Clayton Williams Energy reported a consolidated net loss for the first quarter of 2009 of $21.3 million as compared to net income of $7.3 million in the year-ago quarter. It also reported consolidated cash flow from operations for the first quarter of 2009 was $13.3 million, as compared to $78.1 million in the year-ago quarter.
The current global recession had a major adverse affect on Clayton Williams Energy’s operating results for the first quarter of 2009. Oil and gas sales declined 57% from $118.9 million in the year-ago quarter to $50.8 million for the same quarter in 2009.
Substantially all of the reduction in oil and gas sales was attributable to lower product prices. Average realized oil prices for the first quarter of 2009 reduced 62% to $37.09 per barrel from $96.37 per barrel in the 2008 period, while gas prices decreased 48% to $4.60 per Mcf from $8.86 per Mcf in the year-ago quarter. Average realized prices for 2009 and 2008 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 Clayton Williams Energy’s statements of operations as gain/loss on derivatives under applicable accounting standards.
Oil production for the first quarter of 2009 raised 10% to 751,000 barrels, or 8,344 barrels per day, compared to 684,000 barrels, or 7,516 barrels per day, in the year-ago quarter. Gas production for the first quarter 2009 declined 17% to 4.6 Bcf, or 51,256 Mcf per day, from 5.5 Bcf, or 60,967 Mcf per day, in the 2008 quarter. The comparability of production between the two quarters was affected by the sale of certain South Louisiana properties which produced a daily average of about 900 barrels of oil and 13,000 Mcf of gas in the 2008 quarter. After excluding the sold production from the 2008 reported volumes, oil production raised 26% during the 2009 quarter while gas production increased 7%.
For the first quarter of 2009, Clayton Williams Energy reported a $2.5 million net gain on derivatives, consisting of a $1.1 million realized gain on settled contracts and a $1.4 million non-cash gain to mark the company’s derivative positions to their fair value on March 31, 2009. For the same period in 2008, the company reported a $46.1 million net loss on derivatives, consisting of a $14.1 million realized loss on settled contracts and a $32 million non-cash loss due to changes in mark-to-market estimations.
Clayton Williams Energy recorded abandonment and impairment costs during the first quarter of 2009 of $12.4 million compared to $0.30 million in the year-ago quarter. The 2009 quarter included $10.9 million for leasehold impairments, of which $8.8 million related to the company’s East Texas Bossier area.
Loss on sale of assets and inventory write-downs for the first quarter of 2009, comprises of $3.3 million non-cash loss on inventory due mainly to a write-down of certain tubular equipment to its anticipated fair market value at March 31, 2009.
Clayton Williams Energy also reported that it had incurred expenditures for exploration and development activities of $37.9 million during first quarter of 2009 and has raised its estimates for capital expenditures in fiscal 2009 from $56 million to $78.5 million. The change in estimated expenditures for 2009 reflects higher anticipated levels of exploration and development activities in the Permian basin, East Texas Bossier and South Louisiana.
