Comstock Resources is a leading independent natural gas producer with operations focused
on the development of the Haynesville Shale in North Louisiana and East Texas

News Releases Details

COMSTOCK RESOURCES, INC. REPORTS FOURTH QUARTER 2023 FINANCIAL AND OPERATING RESULTS

FRISCO, TX, Feb. 13, 2024 (GLOBE NEWSWIRE) -- Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter and year ended December 31, 2023.

Highlights of 2023's Fourth Quarter

  • Continued weak natural gas prices weighed heavily on the fourth quarter results.
  • Natural gas and oil sales, including realized hedging gains, were $354 million.
  • Adjusted EBITDAX for the quarter was $244 million.
  • Operating cash flow was $207 million or $0.75 per share.
  • Solid results from the Haynesville shale drilling program with 22 (16.5 net) operated wells turned to sales since the Company's last update with an average initial production rate of 24 MMcf per day.
  • Added 23,000 net acres in the Western Haynesville, increasing our acreage in the play to over 250,000 net acres.
  • Latest Western Haynesville successful well is currently producing at a rate of 31 MMcf per day.

Financial Results for the Three Months Ended December 31, 2023

Comstock's natural gas and oil sales in the fourth quarter of 2023 totaled $353.5 million (including realized hedging gains of $4.1 million). Operating cash flow (excluding changes in working capital) generated in the fourth quarter of 2023 was $206.9 million, and net income available to common stockholders for the fourth quarter was $108.4 million or $0.39 per share. Net income in the quarter included a pre-tax $107.3 million unrealized gain on hedging contracts held for natural gas price risk management. Excluding this item, adjusted net income for the fourth quarter of 2023 was $27.9 million, or $0.10 per share.

Comstock's production cost per Mcfe in the fourth quarter averaged $0.81 per Mcfe, which was comprised of $0.33 for gathering and transportation costs, $0.23 for lease operating costs, $0.23 for production and other taxes and $0.02 for cash general and administrative expenses. Comstock's unhedged operating margin was 67% in the fourth quarter of 2023 and 68% after hedging.

Financial Results for the Year Ended December 31, 2023

Natural gas and oil sales for the year ended December 31, 2023 totaled $1.3 billion (including realized hedging gains of $80.3 million). Operating cash flow (excluding changes in working capital) generated during the year was $774.5 million, and net income available to common stockholders was $211.9 million or $0.76 per share. Adjusted net income excluding unrealized gain on hedging contracts for the year ended December 31, 2023 was $132.7 million or $0.47 per share.

Comstock's production cost per Mcfe during the year ended December 31, 2023 averaged $0.83 per Mcfe, which was comprised of $0.35 for gathering and transportation costs, $0.25 for lease operating costs, $0.18 for production and other taxes and $0.05 for cash general and administrative expenses. Comstock's unhedged operating margin was 65% during 2023 and 68% after hedging.

2023 Drilling Results

Comstock drilled 67 (55.5 net) operated horizontal Haynesville/Bossier shale wells in 2023, which had an average lateral length of 10,796 feet. Comstock also turned 74 (55.7 net) operated wells to sales in 2023, which had an average initial production rate of 25 MMcf per day.

Since its last operational update in November, Comstock has turned an additional 22 (16.5 net) operated Haynesville/Bossier shale wells to sales. These wells had initial daily production rates that averaged 24 MMcf per day. The completed lateral length of these wells averaged 11,966 feet. Included in the wells turned to sales since the last operational update was the eighth successful Western Haynesville well – the Neyland MMM #1, which was drilled to a total vertical depth of 16,752 feet with a 10,438 foot completed lateral. The well is currently producing 31 MMcf per day and has not reached its maximum initial production rate.

2023 Proved Oil and Gas Reserves

Comstock also announced that proved natural gas and oil reserves as of December 31, 2023 were estimated at 4.9 trillion cubic feet equivalent ("Tcfe") as compared to 6.7 Tcfe as of December 31, 2022. The reserve estimates were determined under SEC guidelines and were audited by the Company's independent reserve engineering firm. The 4.9 Tcfe of proved reserves at December 31, 2023 were substantially all natural gas, 56% developed and 98% operated by Comstock. The decrease is the result of lower natural gas prices used in the determination. The present value, using a 10% discount rate, of the future net cash flows before income taxes of the proved reserves (the "PV-10 Value"), was approximately $2.5 billion using the Company's average first of month 2023 prices of $2.39 per thousand cubic feet of natural gas and $72.63 per barrel of oil. The natural gas and oil prices used in determining the December 31, 2023 proved reserve estimates were 56% lower for natural gas and 14% lower for oil as compared to prices used at December 31, 2022. Comstock's proved reserves would have been 6.6 Tcfe with a PV-10 Value of $5.2 billion using NYMEX reference prices of $3.50 per Mcf for natural gas and $75.00 per barrel of oil less the Company's differentials.

The following table reflects the changes in the SEC proved reserve estimates since the end of 2022:

  Total
(Bcfe)		  
Proved Reserves:    
Proved Reserves at December 31, 2022   6,700.9  
Production   (524.9 )
Extensions and discoveries   571.4  
Revisions   (1,803.9 )
Proved Reserves at December 31, 2023   4,943.5  

Despite the lower prices used in determining proved reserves, Comstock replaced 109% of its 2023 production excluding revisions, which were related to the lower prices used in the determination.

2024 Budget

In response to weak natural gas prices, Comstock plans to suspend its quarterly dividend until natural gas prices improve. In addition, the Company plans to reduce the number of operating drilling rigs it is running from seven to five. Two of the five drilling rigs will continue to be deployed in the Company's Western Haynesville play. As a result, Comstock plans to spend approximately $750 million to $850 million in 2024 on its development and exploration projects to drill 46 (35.9 net) operated horizontal wells and to turn 44 (38.2 net) operated wells to sales in 2024. Comstock expects to spend $125 million to $150 million on its Western Haynesville midstream system, which will be funded by its midstream partnership.

Earnings Call Information

Comstock has planned a conference call for 10:00 a.m. Central Time on February 14, 2024, to discuss the fourth quarter 2024 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/BI9aed23e8af74454f89bd226e82af31c9

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/jx7owzgq.

If you are unable to participate in the original conference call, a web replay will be available for twelve months beginning at 1:00 p.m. CT on February 14, 2024. The replay of the conference can be accessed using the webcast link: https://edge.media-server.com/mmc/p/jx7owzgq.

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
December 31,		     Year Ended
December 31,		  
    2023     2022     2023     2022  
Revenues:                        
Natural gas sales   $ 348,385     $ 740,320     $ 1,259,450     $ 3,117,094  
Oil sales     1,050       1,273       5,161       7,597  
Total natural gas and oil sales     349,435       741,593       1,264,611       3,124,691  
Gas services     61,148       180,791       300,498       503,366  
Total revenues     410,583       922,384       1,565,109       3,628,057  
Operating expenses:                        
Production and ad valorem taxes     31,912       17,837       91,803       77,917  
Gathering and transportation     46,925       41,882       184,906       155,679  
Lease operating     31,678       31,261       132,203       111,134  
Exploration     —       4,924       1,775       8,287  
Depreciation, depletion and amortization     185,558       134,456       607,908       489,450  
Gas services     57,733       159,773       282,050       465,044  
General and administrative     6,000       11,954       37,992       39,405  
Gain on sale of assets     —       (319 )     (125 )     (340 )
Total operating expenses     359,806       401,768       1,338,512       1,346,576  
Operating income     50,777       520,616       226,597       2,281,481  
Other income (expenses):                        
Gain (loss) from derivative financial instruments     111,449       119,132       187,639       (662,522 )
Other income     304       410       1,771       916  
Interest expense     (47,936 )     (38,888 )     (169,018 )     (171,092 )
Loss on early retirement of debt     —       —       —       (46,840 )
Total other income (expenses)     63,817       80,654       20,392       (879,538 )
Income before income taxes     114,594       601,270       246,989       1,401,943  
Provision for income taxes     (6,217 )     (81,451 )     (35,095 )     (261,061 )
Net income     108,377       519,819       211,894       1,140,882  
Preferred stock dividends     —       (2,925 )     —       (16,014 )
Net income available to common stockholders     108,377       516,894       211,894       1,124,868  
Net income attributable to noncontrolling interest     (777 )     —       (777 )     —  
Net income attributable to Comstock   $ 107,600     $ 516,894     $ 211,117     $ 1,124,868  
                         
Net income per share:                        
Basic   $ 0.39     $ 2.08     $ 0.76     $ 4.75  
Diluted   $ 0.39     $ 1.87     $ 0.76     $ 4.11  
Weighted average shares outstanding:                        
Basic     276,999       247,543       276,806       236,045  
Diluted     276,999       277,032       276,806       277,465  
Dividends per share   $ 0.125     $ 0.125     $ 0.50     $ 0.125  

COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands, except per unit amounts)

    Three Months Ended
December 31,		     Year Ended
December 31,		  
    2023     2022     2023     2022  
Natural gas production (MMcf)     140,565       132,858       524,467       500,616  
Oil production (Mbbls)     13       16       70       82  
Total production (MMcfe)     140,649       132,955       524,890       501,107  
                         
Natural gas sales   $ 348,385     $ 740,320     $ 1,259,450     $ 3,117,094  
Natural gas hedging settlements (1)     4,107       (183,677 )     80,328       (862,715 )
Total natural gas including hedging     352,492       556,643       1,339,778       2,254,379  
Oil sales     1,050       1,273       5,161       7,597  
Total natural gas and oil sales including hedging   $ 353,542     $ 557,916     $ 1,344,939     $ 2,261,976  
                         
Average natural gas price (per Mcf)   $ 2.48     $ 5.57     $ 2.40     $ 6.23  
Average natural gas price including hedging (per Mcf)   $ 2.51     $ 4.19     $ 2.55     $ 4.50  
Average oil price (per barrel)   $ 80.77     $ 79.56     $ 73.73     $ 92.65  
Average price (per Mcfe)   $ 2.48     $ 5.58     $ 2.41     $ 6.24  
Average price including hedging (per Mcfe)   $ 2.51     $ 4.20     $ 2.56     $ 4.51  
                         
Production and ad valorem taxes   $ 31,912     $ 17,837     $ 91,803     $ 77,917  
Gathering and transportation     46,925       41,882       184,906       155,679  
Lease operating     31,678       31,261       132,203       111,134  
Cash general and administrative (2)     3,141       10,262       28,125       32,795  
Total production costs   $ 113,656     $ 101,242     $ 437,037     $ 377,525  
                         
Production and ad valorem taxes (per Mcfe)   $ 0.23     $ 0.12     $ 0.18     $ 0.16  
Gathering and transportation (per Mcfe)     0.33       0.32       0.35       0.31  
Lease operating (per Mcfe)     0.23       0.24       0.25       0.22  
Cash general and administrative (per Mcfe)     0.02       0.08       0.05       0.07  
Total production costs (per Mcfe)   $ 0.81     $ 0.76     $ 0.83     $ 0.76  
                         
Unhedged operating margin     67 %     86 %     65 %     88 %
Hedged operating margin     68 %     82 %     68 %     83 %
                         
Gas services revenues   $ 61,148     $ 180,791     $ 300,498     $ 503,366  
Gas services expenses     57,733       159,773       282,050       465,044  
Gas services margin   $ 3,415     $ 21,018     $ 18,448     $ 38,322  
                         
Natural Gas and Oil Capital Expenditures:                        
Proved property acquisitions   $ —     $ 295     $ —     $ 500  
Unproved property acquisitions     21,907       16,724       98,553       54,120  
Total natural gas and oil properties acquisitions   $ 21,907     $ 17,019     $ 98,553     $ 54,620  
Exploration and Development:                        
Development leasehold   $ 8,818     $ 5,429     $ 27,905     $ 13,727  
Exploratory drilling and completion     65,079       14,517       244,129       63,520  
Development drilling and completion     233,856       281,653       974,664       901,026  
Other development costs     6,262       1,193       25,130       53,693  
Total exploration and development capital expenditures   $ 314,015     $ 302,792     $ 1,271,828     $ 1,031,966  
  1. Included in gain (loss) from derivative financial instruments in operating results.
  2. Excludes stock-based compensation.

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

    Three Months Ended
December 31,		     Year Ended
December 31,		  
    2023     2022     2023     2022  
ADJUSTED NET INCOME:                        
Net income available to common stockholders   $ 108,377     $ 516,894     $ 211,894     $ 1,124,868  
Unrealized gain from derivative financial instruments     (107,342 )     (302,809 )     (107,311 )     (200,193 )
Loss on early retirement of debt     —       —       —       46,840  
Non-cash interest amortization from adjusting debt assumed in acquisition to fair value     —       —       —       4,174  
Exploration expense     —       4,924       1,775       8,287  
Gain on sale of assets     —       (319 )     (125 )     (340 )
Adjustment to income taxes     26,868       68,970       26,450       39,011  
Adjusted net income (1)   $ 27,903     $ 287,660     $ 132,683     $ 1,022,647  
                         
Adjusted net income per share (2)   $ 0.10     $ 1.05     $ 0.47     $ 3.73  
Diluted shares outstanding     276,999       277,032       276,806       277,464  
                         
                         
ADJUSTED EBITDAX:                        
Net income   $ 108,377     $ 519,819     $ 211,894     $ 1,140,882  
Interest expense     47,936       38,888       169,018       171,092  
Income taxes     6,217       81,451       35,095       261,061  
Depreciation, depletion, and amortization     185,558       134,456       607,908       489,450  
Exploration     —       4,924       1,775       8,287  
Unrealized gain from derivative financial instruments     (107,342 )     (302,809 )     (107,311 )     (200,193 )
Stock-based compensation     2,861       1,692       9,867       6,610  
Loss on early extinguishment of debt     —       —       —       46,840  
Gain on sale of assets     —       (319 )     (125 )     (340 )
Total Adjusted EBITDAX (3)   $ 243,607     $ 478,102     $ 928,121     $ 1,923,689  
  1. Adjusted net income 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 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. 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
December 31,		     Year Ended
December 31,		  
    2023     2022     2023     2022  
OPERATING CASH FLOW (1):                        
Net income   $ 108,377     $ 519,819     $ 211,894     $ 1,140,882  
Reconciling items:                        
Unrealized gain from derivative financial instruments     (107,342 )     (302,809 )     (107,311 )     (200,193 )
Deferred income taxes     15,423       79,928       44,301       228,317  
Depreciation, depletion and amortization     185,558       134,456       607,908       489,450  
Loss on early retirement of debt     —       —       —       46,840  
Amortization of debt discount and issuance costs     1,984       1,713       7,964       10,255  
Stock-based compensation     2,861       1,692       9,867       6,610  
Gain on sale of assets     —       (319 )     (125 )     (340 )
Operating cash flow   $ 206,861     $ 434,480     $ 774,498     $ 1,721,821  
(Increase) decrease in accounts receivable     (16,626 )     117,211       278,697       (242,389 )
(Increase) decrease in other current assets     1,369       (10,655 )     745       (10,296 )
Increase (decrease) in accounts payable and other accrued expenses     36,603       (72,704 )     (37,094 )     229,252  
Net cash provided by operating activities   $ 228,207     $ 468,332     $ 1,016,846     $ 1,698,388  

 

    Three Months Ended
December 31,		     Year Ended
December 31,		  
    2023     2022     2023     2022  
FREE CASH FLOW (2):                        
Operating cash flow   $ 206,861     $ 434,480     $ 774,498     $ 1,721,821  
Less:                        
Exploration and development capital expenditures     (314,015 )     (302,792 )     (1,271,828 )     (1,031,966 )
Midstream capital expenditures     (14,098 )     —       (35,694 )     —  
Other capital expenditures     (11 )     (147 )     (491 )     (803 )
Preferred stock dividends     —       (2,925 )     —       (16,014 )
Contributions from midstream partnership     24,000       —       24,000       —  
Free cash flow (deficit) from operations   $ (97,263 )   $ 128,616     $ (509,515 )   $ 673,038  
Acquisitions     (21,907 )     (18,044 )     (98,553 )     (72,593 )
Proceeds from divestitures     —       4,093       41,295       4,186  
Free cash flow (deficit) after acquisition and divestiture activity   $ (119,170 )   $ 114,665     $ (566,773 )   $ 604,631  
  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, midstream and other capital expenditures, preferred dividend payments, proved and unproved property acquisitions, and proceeds from divestitures of natural gas and oil properties.

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

    December 31,
2023		     December 31,
2022		  
ASSETS            
Cash and cash equivalents   $ 16,669     $ 54,652  
Accounts receivable     231,430       510,127  
Derivative financial instruments     126,775       23,884  
Other current assets     86,619       56,324  
Total current assets     461,493       644,987  
Property and equipment, net     5,384,771       4,622,655  
Goodwill     335,897       335,897  
Operating lease right-of-use assets     71,462       90,716  
    $ 6,253,623     $ 5,694,255  
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
Accounts payable   $ 523,260     $ 530,195  
Accrued costs     134,466       183,111  
Operating leases     23,765       38,411  
Derivative financial instruments     —       4,420  
Total current liabilities     681,491       756,137  
Long-term debt     2,640,391       2,152,571  
Deferred income taxes     470,035       425,734  
Derivative financial instruments     —       —  
Long-term operating leases     47,742       52,385  
Asset retirement obligation     30,773       29,114  
Total liabilities     3,870,432       3,415,941  
Stockholders' Equity:            
Common stock     139,214       138,759  
Additional paid-in capital     1,260,930       1,253,417  
Accumulated earnings     958,270       886,138  
Total stockholders' equity attributable to Comstock     2,358,414       2,278,314  
Noncontrolling interest     24,777       —  
Total stockholders' equity     2,383,191       2,278,314  
    $ 6,253,623     $ 5,694,255  

 


Ron Mills
Comstock Resources
Vice President of Finance and Investor Relations
972-668-8834
rmills@comstockresources.com

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Source: Comstock Resources, Inc.