Nature of Operations

12 Months Ended

Dec. 31, 2016

Nature of Operations Disclosures [Abstract]

Nature of Operations

Nature of Operations

Clayton Williams Energy, Inc., a Delaware corporation, is an independent oil and gas company engaged in the exploration for and development and production of oil and natural gas primarily in its core area in Southern Reeves County, Texas.  Unless the context otherwise requires, references to “CWEI” mean Clayton Williams Energy, Inc., the parent company, and references to “the Company,” “we,” “us” or “our” mean Clayton Williams Energy, Inc. and its consolidated subsidiaries.  Approximately 17.6% of CWEI’s outstanding common stock is beneficially owned by Clayton W. Williams, Jr. (“Mr. Williams”), Chairman of the Board and Chief Executive Officer of the Company, and approximately 17.3% is owned by a partnership in which Mr. Williams’ adult children are limited partners, and Mel G. Riggs, our President, is the sole member in the general partner.

Ares Management, LLC (“Ares”) beneficially owns, either individually or through its affiliates, 42.0% of the outstanding shares of our common stock. In addition, Ares possesses the right to elect up to two members of our Board and to recommend one other director to the Nominating and Governance Committee of the Board for appointment to the Board. Through its elected and recommended Board members and substantial ownership of our common stock, Ares has significant influence in matters voted on by our shareholders, including the election of our Board members.

Substantially all of our oil and gas production is sold under short-term contracts which are market-sensitive.  Accordingly, our results of operations and capital resources are highly dependent upon prevailing market prices of, and demand for, oil and natural gas. These commodity prices are subject to wide fluctuations and market uncertainties due to a variety of factors that are beyond our control.  These factors include the level of global supply and demand for oil and natural gas, market uncertainties, weather conditions, domestic governmental regulations and taxes, political and economic conditions in oil producing countries, price and availability of alternative fuels and overall domestic and foreign economic conditions.