Clayton Williams Energy, Inc. provided an update on its exploration and development activities by area.

East Texas Bossier

The Company has drilled two wells targeting the deep Bossier sands in East Texas: the Big Bill Simpson #1, a 19,000-foot exploratory well in Leon County (70% working interest), and the Margarita #1, a 20,000-foot exploratory well in Robertson County (100% working interest). The Big Bill Simpson #1 is currently producing approximately 500 gross (263 net) Mcf of gas per day, and the Margarita #1 is waiting on completion of pipeline facilities to begin production, but is expected to initially produce approximately 750 gross (563 net) Mcf of gas per day, based on well test data. The Big Bill Simpson encountered a thick section of lower and middle Bossier sands, but these sands had limited porosity. The Margarita well encountered only the upper Bossier sands. The Company plans to conduct a 3D seismic shoot over the Big Bill Simpson prospect in 2008 in an attempt to high grade possible locations for future drilling on this acreage.

"Although the production from these wells is non-commercial, we remain optimistic about our Bossier acreage," stated Clayton W. Williams, Jr., the Company's President and Chief Executive Officer. "Currently, we have 142,000 net acres under lease in the East Texas Bossier play, of which approximately 70,000 net acres are held by production. We also have approximately 170,000 net acres under lease in our Louisiana Bossier play."

North Louisiana

The Company continues to be encouraged by the results of its drilling program in the Terryville prospect in Lincoln Parish, where it has drilled a total of 13 wells in the Cotton Valley/Gray sand intervals since mid-2006. These wells are currently producing at combined rates of approximately 10,700 Mcf of gas per day and 310 barrels of oil per day, net to the Company's interest. The Company plans to drill five more development wells on the Terryville prospect in 2008.

In Lincoln Parish, on the Ruston prospect, the Company has drilled the LA Minerals #1 which is producing from the Gray sand. The Company is currently drilling the J.G. Mitchell #1 and plans to drill another three wells on this prospect in 2008.

South Louisiana

As previously reported, the Company has entered into an exploration agreement with an industry partner covering six of the Company's exploratory prospects in South Louisiana. The terms of the agreement obligate the industry partner to drill up to six wells, with the first well scheduled to commence mid-year. The partner will bear 85% of all drilling costs incurred to casing point and 50% of all subsequent costs to earn a 50% working interest in the wells.

In addition, the Company plans to drill the third well on its Fleur prospect to accelerate the production from an oil sand that is behind pipe in one of the existing wells on this prospect.

Austin Chalk (Trend)

The Company has begun an infill drilling program in the Austin Chalk (Trend), an oil-prone formation where the Company has significant holdings in Robertson, Burleson, Brazos, Milam and Leon Counties, Texas. Most of the wells in this area were drilled as horizontal wells, many with multiple laterals in different producing horizons. By increasing the density of the wells, the Company is adding new reserves and accelerating production from this field. Results of the program have been very encouraging to date. The Company currently has two drilling rigs operating in the area, and continues to supplement the drilling program with secondary re-fracturing operations on existing wells designed to improve production and add reserves.

Permian Basin

In the Permian Basin, the Company has a significant acreage position with a large inventory of potential drilling and recompletion projects. The Company intends to utilize four drilling rigs throughout the year in this area. Most of the activity is on the Company's War-Wink and Amacker-Tippett prospects in West Texas. In the War-Wink area, the Company is presently drilling horizontal wells targeting oil-prone sands in the Bone Spring formation and has identified at least 10 other possible locations to further exploit this area. On the Amacker-Tippett prospect, the Company has identified 15 possible locations on which to drill vertical wells. These wells will target oil-prone sands in the Spraberry and Wolfcamp formations, which are encountered at depths ranging from 7,000 to 10,500 feet. The Company has also identified several recompletion opportunities on existing vertical wells in the area.

Tags: Clayton Williams Energy