Clayton Williams Energy, Inc. is an independent exploration and production company focused on developing and producing oil and natural gas. The company operates primarily in Texas, Louisiana and New Mexico, and has extensive experience utilizing 3-D seismic and horizontal drilling.

President and CEO Clayton W. Williams leads the company with more than a half a century of experience in the energy industry. Mr. Williams has also been involved in a broad spectrum of other business enterprises, including gas pipeline operations, ranching, real estate development and management, banking and telecommunications.

In recent news, the company announced that it plans to increase capital spending for the rest of the year in response to lower drilling and completion costs and higher oil prices. Clayton Williams Energy now plans to invest approximately $107.7 million in exploration and development activities instead of the previous estimate totaling approximately $78.5 million.

Clayton W. Williams, Jr., President commented, “Over the

We are downgrading Clayton Williams Energy, Inc. (CWEI) to Hold on valuation grounds. The shift in strategy earlier this year away from wildcat exploration and greater focus on developmental drilling in the oil-prone Permian basin and Austin Chalk regions, helped in no small part by the earlier oil surge, pushed the stock price to new levels.

While the stock has pulled back some in recent weeks, it remains fairly close to our new net asset value (NAV)-based target price; hence the downgrade. We have, however, raised our earnings estimates to reflect a higher commodity-price deck and other model changes. Our new 2008 and 2009 EPS estimates are $11.39 and $9.83, up from $7.48 and 9.46, respectively. We are decreasing our price objective from $96 to $93 for Clayton Williams’ shares.

Clayton Williams reported better than expected second-quarter 2008 adjusted EPS of $4.29, compared to $0.77 in Q2 07 and $0.62