Clayton Williams provided an operations update on its drilling activities, by area:

Wolfbone Oil Play (Reeves County, Texas) The Company is in the early stages of a major oil play in Reeves County targeting the Bone Springs and Wolfcamp formations (Wolfbone). The Company has leased 20,000 acres and will add significantly more acreage through a drill to earn farm-out agreement with Chesapeake Exploration. CWEI earns a 75% interest in 640 net acres for each well that it carries Chesapeake to the tanks for a quarter interest.

The Company is making significant front-end investments in this play: to acquire the acreage, the Chesapeake Carry, and to build pipelines and other infrastructure. The amount and timing of these investments will depend on drilling results.

Drilling and completion operations have begun on 13 wells. We are currently running seven rigs in Reeves County and plan to increase the rig count to 11 rigs in the near future.

"Early indications are encouraging," stated Clayton W. Williams, Jr., President and Chief Executive Officer of the Company, "but we need more production data. We are accelerating drilling operations to meet the Chesapeake agreement and to further evaluate our acreage."

Wolfberry Oil Play (Andrews County, Texas) To date, the Company has drilled 154 Wolfberry wells in Andrews County, 128 on 80-acre spacing and 26 on 40-acre spacing. The Company has an inventory of approximately 80 80-acre locations and 180 40-acre locations for future development drilling. The Company currently has three rigs running in Andrews County, but plans to reduce the rig count to one rig in the near future.

During the second quarter of 2011, the Company produced approximately 2,800 barrels of oil and natural gas liquids per day and 1,250 Mcf of natural gas per day from this area, as compared to 1,600 barrels and 400 Mcf per day during the second quarter of 2010.

Deep Bossier Trend The Company has begun drilling the Hamill Foundation #1, an 18,000-foot exploratory well in Leon County, Texas. This well targets a Deep Bossier sand that is offsetting and updip to the Company's Big Bill Simpson #1. The well is expected to cost approximately $10 million to drill to casing point.

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