2011-04-01-2011-03-23

To acquire a 75% interest in leases on approximately 75,000 net acres in southern Reeves County.

Clayton Williams Energy Inc., Midland, Texas, (Nasdaq: CWEI) has entered an agreement with Chesapeake Exploration LLC to earn a 75% interest in leases held by Chesapeake on approximately 75,000 net acres in southern Reeves County, Texas.

Clayton has a commitment to drill at least 20 earning wells in the first year and an option to drill an additional 20 earning wells per year during the next four years to earn all of Chesapeake's acreage. Clayton will carry Chesapeake for one-quarter of the drilling costs in these wells, which will result in a 75% interest in 640 net acres. Subsequent wells in an earned area shall be drilled on a heads-up basis. The company will also receive credit towards its annual drilling obligations for drilling more than 20 earning wells in any year.

The acreage is in the center of the developing Wolfbone oil and gas play, where wells produce from the Avalon shale, Bone Springs and Wolfcamp formations at depths from 8,000 to 13,000 feet.

"This is a major opportunity for our company, and we will focus significant resources to this development project," says Clayton W. Williams, Jr.