form8kmay162012.htm
 

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 8-K/A
Amendment No. 1


CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934



Date of Report (Date of Earliest Event Reported):  May 1, 2012


COMSTOCK RESOURCES, INC.

(Exact Name of Registrant as Specified in Charter)


STATE OF NEVADA
001-03262
94-1667468
(State or other
jurisdiction incorporation)
 
(Commission File Number)
(I.R.S. Employer
Identification Number)

5300 Town And Country Boulevard
Suite 500
Frisco, Texas 75034
(Address of principal executive offices)

(972) 668-8800
(Registrant's Telephone No.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 
 
 
 

 
 
 

 

Item 9.01  Financial Statements, Pro Forma Financial Information and Exhibits
 
(b)  
Pro Forma Information.
 
This Current Report on Form 8-K/A of Comstock Resources, Inc. (the "Company") amends the Company's Current Report on Form 8-K filed on May 1, 2012.  This Amendment is being filed solely to furnish pro forma information with respect to the divestiture of certain of the Company's oil and gas properties in South Texas and North Louisiana during 2012.

The unaudited pro forma consolidated financial statements giving effect to the disposition of certain of the Company's oil and gas properties in South Texas and North Louisiana properties as of March 31, 2012 and for the twelve months ended December 31, 2011 and the three months ended March 31, 2012 are filed as Exhibit 99.2 and incorporated by reference herein.


(d)  
Exhibits.  The following Exhibits are filed with this document:
 
Exhibit 99.2
 
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2012 and Consolidated Statements of Operations for the Year Ended December 31, 2011 and the Three Months ended March 31, 2012.

SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

   
COMSTOCK RESOURCES, INC.
     
     
Dated:  May 16, 2012
By:
/s/ ROLAND O. BURNS
   
Roland O. Burns
   
Senior Vice President and Chief Financial Officer

exhibit99pnt2may162012.htm
Exhibit 99.2
 
 
COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA FINANCIAL STATEMENTS

Introduction

Comstock Resources, Inc. ("Comstock" or the "Company") completed the sale of oil and gas properties (collectively, the "Divestiture Properties") on February 23, 2012 and on May 1, 2012.  These properties were located in Tyler and Polk counties in South Texas and Lincoln Parish in North Louisiana.  Total net cash proceeds received from the sales of the Divestiture Properties were approximately $123.3 million. These proceeds were used to repay outstanding borrowings on the Company’s revolving bank credit facility.  Proved reserves sold totaled approximately 63 billion cubic feet of natural gas equivalent as of January 1, 2012,  the effective date for both of the transactions.  Daily production from the Divestiture Properties averaged approximately 11.5 million cubic feet of natural gas equivalent per day during the three months ended March 31, 2012.

 Following are the unaudited pro forma financial statements of Comstock for the year ended December 31, 2011 and the three months ended March 31, 2012, which give effect to the sale of the Divestiture Properties.  The unaudited pro forma condensed balance sheet as of March 31, 2012 assumes the sales of the Divestiture Properties occurred as of that date.  The unaudited pro forma statements of operations assume that the sale transactions occurred on January 1, 2011.  Pro forma adjustments are presented in the notes to the unaudited pro forma financial statements.       

The pro forma adjustments are based upon available information and assumptions that the management of Comstock believes are reasonable.  The pro forma financial statements do not purport to represent the financial position or results of operations of Comstock which would have occurred had the sale transactions been consummated on the dates indicated or Comstock's financial position or results of operations for any future date or period.  The unaudited pro forma financial statements and accompanying notes should be read together with the historical consolidated financial statements of Comstock filed with its Form 10-K for the year ended December 31, 2011 and its Form 10-Q for the three months ended March 31, 2012.












 
 
 
 
 
 
 

 







 
1

 

COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)

AS OF MARCH 31, 2012
(in thousands)


   
Historical
   
Pro Forma Adjustments
   
Pro Forma
 
 
ASSETS
 
Cash and Cash Equivalents
 
$
3,750
   
$
113,786
 
(a)
$
3,750
 
             
(113,786
)
(c)
     
Restricted Cash
   
9,549
     
(9,549
)
(c)
 
 
Marketable Securities
   
17,154
     
     
17,154
 
Assets Held for Sale
   
91,520
     
(91,520
)
(b)
 
 
Other Current Assets
   
54,826
     
     
54,826
 
Total Current Assets
   
176,799
     
(101,069
)
   
75,730
 
Property and Equipment
   
2,517,672
     
     
2,517,672
 
Other Assets
   
16,201
     
     
16,201
 
Total Assets
 
$
2,710,672
   
$
(101,069
)
 
$
2,609,603
 


LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
Accounts Payable
 
$
148,633
   
$
   
$
148,633
 
Accrued Expenses and Other Current Liabilities
   
101,427
     
(822
)
(b)
 
100,605
 
Total Current Liabilities
   
250,060
     
(822
)
   
249,238
 
Long-term Debt, Less Current Portion
   
1,207,042
     
(123,335
)
(c)
 
1,083,707
 
Deferred Taxes Payable
   
208,078
     
8,427
 
(d)
 
216,505
 
Other Liabilities
   
18,135
     
     
18,135
 
Stockholders' Equity
   
1,027,357
     
14,661
 
(e)
 
1,042,018
 
Total Liabilities and Stockholders' Equity
 
$
2,710,672
   
$
(101,069
)
 
$
2,609,603
 









 

 




See accompanying notes to unaudited pro forma
consolidated financial statements

 
2

 

COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)

FOR THE YEAR ENDED DECEMBER 31, 2011
(in thousands except per share amounts)


   
Historical
   
Pro Forma
Adjustments
   
Pro Forma
 
Revenues:
                       
Oil and gas sales
 
$
434,367
 
$
 
(37,425
)
(f)
$
396,942
 
                         
Operating expenses:
                       
Production taxes
   
3,670
     
(2,031
)
(f)
 
1,639
 
Gathering and transportation
   
28,491
     
(1,015
)
(f)
 
27,476
 
Lease operating
   
46,552
     
(5,391
)
(f)
 
41,161
 
Exploration
   
10,148
     
     
10,148
 
Depreciation, depletion and amortization
   
290,776
     
(9,990
)
(g)
 
280,786
 
Impairment of oil and gas properties
   
60,817
     
     
60,817
 
Loss on sale of  properties
   
57
     
     
57
 
General and administrative, net
   
35,172
     
     
35,172
 
Total operating expenses
   
475,683
     
(18,427
)
   
457,256
 
                         
Operating loss
   
(41,316
)
   
(18,998
)
   
(60,314
)
                         
Other income (expenses):
                       
Interest expense
   
(42,688
)
   
1,825
 
(h)
 
(40,863
)
Gain on sale of marketable securities
   
35,118
     
     
35,118
 
Other income
   
790
     
     
790
 
Total other income (expenses)
   
(6,780
)
   
1,825
     
(4,955
)
Loss before income taxes
   
(48,096
)
   
(17,173
)
   
(65,269
)
Benefit from income taxes
   
14,624
     
6,268
 
(i)
 
20,892
 
Net loss from continuing operations
 
$
(33,472
)
 
$
(10,905
)
 
$
(44,377
)
                         
Net loss per share:
                       
Basic
 
$
(0.73
)
         
$
(0.96
)
Diluted
 
$
(0.73
)
         
$
(0.96
)
                         
Weighted average common and common stock equivalent shares outstanding:
                       
Basic
   
45,997
             
45,997
 
Diluted
   
45,997
             
45,997
 




 

 

See accompanying notes to unaudited pro forma
consolidated financial statements.

 
3

 

COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)

FOR THE THREE MONTHS ENDED MARCH 31, 2012
(in thousands except per share amounts)


   
Historical
   
Pro Forma
Adjustments
   
Pro Forma
 
Revenues:
                       
Oil and gas sales
 
$
110,335
   
$
(7,561
)
(f)
$
102,774
 
Gain on sale of assets
   
6,727
     
(6,727
)
(j)
 
 
     Total revenues
   
117,062
     
(14,288
)
   
102,774
 
                         
Operating expenses:
                       
Production taxes
   
3,637
     
(412
)
(f)
 
3,225
 
Gathering and transportation
   
7,892
     
(231
)
(f)
 
7,661
 
Lease operating
   
14,749
     
(1,192
)
(f)
 
13,557
 
Exploration
   
1,353
     
     
1,353
 
Depreciation, depletion and amortization
   
79,097
     
 
 
 
79,097
 
Impairment of oil and gas properties
   
49
     
     
49
 
General and administrative, net
   
8,798
     
     
8,798
 
Total operating expenses
   
115,575
     
(1,835
)
   
113,740
 
                         
Operating income (loss)
   
1,487
     
(12,453
)
   
(10,966
)
                         
Other income (expenses):
                       
Interest expense
   
(13,237
)
   
1,026
 
(h)
 
(12,211
)
Gain on sale of marketable securities
   
26,621
     
     
26,621
 
Other income (expense)
   
(23
)
   
     
(23
)
Total other income (expenses)
   
13,361
     
1,026
     
14,387
 
                         
Income (loss) before income taxes
   
14,848
     
(11,427
)
   
3,421
 
Benefit from (provision for) income taxes
   
(7,989
)
   
4,171
 
(i)
 
(3,818
)
Net income (loss) from continuing operations
 
$
6,859
   
$
(7,256
)
 
$
(397
)
                         
Net income (loss) per share:
                       
Basic
 
$
0.14
           
$
(0.01
)
Diluted
 
$
0.14
           
$
(0.01
)
                         
Weighted average common and common stock equivalent shares outstanding:
                       
Basic
   
46,372
             
46,372
 
Diluted
   
46,372
             
46,372
 





See accompanying notes to unaudited pro forma
consolidated financial statements.

 
4

 

COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited pro forma condensed consolidated balance sheet as of March 31, 2012 reflects the following adjustments:

(a)  
Adjustment to recognize the net cash proceeds of $113.8 million for the Divestiture Property sale transaction that closed on May 1, 2012.  This amount represents the sales price of $118.5 million less purchase price adjustments and transaction costs.

(b)  
Adjustment to eliminate the carrying value of the properties and the related asset retirement obligation which were sold on May 1, 2012.  The carrying value of the Divestiture Properties was reclassified to Assets Held for Sale on the consolidated balance sheet during the quarter ended March 31, 2012.
 
(c)  
Adjustment to reflect repayment of a portion of the outstanding balance of the Company's outstanding borrowings under its bank credit facility following the closing of the last sale transaction and upon completion of a reverse tax free exchange transaction.  The balance in restricted cash, which included the net proceeds from the Divestiture Property sales transaction which closed in February 2012, was held by an exchange accommodation titleholder until the tax free exchange transaction was completed.

(d)  
Adjustment for income taxes payable associated with the gain on the sale of the assets which closed on May 1, 2012.  The Divestiture Properties were part of a reverse like-kind exchange transaction in accordance with Section 1031 of the Internal Revenue Code, and the income taxes on the sale of these properties are accordingly being deferred.

(e)  
Adjustment to reflect in retained earnings the pro forma net gain on disposal of $23.1 million ($14.7 million after income taxes) from the sale of the Divestiture Properties that closed on May 1, 2012.  This gain reflects the sales price of $118.5 million, less the closing adjustments and transaction costs of $4.7 million, the carrying value of the assets of $91.5 million, the asset retirement obligation sold of $0.8 million, and deferred income taxes of $8.4 million, which were provided at the Company's estimated combined federal and state tax rate of 36.5%.  The net gain from the sale of a portion of the Divestiture Properties which closed in February 2012 ($6.7 million or $4.2 million after income taxes) is included in the Results of Operations for the three months ended March 31, 2012 and in retained earnings at March 31, 2012.

No depletion, depreciation and amortization expense ("DD&A") expense and no asset retirement obligation accretion expense were recognized for the Divestiture Properties during the three months ended March 31, 2012 as they were classified as Assets Held for Sale on the consolidated balance sheet during this period.

The accompanying unaudited pro forma statements of operations for the year ended December 31, 2011 and the three months ended March 31, 2012 reflect the following adjustments:

(f)  
Adjustment to reverse operating revenues and direct operating costs attributable to the Divestiture Properties.
 
(g)  
Adjustment for the reversal of DD&A expense for the Divestiture Properties, including a reduction of the accretion expense related to asset retirement obligations.

(h)  
Adjustment to interest expense to reflect the use of the cash proceeds to reduce borrowings under the Company's bank credit facility.

(i)  
Adjustment for the income tax consequences of the pro forma adjustments at the Company's estimated combined federal and state tax rate of 36.5%.

(j)  
Adjustment to eliminate the gain realized on the sale of Divestiture Properties that closed on February 23, 2012 which was included in the results of operations for the three months ended March 31, 2012.
 
 
 
5