Supplemental Oil and Gas Reserve Information

The estimates of proved oil and gas reserves utilized in the preparation of the consolidated financial statements were prepared by independent petroleum engineers. Such estimates are in accordance with guidelines established by the Securities and Exchange Commission and the FASB. All of our reserves are located in the United States. For information about our results of operations from oil and gas activities, see the accompanying consolidated statements of operations and comprehensive income (loss).

We emphasize that reserve estimates are inherently imprecise. Accordingly, the estimates are expected to change as more current information becomes available. In addition, a portion of our proved reserves are classified as proved developed nonproducing and proved undeveloped, which increases the imprecision inherent in estimating reserves which may ultimately be produced.

We did not have any capital costs relating to exploratory wells pending the determination of proved reserves for the years ended December 31, 2014, 2013 and 2012.

The following table sets forth estimated proved reserves together with the changes therein (oil and NGL in MBbls, gas in MMcf, gas converted to MBOE by dividing MMcf by six) for the years ended December 31, 2014, 2013 and 2012.



	Oil		Natural Gas Liquids		Natural Gas		MBOE
Proved reserves:
December 31, 2011	44,919		4,617		88,876		64,349
Extensions and discoveries	13,501		3,175		22,604		20,443
Revisions	(7,303	)	1,805		(6,699	)	(6,615	)
Purchases of minerals-in-place	2,456		18		6,182		3,504
Sales of minerals-in-place	(633	)	—		(555	)	(725	)
Production	(3,821	)	(433	)	(8,072	)	(5,599	)
December 31, 2012	49,119		9,182		102,336		75,357
Extensions and discoveries	20,540		3,562		21,389		27,666
Revisions	85		1,806		(16,753	)	(901	)
Sales of minerals-in-place	(17,387	)	(5,531	)	(23,605	)	(26,852	)
Production	(3,692	)	(532	)	(6,188	)	(5,255	)
December 31, 2013	48,665		8,487		77,179		70,015
Extensions and discoveries	19,032		2,298		12,034		23,336
Revisions	(7,786	)	(1,160	)	(6,934	)	(10,101	)
Sales of minerals-in-place	(1,850	)	(73	)	(803	)	(2,057	)
Production	(4,194	)	(585	)	(5,901	)	(5,763	)
December 31, 2014	53,867		8,967		75,575		75,430
Proved developed reserves:
December 31, 2012	27,641		5,044		64,013		43,354
December 31, 2013	25,989		4,293		47,839		38,255
December 31, 2014	29,059		4,668		51,072		42,239



CLAYTON WILLIAMS ENERGY, INC.
SUPPLEMENTAL INFORMATION (Continued)
(UNAUDITED)

The 10,101 MBOE of net downward revisions in proved reserves for 2014 resulted from a combination of (1) reclassifications of 4,911 MBOE of proved undeveloped reserves to probable reserves due solely to the SEC 5-year development rule, (2) other net downward revisions of 4,837 MBOE related primarily to proved undeveloped reserves associated with vertical locations in Reeves County, Texas originally assigned prior to our conversion to horizontal drilling in this area, and (3) downward revisions of 353 MBOE related to the effects of lower commodity prices on the estimated quantities of proved reserves.

The standardized measure of discounted future net cash flows relating to estimated proved reserves as of December 31, 2014, 2013 and 2012 was as follows:



	2014			2013			2012
	(In thousands)
Future cash inflows	$	5,479,211		$	5,162,702		$	5,222,621
Future costs:
Production	(1,719,989		)	(1,724,560		)	(1,819,356		)
Abandonment	(149,112		)	(131,747		)	(137,499		)
Development	(695,180		)	(592,695		)	(651,292		)
Income taxes	(833,601		)	(786,196		)	(673,686		)
Future net cash flows	2,081,329			1,927,504			1,940,788
10% discount factor	(1,148,416		)	(1,000,581		)	(1,000,957		)
Standardized measure of discounted net cash flows	$	932,913		$	926,923		$	939,831

Changes in the standardized measure of discounted future net cash flows relating to estimated proved reserves for the years ended December 31, 2014, 2013 and 2012 were as follows:



	2014			2013			2012
	(In thousands)
Standardized measure, beginning of period	$	926,923		$	939,831		$	938,513
Net changes in sales prices, net of production costs	(94,104		)	13,292			(196,930		)
Revisions of quantity estimates	(234,612		)	(10,680		)	(144,899		)
Accretion of discount	138,095			130,736			137,369
Changes in future development costs, including development costs incurred that reduced future development costs	146,392			46,068			148,733
Changes in timing and other	(70,774		)	(10,249		)	(58,323		)
Net change in income taxes	2,893			(84,673		)	76,593
Future abandonment cost, net of salvage	4,066			232			(9,230		)
Extensions and discoveries	431,895			502,619			289,999
Sales, net of production costs	(309,758		)	(289,035		)	(277,248		)
Purchases of minerals-in-place	—			—			80,744
Sales of minerals-in-place	(8,103		)	(311,218		)	(45,490		)
Standardized measure, end of period	$	932,913		$	926,923		$	939,831



CLAYTON WILLIAMS ENERGY, INC.
SUPPLEMENTAL INFORMATION (Continued)
(UNAUDITED)

The estimated present value of future cash flows relating to estimated proved reserves is extremely sensitive to prices used at any measurement period. Average prices for December 31, 2014, 2013 and 2012 were based on the 12-month unweighted arithmetic average of the first-day-of-the-month prices for the period from January through December during each respective calendar year. These benchmark average prices were further adjusted for quality, energy content, transportation fees and other price differentials specific to our properties. The average prices used for each commodity for the years ended December 31, 2014, 2013 and 2012 were as follows:



	Average Price
	Oil		Natural Gas Liquids		Natural Gas
	($/Bbl)		($/Bbl)		($/Mcf)
As of December 31:
2014	$	90.48	$	31.54	$	4.27
2013	$	94.88	$	31.63	$	3.59
2012	$	90.45	$	43.74	$	3.70