Comstock Resources is a leading independent natural gas producer with operations focused
on the development of the Haynesville Shale in North Louisiana and East Texas

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COMSTOCK RESOURCES, INC. REPORTS SECOND QUARTER 2021 FINANCIAL AND OPERATING RESULTS

FRISCO, TX, Aug. 03, 2021 (GLOBE NEWSWIRE) -- Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter ended June 30, 2021.

Highlights of 2021's Second Quarter

  • Adjusted net income to common stockholders was $55 million for the quarter or $0.22 per diluted share.
  • Production averaged 1,387 MMcfe per day, comprised of 98% natural gas, and was 8% higher than the first quarter of 2021 and 6% higher than the second quarter of 2020.
  • Average realized price, including hedging, was $2.57 per Mcfe compared to $1.96 per Mcfe in 2020's second quarter.
  • Revenues, including realized hedging losses, were $325 million, 40% higher than 2020's second quarter.
  • Adjusted EBITDAX was $251 million, 55% higher than 2020's second quarter.
  • Operating cash flow (excluding working capital changes) was $196 million or $0.71 per diluted share.
  • Second quarter capital spending was $172 million, including $8 million for leasing activities.
  • Generated free cash flow of $20 million, bringing free cash flow for the first six months of 2021 to $53 million.
  • Refinanced 9.75% notes with new 8.5 year 5.875% senior notes, reducing annual interest payments by $28 million and extending senior note maturities to 7.6 years from 6.3 years. Combined with the March 2021 refinancing transaction, future annual interest payments have now been reduced by $48 million.
     

Second Quarter 2021 Financial Results

Revenues in the second quarter of 2021 totaled $324.8 million (including realized losses on hedging of $18.8 million). Net cash provided by operating activities (excluding changes in working capital) generated in the second quarter was $196.4 million, and the Company reported a net loss available to common stockholders for the second quarter of $184.1 million ($0.80 per share). The net loss in the quarter was due to a $114.1 million pre-tax loss on the early retirement of the 9.75% senior notes and a $204.8 million unrealized loss on hedging contracts held for risk management. The significant improvement in future natural gas prices since March 31, 2021 drove the unrealized loss on the hedging contracts. Excluding these items and certain other unusual items, adjusted net income available to common stockholders for the second quarter of 2021 was $55.0 million, or $0.22 per diluted share.

Comstock's production cost per Mcfe in the second quarter was $0.59 per Mcfe, which was comprised of $0.25 for gathering and transportation costs, $0.21 for lease operating costs, $0.08 for production and other taxes and $0.05 for cash general and administrative expenses. Production cost was $0.60 per Mcfe in both the first quarter of 2021 and the second quarter of 2020. Comstock's unhedged operating margin was 78% in the second quarter of 2021.

Financial Results for the Six Months Ended June 30, 2021

Revenues reported for the first six months of 2021 totaled $656.9 million (including realized losses on hedging of $27.3 million). Net cash provided by operating activities (excluding changes in working capital) was $403.0 million, and the Company reported a net loss available to common stockholders for the first six months of 2021 of $322.5 million ($1.39 per share). The net loss in the first six months of 2021 included $352.6 million in pre-tax losses on the early retirement of the 9.75% and 7.50% senior notes and a $217.9 million unrealized loss on the change in fair market value of the Company's hedging contracts. Excluding these items and certain other unusual items, adjusted net income available to common stockholders was $118.3 million, or $0.46 per diluted share.

Drilling Results

Comstock drilled 42 (33.5 net) operated horizontal Haynesville/Bossier shale wells in the first six months of 2021 which had an average lateral length of 7,902 feet. Comstock also participated in an additional eight (0.9 net) non-operated Haynesville shale wells in the first six months of 2021. Comstock turned 26 (23.3 net) wells to sales in the first six months of 2021 and currently expects to turn an additional 25 wells (20.8 net) to sales in the third quarter of 2021.

Since its last operational update in May, Comstock has turned 21 (18.5 net) new operated Haynesville/Bossier shale wells to sales. These wells had initial daily production rates of 15 MMcf to 32 MMcf per day, with an average of 22 MMcf per day. The completed lateral length of these wells averaged 8,251 feet. Comstock plans to continue to utilize five operated rigs for the remainder of 2021 for its planned drilling activity, having released one operated rig in May 2021.

Earnings Call Information

Comstock has planned a conference call for 10:00 a.m. Central Time on August 4, 2021, to discuss the second quarter of 2021 operational and financial results. Investors wishing to participate should visit the Company's website at www.comstockresources.com for a live webcast or dial 844-776-7840 (international dial-in use 661-378-9538) and provide access code 9664203 when prompted. If you are unable to participate in the original conference call, a web replay will be available approximately 24 hours following the completion of the call on Comstock's website at www.comstockresources.com. The web replay will be available for approximately one week. A replay of the conference call will be available beginning at 1:00 p.m. CT August 4, 2021 and will continue until 1:00 p.m. August 11, 2021. To hear the replay, call 855-859-2056 (404-537-3406 if calling from outside the US). The conference call access code is 9664203.

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 leading independent natural gas producer with operations focused on the development of the Haynesville shale in North Louisiana and East Texas. The Company's stock is traded on the New York Stock Exchange under the symbol CRK.

COMSTOCK RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

  Three Months Ended
June 30,		   Six Months Ended
June 30,
  2021   2020   2021   2020
Revenues:              
Natural gas sales $ 321,520        $ 172,362        $ 645,480        $ 379,601     
Oil sales 22,173        7,173        38,698        25,812     
Total oil and gas sales 343,693        179,535        684,178        405,413     
Operating expenses:              
Production and ad valorem taxes 10,141        9,569        19,793        17,970     
Gathering and transportation 31,736        26,590        61,194        55,001     
Lease operating 26,011        27,820        50,574        53,698     
Exploration —        —        —        27     
Depreciation, depletion and amortization 121,446        103,347        230,574        213,772     
General and administrative 7,872        8,298        15,900        17,017     
Gains on asset sales (9 )     —        (79 )     —     
Total operating expenses 197,197        175,624        377,956        357,485     
               
Operating income 146,496        3,911        306,222        47,928     
Other income (expenses):              
Gain (loss) from derivative financial instruments (223,958 )     (12,298 )     (245,707 )     49,601     
Other income (expense) 530        (9 )     811        304     
Interest expense (56,880 )     (52,064 )     (120,691 )     (104,874 )  
Loss on early retirement of debt (114,060 )     (861 )     (352,599 )     (861 )  
Total other expenses (394,368 )     (65,232 )     (718,186 )     (55,830 )  
Loss before income taxes (247,872 )     (61,321 )     (411,964 )     (7,902 )  
Benefit from income taxes 68,177        11,445        98,144        54     
Net loss (179,695 )     (49,876 )     (313,820 )     (7,848 )  
Preferred stock dividends and accretion (4,363 )     (10,126 )     (8,678 )     (22,198 )  
Net loss available to common stockholders $ (184,058 )     $ (60,002 )     $ (322,498 )     $ (30,046 )  
               
Net loss per share:              
Basic $ (0.80 )     $ (0.29 )     $ (1.39 )     $ (0.15 )  
Diluted $ (0.80 )     $ (0.29 )     $ (1.39 )     $ (0.15 )  
Weighted average shares outstanding:              
Basic 231,428        208,904        231,403        198,910     
Diluted (1) 231,428        208,904        231,403        198,910     
               

 

 

(1)   Basic and diluted shares outstanding are the same since the effect of unvested restricted stock, performance stock units and preferred stock would be anti-dilutive.
 

COMSTOCK RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)

  As of
  June 30,
2021		   December 31, 2020
ASSETS      
Cash and cash equivalents $ 19,727     $ 30,272
Accounts receivable 185,976     145,786
Derivative financial instruments 10,765     8,913
Other current assets 8,410     14,839
Total current assets 224,878     199,810
Property and equipment, net 4,195,773     4,084,550
Goodwill 335,897     335,897
Derivative financial instruments 830     661
Operating lease right-of-use assets 6,833     3,025
Other assets 37     40
  $ 4,764,248     $ 4,623,983
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Accounts payable $ 292,998     $ 259,284
Accrued costs 105,210     133,019
Operating leases 2,190     2,284
Derivative financial instruments 255,127     47,005
Total current liabilities 655,525     441,592
Long-term debt 2,847,309     2,517,149
Deferred income taxes 99,245     200,583
Derivative financial instruments 14,157     2,364
Long-term operating leases 4,674     740
Reserve for future abandonment costs 20,748     19,290
Other non-current liabilities 180     492
Total liabilities 3,641,838     3,182,210
Mezzanine equity:      
Preferred stock 175,000     175,000
Stockholders' equity:      
Common stock 116,425     116,206
Additional paid-in capital 1,098,300     1,095,384
Accumulated earnings (deficit) (267,315 )   55,183
Total stockholders' equity 947,410     1,266,773
  $ 4,764,248     $ 4,623,983

COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands, except per unit amounts)

  Three Months Ended
June 30,		   Six Months Ended
June 30,
  2021   2020   2021   2020
Gas production (MMcf) 124,083        116,477      237,376        239,263   
Oil production (Mbbls) 362        360      688        814   
Total production (MMcfe) 126,260        118,631      241,506        244,144   
               
Natural gas sales $ 321,520        $ 172,362      $ 645,480        $ 379,601   
Natural gas hedging settlements (1) (16,879 )     46,791      (24,369 )     89,796   
Total natural gas including hedging 304,641        219,153      621,111        469,397   
Oil sales 22,173        7,173      38,698        25,812   
Oil hedging settlements (1) (1,965 )     6,434      (2,883 )     8,844   
Total oil including hedging 20,208        13,607      35,815        34,656   
Total oil and gas sales including hedging $ 324,849        $ 232,760      $ 656,926        $ 504,053   
               
Average gas price (per Mcf) $ 2.59        $ 1.48      $ 2.72        $ 1.59   
Average gas price including hedging (per Mcf) $ 2.46        $ 1.88      $ 2.62        $ 1.96   
Average oil price (per barrel) $ 61.25        $ 19.97      $ 56.25        $ 31.72   
Average oil price including hedging (per barrel) $ 55.82        $ 37.89      $ 52.06        $ 42.59   
Average price (per Mcfe) $ 2.72        $ 1.51      $ 2.83        $ 1.66   
Average price including hedging (per Mcfe) $ 2.57        $ 1.96      $ 2.72        $ 2.06   
               
Production and ad valorem taxes $ 10,141        $ 9,569      $ 19,793        $ 17,970   
Gathering and transportation 31,736        26,590      61,194        55,001   
Lease operating 26,011        27,820      50,574        53,698   
Cash general and administrative (2) 6,073        6,746      12,411        14,035   
Total production costs $ 73,961        $ 70,725      $ 143,972        $ 140,704   
               
Production and ad valorem taxes (per Mcfe) $ 0.08        $ 0.08      $ 0.08        $ 0.07   
Gathering and transportation (per Mcfe) 0.25        0.22      0.25        0.23   
Lease operating (per Mcfe) 0.21        0.24      0.21        0.22   
Cash general and administrative (per Mcfe) 0.05        0.06      0.05        0.06   
Total production costs (per Mcfe) $ 0.59        $ 0.60      $ 0.59        $ 0.58   
               
Unhedged operating margin 78    %   61  %   79    %   65  %
Hedged operating margin 77    %   70  %   78    %   72  %
               
Oil and Gas Capital Expenditures:              
Exploratory leasehold $ 7,625        $ —      $ 13,401        $ —   
Development leasehold 2,005        2,455      6,061        6,336   
Development drilling and completion 157,648        61,422      312,887        183,480   
Other development 5,151        10,857      8,931        15,418   
Total $ 172,429        $ 74,734      $ 341,280        $ 205,234   

 

 

(1)   Included in gain (loss) from derivative financial instruments in operating results.

(2)   Excludes stock-based compensation.

COMSTOCK RESOURCES, INC.
NON-GAAP FINANCIAL MEASURES
(In thousands, except per share amounts)

  Three Months Ended
June 30,		   Six Months Ended
June 30,		  
  2021   2020   2021   2020  
ADJUSTED NET INCOME AVAILABLE TO COMMON STOCKHOLDERS:                
Net loss available to common stockholders $ (184,058 )     $ (60,002 )     $ (322,498 )     $ (30,046 )    
Loss on early retirement of debt 114,060        861        352,599        861       
Unrealized loss from derivative financial instruments 204,822        65,585        217,894        49,102       
Non-cash interest amortization from adjusting debt assumed in acquisition to fair value 2,470        5,425        7,397        10,680       
Gains on asset sales (9 )     —        (79 )     —       
Impairment of unevaluated oil and gas properties —        —        —        27       
Non-cash accretion from adjusting preferred stock issued in
acquisition to fair value		 —        2,917        —        5,417       
Adjustment to provision for income taxes (82,236 )     (13,043 )     (137,007 )     (8,048 )    
Adjusted net income available to common stockholders (1) $ 55,049        $ 1,743        $ 118,306        $ 27,993       
                 
Adjusted net income available to common stockholders per share (2) $ 0.22        $ 0.01        $ 0.46        $ 0.14       
                 
Diluted shares outstanding 275,211        208,904      (3) 275,153        198,910      (3)

 

ADJUSTED EBITDAX:                
Net loss $ (179,695 )     $ (49,876 )     $ (313,820 )     $ (7,848 )    
Interest expense (4) 57,172        52,001        121,252        104,811       
Income taxes (68,177 )     (11,445 )     (98,144 )     (54 )    
Depreciation, depletion, and amortization 121,446        103,347        230,574        213,772       
Exploration —        —        —        27       
Unrealized loss from derivative financial instruments 204,822        65,585        217,894        49,102       
Stock-based compensation 1,799        1,552        3,489        2,982       
Loss on early retirement of debt 114,060        861        352,599        861       
Gains on asset sales (9 )     —        (79 )     —       
Total Adjusted EBITDAX (5) $ 251,418        $ 162,025        $ 513,765        $ 363,653       

 

 

(1)   Adjusted net income available to common stockholders is presented because of its acceptance by investors and by Comstock management as an indicator of the Company's profitability excluding loss on early retirement of debt, non-cash unrealized gains and losses on derivative financial instruments and other unusual items.

(2)   Adjusted net income available to common stockholders per share is calculated to include the dilutive effects of unvested restricted stock pursuant to the two-class method and performance stock units and preferred stock pursuant to the treasury stock method.

(3)   Basic and diluted shares outstanding are the same since the effect of unvested restricted stock, performance stock units and preferred stock would be anti-dilutive.

(4)   Includes realized gains or losses from interest rate derivative financial instruments.

(5)   Adjusted EBITDAX is presented in the earnings release because management believes that adjusted EBITDAX, which represents Comstock's results from operations before interest, income taxes, and certain non-cash items, including loss on early retirement of debt, depreciation, depletion and amortization and exploration expense, is a common alternative measure of operating performance used by certain investors and financial analysts.
 

COMSTOCK RESOURCES, INC.
NON-GAAP FINANCIAL MEASURES
(In thousands)

  Three Months Ended
June 30,		   Six Months Ended
June 30,
  2021   2020   2021   2020
OPERATING CASH FLOW(1):              
Net loss $ (179,695 )     $ (49,876 )     $ (313,820 )     $ (7,848 )  
Reconciling items:              
Loss on early retirement of debt 114,060        861        352,599        861     
Deferred income tax benefit (71,131 )     (11,536 )     (101,281 )     (206 )  
Depreciation, depletion and amortization 121,446        103,347        230,574        213,772     
Unrealized loss from derivative financial instruments 204,822        65,585        217,894        49,102     
Amortization of debt discount and issuance costs 5,086        7,527        13,575        14,726     
Stock-based compensation 1,799        1,552        3,489        2,982     
Exploration —        —        —        27     
Gains on asset sales (9 )     —        (79 )     —     
Operating cash flow 196,378        117,460        402,951        273,416     
Decrease (increase) in accounts receivable (33,158 )     28,875        (40,190 )     83,172     
Decrease (increase) in other current assets 750        1,025        5,528        (2,803 )  
Increase (decrease) in accounts payable and accrued expenses 28,341        (31,388 )     17,294        (87,694 )  
Net cash provided by operating activities $ 192,311        $ 115,972        $ 385,583        $ 266,091     
               

 

  Three Months Ended
June 30,		   Six Months Ended
June 30,
  2021   2020   2021   2020
FREE CASH FLOW(2):              
Operating cash flow $ 196,378        $ 117,460        $ 402,951        $ 273,416     
Less:              
Capital expenditures (172,429 )     (74,734 )     (341,280 )     (205,234 )  
Preferred dividends (4,363 )     (7,210 )     (8,678 )     (16,782 )  
Free cash flow $ 19,586        $ 35,516        $ 52,993        $ 51,400     
               

 

 

(1)   Operating cash flow is presented in the earnings release because management believes it to be useful to investors as a common alternative measure of cash flows which excludes changes to other working capital accounts.

(2)   Free cash flow is presented in the earnings release because management believes it to be a useful indicator of the Company's ability to internally fund acquisitions and debt maturities after capital expenditures and preferred dividend payments.

 

  
Ron Mills
VP - Finance and Investor Relations
Comstock Resources
972-668-8834
rmills@comstockresources.com

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Source: Comstock Resources, Inc.