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 FOURTH QUARTER 2020 FINANCIAL AND OPERATING RESULTS

FRISCO, TX, Feb. 16, 2021 (GLOBE NEWSWIRE) -- Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter and year ended December 31, 2020.  

Financial Results for the Three Months Ended December 31, 2020

For the fourth quarter of 2020, Comstock reported net income available to common stockholders of $77.5 million or $0.30 per diluted share. The quarter results included a $80.2 million unrealized gain on the mark-to-market value of the Company's derivative financial instruments that are held to hedge oil and natural gas prices. The adjusted net income available to common stockholders excluding the unrealized gain on the hedge contracts and other non-recurring items for the fourth quarter of 2020 was $34.6 million or $0.14 per diluted share.

Comstock produced 109.0 billion cubic feet ("Bcf") of natural gas and 0.3 million barrels ("Bbls") of oil or 111.1 billion cubic feet of natural gas equivalent ("Bcfe") in the fourth quarter of 2020. Natural gas production averaged 1.2 Bcf per day, an increase of 6% over natural gas production in the third quarter of 2020. Oil production in the fourth quarter of 2020 averaged 3,694 Bbls of oil per day as compared to 3,851 Bbls per day produced in the third quarter of 2020.

Comstock's average realized natural gas price in the fourth quarter of 2020, including realized hedging gains, was $2.40 per Mcf as compared to $2.30 per Mcf realized in the fourth quarter of 2019 and $1.95 per Mcf realized in the third quarter of 2020. The Company's average realized oil price in the fourth quarter of 2020, including realized hedging gains, was $44.47 per Bbl as compared to $50.36 per Bbl in the fourth quarter of 2019 and $33.52 per Bbl in the third quarter of 2020. Oil and gas sales were $276.8 million (including realized hedging gains) in the fourth quarter of 2020 as compared to $308.6 million in the fourth quarter of 2019. Adjusted EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses was $210.8 million in the fourth quarter of 2020 as compared to adjusted EBITDAX of $234.8 million for the fourth quarter of 2019. The Company's operating cash flow generated in the fourth quarter of 2020 was $154.6 million as compared to $187.9 million in the fourth quarter of 2019.

Financial Results for the Year Ended December 31, 2020

For the year ended December 31, 2020, Comstock reported a net loss available to common stockholders of $83.4 million or $0.39 per diluted share. The loss was primarily due to a $124.5 million unrealized loss related to the mark-to-market valuation of derivative financial instruments.  Adjusted net income available to common stockholders excluding the unrealized loss on hedges and other non-recurring items for the year ended December 31, 2020 was $49.6 million or $0.23 per diluted share.

Comstock produced 450.8 Bcf of natural gas and 1.5 million Bbls of oil or 459.9 Bcfe for the year ended December 31, 2020 as compared to 292.8 Bcf of natural gas, 2.7 million Bbls of oil or 308.9 Bcfe for the year ended December 31, 2019. Natural gas production averaged 1.2 Bcf per day in 2020, an increase of 54% over natural gas production in 2019.  Oil production averaged 4,120 Bbls of oil per day in 2020 compared to 7,356 Bbls of oil per day in 2019. Comstock's average realized natural gas price, including realized hedging gains, was $2.07 per Mcf for the year ended December 31, 2020, as compared to $2.35 per Mcf realized for the year ended December 31, 2019. The Company's average realized oil price in 2020, including realized hedging gains, was $40.88 per barrel as compared to $49.64 per barrel in 2019. Oil and gas sales were $993.1 million, including realized hedging gains, for the year ended December 31, 2020 as compared to oil and gas sales of $821.4 million in 2019. Adjusted EBITDAX of $722.2 million in  2020 was 18% higher than adjusted EBITDAX of $613.6 million in 2019. The Company's operating cash flow generated for the year ended December 31, 2020 of $521.2 million increased 11% over operating cash flow of $468.3 million for the year ended December 31, 2019.

Drilling Results

Comstock spent $483.6 million during 2020 for drilling and development activities in 2020. Comstock also spent $7.9 million on leasing activity. $476.9 million was spent to develop its Haynesville and Bossier shale properties, comprised of $436.1 million on drilling and completing wells and an additional $40.8 million on other development activity. Comstock drilled 55 (46.1 net) operated horizontal Haynesville shale wells during the year ended December 31, 2020, which had an average lateral length of  9,247 feet. Comstock also participated in 16 (1.3 net) non-operated Haynesville shale wells in 2020. During the year ended December 31, 2020, Comstock turned 76 (43.7 net) Haynesville shale wells to sales and currently expects to turn 14 (13.0 net) operated wells to sales in the first quarter of 2021.

Since its last operational update, Comstock completed an additional 20 (17.7 net) Haynesville shale wells.  The average initial production rate of these wells was 24 MMcf per day and had an average completed lateral length of 9,288 feet.

2020 Proved Oil & Gas Reserves

Comstock also announced that proved natural gas and oil reserves as of December 31, 2020 were estimated at 5.6 trillion cubic feet ("Tcf") of natural gas and 11.0 million Bbls of oil, or 5.6 Tcfe as compared to total proved reserves of 5.4 Tcfe as of December 31, 2019. The reserve estimates were determined under the SEC guidelines and were audited by the Company's independent reserve engineering firms. The 5.6 Tcfe of proved reserves at December 31, 2020 were 36% developed and 97% were operated by Comstock. The present value, using a 10% discount rate, or the future net cash flows before income taxes of the proved reserves (the "PV-10 Value") was approximately $2.0 billion, using average first of month 2020 prices of $1.99 per Mcf of natural gas and $39.57 per Bbl of oil. The PV-10 Value was impacted by the much lower oil and gas prices required under the SEC methodology. The natural gas and oil prices used in determining the December 31, 2020 proved reserves estimates were 23% lower for natural gas and 29% lower for oil as compared to prices used at December 31, 2019. The PV-10 Value using NYMEX reference prices of $2.75 per Mcf for natural gas and $50.00 per barrel for oil less the Company’s differentials would have been $4.4 billion.

 

The following table reflects the changes in the proved reserve estimates since the end of 2019:

    Oil
(MMBbls)		   Natural Gas
(Bcf)		   Total
(Bcfe)
Proved Reserves:            
Proved Reserves at December 31, 2019   16.7        5,341.5        5,442.0     
Production   (1.5 )     (450.8 )     (459.9 )  
Extensions and discoveries   —        365.7        365.7     
Revisions:            
Price   (2.9 )     (68.2 )     (85.3 )  
Performance and Other   (1.3 )     374.7        366.4     
Proved Reserves at December 31, 2020   11.0        5,562.9        5,628.9     

Despite the low prices used to determine proved reserves, Comstock replaced 159% of its 2020 production excluding price revisions and 141% including them. Based on the 2020 proved reserve additions, Comstock’s "all-in" finding costs were approximately $0.66 per Mcfe excluding price-related revisions ($0.75 per Mcfe including price-related revisions).

2021 Drilling Budget

The Company currently plans to spend approximately $510 million to $550 million in 2021 on drilling and completion activities primarily focused on development of its Haynesville/Bossier shale properties and $7 million to $10 million on its leasing program. Under its current operating plan, Comstock expects to drill 62 (51.0 net) and complete 58 (50.5 net) operated horizontal wells utilizing five to six rigs during 2021. 

Other Matters

Comstock has planned a conference call for 10:00 a.m. Central Time on February 17, 2021, to discuss the fourth quarter of 2020 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 8399473 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 February 17, 2021 and will continue until 1:00 p.m. February 24, 2021. To hear the replay, call 855-859-2056 (404-537-3406) if calling from outside the US). The conference call access code is 8399473.

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 December 31,   Twelve Months Ended December 31,
  2020   2019   2020   2019
Revenues:              
Natural gas sales $ 261,424        $ 260,206        $ 809,399        $ 635,795     
Oil sales 13,347        29,042        48,796        132,894     
Total oil and gas sales 274,771        289,248        858,195        768,689     
Operating expenses:              
Production and ad valorem taxes 9,199        12,999        36,967        35,702     
Gathering and transportation 29,159        29,957        106,582        71,303     
Lease operating 23,342        26,285        102,452        80,762     
Depreciation, depletion and amortization 104,284        111,842        417,112        276,526     
General and administrative 6,049        6,484        32,040        29,244     
Exploration —        —        27        241     
(Gain) loss on sale of assets (1 )     —        (17 )     25     
Total operating expenses 172,032        187,567        695,163        493,803     
               
Operating income 102,739        101,681        163,032        274,886     
Other income (expenses):              
Gain from derivative financial instruments 81,929        19,790        9,951        51,735     
Other income 287        282        1,080        622     
Transaction costs —        90        —        (41,010 )  
Interest expense (66,065 )     (54,107 )     (234,829 )     (161,541 )  
Loss on early extinguishment of debt —        —        (861 )     —     
Total other income (expenses) 16,151        (33,945 )     (224,659 )     (150,194 )  
Income (loss) before income taxes 118,890        67,736        (61,627 )     124,692     
Benefit from (provision for) income taxes (36,967 )     (12,620 )     9,210        (27,803 )  
Net income (loss) 81,923        55,116        (52,417 )     96,889     
Preferred stock dividends and accretion (4,400 )     (14,287 )     (30,996 )     (22,415 )  
Net income (loss) available to common stockholders $ 77,523        $ 40,829        $ (83,413 )     $ 74,474     
               
Net income (loss) per share:              
Basic $ 0.34        $ 0.22        $ (0.39 )     $ 0.52     
Diluted $ 0.30        $ 0.19        $ (0.39 )     $ 0.52     
Weighted average shares outstanding:              
Basic 231,377        187,280        215,194        142,750     
Diluted 275,127        284,100        215,194        187,378     
               

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

  As of
  December 31, 2020   December 31, 2019
ASSETS      
Cash and cash equivalents $ 30,272   $ 18,532
Accounts receivable 145,786   180,341
Derivative financial instruments 8,913   75,304
Income taxes receivable —   5,109
Other current assets 14,839   10,399
Total current assets 199,810   289,685
Property and equipment, net 4,084,550   4,008,803
Goodwill 335,897   335,897
Income taxes receivable —   5,109
Derivative financial instruments 661   13,888
Operating lease right-of-use assets 3,025   3,509
Other assets 40   231
  $ 4,623,983   $ 4,657,122
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Accounts payable $ 259,284   $ 252,994
Accrued costs 133,019   137,166
Operating leases 2,284   1,994
Derivative financial instruments 47,005   222
Total current liabilities 441,592   392,376
Long-term debt 2,517,149   2,500,132
Deferred income taxes 200,583   211,772
Derivative financial instruments 2,364   4,220
Long-term operating leases 740   1,515
Asset retirement obligation 19,290   18,151
Other non-current liabilities 492   6,351
Total liabilities 3,182,210   3,134,517
Mezzanine Equity:      
Preferred stock 175,000   379,583
Stockholders' Equity:      
Common stock 116,206   95,003
Additional paid-in capital 1,095,384   909,423
Accumulated earnings 55,183   138,596
Total stockholders' equity 1,266,773   1,143,022
  $ 4,623,983   $ 4,657,122

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

  Three Months Ended December 31,   Twelve Months Ended December 31,
  2020   2019   2020   2019
Gas production (MMcf) 109,013      121,521      450,836      292,834   
Oil production (Mbbls) 340      577      1,508      2,685   
Total production (MMcfe) 111,052      124,980      459,883      308,944   
               
Natural gas sales $ 261,424      $ 260,206      $ 809,399      $ 635,795   
Natural gas hedging settlements (1) 240      19,302      122,036      52,297   
Total natural gas including hedging 261,664      279,508      931,435      688,092   
Oil sales 13,347      29,042      48,796      132,894   
Oil hedging settlements (1) 1,767      —      12,849      387   
Total oil including hedging 15,114      29,042      61,645      133,281   
Total oil and gas sales including hedging $ 276,778      $ 308,550      $ 993,080      $ 821,373   
               
Average gas price (per Mcf) $ 2.40      $ 2.14      $ 1.80      $ 2.17   
Average gas price including hedging (per Mcf) $ 2.40      $ 2.30      $ 2.07      $ 2.35   
Average oil price (per barrel) $ 39.27      $ 50.36      $ 32.36      $ 49.49   
Average oil price including hedging (per barrel) $ 44.47      $ 50.36      $ 40.88      $ 49.64   
Average price (per Mcfe) $ 2.47      $ 2.31      $ 1.87      $ 2.49   
Average price including hedging (per Mcfe) $ 2.49      $ 2.47      $ 2.16      $ 2.66   
               
Production and ad valorem taxes $ 9,199      $ 12,999      $ 36,967      $ 35,702   
Gathering and transportation $ 29,159      $ 29,957      $ 106,582      $ 71,303   
Lease operating $ 23,342      $ 26,285      $ 102,452      $ 80,762   
               
Production and ad valorem taxes (per Mcfe) $ 0.09      $ 0.10      $ 0.08      $ 0.11   
Gathering and transportation (per Mcfe) $ 0.26      $ 0.24      $ 0.23      $ 0.23   
Lease operating (per Mcfe) $ 0.21      $ 0.21      $ 0.22      $ 0.27   
               
Oil and Gas Capital Expenditures:              
Acquisitions $ —      $ 41,828      $ —      $ 2,097,451   
Exploratory leasehold 6,492      —      7,949      —   
Development leasehold 5,659      890      13,022      7,603   
Development drilling and completion 155,691      150,960      436,074      493,625   
Other development 8,062      3,121      34,525      9,339   
Total $ 175,904      $ 196,799      $ 491,570      $ 2,608,018   

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

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

  Three Months Ended
December 31,		   Twelve Months Ended
December 31,
  2020   2019   2020   2019
ADJUSTED NET INCOME (LOSS) TO COMMON STOCKHOLDERS:              
Net income (loss) available to common stockholders $ 77,523        $ 40,829        $ (83,413 )     $ 74,474     
(Gain) loss on sale of assets (1 )     —        (17 )     25     
Unrealized (gain) loss on derivative financial instruments (80,158 )     (488 )     124,545        949     
Loss on early extinguishment of debt —        —        861        —     
Non-cash interest amortization from adjusting debt assumed in
acquisition to fair value		 5,811        5,065        22,112        9,143     
Non-cash accretion from adjusting preferred stock issued in
acquisition to fair value		 —        4,583        5,417        4,583     
Impairment of unevaluated oil and gas properties —        —        27        —     
Transaction costs —        (90 )     —        41,010     
Covey Park July 2019 hedging settlements —        —        —        4,574     
Adjusted benefit (provision) for income taxes 31,408        (836 )     (19,930 )     (12,420 )  
Adjusted net income available to common stockholders (1) $ 34,583        $ 49,063        $ 49,602        $ 122,338     
               
Adjusted net income available to common stockholders per diluted share $ 0.14        $ 0.22        $ 0.23        $ 0.77     

 

ADJUSTED EBITDAX:              
Net income (loss) $ 81,923        $ 55,116        $ (52,417 )     $ 96,889   
Interest expense 66,065        54,107        234,829        161,541   
Income taxes 36,967        12,620        (9,210 )     27,803   
Depreciation, depletion, and amortization 104,284        111,842        417,112        276,526   
Unrealized (gain) loss from derivative financial instruments (80,158 )     (488 )     124,545        949   
Exploration —        —        27        241   
Stock-based compensation 1,730        1,661        6,464        4,020   
Loss on early extinguishment of debt —        —        861        —   
Transaction costs —        (90 )     —        41,010   
Covey Park July 2019 hedging settlements —        —        —        4,574   
(Gain) loss on sale of assets (1 )     —        (17 )     25   
Total Adjusted EBITDAX (2) $ 210,810        $ 234,768        $ 722,194        $ 613,578   
  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 non-cash unrealized gains and losses on derivative financial instruments and other unusual items.
  2. 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 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 December 31,   Twelve Months Ended December 31,
  2020   2019   2020   2019
OPERATING CASH FLOW:              
Net income (loss) $ 81,923        $ 55,116        $ (52,417 )     $ 96,889     
Reconciling items:              
Deferred income taxes 37,034        12,821        (9,409 )     28,026     
Depreciation, depletion and amortization 104,284        111,842        417,112        276,526     
Unrealized (gain) loss from derivative financial instruments (80,158 )     (488 )     124,545        949     
Amortization of debt discount and issuance costs 9,807        7,068        34,038        16,274     
Stock-based compensation 1,730        1,661        6,464        4,020     
Loss on early extinguishment of debt —        —        861        —     
Transaction costs —        (90 )     —        41,010     
Covey Park July 2019 hedging settlements —        —        —        4,574     
Exploration —        —        27        —     
(Gain) loss on sale of assets (1 )     —        (17 )     25     
Operating cash flow (1) $ 154,619        $ 187,930        $ 521,204        $ 468,293     
               
Net cash provided by operating activities $ 185,746        $ 168,431        $ 575,701        $ 451,237     
Transaction costs —        (90 )     —        41,010     
Covey Park July 2019 hedging settlements —        —        —        4,574     
Increase (decrease) in accounts receivable 44,827        45,184        (34,555 )     (3,220 )  
Increase (decrease) in other current assets 1,272        (2,686 )     (7,019 )     (9,823 )  
Increase in accounts payable and accrued expenses (77,226 )     (22,909 )     (12,923 )     (15,485 )  
Operating cash flow (1) $ 154,619        $ 187,930        $ 521,204        $ 468,293     

(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.

 

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

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Source: Comstock Resources, Inc.