Clayton Williams Energy, Inc. (NASDAQ: CWEI) reported a net loss for the second quarter of 2008 of $21.2 million, or $1.75 per share, as compared to net income of $8.8 million, or $.77 per share, for the second quarter of 2007. Cash flow from operations for the second quarter of 2008 was $71.4 million, as compared to $53.7 million during the same period in 2007.

For the six months ended June 30, 2008, the Company reported a net loss of $14 million, or $1.19 per share, as compared to a net loss of $3.5 million, or $.31 per share, for the same period in 2007. Cash flow from operations for the six-month period in 2008 was $149.4 million, as compared to $89.9 million during the same period in 2007.

Oil and gas sales increased 79% from $74.9 million for the second quarter of 2007 to $134.3 million for the same quarter in 2008. On an Mcf equivalent basis, oil and gas production declined 4%, despite significant additions from the Company’s on-going developmental drilling programs, due to the loss of production from a previously-reported sale of South Louisiana assets. Oil production for the second quarter of 2008 increased 22% to 703,000 barrels, or 7,725 barrels per day, compared to 577,000 barrels, or 6,341 barrels per day, in the second quarter of 2007. Gas production decreased 19% to 4.2 Bcf, or 45,901 Mcf per day, from 5.2 Bcf, or 56,604 Mcf per day, in the 2007 quarter. The growth in oil production was attributed to in-fill drilling in the Austin Chalk (Trend) and increased drilling activities in the Permian Basin. As adjusted for the South Louisiana asset sale, gas production was favorably impacted by incremental production from the Company’s drilling activities in North Louisiana.

For the second quarter of 2008, average realized oil prices increased 94% to $121.51 per barrel from $62.51 per barrel in the 2007 period, while gas prices increased 54% to $11.07 per Mcf from $7.20 per Mcf in the same quarter of 2007. Average realized prices for 2008 and 2007 exclude the effects of any gains or losses realized on commodity hedging transactions since those derivatives were not designated as cash flow hedges and have been reported in the Company’s statements of operations as gain/loss on derivatives under applicable accounting standards.

For the second quarter of 2008, the Company reported a $148.6 million net loss on derivatives, consisting of a $113.6 million non-cash loss to mark the Company’s derivative positions to their fair value on June 30, 2008 and a $35 million realized loss on settled contracts. For the same period in 2007, the Company reported a $6.1 million net gain on derivatives, consisting of a $7.6 million non-cash gain due to changes in mark-to-market valuations and a $1.5 million realized loss on settled contracts.

In the second quarter of 2008, the Company recorded a net gain of $40.4 million for the sale of property and equipment which included a gain of $33.1 million from the South Louisiana sale and $5.7 million from the sale of the two 2,000 horsepower drilling rigs.

The Company recorded exploration costs during the second quarter of 2008 of $3.5 million compared to $25.1 million for the second quarter of 2007. The 2008 quarter included a charge of $1.8 million for the abandonment of the Wynn 35 #1 in North Louisiana and $1.6 million for seismic expense. The Company is continuing to monitor and evaluate its two exploratory wells in the Company’s East Texas Bossier prospect, the Big Bill Simpson #1 and the Margarita #1. If the Company is unable to establish sufficient production levels from either or both of these wells, results of operations in subsequent quarters may be adversely affected by the outcome of those wells.

The Company has increased its estimates for planned exploration and development expenditures for fiscal 2008 by $56.2 million from $344.5 million to $400.7 million. Most of the planned increase in capital spending relates to developmental drilling activities in the Permian Basin and North Louisiana and exploratory drilling activities in South Louisiana.

The Company will host a conference call to discuss these results and other forward-looking items today, August 6th at 1:30 pm CT (2:30 pm ET). The dial-in conference number is: 800-901-5213, passcode 69706053. The replay will be available for one week at 888-286-8010, passcode 97137420.

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.

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 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.

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