CLAYTON WILLIAMS ENERGY INC /DE - FORM 8-K/A - EX-99.1 - EXHIBIT 99.1 - August 5, 2016

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Exhibit 99.1


CLAYTON WILLIAMS ENERGY REVISED SECOND QUARTER
AND SIX MONTHS 2016 GAAP NET LOSS


Midland, Texas, August 5, 2016 (BUSINESS WIRE) - Clayton Williams Energy, Inc. (the “Company”) (NYSE: CWEI) announced revised GAAP net losses for the three months and six months ended June 30, 2016 to account for a change in tax expense associated with charges related to fair value of common stock warrants. 

The Company revised its estimated annualized effective income tax rate from a benefit of 35.1% to a benefit of 30.8% of pre-tax loss for the six months ended June 30, 2016.  The change in estimated tax rate was made to give effect to the treatment of $31.6 million of cumulative loss on change in fair value of common stock warrants as a permanent difference. 

As revised, GAAP net loss for the three months and six months ended June 30, 2016 were $80.9 million ($6.65 per basic and diluted share) and $116.2 million ($9.55 per basic and diluted share), respectively.  Adjusted net loss (non-GAAP) for the three months and six months ended June 30, 2016 were revised to $37.6 million ($3.09 per basic and diluted share) and $69.2 million ($5.69 per basic and diluted share). See accompanying tables for updated consolidated statements of operations, consolidated balance sheet and consolidated statements of cash flows as of and for the periods ended June 30, 2016, along with related computations of non-GAAP measures for adjusted net loss and EBITDAX and reconciliations of such non-GAAP measures to the applicable GAAP measures.

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

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  All statements, other than statements of historical or current facts, that address activities, events, outcomes and other matters that we plan, expect, intend, assume, believe, budget, predict, forecast, project, estimate or anticipate (and other similar expressions) will, should or may occur in the future are forward-looking statements.  These forward-looking statements are based on management's current belief, based on currently available information, as to the outcome and timing of future events.  The Company cautions that its future natural gas and liquids production, revenues, cash flows, liquidity, plans for future operations, expenses, outlook for oil and natural gas prices, timing of capital expenditures and other forward-looking statements are subject to all of the risks and uncertainties, many of which are beyond our control, incident to the exploration for and development, production and marketing of oil and gas.

These risks include, but are not limited to, the possibility of unsuccessful exploration and development drilling activities, our ability to replace and sustain production, commodity price volatility, domestic and worldwide economic conditions, the availability of capital on economic terms to fund our capital expenditures and acquisitions, our level of indebtedness, the impact of the current economic recession on our business operations, financial condition and ability to raise capital, declines in the value of our oil and gas properties resulting in a decrease in our borrowing base under our credit facility and impairments, the ability of financial counterparties to perform or fulfill their obligations under existing agreements, the uncertainty inherent in estimating proved oil and gas reserves and in projecting future rates of production and timing of development expenditures, drilling and other operating risks, lack of availability of goods and services, regulatory and environmental risks associated with drilling and production activities, the adverse effects of changes in applicable tax, environmental and other regulatory legislation, and other risks and uncertainties are described in the Company's filings with the Securities and Exchange Commission.  The Company undertakes no obligation to publicly update or revise any forward-looking statements.



Contact:

Patti Hollums                    Michael L. Pollard
Director of Investor Relations            Chief Financial Officer
(432) 688-3419                    (432) 688-3029
e-mail: cwei@claytonwilliams.com
website: www.claytonwilliams.com


TABLES AND SUPPLEMENTAL INFORMATION FOLLOW


CLAYTON WILLIAMS ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
REVENUES
 
 
 
 
 
 
 
    Oil and gas sales
$
41,055

 
$
68,662

 
$
69,881

 
$
127,232

    Midstream services
1,072

 
1,603

 
2,359

 
3,214

    Drilling rig services
—

 
—

 
—

 
23

    Other operating revenues
68

 
2,966

 
269

 
6,904

        Total revenues
42,195

 
73,231

 
72,509

 
137,373

 
 
 
 
 
 
 
 
COSTS AND EXPENSES
 

 
 
 
 
 
 
    Production
19,230

 
23,093

 
36,384

 
46,523

    Exploration:
 

 
 

 
 

 
 

      Abandonments and impairments
34

 
2,508

 
1,024

 
4,131

      Seismic and other
318

 
105

 
429

 
971

    Midstream services
833

 
534

 
1,169

 
933

    Drilling rig services
1,197

 
1,620

 
2,466

 
3,496

    Depreciation, depletion and amortization
38,178

 
42,121

 
76,791

 
84,775

    Impairment of property and equipment
—

 
—

 
2,347

 
2,531

    Accretion of asset retirement obligations
1,041

 
977

 
2,070

 
1,935

    General and administrative
13,565

 
11,328

 
17,456

 
20,471

    Other operating expenses
1,364

 
2,003

 
2,515

 
2,847

        Total costs and expenses
75,760

 
84,289

 
142,651

 
168,613

        Operating loss
(33,565
)
 
(11,058
)
 
(70,142
)
 
(31,240
)
 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSE)
 

 
 

 
 
 
 
  Interest expense
(26,557
)
 
(13,609
)
 
(43,644
)
 
(26,886
)
  Loss on change in fair value of common stock warrants
(37,910
)
 
—

 
(31,605
)
 
—

  Loss on commodity derivatives
(15,953
)
 
(12,300
)
 
(15,327
)
 
(7,668
)
  Impairment of investment and other
372

 
871

 
(7,199
)
 
1,564

       Total other income (expense)
(80,048
)
 
(25,038
)
 
(97,775
)
 
(32,990
)
Loss before income taxes
(113,613
)
 
(36,096
)
 
(167,917
)
 
(64,230
)
Income tax benefit
32,676

 
12,764

 
51,719

 
22,666

NET LOSS
$
(80,937
)
 
$
(23,332
)
 
$
(116,198
)
 
$
(41,564
)
 
 
 
 
 
 
 
 
Net loss per common share:
 

 
 

 
 
 
 
  Basic
$
(6.65
)
 
$
(1.92
)
 
$
(9.55
)
 
$
(3.42
)
  Diluted
$
(6.65
)
 
$
(1.92
)
 
$
(9.55
)
 
$
(3.42
)
Weighted average common shares outstanding:
 

 
 

 
 

 
 

  Basic
12,170

 
12,170

 
12,170

 
12,170

  Diluted
12,170

 
12,170

 
12,170

 
12,170





CLAYTON WILLIAMS ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
 
ASSETS
 
June 30,
 
December 31,
 
2016
 
2015
CURRENT ASSETS
(Unaudited)
 
 
 
 

 
 

Cash and cash equivalents
$
63,627

 
$
7,780

Investments - certificates of deposit and commercial paper
93,951

 
—

Accounts receivable:
 

 
 

Oil and gas sales
16,804

 
16,660

Joint interest and other, net
3,112

 
3,661

Affiliates
238

 
260

Inventory
27,735

 
31,455

Deferred income taxes
9,280

 
6,526

Fair value of commodity derivatives
218

 
—

Prepaids and other
2,574

 
2,463

 
217,539

 
68,805

PROPERTY AND EQUIPMENT
 

 
 

Oil and gas properties, successful efforts method
2,615,105

 
2,585,502

Pipelines and other midstream facilities
61,323

 
60,120

Contract drilling equipment
123,917

 
123,876

Other
19,176

 
19,371

 
2,819,521

 
2,788,869

Less accumulated depreciation, depletion and amortization
(1,656,134
)
 
(1,587,585
)
Property and equipment, net
1,163,387

 
1,201,284

 
 
 
 
OTHER ASSETS
 

 
 

Fair value of commodity derivatives
324

 
—

Investments and other
7,041

 
17,331

 
7,365

 
17,331

 
$
1,388,291

 
$
1,287,420

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
 

 
 

Accounts payable:
 

 
 

Trade
$
25,537

 
$
29,197

Oil and gas sales
17,816

 
19,490

Affiliates
195

 
383

Fair value of commodity derivatives
13,387

 
—

Accrued liabilities and other
16,635

 
16,669

 
73,570

 
65,739

NON-CURRENT LIABILITIES
 

 
 

Long-term debt
930,129

 
742,410

Deferred income taxes
60,031

 
108,996

Fair value of commodity derivatives
2,458

 
—

Fair value of common stock warrants
48,368

 
—

Asset retirement obligations
61,482

 
48,728

Accrued compensation under non-equity award plans
23,870

 
16,254

Deferred revenue from volumetric production payment and other
4,983

 
5,695

 
1,131,321

 
922,083

STOCKHOLDERS’ EQUITY
 

 
 

Preferred stock, par value $.10 per share
—

 
—

Common stock, par value $.10 per share
1,216

 
1,216

Additional paid-in capital
152,686

 
152,686

Retained earnings
29,498

 
145,696

Total stockholders' equity
183,400

 
299,598

 
$
1,388,291

 
$
1,287,420




CLAYTON WILLIAMS ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
CASH FLOWS FROM OPERATING ACTIVITIES
 

 
 

 
 

 
 

Net loss
$
(80,937
)
 
$
(23,332
)
 
$
(116,198
)
 
$
(41,564
)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
 
 
 

 
 

 
 

Depreciation, depletion and amortization
38,178

 
42,121

 
76,791

 
84,775

Impairment of property and equipment
—

 
—

 
2,347

 
2,531

Abandonments and impairments
34

 
2,508

 
1,024

 
4,131

(Gain) loss on sales of assets and impairment of inventory, net
1,255

 
(1,178
)
 
1,963

 
(4,249
)
Deferred income tax benefit
(32,676
)
 
(12,764
)
 
(51,719
)
 
(22,666
)
Non-cash employee compensation
8,936

 
5,770

 
7,868

 
7,084

Loss on commodity derivatives
15,953

 
12,300

 
15,327

 
7,668

Cash settlements of commodity derivatives
(2,906
)
 
(1,767
)
 
(24
)
 
(1,767
)
Accretion of asset retirement obligations
1,041

 
977

 
2,070

 
1,935

Amortization of debt issue costs and original issue discount
1,572

 
748

 
3,953

 
1,495

Loss on change in fair value of common stock warrants
37,910

 
—

 
31,605

 
—

Amortization of deferred revenue from volumetric production payment
(437
)
 
(1,723
)
 
(639
)
 
(3,501
)
Paid in-kind interest expense
13,271

 
—

 
13,271

 
—

Impairment of investment and other
149

 
(94
)
 
8,381

 
404

Changes in operating working capital:
 
 
 

 
 
 
 
Accounts receivable
(4,176
)
 
(1,528
)
 
427

 
21,027

Accounts payable
(704
)
 
(33
)
 
(11,356
)
 
(26,211
)
Other
(13,091
)
 
(13,469
)
 
(1,197
)
 
(2,472
)
Net cash provided by (used in) operating activities
(16,628
)
 
8,536

 
(16,106
)
 
28,620

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 

 
 

 
 

Additions to property and equipment
(14,734
)
 
(35,730
)
 
(28,974
)
 
(125,267
)
Purchase of certificates of deposit and commercial paper
(93,951
)
 
—

 
(93,951
)
 
—

Proceeds from sales of assets
3,796

 
27,745

 
5,176

 
32,740

Decrease (increase) in equipment inventory
263

 
(680
)
 
477

 
1,027

Proceeds from volumetric production payment and other
(6
)
 
232

 
132

 
498

Net cash used in investing activities
(104,632
)
 
(8,433
)
 
(117,140
)
 
(91,002
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 

 
 

 
 

Proceeds from long-term debt
—

 
—

 
343,237

 
42,000

Proceeds from issuance of common stock warrants
—

 
—

 
16,763

 
—

Repayments of long-term debt
—

 
—

 
(160,000
)
 
—

Payment of debt issuance costs
(4
)
 
—

 
(10,907
)
 
—

Net cash provided by (used in) financing activities
(4
)
 
—

 
189,093

 
42,000

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(121,264
)
 
103

 
55,847

 
(20,382
)
CASH AND CASH EQUIVALENTS
 

 
 

 
 

 
 

Beginning of period
184,891

 
7,531

 
7,780

 
28,016

End of period
$
63,627

 
$
7,634

 
$
63,627

 
$
7,634




CLAYTON WILLIAMS ENERGY, INC.
COMPUTATION OF ADJUSTED NET LOSS (NON-GAAP)
(Unaudited)
(In thousands, except per share)
Adjusted net loss is presented as a supplemental non-GAAP financial measure because of its wide acceptance by financial analysts, investors, debt holders, banks, rating agencies and other financial statement users as a tool for operating trends analysis and industry comparisons. Adjusted net loss is not an alternative to net loss presented in conformity with GAAP.
 
 
 
 
 
 
 
 
The Company defines adjusted net loss as net loss before changes in fair value of commodity derivatives and common stock warrants, abandonments and impairments, impairments of property and equipment, net (gain) loss on sales of assets and impairment of inventory, amortization of deferred revenue from volumetric production payment, impairment of investments, certain non-cash and unusual items and the impact on taxes of the adjustments for each period presented.
 
 
 
 
 
 
 
 
The following table is a reconciliation of net loss (GAAP) to adjusted net loss (non-GAAP):
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2016
 
2015
 
2016
 
2015
Net loss
$
(80,937
)
 
$
(23,332
)
 
$
(116,198
)
 
$
(41,564
)
Loss on commodity derivatives
15,953

 
12,300

 
15,327

 
7,668

Cash settlements of commodity derivatives
(2,906
)
 
(1,767
)
 
(24
)
 
(1,767
)
Loss on change in fair value of common stock warrants
37,910

 
—

 
31,605

 
—

Abandonments and impairments
34

 
2,508

 
1,024

 
4,131

Impairment of property and equipment
—

 
—

 
2,347

 
2,531

Net (gain) loss on sales of assets and impairment of inventory
1,255

 
(1,178
)
 
1,963

 
(4,249
)
Amortization of deferred revenue from volumetric production payment
(437
)
 
(1,723
)
 
(639
)
 
(3,501
)
Non-cash employee compensation
8,936

 
5,770

 
7,868

 
7,084

Impairment of investment and other
149

 
(94
)
 
8,381

 
404

Tax impact (a)
(17,537
)
 
(5,599
)
 
(20,898
)
 
(4,342
)
Adjusted net loss
$
(37,580
)
 
$
(13,115
)
 
$
(69,244
)
 
$
(33,605
)
 
 
 
 
 
 
 
 
Adjusted earnings per share:
 
 
 
 
 
 
 
Diluted
$
(3.09
)
 
$
(1.08
)
 
$
(5.69
)
 
$
(2.76
)
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Diluted
12,170
 
12,170
 
12,170
 
12,170
 
 
 
 
 
 
 
 
Effective tax rates
28.8
%
 
35.4
%
 
30.8
%
 
35.3
%
_______
 
 
 
 
 
 
 
(a)
The tax impact is computed utilizing the Company’s effective tax rate on the adjustments for each period presented.



CLAYTON WILLIAMS ENERGY, INC.
COMPUTATION OF EBITDAX (NON-GAAP)
(Unaudited)
(In thousands)
EBITDAX is presented as a supplemental non-GAAP financial measure because of its wide acceptance by financial analysts, investors, debt holders, banks, rating agencies and other financial statement users as an indication of an entity's ability to meet its debt service obligations and to internally fund its exploration and development activities. EBITDAX is not an alternative to net loss or cash flow from operating activities, or any other measure of financial performance presented in conformity with GAAP.
 
 
 
 
 
 
 
 
The Company defines EBITDAX as net loss before interest expense, income taxes, exploration costs, net (gain) loss on sales of assets and impairment of inventory, and all non-cash items in the Company's statements of operations, including depreciation, depletion and amortization, impairment of property and equipment, accretion of asset retirement obligations, amortization of deferred revenue from volumetric production payment, certain employee compensation, changes in fair value of commodity derivatives and common stock warrants, impairment of investments and certain non-cash and unusual items.
 
 
 
 
 
 
 
 
The following table reconciles net loss to EBITDAX:
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2016
 
2015
 
2016
 
2015
Net loss
$
(80,937
)
 
$
(23,332
)
 
$
(116,198
)
 
$
(41,564
)
Interest expense
26,557

 
13,609

 
43,644

 
26,886

Income tax benefit
(32,676
)
 
(12,764
)
 
(51,719
)
 
(22,666
)
Exploration:
 
 
 
 
 
 
 
Abandonments and impairments
34

 
2,508

 
1,024

 
4,131

Seismic and other
318

 
105

 
429

 
971

Net (gain) loss on sales of assets and impairment of inventory
1,255

 
(1,178
)
 
1,963

 
(4,249
)
Depreciation, depletion and amortization
38,178

 
42,121

 
76,791

 
84,775

Impairment of property and equipment
—

 
—

 
2,347

 
2,531

Accretion of asset retirement obligations
1,041

 
977

 
2,070

 
1,935

Amortization of deferred revenue from volumetric production payment
(437
)
 
(1,723
)
 
(639
)
 
(3,501
)
Non-cash employee compensation
8,936

 
5,770

 
7,868

 
7,084

Loss on commodity derivatives
15,953

 
12,300

 
15,327

 
7,668

Cash settlements of commodity derivatives
(2,906
)
 
(1,767
)
 
(24
)
 
(1,767
)
Loss on change in fair value of common stock warrants
37,910

 
—

 
31,605

 
—

Impairment of investment and other
149

 
(94
)
 
8,381

 
404

EBITDAX
$
13,375

 
$
36,532

 
$
22,869

 
$
62,638

 
 
 
 
 
 
 
 
The following table reconciles net cash provided by (used in) operating activities to EBITDAX:
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities
$
(16,628
)
 
$
8,536

 
$
(16,106
)
 
$
28,620

Changes in operating working capital
17,971

 
15,030

 
12,126

 
7,656

Seismic and other
318

 
105

 
429

 
971

Cash interest expense
11,714

 
12,861

 
26,420

 
25,391

 
$
13,375

 
$
36,532

 
$
22,869

 
$
62,638




CLAYTON WILLIAMS ENERGY INC /DE Reports