Comstock Resources, Inc. Reports Second Quarter 2004 Financial and Operating Results
FRISCO, Texas, Aug. 4 /PRNewswire-FirstCall/ -- Comstock Resources, Inc. (NYSE: CRK) ("Comstock" or the "Company") today reported financial and operating results for the quarter and six months ended June 30, 2004.
Financial Results for The Three Months and Six Months Ended June 30, 2004
Comstock reported net income of $18.7 million or 52 cents per diluted share for the three months ended June 30, 2004 which is 32% higher than 2003's second quarter net income of $14.1 million or 40 cents per diluted share. Comstock had $66.5 million in oil and gas sales in 2004's second quarter, an increase of 16% over 2003's second quarter oil and gas sales of $57.2 million. Comstock generated $45.4 million in operating cash flow (before changes in working capital accounts) in 2004's second quarter, which represents a 21% increase over 2003's second quarter cash flow of $37.4 million. EBITDAX or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses was $52.5 million in 2004's second quarter, a 17% increase over 2003's second quarter EBITDAX of $44.8 million.
For the six months ended June 30, 2004, Comstock's oil and gas sales totaled $127.3 million, as compared to oil and gas sales of $125.7 for the same period in 2003. Net income for the six months ended June 30, 2004 was $18.7 million, or 52 cents per diluted share, as compared to net income of $35.7 million, excluding the cumulative effect of adopting a new accounting standard in 2003 which changed the Company's accounting for future abandonment costs of its oil and gas properties. The results for the six months ended June 30, 2004 include a charge of $19.6 million ($12.5 million after income taxes or 35 cents per diluted share) relating to the early retirement of the Company's 11 1/4% senior notes. Operating cash flow (before changes in working capital accounts) generated by Comstock was $82.9 million for the first six months of 2004, a 3% decrease from the first six months ended 2003's cash flow of $85.3 million. For the six months ended June 30, 2004, EBITDAX was $98.7 million as compared to EBITDAX of $100.6 million for the same period in 2003.
Increasing production and strong oil and natural gas prices were the drivers of the second most profitable quarter in the Company's history. Comstock's production in the second quarter of 2004 totaled 11.3 Bcf equivalent of natural gas ("Bcfe"), a 5% increase from 2003's second quarter production of 10.8 Bcfe. For the first six months of 2004, Comstock produced 22.0 Bcfe, an increase of 2% as compared to production in the same period of 2003 of 21.6 Bcfe. The Company's realized natural gas price averaged $5.77 per Mcf in 2004's second quarter as compared to $5.44 per Mcf in 2003's second quarter. Realized oil prices in the second quarter of 2004 averaged $37.55 per barrel as compared to $28.83 per barrel for 2003. For the first six months of 2004, Comstock's realized natural gas price averaged $5.71 per Mcf as compared to 2003's average natural gas price of $5.98 per Mcf. For the first six months of 2004, Comstock's realized oil price was $36.24 per barrel as compared to $31.39 per barrel for the first six months of 2003.
Year to Date 2004 Drilling Results
In the first half of 2004, Comstock drilled 33 wells (13.6 net) as part of its 2004 development and exploration program. Twenty-eight of the 33 wells drilled were successful and five were dry holes.
Comstock drilled 14 wells, 4.8 net wells, in its South Texas region in the first half of 2004. Ten of these wells were successful and four were dry holes. Seven of the successful South Texas wells were tested at an average per well rate of 4.5 million cubic feet of natural gas equivalent ("Mmcfe") per day. The remaining three are being completed. Five of the successful wells were development wells drilled at the J. C. Martin field in Zapata County. Comstock has a 16% working interest and a higher revenue interest of 25% in this field. At the Company's Ball Ranch field in Kenedy County, Comstock drilled three development wells in which it has a 20% working interest. Two of these wells were successful and one was a dry hole. Comstock also drilled a successful development well in Starr County. The remaining five wells drilled in 2004 were exploratory wells. Three of the exploratory tests were dry holes and two resulted in new discoveries. The Gonzales #1 was drilled to a depth of 11,400 feet in Zapata County and discovered approximately 25 net feet of pay in the Wilcox formation. Comstock has a 45% working interest in this discovery. The Dixie Mortgage Pawalek #1 was drilled to a total depth of 13,856 feet to test a prospect in Javelina field in Hidalgo County which is part of a 1,282 acre farm-out from Shell. The Dixie Mortgage Pawalek #1 found approximately 44 feet of net pay in the Vicksburg formation and may have another 215 feet of potential net pay subject to further evaluation. Comstock has a 66% working interest in this well and will have a 50% working interest in future wells drilled on this acreage.
Comstock drilled four development wells (2.3 net) in its East Texas and North Louisiana region in the first half of 2004. All of these wells were successful. Two of these have been tested at a per well average rate of 2.5 Mmcfe per day and the remaining two are being completed. One successful development well was also drilled in one of the Company's fields in Oklahoma in which Comstock has a 21% working interest. This well has been tested at a rate of 8.2 Mmcfe per day.
Planned development and exploratory activity in Comstock's Southeast Texas region is waiting on the receipt and evaluation of 75 square miles of new seismic data that its expected to be received by mid-August. The Davis-Blackstone #1 was drilled in the first quarter and connected to sales in the second quarter at an initial production rate of 8.2 Mmcfe per day. Comstock has a 48% working interest in this well.
Comstock has drilled thirteen offshore wells (6.0 net) in its Gulf of Mexico region in the first half of 2004. These wells were drilled under its exploration program with Bois d'Arc Offshore Ltd. ("Bois d'Arc"), or as part of Comstock's redevelopment of its Ship Shoal 113 Unit. All but one of the offshore wells were successful. The one dry hole was drilled in the first quarter. Six of the successful wells drilled with Bois d'Arc were reported on in the first quarter results, including two successful wells at Vermilion Block 122, a successful sidetrack of a well at South Timbalier Block 11, the OCS-G 18054 #5 at South Pelto Block 22, the OCS-G 14535 #6 at South Pelto Block 25 and the OCS-G 22605 #3 at Vermilion Block 51. Wells drilled in the second quarter include the OCS-G 12027 #3 well at South Pelto Block 5, which was drilled to a total depth of 16,334 feet and found 97 feet of net productive pay. Comstock had a 25% working interest in this well. Two exploratory wells that were also drilled in the second quarter with Bois d'Arc which resulted in new discoveries. The OCS-G 22702 #1 at Ship Shoal Block 135 was drilled to a depth of 7,991 feet and found 26 feet of net productive pay and the OCS-G 22702 #2 at Ship Shoal Block 134 was drilled to a depth of 13,006 feet and found 53 feet of net productive pay. Comstock had a 40% working interest in both wells. Comstock drilled and completed three wells in its Ship Shoal 113 Unit during the first half of 2004. These three wells were tested at a per well average rate of 2.5 Mmcfe per day.
Three of Comstock's offshore projects had production start up in the second quarter. At South Pelto Block 22, two of the wells are flowing approximately 1,275 barrels of oil and 3 Mmcf of natural gas per day with the third well awaiting recompletion to the D-2 sand which has 31 feet of net productive pay. The initial discovery at South Pelto Block 25 is flowing approximately 1,570 barrels of oil and 1 Mmcf of natural gas per day and the second well is waiting recompletion to the lower H-3 sand which has 17 feet of pay. Vermilion Block 122, which includes three wells, also started up production operations in the second quarter. These three wells combined are currently flowing approximately 13.3 Mmcfe per day. Two wells drilled earlier at Ship Shoal Blocks 109 and 110 are expected to be on line by September 1. Four wells at Vermillion Block 51 and South Marsh Island Block 220 are expected to come on line in November and the two wells drilled in the second quarter at Ship Shoal Blocks 134 and 135 are expected to come on line in December.
Comstock also announced today that it is increasing its capital expenditure budget for development and exploration activities for 2004 from $110 million to $150 million. Approximately $80 million of the total budget will be for development activity and $70 million will be for exploration activity. The increase is driven by the recently announced contribution of Comstock's Gulf of Mexico assets to Bois d'Arc Energy, LLC ("Bois d'Arc Energy"). Due to Comstock's 59.9% ownership of Bois d'Arc Energy, Comstock's capital expenditures in the Gulf of Mexico are expected to increase to $90 million from the previously budgeted $67 million as Comstock will have a higher interest in exploratory projects in the new joint venture company compared to the 40% participation in the previous exploration venture with Bois d'Arc.
Comstock now plans to spend $20 million in each of its three onshore regions in 2004, including an increase of $5 million in South Texas from the previous budget of $15 million and an increase of $12 million in its East Texas/North Louisiana region from the previous budget of $8 million. In the second half of 2004, Comstock plans to participate in drilling 13 offshore wells through its ownership in Bois d'Arc Energy, 11 wells in its South Texas region, 13 development wells in its East Texas/North Louisiana region and 5 wells in its Southeast Texas region. The additional eleven wells being drilled in the East Texas/North Louisiana region are part of the first phase of a 100 well development program being launched by Comstock to exploit its properties in this region. This program will extend into 2005 and 2006, and will be a significant part of the Company's next year's drilling program.
The appointment of Mack D. Good to the position of Chief Operating Officer of the Company was also announced today. Mr. Good will oversee all of Comstock's onshore properties and head up the Company's operations, acquisitions and land divisions effective August 1. Mr. Good has been Comstock's Vice President of Operations since 1999.
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 that the expectations in such statements to be reasonable, there can be no assurance that such expectations will prove to be correct.
Comstock Resources, Inc. is a growing independent energy company based in Frisco, Texas and is engaged in oil and gas acquisitions, exploration and development primarily in Texas, Louisiana and the Gulf of Mexico. The company's stock is traded on the New York Stock Exchange under the symbol CRK.
COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Oil and gas sales $66,508 $57,161 $127,269 $125,737
Operating expenses:
Oil and gas operating 12,456 10,531 25,106 21,896
Exploration 1,797 505 5,179 2,141
Depreciation, depletion
and amortization 15,728 15,117 31,537 30,304
General and administrative,
net 2,882 1,947 5,972 3,475
Total operating expenses 32,863 28,100 67,794 57,816
Income from operations 33,645 29,061 59,475 67,921
Other income (expenses):
Other income 47 44 86 91
Interest income 18 23 34 43
Interest expense (4,526) (7,370) (10,791) (14,678)
Loss from early extinguishment
of debt (18) --- (19,599) ---
Total other expenses (4,479) (7,303) (30,270) (14,544)
Income before income taxes and
cumulative effect of change
in accounting principle 29,166 21,758 29,205 53,377
Provision for income taxes (10,500) (7,615) (10,514) (18,682)
Income before cumulative effect
of change in accounting
principle 18,666 14,143 18,691 34,695
Cumulative effect of change in
accounting principle, net of
income taxes --- --- --- 675
Net income 18,666 14,143 18,691 35,370
Preferred stock dividends --- (178) --- (573)
Net income attributable to
common stock $18,666 $13,965 $18,691 $34,797
Net income per share before
cumulative change in
accounting principle:
Basic $0.55 $0.44 $0.55 $1.13
Diluted $0.52 $0.40 $0.52 $1.00
Net income per share:
Basic $0.55 $0.44 $0.55 $1.15
Diluted $0.52 $0.40 $0.52 $1.02
Weighted average common and
common stock equivalent
shares outstanding:
Basic 34,111 31,472 33,977 30,205
Diluted 35,979 35,010 35,859 34,719
COMSTOCK RESOURCES, INC.
OTHER FINANCIAL DATA
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Cash flow from operations:
Net cash provided by
operating activities $47,418 $36,511 $67,819 $68,811
Increase (decrease) in
accounts receivable 4,471 (8,620) (4,673) 11,389
Increase (decrease) in
other current assets 31 (1,005) (839) 1,213
Decrease (increase) in accounts
payable and accrued expenses (6,499) 10,543 20,596 3,913
Cash flow from operations $45,421 $37,429 $82,903 $85,326
EBITDAX:
Income before cumulative
effect of change in
accounting principle $18,666 $14,143 $18,691 $34,695
Interest 4,526 7,370 10,791 14,678
Loss from early
extinguishment of debt 18 --- 19,599 ---
Income tax expense 10,500 7,615 10,514 18,682
Depreciation, depletion
and amortization 15,728 15,117 31,537 30,304
Stock-based compensation 1,222 59 2,376 119
Exploration 1,797 505 5,179 2,141
Unrealized losses from
derivatives --- --- --- 3
EBITDAX $52,457 $44,809 $98,687 $100,622
As of June 30
2004 2003
Balance Sheet Data:
Current assets $45,974 $51,560
Property and equipment, net 740,241 678,393
Other 7,840 6,559
Total assets $794,055 $736,512
Current liabilities $44,568 $46,899
Long-term debt 324,000 336,002
Other 109,211 88,528
Stockholders' equity 316,276 265,083
Total liabilities and
stockholders' equity $794,055 $736,512
COMSTOCK RESOURCES, INC.
REGIONAL OPERATING RESULTS
(In thousands, except per unit amounts)
For the Three Months ended June 30, 2004
East Texas/ South
Gulf of North Southeast Texas/
Mexico Louisiana Texas Other Total
Oil production
(thousand barrels) 356 24 61 26 467
Gas production (million
cubic feet - Mmcf) 1,929 2,285 2,601 1,681 8,496
Total production (Mmcfe) 4,065 2,429 2,967 1,835 11,296
Oil sales $13,385 $853 $2,287 $993 $17,518
Gas sales 12,533 12,449 15,668 8,340 48,990
Total oil and gas sales $25,918 $13,302 $17,955 $9,333 $66,508
Average oil price
(per barrel) $37.60 $35.54 $37.49 $38.79 $37.55
Average gas price (per
thousand cubic feet - Mcf) $ 6.50 $ 5.45 $ 6.02 $ 4.96 $ 5.77
Average price (per Mcf
equivalent) $ 6.38 $ 5.48 $ 6.05 $ 5.09 $ 5.89
Lifting cost $5,264 $2,581 $2,700 $1,911 $12,456
Lifting cost (per Mcf
equivalent) $ 1.30 $ 1.06 $ 0.91 $ 1.04 $1.10
Development and exploration
expenditures $23,860 $2,356 $1,495 $6,437 $34,148
For the Six Months ended June 30, 2004
East Texas/ South
Gulf of North Southeast Texas/
Mexico Louisiana Texas Other Total
Oil production
(thousand barrels) 637 49 121 55 862
Gas production (million
cubic feet - Mmcf) 3,594 4,881 5,093 3,250 16,818
Total production (Mmcfe) 7,417 5,175 5,819 3,580 21,991
Oil sales $23,233 $1,687 $4,340 $1,984 $31,244
Gas sales 22,518 26,758 29,557 17,192 96,025
Total oil and gas sales $45,751 $28,445 $33,897 $19,176 $127,269
Average oil price
(per barrel) $36.47 $34.43 $35.87 $36.06 $36.24
Average gas price (per
thousand cubic feet - Mcf) $ 6.27 $ 5.48 $ 5.80 $ 5.29 $ 5.71
Average price (per Mcf
equivalent) $ 6.17 $ 5.50 $ 5.83 $ 5.36 $ 5.79
Lifting cost $10,431 $5,392 $5,242 $4,041 $25,106
Lifting cost (per Mcf
equivalent) $1.41 $1.04 $0.90 $1.13 $1.14
Development and exploration
expenditures $53,536 $3,925 $4,615 $10,044 $72,120
SOURCE Comstock Resources, Inc.
CONTACT: Roland O. Burns, Sr. Vice President and Chief Financial Officer
of Comstock Resources, Inc., +1-972-668-8800
Web site: http://www.comstockresources.com