Comstock Resources, Inc. Corrects Reported Second Quarter 2005 Financial Results
FRISCO, Texas, Aug. 10 /PRNewswire-FirstCall/ -- Comstock Resources, Inc. (NYSE: CRK) ("Comstock" or the "Company") today announced a correction to its previously reported net income for the quarter and six months ended June 30, 2005. The corrected results are a net loss of $10.9 million or 27 cents per diluted share for the three months ended June 30, 2005 rather than $12.7 million of net income or 30 cents per diluted share, as originally reported. For the six months ended June 30, 2005, the corrected results are a net income of $5.0 million or 12 cents per diluted share rather than $28.6 million of net income or 72 cents per diluted share, as originally reported. The correction to net income is due to a change in the accounting for the Company's share of a one time provision for income taxes by Bois d'Arc Energy, Inc. (NYSE: BDE) ("Bois d'Arc") that was recorded by Bois d'Arc in connection with its conversion from a limited liability company to a corporation and to reflect the gain recognized by Comstock in connection with Bois d'Arc's initial public offering. There were no other changes to the results reported in the Company's August 8, 2005 press release. Excluding these one time adjustments for Bois d'Arc's conversion to a corporation and its initial public offering, Comstock's net income for the three months and six months ended June 30, 2005 would be the same as was previously reported.
Comstock will hold an open conference call at 1 p.m. CT / 2 p.m. ET to discuss the revision. Please call 866-686-6743 / international number 847-413-3136, confirmation number 12443404.
Financial Results for the Three Months and Six Months Ended June 30, 2005
Comstock reported a net loss of $10.9 million or 27 cents per diluted share for the three months ended June 30, 2005 as compared to net income of $18.7 million or 52 cents per diluted share in the same quarter of 2004. Excluding the one time adjustments to reflect Bois d'Arc's conversion to a corporation and initial public offering, Comstock's net income would have been $12.7 million or 30 cents per diluted share for the three months ended June 30, 2005. Comstock had $68.5 million in oil and gas sales in 2005's second quarter, an increase of 3% over 2004's second quarter oil and gas sales of $66.5 million. Comstock generated $47.3 million in operating cash flow (before changes in working capital accounts) in 2005's second quarter, which represents a 4% increase over 2004's second quarter cash flow of $45.4 million. EBITDAX or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses was $53.8 million in 2005's second quarter as compared to 2004's second quarter EBITDAX of $52.5 million. On May 10, 2005, Comstock began accounting for its interest in Bois d'Arc under the equity method and subsequent to that date no longer is including its share of Bois d'Arc's revenues, EBITDAX and cash flow in its consolidated results.
For the six months ended June 30, 2005, Comstock's oil and gas sales totaled $138.4 million, as compared to oil and gas sales of $127.3 million for the same period in 2004. Net income for the six months ended June 30, 2005 was $5.0 million, or 12 cents per diluted share, as compared to net income of $18.7 million or 52 cents per diluted share in 2004. Excluding the one time adjustments to reflect Bois d'Arc's conversion to a corporation and its initial public offering, Comstock's net income would have been $28.6 million, or 72 cents per diluted share for the six months ended June 30, 2005. Operating cash flow (before changes in working capital accounts) generated by Comstock was $93.9 million for the first six months of 2005, a 13% increase from the first six months of 2004's cash flow of $82.9 million. For the six months ended June 30, 2005, EBITDAX was $108.8 million as compared to EBITDAX of $98.7 million for the same period in 2004.
Production from Comstock's onshore fields in the second quarter of 2005 totaled 8.4 Bcf equivalent of natural gas ("Bcfe"), a 15% increase from 2004's second quarter production of 7.3 Bcfe. For the first six months of 2005, Comstock produced 15.3 Bcfe from its onshore operations, an increase of 3% as compared to production in the same period of 2004 of 14.8 Bcfe. During the second quarter of 2005, the Company's share of offshore production from its ownership interest in Bois d'Arc of 3.5 Bcfe was 0.5 Bcfe less than last year's production of 4.0 Bcfe. The decrease was attributable to the reduction in Comstock's ownership in Bois d'Arc, which decreased from 60% to 48% in May 2005. Offshore production for the six months ended June 30, 2005 of 7.2 Bcfe was comparable to production in the same period last year.
The Company's realized natural gas price averaged $6.66 per Mcf in 2005's second quarter as compared to $5.77 per Mcf in 2004's second quarter. Realized oil prices in the second quarter of 2005 averaged $46.74 per barrel as compared to $37.55 per barrel for 2004. For the first six months of 2005, Comstock's realized natural gas price averaged $6.46 per Mcf as compared to 2004's average natural gas price of $5.71 per Mcf. For the first six months of 2005, Comstock's realized oil price was $47.26 per barrel as compared to $36.24 per barrel in 2004.
During the second quarter, Comstock completed several strategic transactions. These transactions will accelerate its future growth and have strengthened the Company's balance sheet. On April 4, 2005, Comstock closed a public offering of its common stock and issued 4.5 million shares at $27.50 per share for net proceeds of $121.2 million. On May 12, 2005, Comstock closed an acquisition of producing properties in Texas, Louisiana and Mississippi from EnSight for $191.6 million. The acquisition added proved reserves of 120.2 Bcfe and added 18.1 Mmcfe to the Company's daily production rate. On May 11, 2005, Bois d'Arc completed its initial public offering of its common stock and used the proceeds to repay Comstock $158.0 million which Comstock had loaned Bois d'Arc on its formation on July 16, 2004. As a result of these transactions, as well as the Company's second quarter results, Comstock's total debt fell from $429.3 million at the end of the first quarter to $307.0 million at the end of the second quarter. Comstock's total stockholders equity increased from $380.9 million at the end of the first quarter to $492.2 million at June 30, 2005. Debt as a percent of total book capitalization fell from 53% at March 31, 2005 to 38% at June 30, 2005.
Year to Date 2005 Drilling Results
Comstock also announced the results to date of its 2005 drilling program. Onshore, Comstock has drilled 42 wells (26.1 net) in the first six months of 2005. Thirty-nine (24.7 net) of the wells drilled were development wells; all of which were successful. Comstock drilled 28 successful development wells (20.8 net) in its East Texas/North Louisiana region. These wells have been tested at a per well average rate of 1.6 Mmcfe per day and are part of Comstock's expanded drilling program planned in this region for 2005. Comstock currently has three rigs under contract drilling in this region and is working to add a fourth rig.
Comstock also drilled 11 successful development wells (3.9 net) in South Texas and in its other regions in the first half of 2005. Five of the wells (2.2 net) were in South Texas which were tested at a per well average rate of 2.6 Mmcfe per day. The South Texas wells include Comstock's third successful well drilled in the Javelina field, the Dixie Mortgage Pawalak #3 which was drilled to a total depth of 12,230 feet and is currently producing 4.8 Mmcfe per day. Comstock has a 50% working interest in this well. Comstock also drilled two successful wells (1.1 net) in the Gragg field in Arkansas which were tested at a per well average rate of 2.2 Mmfe per day and participated in drilling four successful coal bed methane wells (0.6 net) in San Juan Basin in New Mexico.
In addition to the development wells, Comstock drilled three exploratory wells (1.4 net) in the first half of 2005. Two of those were dry holes (1.2 net) and one was successful. The successful well was drilled in Hidalgo County, Texas. The Kotara Aldridge #3 was drilled to a depth of 17,174 feet and is currently producing 1.7 Mmcfe per day. Comstock had a 20% working interest in this well.
The unsuccessful exploratory wells include a shallow test well drilled in West Texas and the previously reported unsuccessful exploratory well drilled to test the "Big Sandy" prospect in Polk County, Texas. The well failed to encounter sufficient pay sand to justify a completion. The total costs of the project of $14.3 million (before income taxes) was written off in the second quarter of 2005 and is included in exploration expense.
Comstock's offshore operations are conducted exclusively through its 48% ownership of Bois d'Arc. Bois d'Arc has drilled twelve offshore wells (10.2 net) in the Gulf of Mexico to date in 2005 with a 92% success rate. Five of the wells were exploratory and seven were developmental. All of the exploration wells were successful and six of the seven developmental wells were successful. The reserves added as a result of these eleven successful wells are expected to more than replace Bois d'Arc's 2005 estimated annual production. The larger discoveries were at Ship Shoal blocks 92 and 111 and South Pelto 5. Two successful wells at Ship Shoal 92 proved up the "Paddlefish" Prospect. A discovery well drilled at Ship Shoal 111 proved up the "Laker" Prospect. The first "Laker" well was placed on production in July at a rate of 5.9 Mmcfe per day, while the "Paddlefish" wells at Ship Shoal 92 are expected to be on production in September. Other successes include three discoveries at Ship Shoal 98 and 99 and a deep well at South Pelto 5. The South Pelto well was placed on production in May at a rate of 7.1 Mmcfe per day. The other wells are expected to be on production in the third quarter.
This press release may contain "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties which could cause actual results to differ materially from those described herein. Although the Company believes that the expectations in such statements to be reasonable, there can be no assurance that such expectations will prove to be correct.
Comstock Resources, Inc. is a growing independent energy company based in Frisco, Texas and is engaged in oil and gas acquisitions, exploration and development primarily in Louisiana and Texas and in the Gulf of Mexico through its ownership of Bois d'Arc Energy, Inc. The company's stock is traded on the New York Stock Exchange under the symbol CRK.
COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands, except per share amounts)
Six Months Ended Three Months Ended
June 30, 2005 June 30, 2005
As As Previously As As Previously
Corrected Reported Corrected Reported
Oil and gas sales $138,351 $138,351 $68,529 $68,529
Operating expenses:
Oil and gas
operating 26,066 26,066 12,879 12,879
Exploration 17,286 17,286 15,201 15,201
Depreciation,
depletion and
amortization 33,332 33,332 15,979 15,979
General and
administrative, net 7,957 7,957 3,769 3,769
Total operating
expenses 84,641 84,641 47,828 47,828
Income from operations 53,710 53,710 20,701 20,701
Other income (expenses):
Other income 136 136 32 32
Interest income 1,207 1,207 459 459
Interest expense (10,517) (10,517) (4,719) (4,719)
Equity in loss of
Bois d'Arc Energy (61,225) 3,370 (61,225) 3,370
Gain on sale of stock
by Bois d'Arc Energy 28,797 --- 28,797 ---
Gain (loss)
on derivatives (3,231) (3,231) 7 7
Total other expenses (44,833) (9,035) (36,649) (851)
Income before
income taxes 8,877 44,675 (15,948) 19,850
Provision for
income taxes (3,867) (16,108) 5,070 (7,171)
Net income (loss) $5,010 $28,567 $(10,878) $12,679
Net income (loss)
per share:
Basic $ 0.13 $ 0.76 $(0.27) $ 0.32
Diluted $ 0.12 $ 0.72 $(0.27) $ 0.30
Weighted average common
and common stock
equivalent shares
outstanding:
Basic 37,393 37,393 39,762 39,762
Diluted 39,570 39,570 41,757 41,757
COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands, except per share amounts)
Six Months Ended Three Months Ended
June 30, 2005 June 30, 2005
As Previously As Previously
As Corrected Reported As Corrected Reported
Cash flow from operations:
Net cash provided by
operating activities $99,597 $99,597 $53,876 $53,876
Increase (decrease) in
accounts receivable (2,719) (2,719) 1,128 1,128
Increase (decrease) in
other current assets 4 4 (966) (966)
Decrease (increase) in
accounts payable and
accrued expenses (3,009) (3,009) (6,703) (6,703)
Cash flow from
operations $93,873 $93,873 $47,335 $47,335
EBITDAX:
Net income (loss) $5,010 $28,567 $(10,878) $12,679
Interest expense 10,517 10,517 4,719 4,719
Gain on sale of stock by
Bois d'Arc Energy (28,797) --- (28,797) ---
Equity in loss of
Bois d'Arc Energy 61,225 (3,370) 61,225 (3,370)
Income tax expense 3,867 16,108 (5,070) 7,171
Depreciation, depletion
and amortization 33,332 33,332 15,979 15,979
Stock-based compensation 3,178 3,178 1,383 1,383
Exploration expense 17,286 17,286 15,201 15,201
Loss (gain) on
derivatives 3,231 3,231 (7) (7)
EBITDAX $108,849 $108,849 $53,755 $53,755
As of June 30, 2005
As Previously
As Corrected Reported
(In thousands)
Balance Sheet Data:
Current assets $36,066 $36,066
Property and equipment, net 666,616 666,616
Investment in Bois d'Arc Energy 240,770 276,568
Other 5,382 5,382
Total assets $948,834 $984,632
Current liabilities $49,191 $49,191
Long-term debt 307,000 307,000
Other 100,455 112,696
Stockholders. equity 492,188 515,745
Total liabilities and
stockholders. equity $948,834 $984,632
COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands, except per share amounts)
Six Months Ended Three Months Ended
June 30, June 30,
2005 2004 2005 2004
Oil and gas sales $138,351 $127,269 $68,529 $66,508
Operating expenses:
Oil and gas operating 26,066 25,106 12,879 12,456
Exploration 17,286 5,179 15,201 1,797
Depreciation, depletion
and amortization 33,332 31,537 15,979 15,728
General and
administrative, net 7,957 5,972 3,769 2,882
Total operating
expenses 84,641 67,794 47,828 32,863
Income from operations 53,710 59,475 20,701 33,645
Other income (expenses):
Other income 136 86 32 47
Interest income 1,207 34 459 18
Interest expense (10,517) (10,791) (4,719) (4,526)
Equity in loss of
Bois d'Arc Energy (61,225) --- (61,225) ---
Gain on sale of stock by
Bois d'Arc Energy 28,797 --- 28,797 ---
Loss on early
extinguishment of debt --- (19,599) --- (18)
Gain (loss) on
derivatives (3,231) --- 7 ---
Total other expenses (44,833) (30,270) (36,649) (4,479)
Income (loss) before
income taxes 8,877 29,205 (15,948) 29,166
Provision for income taxes (3,867) (10,514) 5,070 (10,500)
Net income (loss) $5,010 $18,691 $(10,878) $18,666
Net income (loss) per share:
Basic $0.13 $0.55 $(0.27) $0.55
Diluted $0.12 $0.52 $(0.27) $0.52
Weighted average common and
common stock equivalent
shares outstanding:
Basic 37,393 33,977 39,762 34,111
Diluted 39,570 35,990 41,757 36,133
COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands, except per share amounts)
Six Months Ended Three Months Ended
June 30, June 30,
2005 2004 2005 2004
Cash flow from operations:
Net cash provided by
operating activities $99,597 $67,819 $53,876 $47,418
Increase (decrease) in
accounts receivable (2,719) (4,673) 1,128 4,471
Increase (decrease) in
other current assets 4 (839) (966) 31
Decrease (increase) in
accounts payable and
accrued expenses (3,009) 20,596 (6,703) (6,499)
Cash flow from
operations $93,873 $82,903 $47,335 $45,421
EBITDAX:
Net income (loss) $5,010 $18,691 $(10,878) $18,666
Interest expense 10,517 10,791 4,719 4,526
Loss from early
extinguishment of debt --- 19,599 --- 18
Equity in loss of
Bois d'Arc Energy 61,225 --- 61,225 ---
Gain on sale of stock
by Bois d'Arc Energy (28,797) --- (28,797) ---
Income tax expense 3,867 10,514 (5,070) 10,500
Depreciation, depletion
and amortization 33,332 31,537 15,979 15,728
Stock-based compensation 3,178 2,376 1,383 1,222
Exploration expense 17,286 5,179 15,201 1,797
Loss (gain) on derivatives 3,231 --- (7) ---
EBITDAX $108,849 $98,687 $53,755 $52,457
As of June 30,
2005 2004
(In thousands)
Balance Sheet Data:
Current assets $36,066 $45,974
Property and equipment, net 666,616 740,240
Investment in Bois d'Arc Energy 240,770 ---
Other 5,382 7,840
Total assets $948,834 $794,054
Current liabilities $49,191 $44,568
Long-term debt 307,000 324,000
Other 100,455 108,189
Stockholders' equity 492,188 317,297
Total liabilities and
stockholders' equity $948,834 $794,054
COMSTOCK RESOURCES, INC.
SELECTED OPERATING AND FINANCIAL RESULTS
(In thousands, except as noted and per unit amounts)
For the Three Months ended June 30, 2005
Comstock Equity Method
Resources (A) Bois d'Arc (B) Adjustments Total
Oil production
(thousand barrels) 204 192 (100) 296
Gas production
(million cubic
feet - Mmcf) 7,135 2,316 (1,234) 8,217
Total production
(Mmcfe) 8,356 3,468 (1,835) 9,989
Oil sales $9,286 $9,528 $(4,980) $13,834
Gas sales 46,743 16,398 (8,446) 54,695
Total oil and
gas sales $56,029 $25,926 $(13,426) $68,529
Average oil price
(per barrel) $45.63 $49.63 $46.74
Average gas price
(per thousand cubic
feet - Mcf) $6.55 $7.08 $6.66
Average price
(per Mcf equivalent) $6.70 $7.48 $6.86
Lifting cost $10,795 $4,397 $(2,313) $12,879
Lifting cost
(per Mcf equivalent) $1.29 $1.27 $1.29
For the Six Months ended June 30, 2005
Comstock Equity Method
Resources (A) Bois d'Arc (B) Adjustments Total
Oil production
(thousand barrels) 293 402 (100) 595
Gas production
(million cubic
feet - Mmcf) 13,547 4,741 (1,234) 17,054
Total production
(Mmcfe) 15,306 7,153 (1,835) 20,624
Oil sales $13,574 $19,526 $(4,980) $28,120
Gas sales 86,248 32,429 (8,446) 110,231
Total oil and
gas sales $99,822 $51,955 $(13,426) $138,351
Average oil price
(per barrel) $46.30 $48.58 $47.26
Average gas price
(per thousand cubic
feet - Mcf) $6.37 $6.84 $6.46
Average price
(per Mcf equivalent) $6.52 $7.26 $6.71
Lifting cost $19,367 $9,012 $(2,313) $26,066
Lifting cost
(per Mcf equivalent) $1.27 $1.26 $1.26
(A) Excludes Bois d'Arc Energy.
(B) Comstock owned 59.9% of Bois d'Arc Energy through May 10, 2005 and
48.3% thereafter.
COMSTOCK RESOURCES, INC.
SELECTED OPERATING AND FINANCIAL RESULTS
(In thousands, except as noted and per unit amounts)
Three Months ended June 30, 2005
East Texas/
North Southeast Total
Louisiana Texas Other Onshore
Oil production (thousand barrels) 22 43 139 204
Gas production (million cubic
feet - Mmcf) 3,314 1,678 2,143 7,135
Total production (Mmcfe) 3,443 1,938 2,975 8,356
Oil sales $1,120 $2,192 $5,974 $9,286
Gas sales 21,425 11,915 13,403 46,743
Total oil and gas sales $22,545 $14,107 $19,377 $56,029
Average oil price (per barrel) $50.91 $50.98 $42.98 $45.63
Average gas price (per thousand
cubic feet - Mcf) $6.46 $7.10 $6.25 $6.55
Average price (per Mcf equivalent) $6.55 $7.28 $6.51 $6.70
Lifting cost $5,056 $1,983 $3,756 $10,796
Lifting cost (per Mcf equivalent) $1.47 $1.02 $1.26 $1.29
Acquisition, development and
exploration expenditures $139,358 $5,703 $79,198 $224,259
Six Months ended June 30, 2005
East Texas/
North Southeast Total
Louisiana Texas Other Onshore
Oil production (thousand barrels) 40 86 167 293
Gas production (million cubic
feet - Mmcf) 5,924 3,535 4,088 13,547
Total production (Mmcfe) 6,163 4,052 5,091 15,306
Oil sales $1,953 $4,243 $7,378 $13,574
Gas sales 36,947 23,587 25,714 86,248
Total oil and gas sales $38,900 $27,830 $33,092 $99,822
Average oil price (per barrel) $48.83 $49.34 $44.18 $46.30
Average gas price (per thousand
cubic feet - Mcf) $6.24 $6.67 $6.29 $6.37
Average price (per Mcf equivalent) $6.31 $6.87 $6.50 $6.52
Lifting cost $8,639 $4,082 $6,647 $19,367
Lifting cost (per Mcf equivalent) $1.40 $1.01 $1.31 $1.27
Acquisition, development and
exploration expenditures $150,931 $12,962 $83,955 $247,848
SOURCE Comstock Resources, Inc.
CONTACT:
Roland O. Burns
Sr. Vice President and Chief Financial Officer
Comstock Resources, Inc.
972-668-8800