Clayton Williams Energy Provides Financial Guidance for 2008

A copy of these disclosures accompanies this release or may be obtained electronically by accessing the Company's website at www.claytonwilliams.com.

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 of 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.

Financial Guidance Disclosures Follow

CLAYTON WILLIAMS ENERGY, INC.

FINANCIAL GUIDANCE DISCLOSURES FOR 2008

Overview

Clayton Williams Energy, Inc. and its subsidiaries have prepared this document to provide public disclosure of certain financial and operating estimates in order to permit the preparation of models to forecast our operating results for each quarter during the year ending December 31, 2008. These estimates are based on information available to us as of the date of this filing, and actual results may vary materially from these estimates. We do not undertake any obligation to update these estimates as conditions change or as additional information becomes available.

The estimates provided in this document are based on assumptions that we believe are reasonable. Until our actual results of operations for these periods have been compiled and released, all of the estimates and assumptions set forth herein constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this document that address activities, events or developments that we expect, project, believe or anticipate will or may occur in the future, or may have occurred through the date of this filing, including such matters as production of oil and gas, product prices, oil and gas reserves, drilling and completion results, capital expenditures and other such matters, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the results, performance, or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: the volatility of oil and gas prices, the unpredictable nature of our exploratory drilling results; the reliance upon estimates of proved reserves; operating hazards and uninsured risks; competition; government regulation; and other factors referenced in filings made by us with the Securities and Exchange Commission.

As a matter of policy, we generally do not attempt to provide guidance on:

(a) production which may be obtained through future exploratory drilling;

(b) dry hole and abandonment costs that may result from future exploratory drilling;

(c) the effects of Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities";

(d) gains or losses from sales of property and equipment unless the sale has been consummated prior to the filing of financial guidance;

(e) capital expenditures related to completion activities on exploratory wells or acquisitions of proved properties until the expenditures are estimable and likely to occur; and

(f) revenues, expenses and minority interest related to our investment in Larclay JV.

As discussed in "Capital Expenditures," approximately 22% of our planned 2008 exploration and development expenditures relate to exploratory prospects. Exploratory prospects involve a higher degree of risk than development prospects. To offset the higher risk, we generally strive to achieve a higher reserve potential and rate of return on investments in exploratory prospects. Actual results from our exploratory drilling activities, when ultimately reported, may have a material impact on the estimates of oil and gas production and exploration costs stated in this guidance.

Summary of Estimates

The following table sets forth certain estimates being used by us to model our anticipated results of operations for each quarter during the fiscal year ending December 31, 2008. When a single value is provided, such value represents the mid-point of the approximate range of estimates. Otherwise, each range of values provided represents the expected low and high estimates for such financial or operating factor. See "Supplemental Information."

Year Ending December 31, 2008
-----------------------------------------------
Estimated Estimated
First Quarter Second Quarter
------------------------ --------------------
(Dollars in thousands, except per unit data)
Average Daily
Production:
Gas (Mcf) 57,000 to 61,000 54,000 to 58,000
Oil (Bbls) 6,750 to 6,950 7,600 to 7,800
Natural gas liquids
(Bbls) 575 to 625 575 to 625
Total gas
equivalents (Mcfe) 100,950 to 106,450 103,050 to 108,550

Differentials:
Gas (Mcf) $(0.40) to $(0.70) $(0.40) to $(0.70)
Oil (Bbls) $(2.80) to $(3.40) $(2.80) to $(3.40)
Natural gas liquids
(Bbls) $(22.00) to $(28.00) $(22.00) to $(28.00)

Costs Variable by
Production ($/Mcfe):
Production expenses
(including
production taxes) $2.10 to $2.30 $2.10 to $2.30
DD&A - Oil and gas
properties $2.00 to $2.30 $2.00 to $2.30

Other Revenues
(Expenses):
Natural gas
services:
Revenues $2,900 to $3,100 $2,900 to $3,100
Operating costs $(2,800) to $(3,000) $(2,800) to $(3,000)
Exploration costs:
Abandonments and
impairments $(1,000) to $(3,000) $(1,000) to $(3,000)
Seismic and other $(1,000) to $(2,000) $(500) to $(2,500)
DD&A - Other (a) $(250) to $(350) $(250) to $(350)
General and
administrative (a) $(4,750) to $(4,950) $(5,300) to $(5,500)
Interest expense (a) $(6,800) to $(7,000) $(7,000) to $(7,200)
Other income
(expense) $250 to $350 $250 to $350

Effective Federal and
State Income
Tax Rate:
Current 0% 0%
Deferred 35% 35%

Weighted Average
Shares Outstanding
(In thousands):
Basic 11,400 to 12,000 11,400 to 12,000
Diluted 11,400 to 12,600 11,400 to 12,600



Year Ending December 31, 2008
-----------------------------------------------
Estimated Estimated
Third Quarter Fourth Quarter
------------------------ ----------------------
(Dollars in thousands, except per unit data)
Average Daily
Production:
Gas (Mcf) 54,250 to 58,250 55,500 to 59,500
Oil (Bbls) 8,025 to 8,225 8,625 to 8,825
Natural gas liquids
(Bbls) 550 to 600 550 to 600
Total gas
equivalents (Mcfe) 105,700 to 111,200 110,550 to 116,050

Differentials:
Gas (Mcf) $(0.40) to $(0.70) $(0.40) to $(0.70)
Oil (Bbls) $(2.80) to $(3.40) $(2.80) to $(3.40)
Natural gas liquids
(Bbls) $(22.00) to $(28.00) $(22.00) to $(28.00)

Costs Variable by
Production ($/Mcfe):
Production expenses
(including
production taxes) $2.10 to $2.30 $2.00 to $2.20
DD&A - Oil and gas
properties $2.00 to $2.30 $2.00 to $2.30

Other Revenues
(Expenses):
Natural gas
services:
Revenues $2,900 to $3,100 $2,900 to $3,100
Operating costs $(2,800) to $(3,000) $(2,800) to $(3,000)
Exploration costs:
Abandonments and
impairments $(1,000) to $(3,000) $(1,000) to $(3,000)
Seismic and other $(500) to $(2,500) $(500) to $(2,500)
DD&A - Other (a) $(250) to $(350) $(250) to $(350)
General and
administrative (a) $(4,600) to $(4,800) $(5,300) to $(5,500)
Interest expense (a) $(7,150) to $(7,350) $(7,250) to $(7,450)
Other income
(expense) $250 to $350 $250 to $350

Effective Federal and
State Income
Tax Rate:
Current 0% 0%
Deferred 35% 35%

Weighted Average
Shares Outstanding
(In thousands):
Basic 11,400 to 12,000 11,400 to 12,000
Diluted 11,400 to 12,600 11,400 to 12,600


(a) Excludes amounts derived from Larclay JV.

Capital Expenditures

The following table sets forth, by area, certain information about our planned exploration and development activities for 2008.

Total
Planned
Expenditures
Year Ending Percentage
December 31, 2008 of Total
----------------- ----------
(In thousands)
Permian Basin $ 74,300 33%
Austin Chalk (Trend) 59,300 27%
North Louisiana 47,900 22%
East Texas Bossier 17,200 8%
South Louisiana 13,400 6%
Utah/California 8,300 4%
Other 100 -
----------------- ----------
$ 220,500 100%
================= ==========

Our actual expenditures during fiscal 2008 may be substantially higher or lower than these estimates since our plans for exploration and development activities may change during the year. Other factors, such as prevailing product prices and the availability of capital resources, could also increase or decrease the ultimate level of expenditures during fiscal 2008.

In 2008, we plan to allocate a majority of our capital resources to developmental drilling activities in oil-prone areas such as the Permian Basin and the Austin Chalk (Trend). In addition, we plan to continue drilling developmental gas wells in North Louisiana, primarily on our Terryville prospect. Based on these current estimates, approximately 78% of our expenditures for exploration and development activities for fiscal 2008 will relate to developmental prospects, as compared to an estimated 50% in fiscal 2007.

Supplementary Information

Oil and Gas Production

The following table summarizes, by area, our estimated daily net production for each quarter during the year ending December 31, 2008. These estimates represent the approximate mid-point of the estimated production range.

Daily Net Production for 2008
---------------------------------------
Estimated Estimated Estimated Estimated
First Second Third Fourth
Quarter Quarter Quarter Quarter
--------- --------- --------- ---------
Gas (Mcf):
Permian Basin 14,200 14,175 15,728 17,739
North Louisiana 11,778 10,747 11,163 12,304
South Louisiana 24,256 22,934 21,728 20,185
Austin Chalk (Trend) 2,111 2,001 1,925 1,913
Cotton Valley Reef Complex 6,322 5,824 5,391 5,033
Other 333 319 315 326
--------- --------- --------- ---------
Total 59,000 56,000 56,250 57,500
========= ========= ========= =========

Oil (Bbls):
Permian Basin 3,255 3,901 4,250 4,544
North Louisiana 389 341 315 337
South Louisiana 1,011 1,033 880 913
Austin Chalk (Trend) 2,128 2,359 2,615 2,866
Other 67 66 65 65
--------- --------- --------- ---------
Total 6,850 7,700 8,125 8,725
========= ========= ========= =========

Natural Gas Liquids (Bbls):
Permian Basin 166 165 163 163
Austin Chalk (Trend) 234 226 227 216
Other 200 209 185 196
--------- --------- --------- ---------
Total 600 600 575 575
========= ========= ========= =========

Accounting for Derivatives

The following summarizes information concerning our net positions in open commodity derivatives applicable to periods subsequent to December 31, 2007. The settlement prices of commodity derivatives are based on NYMEX futures prices.

Collars:
Gas Oil
----------------------- ----------------------
MMBtu (a) Floor Ceiling Bbls Floor Ceiling
--------- ----- ------- ------- ------ -------
Production Period:
1st Quarter 2008 434,000 $4.00 $ 5.15 132,000 $23.00 $ 25.07
2nd Quarter 2008 426,000 $4.00 $ 5.15 132,000 $23.00 $ 25.07
3rd Quarter 2008 419,000 $4.00 $ 5.15 128,000 $23.00 $ 25.07
--------- -------
1,279,000 392,000
========= =======


Swaps:
Gas Oil
--------------- ----------------
MMBtu (a) Price Bbls Price
--------- ----- --------- ------
Production Period:
1st Quarter 2008 1,800,000 $8.26 380,000 $91.85
2nd Quarter 2008 1,500,000 $8.16 330,000 $79.84
3rd Quarter 2008 1,500,000 $8.16 310,000 $78.96
4th Quarter 2008 1,500,000 $8.16 400,000 $82.21
2009 - $- 1,440,000 $85.30
--------- ---------
6,300,000 2,860,000
========= =========

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

In September 2007, we terminated certain fixed-priced oil swaps covering 270,000 barrels at a price of $78.64 from January 2008 through March 2008 and a price of $76.65 from April 2008 through December 2008, resulting in an aggregate loss of approximately $3.3 million, which will be paid to the counterparty monthly during 2008.

Interest Rates

The following summarizes information concerning our net positions in open interest rate swaps applicable to periods subsequent to December 31, 2007.

Interest Rate Swaps:
Fixed
Principal Libor
Balance Rates
------------ -----
Period:
January 1, 2008 to September 24, 2008 $100,000,000 4.73%
January 1, 2008 to November 1, 2008 $ 45,000,000 5.73%

We did not designate any of the derivatives shown in the preceding tables as cash flow hedges under SFAS 133; therefore, all changes in the fair value of these contracts prior to maturity, plus any realized gains or losses at maturity, will be recorded as other income (expense).