Clayton Williams Energy, Inc. (the "Company") (NASDAQ: CWEI) today reported its financial results for the third quarter of 2010.

Financial Results

Net income attributable to Company stockholders for the third quarter of 2010 was $11.6 million, or $.96 per share, as compared to a net loss of $13.6 million, or $1.12 per share, for the third quarter of 2009. Cash flow from operations for the third quarter of 2010 was $57.5 million as compared to $28.3 million during the same period in 2009.

For the nine months ended September 30, 2010, net income attributable to Company stockholders was $42.3 million, or $3.48 per share, as compared to a net loss of $74.5 million, or $6.14 per share, for the same period in 2009. Cash flow from operations for the nine-month period in 2010 was $154.2 million as compared to $68.2 million during the same period in 2009.

The key factors affecting the comparability of financial results for the third quarter of 2010 ("3Q10") versus the third quarter of 2009 ("3Q09") were:

• Oil and gas sales increased $22.5 million in 3Q10 versus 3Q09. Production variances accounted for $12.3 million of this increase, and price variances accounted for the remaining $10.2 million. Oil production increased 38% in 3Q10 compared to 3Q09 while gas production declined 35% versus 3Q09. Average realized oil prices were $73.18 per barrel in 3Q10 versus $64.60 per barrel in 3Q09, and average realized gas prices were $4.56 per Mcf in 3Q10 versus $3.79 per Mcf in 3Q09.
• Oil and gas production per BOE (barrel of oil equivalent) increased by 4% in 3Q10 as compared to 3Q09. Oil production for 3Q10 increased 38% to 915,000 barrels, or 9,946 barrels per day, as compared to 662,000 barrels, or 7,196 barrels per day, for 3Q09 due primarily to added production from the Company's oil-prone drilling programs in the Permian Basin and the Austin Chalk. Gas production for 3Q10 declined 35% to 2.5 Bcf, or 27,500 Mcf per day, as compared to 3.9 Bcf, or 42,391 Mcf per day, for 3Q09 due primarily to a combination of normal production declines from existing wells and the loss of production related to the sale of certain properties in North Louisiana in June 2010 as discussed below.
• In June 2010, the Company sold its interest in 22 operated and 76 non-operated producing wells in North Louisiana for net proceeds of $73.1 million. During 3Q09 the sold wells produced 230 barrels of oil per day and 10,076 Mcf of gas per day. After giving pro forma effect to the sale of these properties on the reported production for 3Q09, oil and gas production per BOE increased 19% as compared to a 4% unadjusted increase in production.
• Loss on derivatives for 3Q10 was $4 million ($8 million non-cash mark-to-market loss and $4 million realized gain on settled contracts) versus a gain in 3Q09 of $4.7 million ($10.6 million non-cash mark-to-market gain and $5.9 million realized loss on settled contracts). See accompanying tables for additional information about the Company's accounting for derivatives.
• Exploration charges decreased $23.3 million in 3Q10 to $1.7 million compared to $25 million in 3Q09 due primarily to the Company's current emphasis on developmental drilling.

Scheduled Conference Call

The Company will host a conference call to discuss these results and other forward-looking items, November 3rd at 1:30 pm CT (2:30 pm ET). The dial-in conference number is: 800-901-5213, passcode 75748062. The replay will be available for one week at 888-286-8010, passcode 88716373.

To access the conference call via Internet webcast, please go to the Investor Relations section of the Company's website at www.claytonwilliams.com and click on "Live Webcast." Following the live webcast, the call will be archived for a period of 90 days on the Company's website.

Clayton Williams Energy, Inc. is an independent energy company located in Midland, Texas.

This release contains 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.All statements, other than statements of historical or current facts, that address activities, events, outcomes and other matters that we plan, expect, intend, assume, believe, budget, predict, forecast, project, estimate or anticipate (and other similar expressions) will, should or may occur in the future are forward-looking statements.These forward-looking statements are based on management's current belief, based on currently available information, as to the outcome and timing of future events.The Company cautions that its future natural gas and liquids production, revenues, cash flows, liquidity, plans for future operations, expenses, outlook for oil and natural gas prices, timing of capital expenditures and other forward-looking statements are subject to all of the risks and uncertainties, many of which are beyond our control, incident to the exploration for and development, production and marketing of oil and gas.

These risks include, but are not limited to, the possibility of unsuccessful exploration and development drilling activities, our ability to replace and sustain production, commodity price volatility, domestic and worldwide economic conditions, the availability of capital on economic terms to fund our capital expenditures and acquisitions, our level of indebtedness, the impact of the current economic recession on our business operations, financial condition and ability to raise capital, declines in the value of our oil and gas properties resulting in a decrease in our borrowing base under our credit facility and impairments, the ability of financial counterparties to perform or fulfill their obligations under existing agreements, the uncertainty inherent in estimating proved oil and gas reserves and in projecting future rates of production and timing of development expenditures, drilling and other operating risks, lack of availability of goods and services, regulatory and environmental risks associated with drilling and production activities, the adverse effects of changes in applicable tax, environmental and other regulatory legislation, and other 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.

EBITDAX is presented as a supplemental non-GAAP financial measure because of its wide acceptance by financial analysts, investors, debt holders, banks, rating agencies and other financial statement users as an indication of an entity's ability to meet its debt service obligations and to internally fund its exploration and development activities.

The Company defines EBITDAX as net income (loss) before interest expense, income taxes, exploration costs, (gain)/loss on sales of assets and impairment of inventory and all non-cash items in the Company's statements of operations, including depreciation, depletion and amortization, impairment of property and equipment, accretion of abandonment obligations, certain employee compensation and changes in fair value of derivatives. EBITDAX is not an alternative to net income (loss) or cash flow from operating activities, or any other measure of financial performance presented in conformity with GAAP.

(a) One MMBtu equals one Mcf at a Btu factor of 1,000.

Clayton Williams Energy, Inc.
Patti Hollums, 432-688-3419
Director of Investor Relations
or
Mel G. Riggs, 432-688-3431
Chief Financial Officer
cwei@claytonwilliams.com
www.claytonwilliams.com