Clayton Williams Wraps Up Absorption Of 24 Partnerships

Merged with 24 partnerships in Permian Basin of W TX & SE NM.

Southwest Royalties Inc., a subsidiary of Clayton Williams Energy Inc., Midland, Texas, (Nasdaq: CWEI) has closed its merger with 24 partnerships of which Southwest Royalties is the general partner for a combined $38.6 million in cash.

Substantially all of the partnerships’ properties are in the Permian Basin of West Texas and southeastern New Mexico where more than 70% of Clayton Williams oil and gas reserves are concentrated. Clayton Williams expects to obtain the funds to finance the aggregate merger consideration by conveying a volumetric production payment on certain properties acquired in the proposed mergers to a third party.

Southwest Royalties obtained the funds to finance the aggregate merger consideration by conveying a volumetric production payment in the form of a term overriding royalty interest to a third party covering approximately 752,000 barrels of oil equivalents from specified properties acquired in the mergers.

Each public partnership has merged into Southwest Royalties, and the partnership interests of such partnership, other than those owned by Southwest Royalties, will be converted into the right to receive cash.

Southwest Royalties will not receive any cash payment for its partnership interests in the public partnerships; however, as a result of each merger, Southwest Royalties will acquire 100% of the assets and liabilities of the public partnerships.