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United States securities and exchange commission logo
September 18, 2020
Roland Burns
President and Chief Financial Officer
Comstock Resources, Inc.
5300 Town and Country Blvd.
Suite 500
Frisco, Texas 75034
Re: Comstock Resources,
Inc.
Form 10-K for
Fiscal Year Ended December 31, 2019
Filed March 2, 2020
Form 8-K Filed
August 5, 2020
File No. 1-03262
Dear Mr. Burns:
We have reviewed your filings and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-K for Fiscal Year Ended December 31, 2019
Business and Properties
Primary Operating Areas, page 9
1. Expand your disclosure
to provide the annual volumes of production by final product sold
for each of the last
three fiscal years, including the disclosure of natural gas liquids
production if sold
separately. Refer to the disclosure requirements in Item 1204(a) of
Regulation S-K.
Oil and Natural Gas Reserves, page 11
2. The third party
reserves audit reports filed as Exhibits 99.1 and 99.2, respectively, disclose
natural gas liquids
reserves; however, such reserves are not disclosed in the filing on Form
Roland Burns
Comstock Resources, Inc.
September 18, 2020
Page 2
10-K as of December 31, 2019. Tell us the reason(s) for this apparent
inconsistency in the
disclosure of your proved reserves.
3. The tabular presentation provided on page 11 relating to the proved
reserves as of
December 31, 2019 indicates that the present worth discounted at 10% (
PV 10 Value )
for your proved developed non-producing reserves is positive. However,
both third party
reserves audit reports filed as Exhibits 99.1 and 99.2, respectively,
disclose that the
present worth at 10% relating to such reserves is negative. Tell us
the reason(s) for this
apparent inconsistency in the disclosure of information relating to
your proved reserves.
4. The third party reserves audit report filed as Exhibit 99.2 indicates
that you have included
estimates of proved undeveloped reserves for certain locations that
generate positive
future net revenue but have negative present worth discounted at 10
percent. Tell us if the
referenced locations were part of the development plan adopted by your
management at
December 31, 2019. Refer to Rule 4-10(a)(31)(ii) of Regulation S-X.
5. If you have adopted a plan to drill proved undeveloped locations with
negative present
worth discounted at 10 percent, disclose the marginal nature of these
wells and the
economic risk that they pose in your filing. Refer to FASB ASC
932-235-50-10 and your
response dated January 19, 2012 to comment 3 in the letter dated
December 28, 2011.
6. Revise the tabular disclosure provided on page 12 relating to the
average production cost
per unit of production for each of the last three fiscal years to
exclude the costs relating to
severance and ad valorem taxes and transportation costs. Refer to Item
1204(b)(2) of
Regulation S-K.
7. The tabular reconciliation of the changes that occurred in proved
undeveloped reserves
provided on page 13 indicates that no new reserves were added from
extensions and
discoveries for the fiscal year ended December 31, 2019. This
disclosure appears to be
inconsistent with the level of drilling activity that occurred during
the year and the
disclosure relating to the change in total proved reserves for new
reserves added from
extension and discoveries. Tell us the reason(s) for this apparent
inconsistency in the
disclosure of information relating to your proved undeveloped
reserves.
Exhibits and Financial Statement Schedules
(b) Exhibits
Exhibit 99.1, page 66
8. Expand the disclosure in Exhibit 99.1 to provide the qualifications of
the technical
person(s) of the independent petroleum engineering firm primarily
responsible for
FirstName LastNameRoland Burns
overseeing the firm s audit of the Company s proved reserves.
Alternatively, expand the
Comapany NameComstock
disclosure Resources,
in the filing Inc. to provide this disclosure. Refer
to the disclosure
on Form 10-K
requirements
September pursuant
18, 2020 Page 2 to Item 1202(a)(7) of Regulation S-K.
FirstName LastName
Roland Burns
FirstName LastNameRoland Burns
Comstock Resources, Inc.
Comapany 18,
September NameComstock
2020 Resources, Inc.
September
Page 3 18, 2020 Page 3
FirstName LastName
9. The disclosure in Exhibit 99.1 does not appear to address all of the
requirements of the
report pursuant to Item 1202(a)(8) of Regulation S-K. Obtain and file
a revised reserves
report to address the following points:
The reserves report should state the purpose for which the
report was prepared, e.g.
for inclusion as an exhibit in a filing made with the U.S.
Securities and Exchange
Commission. See Item 1202(a)(8)(i) of Regulation S-K.
The reserves report should specify the initial benchmark and
the average realized
prices after adjustments for location and quality differentials,
by product type,
including natural gas liquids, for the reserves included in the
report. See Item
1202(a)(8)(v) of Regulation S-K.
10. The reserves report refers to additional supplemental information,
e.g. various summaries
including Schedule No. 1 through Schedule No. 5 and an Appendix: SEC
Petroleum
Reserve Definitions that are not included with the report. Obtain and
file a revised report
to include the referenced supplemental information. Alternatively,
remove these
references if you do not intend to include this supplemental
information.
11. The tabular summary of the estimated remaining net reserves and future
net revenue
provided on page 1 indicates that the proved developed non-producing
reserves have
negative future net revenue, both undiscounted and discounted at 10%.
Tell us why these
reserves meet the requirements to be classified as proved reserves at
December 31, 2019.
Refer to the definitions of economically producible, proved reserves,
and reserves in
Rules 4-10(a)(10), (a)(22) and (a)(26) of Regulation S-X,
respectively.
Notes to Consolidated Financial Statements
Note 14 Oil and Gas Reserves Information (Unaudited), page F-36
12. Expand your disclosure of the changes in the net quantities of total
proved reserves for
each of the periods presented to include an appropriate narrative
explanation of the
significant changes related to each line item other than production.
To the extent that two
or more separate and unrelated factors are combined to arrive at the
line item figure, your
disclosure should separately identify and quantify each individual
factor that contributed
to a significant change so that the change in net reserves between
periods is fully
explained. In particular, disclosure relating to the revisions in
previous estimates of
reserves should identify such underlying factors as changes caused by
commodity prices,
well performance, improved recovery, uneconomic proved undeveloped
locations or
changes resulting from the removal of proved undeveloped locations due
to changes in a
previously adopted development plan. Refer to FASB ASC 932-235-50-5
and Instruction
1 to Item 302(b) of Regulation S-K.
13. The figures relating to the changes that occurred in your total proved
reserves due to
extensions and discoveries appear to be inconsistent with the
corresponding figures
relating to such changes that occurred in your proved undeveloped
reserves for each of the
Roland Burns
Comstock Resources, Inc.
September 18, 2020
Page 4
last three fiscal years presented. Expand the discussion of the changes
in your total
proved reserves attributed to extensions and discoveries to explain the
reason(s) for this
difference. Refer to FASB ASC 932-235-50-5.
14. Tell us if the costs associated with the abandonment of your proved
undeveloped
locations, have been included as part of the future development costs
used in the
calculation of the standardized measure as of December 31, 2019. If such
costs have been
omitted, explain to us your basis for excluding these costs from your
calculation of the
standardized measure.
Form 8-K Filed August 5, 2020
Exhibit 99.1
Financial Results for the Three and Six Months Ended June 30, 2020, page 1
15. We note your presentation of the non-GAAP measure adjusted net income
available to
common stockholders. Revise to present a tabular reconciliation of
adjusted net income
available to common stockholders to net income. Additionally, revise to
disclose the
reasons why you believe your presentation of this non-GAAP measure
provides useful
information to investors. Lastly, revise to disclose the purposes for
which management
uses this non-GAAP measure. Please refer to Regulation G and Item
10(e)(1)(i) of
Regulation S-K.
16. We note certain line items in your tabular reconciliation of net income
to EBITDAX that
are not traditionally included to arrive at the non-GAAP measure EBITDAX.
Tell us
whether you considered labeling this measure adjusted EBITDAX.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Yolanda Guobadia, Staff Accountant, at (202) 551-3562
or Robert
Babula, Staff Accountant, at (202) 551-3339 if you have questions regarding
comments on the
financial statements and related matters. Please contact John Hodgin, Petroleum
Engineer, at
(202) 551-3699 with any other questions.
Sincerely,
FirstName LastNameRoland Burns
Division of
Corporation Finance
Comapany NameComstock Resources, Inc.
Office of Energy &
Transportation
September 18, 2020 Page 4
cc: Brian Claunch
FirstName LastName