Comstock Resources, Inc. Reports Fourth Quarter and Annual 2006 Financial and Operating Results
Financial Results for the Three Months and Year Ended December 31, 2006
Comstock reported net income of $8.4 million or 19 cents per diluted share for the three months ended December 31, 2006 as compared to net income of $41.3 million or 96 cents per diluted share in the same quarter of 2005. Results for the fourth quarter of 2005 include an unrealized gain on derivatives of $9.8 million. Without this item Comstock would have reported net income of $35.5 million or 82 cents per diluted share for the fourth quarter of 2005. Lower natural gas prices caused oil and gas sales in the fourth quarter of 2006 to decrease by 11% to $126.8 million as compared to pro forma consolidated sales of $142.2 million in the same period last year. Comstock generated $80.8 million in consolidated operating cash flow (before changes in working capital accounts) in 2006's fourth quarter, which represents an 18% decrease from 2005's fourth quarter pro forma consolidated cash flow of $98.4 million. EBITDAX or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses was $92.7 million in 2006's fourth quarter as compared to 2005's pro forma consolidated third quarter EBITDAX of $107.4 million.
For the year ended December 31, 2006, Comstock's oil and gas sales increased $62.7 million or 14% to $511.9 million from pro forma consolidated sales of $449.2 million in 2005. Net income for the year ended December 31, 2006 was $70.7 million, or $1.61 per diluted share, as compared to net income of $60.5 million or $1.47 per diluted share in 2005. Net income for the year ended December 31, 2006 includes unrealized gains on derivative financial instruments of $11.2 million and the impact of the new Texas business tax of $1.3 million. Without these items, Comstock would have reported net income of $64.6 million or $1.48 per diluted share. Excluding the one time adjustments to reflect Bois d'Arc Energy's conversion to a corporation and its initial public offering and unrealized losses on derivatives, Comstock's net income for the year ended December 31, 2005 would have been $91.0 million, or $2.21 per diluted share. Operating cash flow (before changes in working capital accounts) generated by Comstock was $348.5 million during 2006 as compared to pro forma consolidated cash flow of $312.8 million for the same period in 2005. For the year ended December 31, 2006, EBITDAX was $387.4 million as compared to pro forma consolidated EBITDAX of $352.1 million for 2005.
Production in the fourth quarter of 2006 totaled 18.2 Bcf equivalent of natural gas ("Bcfe"), a 33% increase from 2005's pro forma consolidated production of 13.6 Bcfe. For the year ended December 31, 2006 production totaled 67.3 Bcfe, an increase of 22%, as compared to pro forma consolidated production in 2005 of 55.0 Bcfe.
The Company's realized natural gas price averaged $6.47 per Mcf in 2006's fourth quarter which was significantly lower than the average price of $10.75 per Mcf in 2005's fourth quarter. Realized oil prices in the fourth quarter of 2006 averaged $54.51 per barrel as compared to $54.36 per barrel for the fourth quarter of 2005. For the year ended December 31, 2006, Comstock's realized natural gas price averaged $6.95 per Mcf as compared to $8.06 per Mcf in 2005. Comstock's realized oil price in 2006 was $60.93 per barrel as compared to $51.50 per barrel in 2005.
2006 Drilling Results
Comstock made capital expenditures of $288.7 million during 2006 for its onshore acquisition, exploration and development activities and spent an additional $1.1 million on other exploration costs. Onshore, Comstock drilled 122 onshore wells (89.6 net) in 2006. 117 (85.7 net) of the wells drilled were development wells and five (4.0 net) were exploratory. 113 of the development wells were successful and three (2.0 net) of the exploratory wells were successful. Comstock's drilling success rate for its onshore drilling program was 95% in 2006.
Comstock drilled 88 wells (69.3 net) in its East Texas/North Louisiana region. All but two of these were successful. These wells have been tested at a per well average rate of 1.4 million cubic feet of gas equivalent ("Mmcfe") per day. In 2007, Comstock plans to drill 116 (88.6 net) development wells in this region and currently has seven drilling rigs working in this region. In its South Texas region, Comstock drilled ten (4.3 net) successful wells in 2006. These wells have been tested at a per well average rate of 5.6 Mmcfe per day. In 2007, Comstock plans to drill 21 (11.5 net) wells in this region. Comstock drilled 24 wells (16.0 net) in its other regions during 2006. Seven (1.1 net) of the wells drilled were coal bed methane wells in the San Juan Basin in New Mexico. All but one of these were successful. These wells have been tested at a per well average rate of 0.9 Mmcfe per day. Comstock drilled eleven (10.5 net) wells in Mississippi. Nine of the eleven were successful and two were dry holes. These wells have been tested at a per well average rate of 153 barrels of oil per day. The remaining six (4.4 net) successful wells were drilled in Arkansas and Oklahoma. All but one of these were successful. In 2007, Comstock plans to drill 18 (16.4 net) wells in Mississippi and 15 (2.4 net) wells in certain of its other fields.
Comstock's offshore operations are conducted exclusively through its ownership of Bois d'Arc Energy. Bois d'Arc Energy made capital expenditures of $244.6 million during 2006 for its acquisition, exploration and development activities and spent an additional $4.6 million on geological and geophysical costs primarily for 3-D seismic data acquisition. Bois d'Arc successfully replaced 166% of 2006's production primarily through its 2006 drilling program. In 2006, Bois d'Arc Energy drilled ten (8.7 net) successful wells out of a total of 13 (11.2 net) wells drilled with three (2.5 net) dry holes. The largest discoveries made in 2006 included a well drilled at South Pelto 22, which proved up the "Sockeye" prospect and a discovery at Ship Shoal block 111, which proved up the "Steelhead" prospect.
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 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 Texas, Louisiana and the Gulf of Mexico through its ownership in Bois d'Arc Energy, Inc. The Company's stock is traded on the New York Stock Exchange under the symbol CRK.
COMSTOCK RESOURCES, INC.
CONSOLIDATED OPERATING RESULTS
(In thousands, except per share amounts)
Three Months Twelve Months
Ended December 31, Ended December 31,
2005 2005
As Pro As Pro
2006 Reported Forma(A) 2006 Reported Forma(A)
Oil and
gas sales $126,775 $93,366 $142,207 $511,928 $303,336 $449,242
Operating
expenses:
Oil and gas
operating 29,083 14,097 26,862 107,303 50,966 81,356
Exploration 3,470 16 6,294 20,132 19,725 33,693
Depreciation,
depletion and
amortization 49,465 15,970 24,923 153,922 63,338 95,977
Impairment 275 --- 590 10,444 3,400 3,990
General and
administrative,
net 9,031 5,518 8,580 31,769 16,533 24,017
Total
operating
expenses 91,324 35,601 67,249 323,570 153,962 239,033
Income from
operations 35,451 57,765 74,958 188,358 149,374 210,209
Other income
(expenses):
Interest income 288 155 203 1,012 1,604 610
Other income 165 36 86 781 209 209
Interest expense (9,107) (4,773) (5,461) (27,429) (20,272) (21,365)
Loss on disposal
of assets --- --- --- --- --- (89)
Gain on sale of
stock by Bois
d'Arc Energy --- --- --- --- 28,797 28,797
Gain (loss)
on derivatives 108 7,489 7,489 10,716 (13,556) (13,556)
Total other
income
(expenses) (8,546) 2,907 2,317 (14,920) (3,218) (5,394)
Income before
income taxes,
minority interest
and equity in
earnings of
Bois d'Arc
Energy 26,905 60,672 77,275 173,438 146,156 204,815
Provision for
income taxes (12,492) (24,346) (30,511) (74,339) (35,815) (161,623)
Equity in
(earnings)
loss of
Bois d'Arc
Energy --- 5,005 --- --- (49,862) ---
Minority interest
in earnings
(loss) of
Bois d'Arc
Energy (6,001) --- (5,433) (28,434) --- 17,287
Net income $ 8,412 $41,331 $41,331 $70,665 $60,479 $60,479
Net income
per share:
Basic $ 0.20 $ 0.99 $ 0.99 $ 1.67 $ 1.54 $ 1.54
Diluted $ 0.19 $ 0.96 $ 0.96 $ 1.61 $ 1.47 $ 1.47
Weighted average
common and
common stock
equivalent
shares
outstanding:
Basic 42,493 41,652 41,652 42,220 39,216 39,216
Diluted 43,707 43,114 43,114 43,556 41,154 41,154
(A) Pro forma amounts include Bois d'Arc Energy as a consolidated
subsidiary.
COMSTOCK RESOURCES, INC.
CONSOLIDATED OPERATING RESULTS
(In thousands)
Three Months Twelve Months
Ended December 31, Ended December 31,
2005 2005
As Pro As Pro
2006 Reported Forma(A) 2006 Reported Forma(A)
Cash flow
from operations:
Net cash provided
by operating
activities $90,305 $62,700 $93,747 $364,605 $217,954 $322,744
Excess tax
benefit from
stock based
compensation 5,296 --- --- 6,218 --- ---
Increase in
accounts
receivable 13,691 8,289 23,813 2,917 13,030 32,216
Increase
(decrease)
in other
current assets (3,665) 1,043 (2,303) (3,526) (616) 2,119
Increase in
accounts payable
and accrued
expenses (24,819) (2,994) (16,882) (21,666) (14,079) (44,315)
Cash flow
from
operations $80,808 $69,038 $98,375 $348,548 $216,289 $312,764
EBITDAX:
Net income $ 8,412 $41,331 $41,331 $70,665 $60,479 $60,479
Interest expense 9,107 4,773 5,461 27,429 20,272 21,365
Income tax
expense 12,492 24,346 30,511 74,339 35,815 161,623
Depreciation,
depletion and
amortization 49,465 15,970 24,923 153,922 63,338 95,977
Exploration
expense 3,470 16 6,294 20,132 19,725 33,693
Other non-cash
items:
Impairment 275 --- 590 10,444 3,400 3,990
Loss on disposal
of assets --- --- --- --- --- 89
Minority interest
in earnings (loss)
of Bois d'Arc
Energy 6,001 --- 5,433 28,434 --- (17,287)
Equity in
(earnings)
loss of
Bois d'Arc
Energy --- (5,005) --- --- 49,862 ---
Gain on sale
of stock by
Bois d'Arc
Energy --- --- --- --- (28,797) (28,797)
Stock-based
compensation 3,415 1,224 2,693 13,249 5,419 9,885
Unrealized (gain)
loss on
derivatives 69 (9,818) (9,818) (11,242) 11,087 11,087
EBITDAX $92,706 $72,837 $107,418 $387,372 $240,600 $352,104
As of December 31,
2005
2006 As Reported Pro Forma(A)
Balance Sheet Data:
Cash and cash equivalents $ 10,715 $ 89 $ 12,132
Other current assets 88,113 52,681 90,686
Property and equipment, net 1,773,626 706,928 1,368,859
Investment in Bois d'Arc Energy --- 252,134 ---
Other 5,671 4,831 5,630
Total assets $ 1,878,125 $ 1,016,663 $ 1,477,307
Current liabilities $ 151,861 $ 68,117 $ 134,399
Long-term debt 455,000 243,000 312,000
Deferred income taxes 311,236 119,481 242,737
Asset retirement obligation 57,116 3,206 38,240
Minority interest
in Bois d'Arc Energy 220,349 --- 167,072
Stockholders' equity 682,563 582,859 582,859
Total liabilities
and stockholders' equity $ 1,878,125 $ 1,016,663 $ 1,477,307
(A) Pro forma amounts include Bois d'Arc Energy as a consolidated
subsidiary.
COMSTOCK RESOURCES, INC.
OPERATING RESULTS
($ In thousands, except per unit amounts)
Pro Forma Consolidated
For the Three Months For the Three Months
Ended December 31, 2006 Ended December 31, 2005
Bois Bois Pro
d'Arc d'Arc Forma
Onshore(A) Energy Total Onshore(A) Energy Total(B)
Oil production
(thousand
barrels) 225 350 575 234 199 433
Gas production
(million cubic
feet - Mmcf) 7,944 6,795 14,739 7,868 3,178 11,046
Total production
(Mmcfe) 9,296 8,894 18,190 9,270 4,368 13,638
Oil sales $11,147 $20,206 $31,353 $11,725 $11,770 $23,495
Gas sales 49,354 46,068 95,422 81,641 37,071 118,712
Total oil and
gas sales $60,501 $66,274 $126,775 $93,366 $48,841 $142,207
Average oil
price
(per barrel) $49.46 $57.77 $54.51 $50.17 $59.29 $54.36
Average gas
price (per
thousand
cubic feet
- Mcf) $6.21 $6.78 $6.47 $10.38 $11.67 $10.75
Average price
(per Mcf
equivalent) $6.51 $7.45 $6.97 $10.07 $11.18 $10.43
Lifting cost $13,482 $15,601 $29,083 $14,097 $12,765 $26,862
Lifting cost
(per Mcf
equivalent) $1.45 $1.75 $1.60 $1.52 $2.92 $1.97
Oil and Gas
Capital
Expenditures $75,790 $52,812 $128,602 $26,864 $63,839 $90,703
Pro Forma Consolidated
For the Year Ended For the Year Ended
December 31, 2006 December 30, 2005
Bois Bois Pro
d'Arc d'Arc Forma
Onshore (A) Energy Total Onshore(A) Energy Total(B)
Oil production
(thousand barrels) 921 1,383 2,304 735 1,155 1,890
Gas production
(million cubic
feet - Mmcf) 30,271 23,183 53,454 28,742 14,896 43,638
Total production
(Mmcfe) 35,797 31,481 67,278 33,151 21,825 54,976
Oil sales $50,955 $89,421 $140,376 $36,259 $61,064 $97,323
Gas sales 206,263 165,289 371,552 228,547 123,372 351,919
Total oil and
gas sales $257,218 $254,710 $511,928 $264,806 $184,436 $449,242
Average oil price
(per barrel) $55.32 $64.66 $60.93 $49.34 $52.88 $51.50
Average gas price
(per thousand
cubic feet
- Mcf) $6.81 $7.13 $6.95 $7.95 $8.28 $8.06
Average price
(per Mcf
equivalent) $7.19 $8.09 $7.61 $7.99 $8.45 $8.17
Lifting cost $53,903 $53,400 $107,303 $44,267 $37,089 $81,356
Lifting cost
(per Mcf
equivalent) $1.51 $1.70 $1.59 $1.34 $1.70 $1.48
Oil and Gas
Capital
Expenditures $288,729 $244,610 $533,339 $323,953 $187,562 $511,515
(A) Includes the onshore results of operations of Comstock Resources,
Inc.
(B) Pro forma amounts include Bois d'Arc Energy as a consolidated
subsidiary.
COMSTOCK RESOURCES, INC.
REGIONAL ONSHORE OPERATING RESULTS
($ In thousands, except per unit amounts)
For the Three Months ended December 31, 2006
East Texas/
North South Total
Louisiana Texas Other Onshore
Oil production
(thousand barrels) 28 45 152 225
Gas production
(million cubic
feet - Mmcf) 4,775 2,345 824 7,944
Total production (Mmcfe) 4,941 2,613 1,742 9,296
Oil sales $1,658 $2,547 $6,942 $11,147
Gas sales 29,304 15,179 4,871 49,354
Total oil
and gas sales $30,962 $17,726 $11,813 $60,501
Average oil price
(per barrel) $59.21 $56.60 $45.67 $49.46
Average gas price
(per thousand
cubic feet - Mcf) $6.14 $6.47 $5.91 $6.21
Average price (per Mcf
equivalent) $6.27 $6.78 $6.78 $6.51
Lifting cost (A) $5,878 $3,842 $3,762 $13,482
Lifting cost
(per Mcf equivalent) $1.19 $1.47 $2.16 $1.45
Oil and Gas Capital
Expenditures:
Acquisitions $--- $--- $--- $---
Leasehold costs 127 (1,266) 1,132 (7)
Exploratory drilling --- 5,964 1,737 7,701
Development drilling 53,511 2,634 8,070 64,215
Other development 1,987 1,378 516 3,881
Total $55,625 $8,710 $11,455 $75,790
For the Three Months Ended December 31, 2005
East Texas/
North South Total
Louisiana Texas Other Onshore
Oil production
(thousand barrels) 34 61 139 234
Gas production
(million cubic
feet - Mmcf) 4,276 2,008 1,584 7,868
Total production (Mmcfe) 4,478 2,371 2,421 9,270
Oil sales $2,060 $3,562 $6,103 $11,725
Gas sales 45,013 21,755 14,873 81,641
Total oil
and gas sales $47,073 $25,317 $20,976 $93,366
Average oil price
(per barrel) $60.59 $58.39 $43.91 $50.17
Average gas price
(per thousand
cubic feet - Mcf) $10.53 $10.83 $9.39 $10.38
Average price (per Mcf
equivalent) $10.51 $10.68 $8.66 $10.07
Lifting cost(A) $6,123 $4,955 $3,019 $14,097
Lifting cost (per Mcf
equivalent) $1.37 $2.09 $1.25 $1.52
Oil and Gas Capital
Expenditures:
Acquisitions $58 $--- $--- $58
Leasehold costs 803 463 423 1,689
Exploratory drilling --- 20 1 21
Development drilling 19,460 3,289 (1,553) 21,196
Other development 1,721 424 1,755 3,900
Total $22,042 $4,196 $626 $26,864
(A) Includes production taxes of $2,551 and $3,893 for the three months
ended December 31, 2006 and 2005, respectively
For the Year ended December 31, 2006
East Texas/
North South Total
Louisiana Texas Other Onshore
Oil production
(thousand barrels) 117 209 595 921
Gas production
(million cubic
feet - Mmcf) 17,850 9,073 3,348 30,271
Total production
(Mmcfe) 18,550 10,328 6,919 35,797
Oil sales $7,295 $13,332 $30,328 $50,955
Gas sales 119,106 65,594 21,563 206,263
Total oil
and gas sales $126,401 $78,926 $51,891 $257,218
Average oil price
(per barrel) $62.35 $63.79 $50.97 $55.32
Average gas price
(per thousand
cubic feet - Mcf) $6.67 $7.23 $6.44 $6.81
Average price
(per Mcf
equivalent) $6.81 $7.64 $7.50 $7.19
Lifting cost (B) $23,107 $14,612 $16,184 $53,903
Lifting cost (per Mcf
equivalent) $1.25 $1.41 $2.34 $1.51
Oil and Gas Capital
Expenditures:
Acquisitions $912 $60,707 $--- $61,619
Leasehold costs 620 6,358 2,955 9,933
Exploratory drilling --- 6,039 1,737 7,776
Development drilling 145,036 14,537 28,558 188,131
Other development 13,307 2,374 5,589 21,270
Total $159,875 $90,015 $38,839 $288,729
For the Year Ended December 31, 2005
East Texas/
North South Total
Louisiana Texas Other Onshore
Oil production
(thousand barrels) 97 239 399 735
Gas production
(million cubic
feet - Mmcf) 14,130 10,155 4,457 28,742
Total production
(Mmcfe) 14,710 11,586 6,855 33,151
Oil sales $5,243 $12,957 $18,059 $36,259
Gas sales 114,186 79,720 34,641 228,547
Total oil and
gas sales $119,429 $92,677 $52,700 $264,806
Average oil price
(per barrel) $54.05 $54.21 $45.26 $49.34
Average gas price
(per thousand
cubic feet - Mcf) $8.08 $7.85 $7.77 $7.95
Average price
(per Mcf
equivalent) $8.12 $8.00 $7.69 $7.99
Lifting cost (B) $17,823 $14,847 $11,597 $44,267
Lifting cost
(per Mcf equivalent) $1.21 $1.28 $1.69 $1.34
Oil and Gas Capital
Expenditures:
Acquisitions $128,455 $--- $73,334 $201,789
Leasehold costs 1,415 2,123 1,530 5,068
Exploratory drilling --- 14,933 277 15,210
Development drilling 71,516 10,103 5,681 87,300
Other development 8,632 1,567 4,387 14,586
Total $210,018 $28,726 $85,209 $323,953
(B) Includes production taxes of $11,341 and $11,344 for the years ended
December 31, 2006 and 2005, respectively.
SOURCE Comstock Resources, Inc.
Roland O. Burns
Sr. Vice President and Chief Financial Officer
of Comstock
Resources, Inc.
1-972-668-8800
http://www.comstockresources.com