Clayton Williams Energy, Inc. (NASDAQ:CWEI) today updated the status of the Margarita #1, its Bossier wildcat test in Robertson County, Texas. The Company reported that it had suspended drilling operations on the Margarita #1, the second well in its East Texas Bossier exploration program, at a vertical depth of approximately 18,300 feet after failing to encounter the target sands in the deep Bossier formation. The Company has identified a secondary objective in the upper Bossier formation and currently plans to attempt to complete the well at a vertical depth of approximately 14,900 feet. The Company is currently evaluating the geological data obtained in drilling the Margarita #1 to determine the impact of this result on other drilling opportunities in the Robertson County area.
To date, the Company has incurred drilling costs of approximately $13 million and expects to spend an additional $1.5 million to attempt completion in the upper Bossier formation. The Company will record a pretax charge to exploration expense of approximately $3 million in the third quarter of 2007 related to the partial abandonment of the Margarita #1 below the interval identified for the completion attempt. Depending on the results of the planned completion attempt in the upper Bossier formation, additional charges to exploration expense may be necessary.
Clayton Williams Energy, Inc. is an independent energy company located in Midland, Texas.
Except for historical information, statements made in this release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on assumptions and estimates that management believes are reasonable based on currently available information; however, management's assumptions and the Company's future performance are subject to a wide range of business risks and uncertainties, and there is no assurance that these goals and projections can or will be met. Any number of factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to, production variance from expectations, volatility or oil and gas prices, the need to develop and replace reserves, the substantial capital expenditures required to fund operations, exploration risks, uncertainties about estimates of reserves, competition, government regulation, costs and results of drilling new projects, and mechanical and other inherent risks associated with oil and gas production. These risks and uncertainties are described in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements.