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 THIRD QUARTER 2021 FINANCIAL AND OPERATING RESULTS

FRISCO, TX, Nov. 02, 2021 (GLOBE NEWSWIRE) -- Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter ended September 30, 2021.

Highlights of 2021's Third Quarter

  • Free cash flow of $84 million was generated in the quarter.
  • Adjusted net income to common stockholders was $91 million for the quarter or $0.34 per diluted share.
  • Production increased 25% to 1,424 MMcfe per day (98% natural gas).
  • Revenues, including realized hedging losses, were $394 million, 86% higher than 2020's third quarter.
  • Adjusted EBITDAX was up 109% to $309 million.
  • Operating cash flow (excluding working capital changes) increased 30% to $255 million or $0.92 per diluted share.
  • Third quarter capital spending was $167 million, including $5 million for leasing activities.
     

Third Quarter 2021 Financial Results

Revenues in the third quarter of 2021 totaled $394.0 million (after deducting realized losses on hedging of $117.1 million). Net cash provided by operating activities (excluding changes in working capital) generated in the third quarter was $255.4 million, and the Company reported a net loss available to common stockholders for the third quarter of $292.7 million ($1.26 per share). The net loss in the quarter was driven by a $392.9 million unrealized loss on hedging contracts held for risk management. The significant improvement in the outlook for natural gas prices generated the unrealized loss on the hedging contracts. Excluding this item and certain other unusual items, adjusted net income available to common stockholders for the third quarter of 2021 was $90.6 million, or $0.34 per diluted share.

Comstock's production cost per Mcfe in the third quarter was $0.65 per Mcfe, which was comprised of $0.27 for gathering and transportation costs, $0.20 for lease operating costs, $0.13 for production and other taxes and $0.05 for cash general and administrative expenses. Production cost was $0.59 per Mcfe in the second quarter of 2021 and $0.62 in the third quarter of 2020. Comstock's unhedged operating margin was 83% in the third quarter of 2021.

Financial Results for the Nine Months Ended September 30, 2021

Revenues reported for the first nine months of 2021 totaled $1.1 billion (after deducting realized losses on hedging of $144.4 million). Net cash provided by operating activities (excluding changes in working capital) was $658.4 million, and the Company reported a net loss available to common stockholders for the first nine months of 2021 of $615.2 million ($2.66 per share). The net loss in the first nine months of 2021 included a $610.8 million unrealized loss on the change in fair market value of the Company's hedging contracts and $352.6 million in pre-tax losses on the early retirement of the Company's 9.75% and 7.50% senior notes. Excluding these items and certain other unusual items, adjusted net income available to common stockholders was $208.9 million, or $0.80 per diluted share.

Drilling Results

Comstock drilled 55 (45.2 net) operated horizontal Haynesville/Bossier shale wells in the first nine months of 2021 which had an average lateral length of 8,504 feet. Comstock also participated in an additional 26 (1.7 net) non-operated Haynesville shale wells in the first nine months of 2021. Comstock turned 68 (47.2 net) wells to sales in the first nine months of 2021 and currently expects to turn an additional 10 wells (8.8 net) to sales in the fourth quarter of 2021.

Since its last operational update in August 2021, Comstock has turned 15 (12.3 net) new operated Haynesville/Bossier shale wells to sales. These wells had initial daily production rates that averaged 22 MMcf per day. The completed lateral length of these wells averaged 7,925 feet.

Other Matters

Comstock today announced a partnership with MiQ to independently certify its natural gas production in North Louisiana and East Texas and has engaged Responsible Energy Solutions, LLC as the third-party auditor for the certification process. Comstock will use the MiQ Standard, a framework that assesses and grades methane emissions intensity, enhanced monitoring technology deployment and operating practices that promote a culture of emissions management and continuous improvement, for its facilities in North Louisiana and East Texas, which currently produce approximately 2.0 billion cubic feet per day of natural gas (gross). The partnership highlights Comstock's ongoing commitment to produce natural gas under strict environmental standards and deliver differentiated, responsibly sourced gas based on methane intensity to both domestic and international markets. Comstock's goal is to achieve the MiQ certified natural gas status in the first half of 2022.

Earnings Call Information

Comstock has planned a conference call for 10:00 a.m. Central Time on November 3, 2021, to discuss the third 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 9128805 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 on November 3, 2021 and will continue until 12:00 p.m. CT on November 10, 2021. To hear the replay, call 855-859-2056 (404-537-3406 if calling from outside the US). The conference call access code is 9128805.

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 September 30,   Nine Months Ended September 30,
  2021   2020   2021   2020
Revenues:              
Natural gas sales $ 488,303        $ 168,374        $ 1,133,783        $ 547,975     
Oil sales 22,873        9,637        61,571        35,449     
Total oil and gas sales 511,176        178,011        1,195,354        583,424     
Operating expenses:              
Production and ad valorem taxes 16,675        9,798        36,468        27,768     
Gathering and transportation 35,402        22,422        96,596        77,423     
Lease operating 26,576        25,412        77,150        79,110     
Exploration —        —        —        27     
Depreciation, depletion and amortization 128,739        99,056        359,313        312,828     
General and administrative 8,052        8,974        23,952        25,991     
Gains on asset sales (14 )     (16 )     (93 )     (16 )  
Total operating expenses 215,430        165,646        593,386        523,131     
               
Operating income 295,746        12,365        601,968        60,293     
Other income (expenses):              
Loss from derivative financial instruments (510,319 )     (121,579 )     (756,026 )     (71,978 )  
Other income 197        489        1,008        793     
Interest expense (49,954 )     (63,890 )     (170,645 )     (168,764 )  
Loss on early retirement of debt —        —        (352,599 )     (861 )  
Total other expenses (560,076 )     (184,980 )     (1,278,262 )     (240,810 )  
Loss before income taxes (264,330 )     (172,615 )     (676,294 )     (180,517 )  
Benefit from (provision for) income taxes (23,976 )     46,123        74,168        46,177     
Net loss (288,306 )     (126,492 )     (602,126 )     (134,340 )  
Preferred stock dividends and accretion (4,411 )     (4,398 )     (13,089 )     (26,596 )  
Net loss available to common stockholders $ (292,717 )     $ (130,890 )     $ (615,215 )     $ (160,936 )  
               
Net loss per share:              
Basic $ (1.26 )     $ (0.57 )     $ (2.66 )     $ (0.77 )  
Diluted $ (1.26 )     $ (0.57 )     $ (2.66 )     $ (0.77 )  
Weighted average shares outstanding:              
Basic 231,747        231,223        231,519        209,760     
Diluted (1) 231,747        231,223        231,519        209,760     
               

 

 

(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
  September 30, 2021   December 31, 2020
ASSETS      
Cash and cash equivalents $ 27,841     $ 30,272
Accounts receivable 243,165     145,786
Derivative financial instruments 26,392     8,913
Other current assets 12,194     14,839
Total current assets 309,592     199,810
Property and equipment, net 4,234,477     4,084,550
Goodwill 335,897     335,897
Derivative financial instruments 342     661
Operating lease right-of-use assets 6,792     3,025
Other assets 37     40
  $ 4,887,137     $ 4,623,983
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Accounts payable $ 324,811     $ 259,284
Accrued costs 109,122     133,019
Operating leases 2,356     2,284
Derivative financial instruments 627,166     47,005
Total current liabilities 1,063,455     441,592
Long-term debt 2,801,312     2,517,149
Deferred income taxes 115,585     200,583
Derivative financial instruments 50,127     2,364
Long-term operating leases 4,486     740
Reserve for future abandonment costs 21,867     19,290
Other non-current liabilities 24     492
Total liabilities 4,056,856     3,182,210
Mezzanine equity:      
Preferred stock 175,000     175,000
Stockholders' equity:      
Common stock 116,462     116,206
Additional paid-in capital 1,098,851     1,095,384
Accumulated earnings (deficit) (560,032 )   55,183
Total stockholders' equity 655,281     1,266,773
  $ 4,887,137     $ 4,623,983

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

  Three Months Ended September 30,   Nine Months Ended September 30,
  2021   2020   2021   2020
Gas production (MMcf) 128,896        102,560      366,272        341,823   
Oil production (Mbbls) 346        354      1,034        1,168   
Total production (MMcfe) 130,968        104,687      372,474        348,831   
               
Natural gas sales $ 488,303        $ 168,374      $ 1,133,783        $ 547,975   
Natural gas hedging settlements (1) (114,538 )     32,000      (138,907 )     121,796   
Total natural gas including hedging 373,765        200,374      994,876        669,771   
Oil sales 22,873        9,637      61,571        35,449   
Oil hedging settlements (1) (2,606 )     2,238      (5,489 )     11,082   
Total oil including hedging 20,267        11,875      56,082        46,531   
Total oil and gas sales including hedging $ 394,032        $ 212,249      $ 1,050,958        $ 716,302   
               
Average gas price (per Mcf) $ 3.79        $ 1.64      $ 3.10        $ 1.60   
Average gas price including hedging (per Mcf) $ 2.90        $ 1.95      $ 2.72        $ 1.96   
Average oil price (per barrel) $ 66.11        $ 27.20      $ 59.55        $ 30.35   
Average oil price including hedging (per barrel) $ 58.58        $ 33.52      $ 54.24        $ 39.84   
Average price (per Mcfe) $ 3.90        $ 1.70      $ 3.21        $ 1.67   
Average price including hedging (per Mcfe) $ 3.01        $ 2.03      $ 2.82        $ 2.05   
               
Production and ad valorem taxes $ 16,675        $ 9,798      $ 36,468        $ 27,768   
Gathering and transportation 35,402        22,422      96,596        77,423   
Lease operating 26,576        25,412      77,150        79,110   
Cash general and administrative (2) 6,250        7,222      18,661        21,257   
Total production costs $ 84,903        $ 64,854      $ 228,875        $ 205,558   
               
Production and ad valorem taxes (per Mcfe) $ 0.13        $ 0.09      $ 0.09        $ 0.08   
Gathering and transportation (per Mcfe) 0.27        0.21      0.26        0.22   
Lease operating (per Mcfe) 0.20        0.25      0.21        0.23   
Cash general and administrative (per Mcfe) 0.05        0.07      0.05        0.06   
Total production costs (per Mcfe) $ 0.65        $ 0.62      $ 0.61        $ 0.59   
               
Unhedged operating margin 83    %   64  %   81    %   65  %
Hedged operating margin 78    %   69  %   78    %   71  %
               
Oil and Gas Capital Expenditures:              
Exploratory leasehold $ 5,248        $ 1,457      $ 18,649        $ 1,457   
Development leasehold 733        1,027      6,794        7,363   
Development drilling and completion 141,637        96,903      454,524        280,383   
Other development 19,524        11,045      28,455        26,463   
Total $ 167,142        $ 110,432      $ 508,422        $ 315,666   

 

 

(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 September 30,   Nine Months Ended September 30,  
  2021   2020   2021   2020  
ADJUSTED NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS                
Net loss available to common stockholders $ (292,717 )     $ (130,890 )     $ (615,215 )     $ (160,936 )    
Unrealized loss from derivative financial instruments 392,870        155,601        610,764        204,703       
Non-cash interest amortization from adjusting debt assumed in acquisition to fair value 2,565        5,621        9,962        16,301       
Gains on asset sales (14 )     (16 )     (93 )     (16 )    
Loss on early retirement of debt —        —        352,599        861       
Non-cash accretion from adjusting preferred stock issued in
acquisition to fair value		 —        —        —        5,417       
Impairment of unevaluated oil and gas properties —        —        —        27       
Adjustment to provision for income taxes (12,099 )     (44,122 )     (149,106 )     (53,430 )    
Adjusted net income (loss) available to common stockholders (1) $ 90,605        $ (13,806 )     $ 208,911        $ 12,927       
                 
Adjusted net income (loss) available to common stockholders per share (2) $ 0.34        $ (0.06 )     $ 0.80        $ 0.06       
                 
Diluted shares outstanding 276,886        231,223      (3) 276,368        209,760      (3)

 

ADJUSTED EBITDAX:                
Net loss $ (288,306 )     $ (126,492 )     $ (602,126 )     $ (134,340 )    
Interest expense (4) 50,259        64,106        171,511        168,917       
Income taxes 23,976        (46,123 )     (74,168 )     (46,177 )    
Depreciation, depletion, and amortization 128,739        99,056        359,313        312,828       
Exploration —        —        —        27       
Unrealized loss from derivative financial instruments 392,870        155,601        610,764        204,703       
Stock-based compensation 1,802        1,752        5,291        4,734       
Loss on early retirement of debt —        —        352,599        861       
Gains on asset sales (14 )     (16 )     (93 )     (16 )    
Total Adjusted EBITDAX (5) $ 309,326        $ 147,884        $ 823,091        $ 511,537       

 

 

(1)   Adjusted net income (loss) 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 (loss) 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 September 30,   Nine Months Ended September 30,
  2021   2020   2021   2020
OPERATING CASH FLOW (1):              
Net loss $ (288,306 )     $ (126,492 )     $ (602,126 )     $ (134,340 )  
Reconciling items:              
Unrealized loss from derivative financial instruments 392,870        155,601        610,764        204,703     
Deferred income taxes (benefit) 16,339        (46,237 )     (84,942 )     (46,443 )  
Depreciation, depletion and amortization 128,739        99,056        359,313        312,828     
Loss on early retirement of debt —        —        352,599        861     
Amortization of debt discount and issuance costs 4,012        9,505        17,587        24,231     
Stock-based compensation 1,802        1,752        5,291        4,734     
Exploration —        —        —        27     
Gains on asset sales (14 )     (16 )     (93 )     (16 )  
Operating cash flow 255,442        93,169        658,393        366,585     
Decrease (increase) in accounts receivable (57,189 )     (3,790 )     (97,379 )     79,382     
Decrease (increase) in other current assets (4,678 )     11,094        850        8,291     
Increase (decrease) in accounts payable and accrued expenses 39,395        23,391        56,689        (64,303 )  
Net cash provided by operating activities $ 232,970        $ 123,864        $ 618,553        $ 389,955     
               

 

  Three Months Ended September 30,   Nine Months Ended September 30,
  2021   2020   2021   2020
FREE CASH FLOW (2):              
Operating cash flow $ 255,442        $ 93,169        $ 658,393        $ 366,585     
Less:              
Capital expenditures (167,142 )     (110,432 )     (508,422 )     (315,666 )  
Preferred dividends (4,411 )     (4,398 )     (13,089 )     (21,180 )  
Free cash flow $ 83,889        $ (21,661 )     $ 136,882        $ 29,739     
               

 

 

(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 of Finance and Investor Relations
Comstock Resources
972-668-8834
rmills@comstockresources.com

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Source: Comstock Resources, Inc.