Clayton Williams Energy's CEO Discusses Q4 2012 Results - Earnings Call Transcript
February 21, 2013 8:33 PM ET
Start Time: 14:30
End Time: 15:03
Clayton Williams Energy, Inc. (CWEI)
Q4 2012 Earnings Conference Call
February 21, 2013 2:30 p.m.ET
Patti Hollums – Director of Investor Relations
Clayton Williams – President & CEO
Mel Riggs – EVP & COO
Mike Pollard – SVP & CFO
Welles Fitzpatrick – Johnson Rice
Ryan Oatman – SunTrust
Mike Kelly – Global Hunter
Gianna Bern – Brookshire Advisory & Research
Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Clayton Williams Energy Fourth Quarter 2012 and Year End 2012 Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at the time. (Operator Instructions) As a reminder this conference is being recorded.
I would now like to introduce our host for today, Ms. Patti Hollums, Director of Investor Relations. Ma’am please go ahead.
Thank you, good afternoon. Thank you for joining the Clayton Williams Energy year-end and fourth quarter 2012 results conference call. Participating on our call today is Clayton Williams, President and CEO; Mel Riggs, Executive Vice President and COO and Mike Pollard, Senior Vice President and CFO. We also have several other members our management team here available for questions.
During this call we will discuss our year-end and fourth quarter results and operations update that were issued this morning. This call will be recorded and will be available for replay on our website at claytonwilliams.com. Our call today will consist of a financial presentation given by Mr. Pollard, an overview by Mr. Riggs, and then an operations update given by Mr. Williams. We will then entertain a question-and-answer session for as long as time permits at the end of our presentation.
Please be advised that our remarks and answers to your questions include statements that we believe to be forward-looking statements. All statements that relate to future results are forward-looking statements that are based on current expectations. Actual results may differ materially from those expressed or implied by these forward-looking statements, because of the number of risks and uncertainties affecting our business, including those discussed in our quarterly and annual SEC filings, and in the cautionary statements contained in our press release and on our website.
With that being said, I will now turn the call over to Mr. Mike Pollard. Mike?
Thank you, Patti. For the year, we reported net income of $35.1 million or $2.89 per share on total revenues of $423 million and we generated $189 million of cash flow from operations. For the quarter, we reported net income of $1.7 million, $0.14 per share on total revenue of $102 million and we generated $31 million of cash flow from operations.
Taking a closer look at the quarter, production on a BOE basis was down 1% quarter-over-quarter. Our oil averaged 10,130 barrels per day, gas averaged 20.8 million cubic feet per day, and our natural gas liquids averaged 1,402 barrels per day which is more than double from the previous quarter.
With improvements that we’ve made recently in our infrastructures both in Reeves County and in Andrews County, we’ve been able to play our less gas and get more of it to market which has resulted in increases not only in our natural gas but also mass increases in natural gas liquids.
Our average oil price for the quarter was $85.86, up – excuse me, down 6%. Our average gas price was $4.02, down 18%, and our average natural gas liquids was $36.35 per barrel which is down 34%. Our production costs were $22.46 per barrel of oil equivalent which is up 21% from the quarter in 2011. Most of this increase is due to just the growing number of producing wells. Our cost of field services which includes salt water disposal is a large component of that and the higher Texas property taxes through increased appraisal evaluations. The buy-ins of our produced quarter continuing to rise as we bring new wells online, our salt water disposal system though in the Reeves County area is now fully functional. And we saved in the fourth quarter of 2012 about $1.7 million or about $3 per barrel for every barrel disposed just by having our facilities up and running.
We also have our oil pipeline became fully functional in December and about two-thirds of our oil production from the Reeves County area is flowing through the pipeline and natural gas has been on since earlier in the year but showing those infrastructure improvements in development of that is really been working well in the field.
Looking at our derivatives, our gain on settled derivative contracts was $1.6 million for the quarter that is compared to $50 million in the 2011 quarter. And in 2011, we monetized about $50 million of oil contracts for a early gain and that covered about $2.6 million barrels of oil that would have been hedged in 2012 and 2013.
Our DD&A per barrel of oil equivalent was 2,592 which is up 25% from the 2011 quarter. Most of that increase in the rate was attributed with our Andrews County wells. In the Wolfberry play we had a 5 million barrel of oil equivalent downward revision in that area due to well performance.
Turning to the balance sheet, long-term debt grows up to $810 million and its – an increase of $280 million for the year and $40 million for the quarter. At the end of the year, our outstanding balance on the revolver was $460 million and we had $350 million of senior notes outstanding.
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