. The Company plans to evaluate the production performance of this well before making any assessment of its potential reserves.

The Company will take a pre-tax charge in the second quarter of approximately $900,000 associated with the abandonment of the deep sand.