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

News Releases Details

COMSTOCK RESOURCES, INC. REPORTS SECOND QUARTER 2023 FINANCIAL AND OPERATING RESULTS

FRISCO, TX, July 31, 2023 (GLOBE NEWSWIRE) -- Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter ended June 30, 2023.

Highlights of 2023's Second Quarter

  • Weak natural gas prices have weighed heavily on the second quarter results.
  • Natural gas and oil sales, including realized hedging gains, were $285 million.
  • Operating cash flow was $145 million or $0.53 per diluted share.
  • Adjusted EBITDAX for the quarter was $182 million.
  • Adjusted net income was just over break even for the quarter.
  • Solid results from Haynesville shale drilling program with 15 (12.0 net) operated wells turned to sales since the Company's last update with an average initial production of 21 MMcf per day.
  • Comstock continues to have success in its Western Haynesville exploratory play. Comstock's fourth and fifth well were recently turned to sales with strong initial production rates.
     

Financial Results for the Three Months Ended June 30, 2023

Comstock's natural gas and oil sales in the second quarter of 2023 totaled $285.2 million (including realized hedging gains of $55.5 million). Operating cash flow (excluding changes in working capital) generated in the second quarter of 2023 was $145.5 million, and net loss available to common stockholders for the second quarter was $45.7 million or $0.17 per share. The reported net loss in the quarter included a pre-tax $60.0 million unrealized loss on hedging contracts held for risk management. Excluding this item and certain other items, adjusted net income available to common stockholders for the second quarter of 2023 was $1.0 million, or $0.00 per diluted share.

Comstock's production cost per Mcfe in the second quarter averaged $0.84 per Mcfe, which was comprised of $0.36 for gathering and transportation costs, $0.27 for lease operating costs, $0.15 for production and other taxes and $0.06 for cash general and administrative expenses. Comstock's unhedged operating margin was 54% in the second quarter of 2023 and 63% after hedging.

Financial Results for the Six Months Ended June 30, 2023

Natural gas and oil sales for the six months ended June 30, 2023 totaled $675.6 million (including realized hedging gains of $65.9 million). Operating cash flow (excluding changes in working capital) generated during the first six months of 2023 was $400.4 million, and net income available to common stockholders was $88.8 million or $0.32 per share. Net income during the first six months of 2023 included a pre-tax $4.0 million unrealized loss on hedging contracts held for risk management. Excluding this item and certain other items, adjusted net income available to common stockholders for the six months ended June 30, 2023 was $93.0 million or $0.33 per diluted share.

Comstock's production cost per Mcfe during the six months ended June 30, 2023 averaged $0.84 per Mcfe, which was comprised of $0.36 for gathering and transportation costs, $0.27 for lease operating costs, $0.14 for production and other taxes and $0.07 for cash general and administrative expenses. Comstock's unhedged operating margin was 65% during the first six months of 2023 and 69% after hedging.

Drilling Results

Comstock drilled 21 (17.2 net) operated horizontal Haynesville/Bossier shale wells in the second quarter of 2023 which had an average lateral length of 10,887 feet. Comstock turned 17 (13.0 net) operated wells to sales in the second quarter of 2023.

Since its last operational update in May, Comstock has turned 15 (12.0 net) operated Haynesville/Bossier shale wells to sales. These wells had initial daily production rates that averaged 21 MMcf per day. The completed lateral length of these wells averaged 10,671 feet.

Included in the wells turned to sales were the Dinkins JG #1 and the McCullough Ingram A #1, Comstock's fourth and fifth successful Western Haynesville wells. The Dinkins well was drilled to a total vertical depth of 18,042 feet and has a 9,565 foot completed lateral. The well's initial production rate was 34 MMcf per day. The McCullough Ingram well was drilled to a total vertical depth of 17,836 feet and has a 8,256 foot completed lateral. The well's initial production rate was 35 MMcf per day.

Declaration of Quarterly Dividend

On July 31, 2023, Comstock's Board of Directors declared a quarterly dividend of $0.125 per common share. The dividend will be payable on September 15, 2023 to stockholders of record at the close of business on September 1, 2023.

Earnings Call Information

Comstock has planned a conference call for 10:00 a.m. Central Time on August 1, 2023, to discuss the second quarter 2023 operational and financial results. Investors wishing to listen should visit the Company's website at www.comstockresources.com for a live webcast. Investors wishing to participate in the conference call telephonically will need to register at https://register.vevent.com/register/BId240081b2bc14ea8931c4866b16b9dbd. Upon registering to participate in the conference call, participants will receive the dial-in number and a personal PIN number to access the conference call. On the day of the call, please dial in at least 15 minutes in advance to ensure a timely connection to the call. The conference call will also be broadcast live in listen-only mode and can be accessed via the website URL: https://edge.media-server.com/mmc/p/mtj2p68k.

If you are unable to participate in the original conference call, a web replay will be available for twelve months beginning at 1:00 p.m. CT on August 1, 2023. The replay of the conference can be accessed using the webcast link: https://edge.media-server.com/mmc/p/mtj2p68k.

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. Information concerning the assumptions, uncertainties and risks that may affect the actual results can be found in the Company's filings with the Securities and Exchange Commission ("SEC") available on the Company's website or the SEC's website at sec.gov.

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,
    2023       2022       2023       2022  
   
Revenues:              
Natural gas sales $         228,892             $         858,838             $         606,924             $         1,381,795          
Oil sales           860                       2,504                       2,802                       4,388          
Total natural gas and oil sales           229,752                       861,342                       609,726                       1,386,183          
Gas services           58,459                       84,912                       168,063                       129,485          
Total revenues           288,211                       946,254                       777,789                       1,515,668          
Operating expenses:              
Production and ad valorem taxes           19,599                       21,729                       34,505                       35,549          
Gathering and transportation           45,395                       36,964                       90,969                       69,057          
Lease operating           34,031                       25,079                       68,861                       51,265          
Exploration           —                       2,342                       1,775                       3,363          
Depreciation, depletion and amortization           140,177                       119,201                       274,160                       225,929          
Gas services           55,390                       82,778                       156,685                       123,453          
General and administrative           10,038                       9,063                       22,406                       17,286          
Loss (gain) on sale of assets           648                       (19 )             (125 )             (21 )
Total operating expenses           305,278                       297,137                       649,236                       525,881          
Operating income (loss)           (17,067 )             649,117                       128,553                       989,787          
Other income (expenses):              
Gain (loss) from derivative financial instruments           (4,495 )             (72,826 )             61,914                       (510,319 )
Other income           598                       182                       1,058                       450          
Interest expense           (39,188 )             (44,320 )             (77,458 )             (90,811 )
Loss on early retirement of debt           —                       (46,840 )             —                       (46,840 )
Total other expenses           (43,085 )             (163,804 )             (14,486 )             (647,520 )
Income (loss) before income taxes           (60,152 )             485,313                       114,067                       342,267          
(Provision for) benefit from income taxes           14,446                       (108,422 )             (25,270 )             (76,800 )
Net income (loss)           (45,706 )             376,891                       88,797                       265,467          
Preferred stock dividends           —                       (4,363 )             —                       (8,678 )
Net income (loss) available to common stockholders $         (45,706 )   $         372,528             $         88,797             $         256,789          
               
Net income (loss) per share:              
Basic $         (0.17 )   $         1.60             $         0.32             $         1.10          
Diluted $         (0.17 )   $         1.36             $         0.32             $         0.96          
Weighted average shares outstanding:              
Basic           276,669                       232,045                       276,610                       232,011          
Diluted           276,669                       277,614                       276,610                       277,485          
Dividends per share $         0.125             $         —             $         0.25             $         —          

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

  Three Months Ended June 30,   Six Months Ended June 30,
    2023       2022       2023       2022  
Natural gas production (MMcf)           126,307                       123,950                       253,374                       238,856          
Oil production (Mbbls)           13                       24                       40                       45          
Total production (MMcfe)           126,386                       124,092                       253,612                       239,127          
               
Natural gas sales $         228,892             $         858,838             $         606,924             $         1,381,795          
Natural gas hedging settlements (1)           55,494                       (257,363 )             65,877                       (374,549 )
Total natural gas including hedging           284,386                       601,475                       672,801                       1,007,246          
Oil sales           860                       2,504                       2,802                       4,388          
Total natural gas and oil sales including hedging $         285,246             $         603,979             $         675,603             $         1,011,634          
               
Average natural gas price (per Mcf) $         1.81             $         6.93             $         2.40             $         5.79          
Average natural gas price including hedging (per Mcf) $         2.25             $         4.85             $         2.66             $         4.22          
Average oil price (per barrel) $         66.15             $         104.33             $         70.05             $         97.51          
Average price (per Mcfe) $         1.82             $         6.94             $         2.40             $         5.80          
Average price including hedging (per Mcfe) $         2.26             $         4.87             $         2.66             $         4.23          
               
Production and ad valorem taxes $         19,599             $         21,729             $         34,505             $         35,549          
Gathering and transportation           45,395                       36,964                       90,969                       69,057          
Lease operating           34,031                       25,079                       68,861                       51,265          
Cash general and administrative (2)           7,733                       7,482                       18,054                       14,210          
Total production costs $         106,758             $         91,254             $         212,389             $         170,081          
               
Production and ad valorem taxes (per Mcfe) $         0.15             $         0.18             $         0.14             $         0.15          
Gathering and transportation (per Mcfe)           0.36                       0.30                       0.36                       0.29          
Lease operating (per Mcfe)           0.27                       0.20                       0.27                       0.21          
Cash general and administrative (per Mcfe)           0.06                       0.06                       0.07                       0.06          
Total production costs (per Mcfe) $         0.84             $         0.74             $         0.84             $         0.71          
               
Unhedged operating margin   54 %     89 %     65 %     88 %
Hedged operating margin   63 %     85 %     69 %     83 %
               
Gas services revenue $         58,459             $         84,912             $         168,063             $         129,485          
Gas services expenses           55,390                       82,778                       156,685                       123,453          
Gas services margin           3,069                       2,134                       11,378                       6,032          
               
Natural Gas and Oil Capital Expenditures:              
Proved property acquisitions $         —             $         (69 )   $         —             $         205          
Unproved property acquisitions           15,953                       21,551                       56,648                       25,182          
Total natural gas and oil properties acquisitions $         15,953             $         21,482             $         56,648             $         25,387          
Exploration and Development:              
Development leasehold $         4,975             $         655             $         13,718             $         5,287          
Exploratory drilling and completion           74,622                       18,840                       104,312                       30,397          
Development drilling and completion           231,038                       225,371                       511,214                       414,419          
Other development costs           11,353                       18,325                       17,450                       36,937          
Total exploration and development capital expenditures $         321,988             $         263,191             $         646,694             $         487,040          

 

 

(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,
    2023       2022       2023       2022  
ADJUSTED NET INCOME AVAILABLE TO COMMON STOCKHOLDERS:              
Net income (loss) available to common stockholders $         (45,706 )   $         372,528             $         88,797             $         256,789          
Unrealized (gain) loss from derivative financial instruments           59,989                       (184,537 )             3,963                       135,770          
Loss on early retirement of debt           —                       46,840                       —                       46,840          
Non-cash interest amortization from adjusting debt assumed in
acquisition to fair value		           —                       1,414                       —                       4,174          
Exploration expense           —                       2,342                       1,775                       3,363          
Loss (gain) on sale of assets           648                       (19 )             (125 )             (21 )
Adjustment to (provision for) benefit from income taxes           (13,892 )             35,050                       (1,364 )             (37,539 )
Adjusted net income available to common stockholders (1) $         1,039             $         273,618             $         93,046             $         409,376          
               
Adjusted net income available to common stockholders per share (2) $         —             $         1.00             $         0.33             $         1.50          
               
Diluted shares outstanding           276,669                       277,614                       276,610                       277,484          

 

ADJUSTED EBITDAX:              
Net income (loss) $         (45,706 )   $         376,891             $         88,797             $         265,467          
Interest expense           39,188                       44,320                       77,458                       90,811          
Income taxes           (14,446 )             108,422                       25,270                       76,800          
Depreciation, depletion, and amortization           140,177                       119,201                       274,160                       225,929          
Exploration           —                       2,342                       1,775                       3,363          
Unrealized (gain) loss from derivative financial instruments           59,989                       (184,537 )             3,963                       135,770          
Stock-based compensation           2,305                       1,581                       4,351                       3,076          
Loss on early extinguishment of debt           —                       46,840                       —                       46,840          
Loss (gain) on sale of assets           648                       (19 )             (125 )             (21 )
Total Adjusted EBITDAX (3) $         182,155             $         515,041             $         475,649             $         848,035          

 

 

(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, gains and losses on sales of assets 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)   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,
    2023       2022       2023       2022  
OPERATING CASH FLOW(1):              
Net income (loss) $         (45,706 )   $         376,891             $         88,797             $         265,467          
Reconciling items:              
Unrealized (gain) loss from derivative financial instruments           59,989                       (184,537 )             3,963                       135,770          
Deferred income taxes (benefit)           (13,910 )             95,117                       25,270                       70,329          
Depreciation, depletion and amortization           140,177                       119,201                       274,160                       225,929          
Loss on early retirement of debt           —                       46,840                       —                       46,840          
Amortization of debt discount and issuance costs           1,994                       2,873                       3,991                       7,098          
Stock-based compensation           2,305                       1,581                       4,351                       3,076          
Loss (gain) on sale of assets           648                       (19 )             (125 )             (21 )
Operating cash flow $         145,497             $         457,947             $         400,407             $         754,488          
(Increase) decrease in accounts receivable           60,218                       (232,043 )             316,210                       (203,918 )
(Increase) decrease in other current assets           2,715                       (2,104 )             1,201                       881          
Increase in accounts payable and accrued expenses           123,080                       187,116                       56                       145,083          
Net cash provided by operating activities $         331,510             $         410,916             $         717,874             $         696,534          
               

 

  Three Months Ended June 30,   Six Months Ended
June 30,
    2023       2022       2023       2022  
FREE CASH FLOW(2):              
Operating cash flow $         145,497             $         457,947             $         400,407             $         754,488          
Less:              
Exploration and development capital expenditures           (321,988 )             (263,191 )             (646,694 )             (487,040 )
Other capital expenditures           (6,970 )             (18,057 )             (11,513 )             (18,079 )
Preferred stock dividends           —                       (4,363 )             —                       (8,678 )
Free cash flow (deficit) from operations $         (183,461 )   $         172,336             $         (257,800 )   $         240,691          
Acquisitions of natural gas and oil properties           (15,953 )             (21,482 )             (56,648 )             (25,387 )
Proceeds from divestitures           41,165                       48                       41,295                       93          
Free cash flow (deficit) after acquisition and divestiture activity $         (158,249 )   $         150,902             $         (273,153 )   $         215,397          
               

 

 

(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 from operations and free cash flow after acquisition and divestiture activity are presented in the earnings release because management believes them to be useful indicators of the Company's ability to internally fund acquisitions and debt maturities after exploration and development capital expenditures, preferred dividend payments, proved and unproved property acquisitions, and proceeds from divestiture of natural gas and oil properties.

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

  June 30,
2023		   December 31,
2022
ASSETS      
Cash and cash equivalents $         9,919           $         54,652        
Accounts receivable           193,917                     510,127        
Derivative financial instruments           17,553                     23,884        
Other current assets           60,777                     56,324        
Total current assets           282,166                     644,987        
Property and equipment, net           5,026,001                     4,622,655        
Goodwill           335,897                     335,897        
Operating lease right-of-use assets           192,670                     90,716        
  $         5,836,734           $         5,694,255        
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Accounts payable $         552,315           $         530,195        
Accrued costs           132,057                     183,111        
Operating leases           77,690                     38,411        
Derivative financial instruments           —                     4,420        
Total current liabilities           762,062                     756,137        
Long-term debt           2,176,418                     2,152,571        
Deferred income taxes           451,004                     425,734        
Derivative financial instruments           2,052                     —        
Long-term operating leases           115,048                     52,385        
Asset retirement obligation           29,964                     29,114        
Total liabilities           3,536,548                     3,415,941        
Stockholders' Equity:      
Common stock           139,246                     138,759        
Additional paid-in capital           1,255,382                     1,253,417        
Accumulated earnings           905,558                     886,138        
Total stockholders' equity           2,300,186                     2,278,314        
  $         5,836,734           $         5,694,255        

 


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

Primary Logo

Source: Comstock Resources, Inc.