SEVENTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

This Seventh Amendment to Amended and Restated Credit Agreement (hereinafter referred to as the “ Amendment ”) executed as of May 20, 2009 by and among Clayton Williams Energy, Inc., a Delaware corporation (“ CWEI ”), Southwest Royalties, Inc. (successor by merger to CWEI-SWR, Inc.), a Delaware corporation (“ SWR ”, and together with CWEI and each of their respective successors and permitted assigns, the “ Borrowers ” and each a “ Borrower ”), Warrior Gas Co., a Texas corporation (“ Warrior ”), CWEI Acquisitions, Inc. a Delaware corporation (“ CWEI Acquisitions ”), Romere Pass Acquisition L.L.C., a Delaware limited liability company (“ Romere ”), CWEI Romere Pass Acquisition Corp., a Delaware corporation (“ Romere Corp ”), Blue Heel Company, a Delaware corporation (“ Blue Heel ”), and Tex-Hal Partners, Inc., a Delaware corporation (“ Tex-Hal ,” and together with Warrior, CWEI Acquisitions, Romere, Romere Corp and Blue Heel and each of their successors and permitted assigns, the “ Guarantors ” and each a “ Guarantor ”), JPMorgan Chase Bank, N.A. (successor by merger to Bank One, N.A. (Illinois)), a national banking association (“ JPMorgan Chase ”), each of the financial institutions which is a party hereto (as evidenced by the signature pages to this Amendment) or which may from time to time become a party to the Agreement pursuant to the provisions of Section 14.3 thereof or any successor or permitted assignee thereof (hereinafter collectively referred to as “ Lenders ”, and individually, “ Lender ”), JPMorgan Chase, as Administrative Agent (in its capacity as Administrative Agent and together with its successors in such capacity, “ Administrative Agent ”).  Capitalized terms used but not defined in this Amendment have the meanings assigned to such terms in that certain Amended and Restated Credit Agreement dated as of May 21, 2004, by and among Borrowers, Guarantors, Administrative Agent and Lenders (as amended, supplemented or otherwise modified from time to time, the “ Agreement ”).

WHEREAS ,   the Borrowers and the Guarantors have requested, among other things, that the Lenders (or at least the required percentage thereof) amend certain provisions of the Agreement; and

WHEREAS, the Administrative Agent and the Lenders have agreed to do so on the terms and conditions hereinafter set forth.

NOW, THEREFORE , for and in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confessed, the Borrowers, the Guarantors, the Administrative Agent and the Lenders, hereby agree as follows:

SECTION 1.         Amendments to the Agreement .  Subject to the satisfaction or waiver in writing of each condition precedent set forth in Section 3 hereof, and in reliance on the representations, warranties, covenants and agreements contained in this Amendment, the Agreement shall be amended in the manner provided in this Section 1 .

1.1         Amended Definitions .   Article I of the Agreement shall be and it hereby is amended by amending and restating the following definition to read in its entirety as follows:

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (i) the Prime Rate in effect on such day, (ii) the Federal Funds Effective Rate in effect on such day plus one-half of one percent (½ of 1%) and (iii) the LMIR on such day plus 1%.  Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the LMIR shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the LMIR, respectively.

“Obligations” means all obligations of every nature of each Credit Party from time to time owed to the Agents (including former Agents), the LC Issuer, the Lenders or any of them and the Lender Counterparties, under any Loan Document or Rate Management Transaction (including with respect to Rate Management Transactions with any Person that was a Lender Counterparty at the time such Credit Party entered into such Rate Management Transactions regardless of whether such Person is no longer a Lender Counterparty), whether for principal, interest (including interest which, but for the filing of a petition in bankruptcy with respect to such Credit Party, would have accrued on any Obligation, whether or not a claim is allowed against such Credit Party for such interest in the related bankruptcy proceeding), all Cash Management Obligations, all Reimbursement Obligations, payments for early termination of Rate Management Transactions, fees, expenses, indemnification or otherwise.

“Prime Rate” means the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.

“Subsidiary” of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, limited liability company, association, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled.  Unless otherwise expressly provided, all references herein to a “Subsidiary” shall mean a Subsidiary of CWEI.  Notwithstanding the foregoing, until the date on which CWEI makes the Larclay Investment in accordance with Section 8.15(viii), the term “Subsidiary” shall not include Larclay.

1.2         Additional Definitions .   Article I of the Agreement shall be and it hereby is amended by adding the following definition in the correct alphabetical order:

“Cash Collateral Account” means a segregated deposit account with, and in the name of, the Administrative Agent, for the benefit of the Lenders, established and maintained for the deposit of cash collateral required under or in connection with this Agreement and the other Loan Documents.

“Cash Management Obligations” means with respect to any Credit Party, any obligations of such Credit Party owed to any Lender (or any Affiliate of any Lender) in respect of treasury management arrangements, depositary or other cash management services, including commercial credit card and merchant card services.

“Defaulting Lender” means any Lender, as reasonably determined by the Administrative Agent, that has (a) failed to fund any portion of the Reimbursement Obligations required to be funded by it hereunder within one Business Day of the date required to be funded by it hereunder, (b) failed to fund any portion of the Loans required to be funded by it hereunder within one Business Day of the date required to be funded by it hereunder, unless the subject of a good faith dispute, (c) notified the Borrowers, the Administrative Agent, the LC Issuer or any other Lender in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement, (d) otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within one Business Day of the date when due, unless the subject of a good faith dispute, or (e) (i)   become or is insolvent or has a parent company that has become or is insolvent or (ii) become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment.

“Larclay Credit Agreement” means that certain Term Loan and Security Agreement, dated as of April 21, 2006, among Larclay LP, the lenders from time to time party thereto and Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services Inc., as administrative agent, as amended from time to time.

“Larclay Investment” is defined in Section 8.15(viii)(b).

“LMIR” means, for any day, the applicable British Bankers’ Association LIBOR rate as reported by any generally recognized financial information service as of 11:00 a.m. (London time) for one month Dollar deposits on such day, or if such day is not a Business Day, then the immediately preceding Business Day, provided that, if no such British Bankers’ Association LIBOR rate is available to the Administrative Agent, the applicable LMIR shall instead be the rate determined by the Administrative Agent to be the rate at which the Administrative Agent or one of its Affiliate banks offers to place one month Dollar deposits with first-class banks in the London interbank market at approximately 11:00 a.m. (London time) on such day, in the approximate amount of the relevant Loan.

1.3         Collateral Account .   Section 2.19.11 of the Agreement shall be and it hereby is amended in its entirety to read as follows:

2.19.11   Cash Collateralization .

(a)           If any Default or Unmatured Default shall occur and be continuing, on the Business Day that the Borrower Representative receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Lenders having a combined Pro Rata Share of LC Obligations representing greater than sixty-six and two-thirds percent (66-2/3%) of the total LC Obligations) demanding the deposit of cash collateral pursuant to this paragraph, the Borrowers shall deposit in the Cash Collateral Account an amount in cash equal to the total LC Obligations as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Default with respect to the Borrower described in Section 9.5 or Section 9.6.

(b)           Deposits in the Cash Collateral Account made pursuant to the foregoing paragraph (a) and Section 2.25 shall be held by the Administrative Agent as collateral for the payment and performance of the obligations of the Borrowers under this Agreement and the Borrowers hereby grant a security interest in such cash and each deposit account into which such cash is deposited and all proceeds, including cash and non-cash proceeds of the foregoing, to secure the Obligations.  The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over the Cash Collateral Account.  Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Borrowers’ risk and expense, such deposits shall not bear interest.  Interest or profits, if any, on such investments shall accumulate in such account.  Moneys in such account shall be applied by the Administrative Agent to reimburse the LC Issuer for unpaid Reimbursement Obligations and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Obligations at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Lenders having a combined Pro Rata Share of LC Obligations representing sixty-six and two-thirds percent (66-2/3%) or more of the total LC Obligations), be applied to satisfy other Obligations and to the extent any excess remains after payment in full in cash of all Obligations and the termination of all Commitments, such excess shall be released to the Borrowers.

(c)           If the Borrowers are required to provide cash collateral pursuant to paragraph (a) above or Section 2.25, the amount of such cash collateral (to the extent not applied as aforesaid) shall be returned to the Borrowers within three (3) Business Days after (i) in the case of cash collateral provided pursuant to paragraph (a) above, all Defaults and Unmatured Defaults have been cured or waived and (ii) in th