MIDLAND, Texas- Clayton Williams Energy, Inc. recorded another losing quarter, a Q1 a net loss of $35.3 million, or $2.90 per share, as compared to a net loss of $18.2 million, or $1.50 per share, for Q4 2015.
Adjusted net loss (non-GAAP) for 1Q16 was $30.7 million, or $2.53 per share, as compared to adjusted net loss1 (non-GAAP) of $20.5 million, or $1.69 per share, for 1Q15. Cash flow from operations for 1Q16 was $0.5 million as compared to $20.1 million for 1Q15. EBITDAX2 (non-GAAP) for 1Q16 was $9.5 million as compared to $26.1 million for 1Q15.
The key factors affecting the comparability of financial results for 1Q16 versus 1Q15 were:
- Oil and gas sales for 1Q16, excluding amortized deferred revenues, decreased $28.2 million compared to 1Q15. Price variances accounted for a $15.9 million decrease and production variances accounted for a $12.3 million decrease. Average realized oil prices were $28.10 per barrel in 1Q16 versus $43.90 per barrel in 1Q15, average realized gas prices were $1.74 per Mcf in 1Q16 versus $2.65 per Mcf in 1Q15, and average realized NGL prices were $8.91 per barrel in 1Q16 versus $13.01 per barrel in 1Q15.
- Oil, gas and NGL production boe decreased 21 per cent in 1Q16 as compared to 1Q15, with oil production decreasing 25 per cent to 9,868 barrels per day, gas production decreasing 9 per cent to 14,242 Mcf per day, and NGL production decreasing 6 per cent to 1,396 barrels per day. Oil and NGL production accounted for approximately 83 per cent of the Company’s total BOE production in 1Q16 versus 85 per cent in 1Q15. After giving effect to the sale of selected leases and wells in South Louisiana in Sept. 2015, oil, gas and NGL production per BOE decreased 19 per cent in 1Q16 as compared to 1Q15.
- Production costs in 1Q16 were $17.2 million versus $23.4 million in 1Q15 due primarily to lower oilfield service costs and reductions in production taxes associated with a decrease in commodity prices. Production costs on a BOE basis, excluding production taxes, decreased 2% to $12.97 per BOE in 1Q16 versus $13.26 per BOE in 1Q15.
- Interest expense for 1Q16 was $17.1 million versus $13.3 million for 1Q15. The increase was due primarily to incremental interest expense on funded indebtedness incurred under a second lien term loan credit facility issued in connection with a refinancing in March 2016 and to the write-off of debt issuance costs associated with a reduction in aggregate lender commitments under our revolving credit facility.
- In connection with the Refinancing, the company issued warrants to purchase 2,251,364 shares of its common stock at a price of $22.00 per share for cash consideration of $16.8 million. The warrants expire in 2026 and contain various anti-dilution provisions. The company accounts for the warrants as derivative instruments and carries the warrants as a non-current liability at their fair value. The company recorded a $6.3 million gain on change in fair value in 1Q16.
- Gain on commodity derivatives for 1Q16 was $0.6 million (including a $2.9 million gain on settled contracts) versus a gain on commodity derivatives in 1Q15 of $4.6 million (no gain or loss on settled contracts).
- Lower commodity prices negatively impacted the Company’s results of operations due to asset impairments. Clayton Williams recorded an impairment of proved properties in 1Q16 of $2.3 million related to the write-down of certain non-core properties located primarily in Oklahoma and the Permian Basin to their estimated fair value. By comparison, the Company recorded an impairment of proved properties in 1Q15 of $2.5 million related to the write-down of certain non-core properties located in Louisiana to their estimated fair value.
- The Company recorded an $8.4 million charge to fully impair the carrying value of the Company’s investment in Dalea Investment Group, LLC in 1Q16, as compared to a partial impairment of this investment of $0.9 million in 1Q15.
- General and administrative expenses for 1Q16 were $3.9 million versus $9.1 million for 1Q15. Changes in compensation expense attributable to the company’s APO reward plans accounted for a net decrease of $2.9 million ($0.8 million credit in 1Q16 versus a $2.1 million expense in 1Q15). The remaining decrease was largely attributable to salary and personnel reductions.