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crk-20220801
0000023194FALSE00000231942022-08-012022-08-01

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): August 1, 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 August 1, 2022, Comstock Resources, Inc. ("Comstock" or the "Company") announced financial results for the quarter and six months ended June 30, 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: August 1, 2022By:/s/ ROLAND O. BURNS
Roland O. Burns
President and Chief Financial Officer
Document


https://cdn.kscope.io/083abe2b0846c3e8abcfd047cd692188-boxa.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
SECOND QUARTER 2022 FINANCIAL AND OPERATING RESULTS
FRISCO, TEXAS, August 1, 2022 – Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter ended June 30, 2022.
Highlights of 2022's Second Quarter
•Generated free cash flow from operations of $190 million in the quarter.
•Retired $271 million in senior notes and reduced annualized leverage ratio to 1.2x.
•Adjusted net income to common stockholders was $274 million for the quarter or $1.00 per diluted share.
•Adjusted EBITDAX increased 105% to $515 million.
•Operating cash flow (excluding working capital changes) increased 133% to $458 million or $1.65 per diluted share.
•Oil and gas sales, after realized hedging losses, were $604 million, 86% higher than 2021's second quarter.
•Strong results from Haynesville drilling program with 16 (14.4 net) operated wells turned to sales with an average initial production of 26 MMcf per day.
•Completed an attractive bolt-on acquisition which included approximately 60,000 net acres prospective for the Haynesville and Bossier shale in East Texas and a 145 mile high pressure pipeline and natural gas treating plant for $36 million.
•Achieved independent certification for natural gas production under the MiQ standard during the quarter.
Financial Results for the Three Months Ended June 30, 2022
Revenues in the second quarter of 2022 totaled $604.0 million (including realized hedging losses of $257.4 million). Net cash provided by operating activities (excluding changes in working capital) generated in the second quarter was $457.9 million, and net income available to common stockholders for the second quarter of 2022 was $372.5 million or $1.36 per share. Reported net income in the quarter included a pre-tax $184.5 million unrealized gain on hedging contracts held for risk management and a $46.8 million loss on early retirement of senior notes in the quarter. Excluding these items and certain


other items, adjusted net income available to common stockholders for the second quarter of 2022 was $273.6 million, or $1.00 per diluted share.
Comstock's production cost per Mcfe in the second quarter averaged $0.74 per Mcfe, which was comprised of $0.30 for gathering and transportation costs, $0.20 for lease operating costs, $0.18 for production and other taxes and $0.06 for cash general and administrative expenses. Production cost was $0.69 per Mcfe in the first quarter of 2022 and $0.59 in the second quarter of 2021. The increase is due to higher production taxes resulting from higher natural gas prices in the quarter. Comstock's unhedged operating margin was 89% in the second quarter of 2022 and 85% after hedging.
Financial Results for the Six Months Ended June 30, 2022
Revenues for the six months ended June 30, 2022 totaled $1.0 billion (including realized hedging losses of $374.5 million). Net cash provided by operating activities (excluding changes in working capital) generated during the first six months of 2022 was $754.5 million, and income available to common stockholders was $256.8 million or $0.96 per share. Net income during the first six months of 2022 included a pre-tax $135.8 million unrealized loss on hedging contracts held for risk management and a $46.8 million loss on early retirement of debt. Excluding these items and certain other items, adjusted net income available to common stockholders for the six months ended June 30, 2022 was $409.4 million or $1.50 per diluted share.
Comstock's production cost per Mcfe during the six months ended June 30, 2022 averaged $0.71 per Mcfe, which was comprised of $0.29 for gathering and transportation costs, $0.21 for lease operating costs, $0.15 for production and other taxes and $0.06 for cash general and administrative expenses. Production cost was $0.59 per Mcfe for the six months ended June 30, 2021. Comstock's unhedged operating margin was 88% during the first six months of 2022 and 83% after hedging.
Drilling Results
Comstock drilled 18 (16.5 net) operated horizontal Haynesville/Bossier shale wells in the second quarter of 2022 which had an average lateral length of 9,924 feet. The Company also participated in an additional 13 (1.9 net) non-operated Haynesville shale wells in the second quarter of 2022. Comstock turned 16 (14.4 net) wells to sales in the second quarter of 2022 and currently expects to turn an additional 14 (13.2 net) wells to sales in the third quarter of 2022.
Since its last operational update in May, Comstock has turned 14 (12.6 net) new operated Haynesville/Bossier shale wells to sales. These wells had initial daily production rates that averaged 26 MMcf per day. The completed lateral length of these wells averaged 9,577 feet. Included in the reported drilling results was Comstock's successful Circle M well drilled in Robertson County, Texas in the Western Haynesville area. The well was completed with a 7,900 foot lateral and was tested at 37 MMcf per day.
During the second quarter, Comstock completed an acquisition which included approximately 60,000 net acres prospective for the Haynesville and Bossier shale in East Texas, a 145 mile high pressure natural gas pipeline and a natural gas treating plant for $35.6 million.


Natural Gas Certification
Comstock announced it has achieved certification for its operated natural gas production under the MiQ standard for methane emissions measurement and management. The MiQ Standard scores production, based on how well operators deploy integrated technologies to detect, measure, and abate emissions while also including a detailed assessment of policies and work practices that evaluate an operator's preparedness to prevent future methane emissions. The certification highlights Comstock's ongoing commitment to produce natural gas under strict environmental standards and deliver differentiated, independently certified gas based on methane intensity to both domestic and international markets. Comstock received the certification in June 2022 and the first block of the Company's certified natural gas is available for trading. The certificates, which can be traded bundled (combined with natural gas delivery) or unbundled, will be available on MiQ's Digital Registry in the coming weeks. The certification covers all the Company's facilities in North Louisiana and East Texas, which currently produce approximately 2.0 billion cubic feet per day of natural gas.
Earnings Call Information
Comstock has planned a conference call for 10:00 a.m. Central Time on August 2, 2022, to discuss the second quarter 2022 operational and financial results. Investors wishing to listen should visit the Company's website at www.comstockresources.com for a live webcast. Investors wishing to participate in the conference call telephonically will need to register at https://register.vevent.com/register/BI2b5f1d27974644e3bb8e3cae9a36c3c1. Upon registering to participate in the conference call, participants will receive the dial-in number and a personal PIN number to access the conference call. On the day of the call, please dial in at least 15 minutes in advance to ensure a timely connection to the call. The conference call will also be broadcast live in listen-only mode and can be accessed via the website URL: https://edge.media-server.com/mmc/p/cjhpy3va.
If you are unable to participate in the original conference call, a web replay will be available for twelve months beginning at 10:00 a.m. CT on August 2, 2022. The replay of the conference can be accessed using the webcast link: https://edge.media-server.com/mmc/p/cjhpy3va.
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
June 30,		Six Months Ended
June 30,
2022202120222021
Revenues:
Natural gas sales$858,838 $321,520 $1,381,795 $645,480 
Oil sales2,504 22,173 4,388 38,698 
Total oil and gas sales861,342 343,693 1,386,183 684,178 
Gas services84,912 — 129,485 — 
Total revenues946,254 343,693 1,515,668 684,178 
Operating expenses:
Production and ad valorem taxes21,729 10,141 35,549 19,793 
Gathering and transportation36,964 31,736 69,057 61,194 
Lease operating25,079 26,011 51,265 50,574 
Exploration2,342 — 3,363 — 
Depreciation, depletion and amortization119,201 121,446 225,929 230,574 
Gas services82,778 — 123,453 — 
General and administrative9,063 7,872 17,286 15,900 
Gain on sale of assets(19)(9)(21)(79)
Total operating expenses297,137 197,197 525,881 377,956 
Operating income649,117 146,496 989,787 306,222 
Other income (expenses):
Loss from derivative financial instruments(72,826)(223,958)(510,319)(245,707)
Other income182 530 450 811 
Interest expense(44,320)(56,880)(90,811)(120,691)
Loss on early retirement of debt(46,840)(114,060)(46,840)(352,599)
Total other expenses(163,804)(394,368)(647,520)(718,186)
Income (loss) before income taxes485,313 (247,872)342,267 (411,964)
(Provision for) benefit from income taxes(108,422)68,177 (76,800)98,144 
Net income (loss)376,891 (179,695)265,467 (313,820)
Preferred stock dividends(4,363)(4,363)(8,678)(8,678)
Net income (loss) available to common stockholders$372,528 $(184,058)$256,789 $(322,498)
Net income (loss) per share:
Basic$1.60 $(0.80)$1.10 $(1.39)
Diluted$1.36 $(0.80)$0.96 $(1.39)
Weighted average shares outstanding:
Basic232,045 231,428 232,011 231,403 
Diluted277,614 231,428 277,485 231,403 






COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands, except per unit amounts)
Three Months Ended June 30,Six Months Ended June 30,
20212021
2022
Pro
Forma (3)
As Reported2022
Pro
Forma (3)
As Reported
Gas production (MMcf)123,950 122,324 124,083 238,856 234,128 237,376 
Oil production (Mbbls)24 29 362 45 46 688 
Total production (MMcfe)124,092 122,496 126,260 239,127 234,404 241,506 
Natural gas sales$858,838 $317,160 $321,520 $1,381,795 $639,955 $645,480 
Natural gas hedging settlements (1)
(257,363)(16,879)(16,879)(374,549)(24,369)(24,369)
Total natural gas including hedging601,475 300,281 304,641 1,007,246 615,586 621,111 
Oil sales2,504 1,792 22,173 4,388 2,743 38,698 
Oil hedging settlements (1)
— — (1,965)— — (2,883)
Total oil including hedging2,504 1,792 20,208 4,388 2,743 35,815 
Total oil and gas sales including hedging$603,979 $302,073 $324,849 $1,011,634 $618,329 $656,926 
Average gas price (per Mcf)$6.93 $2.59 $2.59 $5.79 $2.73 $2.72 
Average gas price including hedging (per Mcf)$4.85 $2.45 $2.46 $4.22 $2.63 $2.62 
Average oil price (per barrel)$104.33 $61.79 $61.25 $97.51 $59.63 $56.25 
Average oil price including hedging (per barrel)$104.33 $61.79 $55.82 $97.51 $59.63 $52.06 
Average price (per Mcfe)$6.94 $2.60 $2.72 $5.80 $2.74 $2.83 
Average price including hedging (per Mcfe)$4.87 $2.47 $2.57 $4.23 $2.64 $2.72 
Production and ad valorem taxes$21,729 $8,033 $10,141 $35,549 $16,081 $19,793 
Gathering and transportation36,964 31,736 31,736 69,057 61,194 61,194 
Lease operating25,079 22,807 26,011 51,265 43,866 50,574 
Cash general and administrative (2)
7,482 6,073 6,073 14,210 12,411 12,411 
Total production costs$91,254 $68,649 $73,961 $170,081 $133,552 $143,972 
Production and ad valorem taxes (per Mcfe)$0.18 $0.06 $0.08 $0.15 $0.07 $0.08 
Gathering and transportation (per Mcfe)0.30 0.26 0.25 0.29 0.26 0.25 
Lease operating (per Mcfe)0.20 0.19 0.21 0.21 0.19 0.21 
Cash general and administrative (per Mcfe)0.06 0.05 0.05 0.06 0.05 0.05 
Total production costs (per Mcfe)$0.74 $0.56 $0.59 $0.71 $0.57 $0.59 
Unhedged operating margin89%78%78%88%79%79%
Hedged operating margin85%77%77%83%78%78%
Oil and gas capital expenditures:
Proved property acquisitions$(69)$— $— $205 $— $— 
Unproved property acquisitions21,551 7,625 7,625 25,182 13,401 13,401 
Total oil and gas properties acquisitions$21,482 $7,625 $7,625 $25,387 $13,401 $13,401 
Exploration and development:
Development leasehold$655 $1,995 $2,005 $5,287 $6,038 $6,061 
Exploratory drilling and completion18,840 — — 30,397 — — 
Development drilling and completion225,371 157,648 157,648 414,419 312,887 312,887 
Other development costs18,325 2,951 4,624 36,937 5,340 8,076 
Total exploration and development capital expenditures$263,191 $162,594 $164,277 $487,040 $324,265 $327,024 
(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 June 30,Six Months Ended
June 30,
2022202120222021
ADJUSTED NET INCOME AVAILABLE TO COMMON STOCKHOLDERS:
Net income (loss) available to common stockholders$372,528 $(184,058)$256,789 $(322,498)
Unrealized (gain) loss from derivative financial instruments(184,537)204,822 135,770 217,894 
Loss on early retirement of debt46,840 114,060 46,840 352,599 
Non-cash interest amortization from adjusting debt assumed in
acquisition to fair value		1,414 2,470 4,174 7,397 
Exploration expense2,342 — 3,363 — 
Gain on sale of assets(19)(9)(21)(79)
Adjustment to (provision for) benefit from income taxes35,050 (87,875)(37,539)(142,608)
Adjusted net income available to common stockholders (1)
$273,618 $49,410 $409,376 $112,705 
Adjusted net income available to common stockholders per share (2)
$1.00 $0.20 $1.50 $0.44 
Diluted shares outstanding277,614 275,211 277,484 275,153 

ADJUSTED EBITDAX:
Net income (loss)$376,891 $(179,695)$265,467 $(313,820)
Interest expense (3)
44,320 57,172 90,811 121,252 
Income taxes108,422 (68,177)76,800 (98,144)
Depreciation, depletion, and amortization119,201 121,446 225,929 230,574 
Exploration2,342 — 3,363 — 
Unrealized (gain) loss from derivative financial instruments(184,537)204,822 135,770 217,894 
Stock-based compensation1,581 1,799 3,076 3,489 
Loss on early extinguishment of debt46,840 114,060 46,840 352,599 
Gain on sale of assets(19)(9)(21)(79)
Total Adjusted EBITDAX (4)
$515,041 $251,418 $848,035 $513,765 
(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 June 30,Six Months Ended
June 30,
2022202120222021
OPERATING CASH FLOW (1):
Net income (loss)$376,891 $(179,695)$265,467 $(313,820)
Reconciling items:
Unrealized (gain) loss from derivative financial instruments(184,537)204,822 135,770 217,894 
Deferred income taxes (benefit)95,117 (71,131)70,329 (101,281)
Depreciation, depletion and amortization119,201 121,446 225,929 230,574 
Loss on early retirement of debt46,840 114,060 46,840 352,599 
Amortization of debt discount and issuance costs2,873 5,086 7,098 13,575 
Stock-based compensation1,581 1,799 3,076 3,489 
Gain on sale of assets(19)(9)(21)(79)
Operating cash flow$457,947 $196,378 $754,488 $402,951 
Increase in accounts receivable(232,043)(33,158)(203,918)(40,190)
(Increase) decrease in other current assets(11,126)750 (9,720)5,528 
Increase in accounts payable and accrued expenses187,116 28,341 145,083 17,294 
Net cash provided by operating activities$401,894 $192,311 $685,933 $385,583 

Three Months Ended June 30,Six Months Ended
June 30,
2022202120222021
FREE CASH FLOW (2):
Operating cash flow$457,947 $196,378 $754,488 $402,951 
Less:
Exploration and development capital expenditures(263,191)(164,277)(487,040)(327,024)
Preferred dividends(4,363)(4,363)(8,678)(8,678)
Free cash flow from operations$190,393 $27,738 $258,770 $67,249 
Acquisitions(39,539)(7,665)(43,466)(13,447)
Proceeds from divestitures48 11 93 211 
Free cash flow after acquisition and divestiture activity$150,902 $20,084 $215,397 $54,013 
(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
June 30,
2022		December 31, 2021
ASSETS
Cash and cash equivalents$32,272 $30,663 
Accounts receivable471,656 267,738 
Derivative financial instruments2,086 5,258 
Other current assets24,797 15,077 
Total current assets530,811 318,736 
Property and equipment, net4,313,201 4,007,146 
Goodwill335,897 335,897 
Operating lease right-of-use assets108,284 6,450 
$5,288,193 $4,668,229 
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable$454,752 $314,569 
Accrued costs153,763 135,026 
Operating leases37,561 2,444 
Derivative financial instruments318,585 181,945 
Total current liabilities964,661 633,984 
Long-term debt2,510,253 2,615,235 
Deferred income taxes267,746 197,417 
Derivative financial instruments— 4,042 
Long-term operating leases70,797 4,075 
Asset retirement obligation28,433 25,673 
Other non-current liabilities24 24 
Total liabilities3,841,914 3,480,450 
Mezzanine Equity:
Preferred stock175,000 175,000 
Stockholders' Equity:
Common stock116,579 116,462 
Additional paid-in capital1,101,953 1,100,359 
Accumulated earnings (deficit)52,747 (204,042)
Total stockholders' equity1,271,279 1,012,779 
$5,288,193 $4,668,229