UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File No.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
(Address of principal executive offices)
Telephone No.: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Accelerated filer ☐ |
Non-accelerated ☐ |
Smaller reporting company |
|
|
|
|
|
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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No
The number of shares outstanding of the registrant's common stock, par value $0.50, as of November 1, 2023 was
COMSTOCK RESOURCES, INC.
QUARTERLY REPORT
For the Quarter Ended September 30, 2023
INDEX
2
PART 1 — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
3
COMSTOCK RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
|
|
As of |
|
|||||
|
|
September 30, |
|
|
December 31, |
|
||
|
|
(Unaudited) |
|
|
|
|
||
|
|
(In thousands) |
|
|||||
|
|
|
|
|
|
|
||
ASSETS |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Accounts receivable: |
|
|
|
|
|
|
||
Natural gas and oil sales and gas services |
|
|
|
|
|
|
||
Joint interest operations |
|
|
|
|
|
|
||
From affiliates |
|
|
|
|
|
|
||
Derivative financial instruments |
|
|
|
|
|
|
||
Other current assets |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
Property and equipment: |
|
|
|
|
|
|
||
Natural gas and oil properties, successful efforts method: |
|
|
|
|
|
|
||
Proved |
|
|
|
|
|
|
||
Unproved |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Accumulated depreciation, depletion and amortization |
|
|
( |
) |
|
|
( |
) |
Net property and equipment |
|
|
|
|
|
|
||
Goodwill |
|
|
|
|
|
|
||
Operating lease right-of-use assets |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
|
|
$ |
|
||
Accrued costs |
|
|
|
|
|
|
||
Operating leases |
|
|
|
|
|
|
||
Derivative financial instruments |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
Long-term debt |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
|
|
|
|
||
Derivative financial instruments |
|
|
|
|
|
|
||
Long-term operating leases |
|
|
|
|
|
|
||
Reserve for future abandonment costs |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
Stockholders' equity: |
|
|
|
|
|
|
||
Common stock—$ |
|
|
|
|
|
|
||
Additional paid-in capital |
|
|
|
|
|
|
||
Accumulated earnings |
|
|
|
|
|
|
||
Total stockholders' equity |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these statements.
4
COMSTOCK RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
|
|
(In thousands, except per share amounts) |
|
|||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Natural gas sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Oil sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total natural gas and oil sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gas services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Production and ad valorem taxes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gathering and transportation |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Lease operating |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Exploration |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gas services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss (gain) on sale of assets |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income (expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gain (loss) from derivative financial instruments |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Loss on early retirement of debt |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Total other expenses |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Provision for income taxes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Preferred stock dividends |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net income available to common stockholders |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dividends per share |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The accompanying notes are an integral part of these statements.
5
COMSTOCK RESOURCES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
|
|
Common |
|
|
Common |
|
|
Additional |
|
|
Accumulated |
|
|
Total |
|
|||||
|
|
(In thousands) |
|
|||||||||||||||||
Balance at January 1, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Stock-based compensation |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
|
||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Payment of preferred stock dividends |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance at March 31, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Payment of preferred stock dividends |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance at June 30, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Stock-based compensation |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Payment of preferred stock dividends |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance at September 30, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance at January 1, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Stock-based compensation |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
|
||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Payment of common stock dividends |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance at March 31, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Stock-based compensation |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
|||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Payment of common stock dividends |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance at June 30, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Stock-based compensation |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
|
||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Payment of common stock dividends |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance at September 30, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
The accompanying notes are an integral part of these statements.
6
COMSTOCK RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
(In thousands) |
|
|||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
|
|
|
|
||
Gain on sale of assets |
|
|
( |
) |
|
|
( |
) |
Depreciation, depletion and amortization |
|
|
|
|
|
|
||
(Gain) loss on derivative financial instruments |
|
|
( |
) |
|
|
|
|
Cash settlements of derivative financial instruments |
|
|
|
|
|
( |
) |
|
Amortization of debt discount and issuance costs |
|
|
|
|
|
|
||
Stock-based compensation |
|
|
|
|
|
|
||
Loss on early retirement of debt |
|
|
|
|
|
|
||
(Increase) decrease in accounts receivable |
|
|
|
|
|
( |
) |
|
(Increase) decrease in other current assets |
|
|
( |
) |
|
|
|
|
Increase (decrease) in accounts payable and accrued expenses |
|
|
( |
) |
|
|
|
|
Net cash provided by operating activities |
|
|
|
|
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
||
Capital expenditures and acquisitions |
|
|
( |
) |
|
|
( |
) |
Prepaid drilling costs |
|
|
( |
) |
|
|
( |
) |
Proceeds from sales of assets |
|
|
|
|
|
|
||
Net cash used for investing activities |
|
|
( |
) |
|
|
( |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
||
Borrowings on bank credit facility |
|
|
|
|
|
|
||
Repayments of bank credit facility |
|
|
( |
) |
|
|
( |
) |
Retirement of Senior Notes |
|
|
|
|
|
( |
) |
|
Preferred stock dividends paid |
|
|
|
|
|
( |
) |
|
Common stock dividends paid |
|
|
( |
) |
|
|
|
|
Debt and stock issuance costs |
|
|
( |
) |
|
|
|
|
Income tax withholdings on equity awards |
|
|
( |
) |
|
|
( |
) |
Net cash provided by (used for) financing activities |
|
|
|
|
|
( |
) |
|
Net increase (decrease) in cash and cash equivalents |
|
|
( |
) |
|
|
|
|
Cash and cash equivalents, beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents, end of period |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these statements.
7
COMSTOCK RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These unaudited consolidated financial statements include the accounts of Comstock Resources, Inc. and its wholly-owned subsidiaries (collectively, "Comstock" or the "Company"). In management's opinion, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position of Comstock as of September 30, 2023, and the related results of operations and cash flows for the periods being presented. Net income and comprehensive income are the same in all periods presented. All adjustments are of a normal recurring nature unless otherwise disclosed.
The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted pursuant to those rules and regulations, although Comstock believes that the disclosures made are adequate to make the information presented not misleading. These unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in Comstock's Annual Report on Form 10-K for the year ended December 31, 2022. The results of operations for the period through September 30, 2023 are not necessarily an indication of the results expected for the full year.
Other Current Assets
Other current assets at September 30, 2023 and December 31, 2022 consisted of the following:
|
|
As of |
|
|||||
|
|
September 30, |
|
|
December 31, |
|
||
|
|
(In thousands) |
|
|||||
Pipe and well equipment inventory |
|
$ |
|
|
$ |
|
||
Production tax refunds receivable |
|
|
|
|
|
|
||
Prepaid expenses |
|
|
|
|
|
|
||
Prepaid drilling costs |
|
|
|
|
|
|
||
Accrued proceeds from sale of natural gas and oil properties |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
Property and Equipment
The Company follows the successful efforts method of accounting for its natural gas and oil properties. Costs incurred to acquire natural gas and oil leases and to drill and complete developmental wells are capitalized.
8
COMSTOCK RESOURCES, INC.
Exploratory well costs are initially capitalized as proved property in the consolidated balance sheets but charged to exploration expense if and when the well is determined not to have found commercial proved natural gas and oil reserves.