Clayton Williams Energy, Inc. (the “Company”) (NYSE:CWEI) today reported its financial results for the third quarter 2014.
Quarter Highlights
- Oil and Gas Production of 15,586 BOE/d, up 13% (21% PF for Asset Sales)
- Adjusted Net Income1 (non-GAAP) of $17.4 million, in line with consensus estimates
- EBITDA2 (non-GAAP) of $78.1 million, up 14%
- Lifting Costs Averaged $14.19 per BOE, down 11%
Financial Results for the Third Quarter of 2014
Net income attributable to Company stockholders for the third quarter of 2014 (“3Q14”) was $27.4 million, or $2.25 per share, as compared to a net income of $11 million, or $0.90 per share, for the third quarter of 2013 (“3Q13”). Adjusted net income1 (non-GAAP) for 3Q14 was $17.4 million, or $1.43 per share, as compared to $15.1 million, or $1.24 per share, for 3Q13. Cash flow from operations for 3Q14 was $86.7 million as compared to $71 million for 3Q13. EBITDA2 (non-GAAP) for 3Q14 was $78.1 million as compared to $68.6 million for 3Q13.
For the nine months ended September 30, 2014, net income attributable to Company stockholders was $48.1 million, or $3.96 per share, as compared to a net loss of $31.3 million, or $2.57 per share, for the same period in 2013. Adjusted net income1 (non-GAAP) for the nine months ended September 30, 2014 was $52.1 million, or $4.28 per share, as compared to $23.4 million, or $1.92 per share, for the same period in 2013. Cash flow from operations for the nine-month period in 2014 was $211.7 million as compared to $153.9 million during the same period in 2013. EBITDA2 (non-GAAP) for the nine-month period in 2014 was $236.5 million as compared to $184 million during the same period in 2013.
The key factors affecting the comparability of financial results for 3Q14 versus 3Q13 were:
- The Company sold all of its interests in certain non-core Austin Chalk/Eagle Ford assets in March 2014 and sold 95% of its Andrews County Wolfberry assets in April 2013. As a result, reported oil and gas production, revenues and operating costs for the quarter and nine months ended September 30, 2014 are not comparable to reported amounts for the same periods in 2013. See accompanying tables for additional information about the Company’s oil and gas production related to these sold assets.
- Oil and gas sales, excluding amortized deferred revenues, increased $3.7 million in 3Q14 versus 3Q13. Production variances accounted for a $16.6 million increase and price variances accounted for a $12.9 million decrease. Average realized oil prices were $90.73 per barrel in 3Q14 versus $103.75 per barrel in 3Q13, and average realized gas prices were $4.14 per Mcf in 3Q14 versus $3.49 per Mcf in 3Q13. Oil and gas sales in 3Q14 also include $1.9 million of amortized deferred revenue versus $2.2 million in 3Q13 attributable to a volumetric production payment (“VPP”). Reported production and related average realized sales prices exclude volumes associated with the VPP.
- Before giving effect to the asset sales discussed above, oil, gas and natural gas liquids (“NGL”) production per barrel of oil equivalent (“BOE”) increased 13% in 3Q14 as compared to 3Q13, with oil production increasing 17% to 11,304 barrels per day, gas production decreasing 2% to 16,304 Mcf per day, and NGL production increasing 15% to 1,565 barrels per day. Oil and NGL production accounted for approximately 83% of the Company’s total BOE production in 3Q14 versus 80% in 3Q13. See accompanying tables for additional information about the Company’s oil and gas production.
- After giving effect to asset sales, total production per BOE increased 21% in 3Q14 as compared to 3Q13, with oil production increasing 2,456 barrels per day (28%), gas production decreasing 164 Mcf per day (1%) and NGL production increasing 239 barrels per day (18%).
- Gain on derivatives for 3Q14 was $9.6 million (net of a $0.2 million loss on settled contracts) versus a loss on derivatives in 3Q13 of $8.3 million (including a $0.5 million loss on settled contracts). See accompanying tables for additional information about the Company’s accounting for derivatives.
- General and administrative expenses were $0.8 million in 3Q14 versus $10 million in 3Q13. Changes in compensation expense attributable to the Company’s APO reward plans accounted for a net decrease of $7.5 million ($5.7 million credit in 3Q14 versus $1.8 million expense in 3Q13). The credit in 3Q14 resulted from reversals of previously accrued compensation due primarily to lower product prices.
1 See “Computation of Adjusted Net Income (non-GAAP)” below for an explanation of how the Company calculates and uses adjusted net income (non-GAAP) and for a reconciliation of net income (loss) (GAAP) to adjusted net income (non-GAAP).
2 See “Computation of EBITDA (non-GAAP)” below for an explanation of how the Company calculates and uses EBITDA (non-GAAP) and for a reconciliation of net income (loss) (GAAP) to EBITDA (non-GAAP).
Liquidity
As previously reported, the Company sold its interests in approximately 7,500 net acres in Ward and Winkler Counties, Texas for $29.3 million during 3Q14. Proceeds from the sale were used to reduce bank debt. At September 30, 2014, bank commitments under the Company’s revolving credit facility totaled $415 million, and outstanding advances totaled $32 million. The Company had $377.1 million of availability under the facility after allowing for outstanding letters of credit of $5.9 million.
Scheduled Conference Call
The Company will host a conference call to discuss these results and other forward-looking items today, October 23rd at 1:30 p.m. CT (2:30 p.m. ET). The dial-in conference number is: 877-868-1835, passcode 20900942. The replay will be available for one week at 855-859-2056, passcode 20900942.
To access the conference call via Internet webcast, please go to the “Investors” section of the Company’s website at www.claytonwilliams.com and click on the webcast link. Following the live webcast, the call will be archived for a period of 30 days on the Company’s website.
Clayton Williams Energy, Inc. is an independent energy company located in Midland, Texas.
