crk-20220503
0000023194FALSE00000231942022-05-032022-05-03

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
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 3, 2022
COMSTOCK RESOURCES, INC.
(Exact Name of Registrant as Specified in Charter)
Nevada001-0326294-1667468
(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))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.50 (per share)CRKNew York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.



Item 2.02     Results of Operations and Financial Condition
On May 3, 2022, Comstock Resources, Inc. ("Comstock" or the "Company") announced financial results for the quarter ended March 31, 2022. A copy of the press release announcing Comstock's earnings and operating results for these periods and other matters is attached hereto as Exhibit 99.1.
The earnings press release contains financial measures that are not in accordance with generally accepted accounting principles in the United States ("GAAP"). Comstock has provided reconciliations within the earnings release of the non-GAAP financial measures to the most directly comparable GAAP financial measures. The non-GAAP financial measures should be considered in addition to, but not as a substitute for, measures of financial performance prepared in accordance with GAAP that are presented in the earnings release.
The information in this Form 8-K and the Exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to the liability of that section, and shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01     Financial Statements and Exhibits
Exhibit No.
Description




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, hereunto duly authorized.
COMSTOCK RESOURCES, INC.
Dated: May 3, 2022By:/s/ ROLAND O. BURNS
Roland O. Burns
President and Chief Financial Officer

Document

Exhibit 99.1
https://cdn.kscope.io/3398166b41a71b71d0da706b575b1e02-box.jpg
5300 Town and Country Blvd., Suite 500
Frisco, Texas 75034
Telephone: (972) 668-8834
Contact: Ron Mills
VP of Finance and Investor Relations
Web Site: www.comstockresources.com
NEWS RELEASE
For Immediate Release
COMSTOCK RESOURCES, INC. REPORTS
FIRST QUARTER 2022 FINANCIAL AND OPERATING RESULTS
FRISCO, TEXAS, May 3, 2022 – Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter ended March 31, 2022.
Highlights of 2022's First Quarter
Generated free cash flow from operations of $68 million in the quarter.
Paid down $85 million of debt in the quarter.
Adjusted EBITDAX increased 27% to $333 million.
Operating cash flow (excluding working capital changes) increased 44% to $297 million or $1.07 per diluted share.
Revenues, after realized hedging losses, were $408 million, 23% higher than 2021's first quarter.
Adjusted net income to common stockholders was $136 million for the quarter or $0.51 per diluted share.
Strong results from Haynesville drilling program with 15 (12.0 net) operated wells turned to sales with an average initial production of 29 MMcf per day.
Financial Results for the Three Months Ended March 31, 2022
Revenues in the first quarter of 2022 totaled $407.7 million (inclusive of realized hedging losses of $117.2 million). Net cash provided by operating activities (excluding changes in working capital) generated in the first quarter was $296.5 million, and net loss available to common stockholders for the first quarter of 2022 was $115.7 million or $(0.50) per share. Net loss in the quarter included a pre-tax $320.3 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 first quarter of 2022 was $135.8 million, or $0.51 per diluted share.




Comstock's production cost per Mcfe in the first quarter was $0.69 per Mcfe, which was comprised of $0.28 for gathering and transportation costs, $0.23 for lease operating costs, $0.12 for production and other taxes and $0.06 for cash general and administrative expenses. Production cost was $0.67 per Mcfe in the fourth quarter of 2021 and $0.60 in the first quarter of 2021. Comstock's unhedged operating margin was 85% in the first quarter of 2022 and 81% after hedging.
First Quarter 2022 Drilling Results
Comstock drilled 15 (13.1 net) operated horizontal Haynesville/Bossier shale wells in the first quarter of 2022 which had an average lateral length of 10,186 feet. The Company also participated in an additional 14 (0.7 net) non-operated Haynesville shale wells in the first quarter of 2022. Comstock turned 33 (15.2 net) wells to sales in the first quarter of 2022 and currently expects to turn an additional 14 (12.7 net) wells to sales in the second quarter of 2022.
Since its last operational update in February, Comstock has turned 15 (12.0 net) new operated Haynesville/Bossier shale wells to sales. These wells had initial daily production rates that averaged 29 MMcf per day. The completed lateral length of these wells averaged 10,115 feet.
Other Matters
Comstock has planned a conference call for 10:00 a.m. Central Time on May 4, 2022, to discuss the first quarter of 2022 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 2547726 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 May 4, 2022 and will continue until 1:00 p.m. CT on May 11, 2022. To hear the replay, call 855-859-2056 (404-537-3406 if calling from outside the US). The conference call access code is 2547726.
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
March 31,
20222021
Revenues:
Natural gas sales$522,957 $323,960 
Oil sales1,884 16,525 
Total oil and gas sales524,841 340,485 
Operating expenses:
Production and ad valorem taxes13,820 9,652 
Gathering and transportation32,093 29,458 
Lease operating26,186 24,563 
Exploration1,021 — 
Depreciation, depletion and amortization106,728 109,128 
General and administrative8,223 8,028 
Gain on sale of assets(2)(70)
Total operating expenses188,069 180,759 
Operating income336,772 159,726 
Other income (expenses):
Loss from derivative financial instruments(437,493)(21,749)
Other income4,166 281 
Interest expense(46,491)(63,811)
Loss on early retirement of debt— (238,539)
Total other expenses(479,818)(323,818)
Loss before income taxes(143,046)(164,092)
Benefit from income taxes31,622 29,967 
Net loss(111,424)(134,125)
Preferred stock dividends(4,315)(4,315)
Net loss available to common stockholders$(115,739)$(138,440)
Net loss per share:
Basic$(0.50)$(0.60)
Diluted$(0.50)$(0.60)
Weighted average shares outstanding:
Basic231,976 231,377 
Diluted231,976 231,377 







COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands, except per unit amounts)
Three Months Ended
March 31,
2021
2022
Pro Forma (3)
As Reported
Gas production (MMcf)114,906 111,804 113,293 
Oil production (Mbbls)21 17 326 
Total production (MMcfe)115,035 111,908 115,246 
Natural gas sales$522,957 $322,795 $323,960 
Natural gas hedging settlements (1)
(117,186)(7,490)(7,490)
Total natural gas including hedging405,771 315,305 316,470 
Oil sales1,884 951 16,525 
Oil hedging settlements (1)
— — (918)
Total oil including hedging1,884 951 15,607 
Total oil and gas sales including hedging$407,655 $316,256 $332,077 
Average gas price (per Mcf)$4.55 $2.89 $2.86 
Average gas price including hedging (per Mcf)$3.53 $2.82 $2.79 
Average oil price (per barrel)$89.71 $55.94 $50.69 
Average oil price including hedging (per barrel)$89.71 $55.94 $47.87 
Average price (per Mcfe)$4.56 $2.89 $2.95 
Average price including hedging (per Mcfe)$3.54 $2.83 $2.88 
Production and ad valorem taxes$13,820 $8,048 $9,652 
Gathering and transportation32,093 29,458 29,458 
Lease operating26,186 21,059 24,563 
Cash general and administrative (2)
6,728 6,338 6,338 
Total production costs$78,827 $64,903 $70,011 
Production and ad valorem taxes (per Mcfe)$0.12 $0.07 $0.08 
Gathering and transportation (per Mcfe)0.28 0.26 0.26 
Lease operating (per Mcfe)0.23 0.19 0.21 
Cash general and administrative (per Mcfe)0.06 0.06 0.05 
Total production costs (per Mcfe)$0.69 $0.58 $0.60 
Unhedged operating margin85 %80 %79 %
Hedged operating margin81 %79 %79 %
Oil and Gas Capital Expenditures:
Proved property acquisitions$274 $— $— 
Unproved property acquisitions3,631 5,776 5,776 
Total oil and gas properties acquisitions$3,905 $5,776 $5,776 
Exploration and Development:
Development leasehold$4,632 $4,043 $4,056 
Exploratory drilling and completion11,557 — — 
Development drilling and completion189,048 155,239 155,239 
Other development costs18,612 2,389 3,452 
Total exploration and development capital expenditures$223,849 $161,671 $162,747 
(1)Included in gain (loss) from derivative financial instruments in operating results.
(2)Excludes stock-based compensation.
(3)Excludes results of the Company's Bakken shale assets, which were sold in October 2021.





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

Three Months Ended March 31,
20222021
ADJUSTED NET INCOME AVAILABLE TO COMMON STOCKHOLDERS:
Net loss available to common stockholders$(115,739)$(138,440)
Unrealized loss from derivative financial instruments320,307 13,072 
Non-cash interest amortization from adjusting debt assumed in
acquisition to fair value
2,760 4,927 
Exploration expense1,021 — 
Gain on sale of assets(2)(70)
Loss on early retirement of debt— 238,539 
Adjustment to provision for income taxes(72,589)(54,733)
Adjusted net income available to common stockholders (1)
$135,758 $63,295 
Adjusted net income available to common stockholders per share (2)
$0.51 $0.25 
Diluted shares outstanding277,058 275,127 

ADJUSTED EBITDAX:
Net loss$(111,424)$(134,125)
Interest expense (3)
46,491 64,080 
Income taxes(31,622)(29,967)
Depreciation, depletion, and amortization106,728 109,128 
Exploration1,021 — 
Unrealized loss from derivative financial instruments320,307 13,072 
Stock-based compensation1,495 1,690 
Loss on early extinguishment of debt— 238,539 
Gain on sale of assets(2)(70)
Total Adjusted EBITDAX (4)
$332,994 $262,347 
(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)Includes realized gains or losses from interest rate derivative financial instruments.
(4)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 March 31,
20222021
OPERATING CASH FLOW (1):
Net loss$(111,424)$(134,125)
Reconciling items:
Unrealized loss from derivative financial instruments320,307 13,072 
Deferred income tax benefit(24,788)(30,150)
Depreciation, depletion and amortization106,728 109,128 
Loss on early retirement of debt— 238,539 
Amortization of debt discount and issuance costs4,225 8,489 
Stock-based compensation1,495 1,690 
Gain on sale of assets(2)(70)
Operating cash flow$296,541 $206,573 
(Increase) decrease in accounts receivable28,125 (7,032)
Decrease in other current assets1,406 4,778 
Decrease in accounts payable and accrued expenses(42,033)(11,047)
Net cash provided by operating activities$284,039 $193,272 

Three Months Ended March 31,
20222021
FREE CASH FLOW (2):
Operating cash flow$296,541 $206,573 
Less:
Exploration and development capital expenditures(223,849)(162,747)
Preferred dividends(4,315)(4,315)
Free cash flow from operations$68,377 $39,511 
Acquisitions of oil and gas properties(3,905)(5,776)
Free cash flow after acquisition and divestiture activity$64,472 $33,735 
(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 oil and gas properties.







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

As of
March 31, 2022December 31, 2021
ASSETS
Cash and cash equivalents$12,137 $30,663 
Accounts receivable239,613 267,738 
Derivative financial instruments2,601 5,258 
Other current assets13,671 15,077 
Total current assets268,022 318,736 
Property and equipment, net4,128,894 4,007,146 
Goodwill335,897 335,897 
Derivative financial instruments10,008 — 
Operating lease right-of-use assets6,879 6,450 
$4,749,700 $4,668,229 
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable$318,736 $314,569 
Accrued costs103,322 135,026 
Operating leases2,784 2,444 
Derivative financial instruments513,645 181,945 
Total current liabilities938,487 633,984 
Long-term debt2,534,460 2,615,235 
Deferred income taxes172,629 197,417 
Derivative financial instruments— 4,042 
Long-term operating leases4,167 4,075 
Asset retirement obligation26,416 25,673 
Other non-current liabilities24 24 
Total liabilities3,676,183 3,480,450 
Mezzanine Equity:
Preferred stock175,000 175,000 
Stockholders' Equity:
Common stock116,460 116,462 
Additional paid-in capital1,101,838 1,100,359 
Accumulated deficit(319,781)(204,042)
Total stockholders' equity898,517 1,012,779 
$4,749,700 $4,668,229