Comstock Resources, Inc. Reports Fourth Quarter and Annual 2008 Financial and Operating Results
Financial Results for the Three Months and Year Ended December 31, 2008
Comstock reported a net loss of $96.4 million or $2.15 per share for the three months ended December 31, 2008 as compared to 2007's fourth quarter net income of $21.7 million or $0.48 per diluted share. Results for the fourth quarter of 2008 include impairment charges of $162.7 million ($105.8 million after income taxes or $2.33 per share) related to the Company's investment in Stone Energy Corporation ("Stone") and a $0.9 million ($0.6 million after tax or $.01 per diluted share) related to its oil and gas properties. Excluding these impairment charges, net income for the fourth quarter of 2008 would be $10.0 million or $0.22 per diluted share. Comstock's income from continuing operations in the fourth quarter of 2007 was $13.2 million or $0.30 per diluted share.
The fourth quarter operating results were impacted by continued production growth and declining market prices for crude oil and natural gas. Comstock's production from its continuing onshore operations in the fourth quarter of 2008 increased 23% to 15.1 billion cubic feet equivalent of natural gas ("Bcfe") as compared to production of 12.2 Bcfe in the fourth quarter of 2007. The fourth quarter average daily production rate of 164 million cubic feet of natural gas equivalent ("Mmcfe") was slightly higher than the third quarter 2008 production rate of 163 Mmcfe per day. Comstock's realized oil prices in the fourth quarter of 2008 declined to $52.16 per barrel, 31% lower than the $76.10 per barrel in 2007's fourth quarter. Oil prices in the fourth quarter of 2008 were substantially lower than the $105.15 per barrel realized during the third quarter of 2008. Natural gas prices realized in the fourth quarter of 2008 averaged $6.44 per Mcf, 10% lower than the $7.15 per Mcf realized in 2007. Natural gas prices in the fourth quarter of 2008 were also substantially less than the $10.16 per Mcf realized during the third quarter of 2008. Oil and gas sales in the fourth quarter of 2008 of $100.2 million increased 5% from 2007's fourth quarter sales of $95.5 million as the 23% production increase was largely offset by lower crude oil and natural gas prices. Operating cash flow (before changes in working capital accounts) generated by Comstock's continuing operations in 2008's fourth quarter of $79.5 million increased 26% over 2007's fourth quarter operating cash flow of $62.9 million. EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses from continuing operations, of $71.5 million in 2008's fourth quarter was comparable to 2007's fourth quarter EBITDAX from continuing operations of $72.3 million.
Comstock reported net income of $252.0 million or $5.53 per diluted share for the year ended December 31, 2008 as compared to 2007's net income of $68.9 million or $1.54 per diluted share. Income from continuing operations for 2008 was $58.2 million or $1.28 per diluted share as compared to income from continuing operations of $45.6 million or $1.03 per diluted share for 2007. Excluding the impairment charges related to the investment in Stone and its oil and gas properties, and the $26.6 million gain recognized on sale of certain onshore oil and gas properties ($17.3 million after income taxes or $0.38 per diluted share), Comstock's income from continuing operations for 2008 was $147.6 million or $3.25 per diluted share.
The full year 2008 financial results reflect overall higher oil and natural gas prices combined with the Company's strong production growth in 2008. Comstock's continuing onshore production in 2008 increased 32% to 59.9 Bcfe as compared to production of 45.3 Bcfe in 2007. Realized oil prices in 2008 averaged $87.15 per barrel, 43% higher than the $60.96 per barrel realized in 2007. Natural gas prices in 2008 averaged $8.83 per Mcf, 28% higher than the $6.89 per Mcf realized in 2007. Oil and gas sales of $563.7 million during 2008 increased 70% from 2007's sales of $331.6 million. Operating cash flow (before changes in working capital accounts) generated by Comstock's continuing operations in 2008 of $438.2 million increased 103% from 2007's cash flow from continuing operations of $215.5 million. EBITDAX from continuing operations of $458.7 million in 2008 increased 83% over 2007's EBITDAX from continuing operations of $250.8 million.
Comstock's offshore operations represented by its ownership in Bois d'Arc Energy, Inc. ("Bois d'Arc") are reflected as discontinued operations in the 2008 financial results due to the sale of Bois d'Arc to Stone in August 2008. For the year ended December 31, 2008, Bois d'Arc contributed $35.6 million or 77 cents per diluted share to net income as compared to $23.3 million or 51 cents per diluted share in 2007. Comstock recognized a gain of $158.1 million after tax ($3.48 per diluted share) in the third quarter in connection with the sale. Comstock received $439.9 million in cash and 5,317,069 shares of Stone common stock for its stake in Bois d'Arc.
2008 Drilling Results
Comstock also announced the results of its 2008 onshore drilling program. In 2008 Comstock drilled 136 wells (75.7 net). 132 (74.2 net) of the wells drilled were successful and four (1.5 net) were dry holes.
Comstock drilled 114 successful wells (61.5 net) in its East Texas / North Louisiana region which have been tested at an average per well initial production rate of 2.8 Mmcfe per day. One well (.3 net) was unsuccessful. Wells drilled in this region in 2008 include 37 wells (11.2 net) drilled in the Hico Knowles - Terryville area of North Louisiana. All of these wells have been completed and had initial production rates which averaged 3.5 Mmcfe per day. Comstock has also drilled 45 wells (34.2 net) in its Logansport field in North Louisiana. Forty-one of these wells have been completed with initial production rates which averaged 2.1 Mmcfe per day. Comstock's 2008 drilling program in this region includes seven successful horizontal Cotton Valley wells drilled in its Waskom and Blocker fields in Harrison County, Texas. Five of these wells have been completed with a per well average initial production rate of 7.1 Mmcfe per day. Comstock's average working interest in these wells is 83%.
Other activity in the East Texas / North Louisiana region relates to the Company's emerging Haynesville shale play. Comstock has 86,032 (70,504 net) acres that are prospective for Haynesville shale development in this region. The Company has completed two horizontal wells and has an additional eight wells in progress. The BSMC La 7 #1H well in the Toledo Bend North field was successfully completed in December 2008 with an initial production rate of approximately 9 Mmcfe per day. Comstock has an 88% working interest in this well. Comstock has a 22% interest in the successful R. F. Gamble 24 #1H, which was recently completed and with an initial production rate of approximately 14 Mmcfe per day. Comstock is currently completing three Haynesville horizontal wells. Comstock's second operated horizontal Haynesville well is the Collins La 15 #1H in the Logansport field. This well was drilled to a total vertical depth of 11,350 feet with a 4,200 foot lateral. This well's completion has been delayed due to mechanical problems. The Company is completing the Bogue A #6H well in the Waskom field. This well reached an 11,400 foot vertical depth with a 4,000 foot lateral extension. The Company is also completing the Hart #1H in the Logansport field which reached an 11,500 foot vertical depth with a 4,000 foot horizontal extension. The Company is currently drilling five Haynesville horizontal wells. The Green #13H in the Blocker field reached an 11,650 foot vertical depth and the Company is currently drilling this well's 3,700 foot lateral. The Headrick #1H in Bethany-Longstreet field has reached a vertical depth of 11,850 feet and its 4,000 foot lateral is currently being drilled. The Holmes A #1H in Logansport field is currently drilling at a vertical depth of approximately 11,000 feet. Comstock is also drilling the Moneyham #7H in Longwood field which is currently drilling at a vertical depth approaching 11,000 feet. Comstock has also finished drilling the 11,730 foot vertical section of the BSMC La 12 #1H well in the Toledo Bend North field.
During 2008, in South Texas Comstock drilled 18 wells (13.4 net), 15 (12.2 net) of which were successful. Fourteen of the successful wells had an average per well initial production rate of 4.3 Mmcfe per day. Four of the successful wells were in the Las Hermanitas field in Duval County, Texas, six were in the Javelina Field in Hidalgo County, three were in the Ball Ranch field, and one was in the Lorenz Ranch field. Comstock also had a successful well in the Fandango field in Zapata County, Texas. The Leyendecker #10 well was drilled to a total depth of 16,200 feet in the Fandango field. The Company has a 100% interest and is currently finishing this well's multiple stage completion. Subsequent to the success of the Leyendecker #10, Comstock has two additional wells underway in the Fandango field. Comstock has drilled the Muzza #13 to a 16,300 foot vertical depth and is currently drilling the Trevino #3 to a planned vertical depth of 14,900 feet. Both of these wells appear to have encountered the targeted Wilcox sands and will be completed.
Comstock also had two (0.3 net) successful wells drilled in the San Juan Basin and one (0.2 net) successful well drilled in the Anadarko Basin during the year.
2009 Drilling Budget
Comstock also announced that it is reducing its 2009 drilling budget from $450 million to $366 million in response to weak natural gas prices. The revised budget has Comstock drilling approximately 41 (34.8 net) wells in 2009. The 2009 drilling program will continue to be focused on the Company's higher return opportunities, including its extensive acreage position in the Haynesville Shale. Comstock's East Texas/North Louisiana operating region accounts for the largest portion of the revised 2009 budget with forecasted expenditures of $319 million. Comstock has budgeted to drill 36 (31.4 net) wells in this region in 2009, which includes thirty (25.8 net) Haynesville Shale horizontal wells and two (1.6 net) Cotton Valley horizontal wells. Comstock expects to spend $47 million in its South Texas region to drill five (3.4 net) wells in 2009.
Comstock Fourth Quarter and Annual 2008 Earnings Conference Call
Comstock has scheduled a conference call for Tuesday, February 10, 2009 at 9:30 a.m. CST (10:30 a.m. EST) to discuss fourth quarter and annual 2008 financial and operating results. To access, dial (800) 599-9795 before the call begins. Please reference Passcode 13456712. International callers may also participate by dialing (617) 786-2905. A replay of the call will be available approximately two hours after the live broadcast ends and will be accessible until Tuesday, February 17, 2009. To access the replay, please dial (888) 286-8010 and reference Passcode 42281507. International callers may listen to a playback by dialing (617) 801-6888. In addition, the call will be webcast live on Comstock's website at http://www.comstockresources.com. A replay of the call will also be available on that site.
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.
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 and Louisiana. 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 Year Ended
December 31, December 31,
2008 2007 2008 2007
Revenues:
Oil and gas sales $100,154 $95,519 $563,749 $331,613
Gain on sales of assets -- -- 26,560 --
Operating expenses:
Oil and gas operating 20,610 16,082 86,730 64,791
Exploration -- 3,388 5,032 7,039
Depreciation, depletion and
amortization 50,309 34,328 182,179 125,349
Oil and gas property
impairment 922 -- 922 482
General and administrative,
net 11,938 10,312 32,266 27,813
Total operating expenses 83,779 64,110 307,129 225,474
Operating income from
continuing operations 16,375 31,409 283,180 106,139
Other income (expenses):
Interest income 584 233 1,537 877
Other income 32 28 119 144
Interest expense (2,088) (9,461) (25,336) (32,293)
Marketable securities
impairment (162,672) -- (162,672) --
Total other income
(expenses) (164,144) (9,200) (186,352) (31,272)
Income (loss) from continuing
operations before income taxes (147,769) 22,209 96,828 74,867
Benefit from (provision for)
income taxes 51,392 (9,043) (38,611) (29,223)
Income (loss) from continuing
operations (96,377) 13,166 58,217 45,644
Income from discontinued
operations after income taxes
and minority interest -- 8,532 193,745 23,257
Net income (loss) $(96,377) $21,698 $251,962 $68,901
Basic net income (loss) per share:
Continuing operations $(2.15) $0.30 $1.31 $1.05
Discontinued operations -- 0.20 4.35 0.54
$(2.15) $0.50 $5.66 $1.59
Diluted net income (loss) per share:
Continuing operations $(2.15) $0.30 $1.28 $1.03
Discontinued operations -- 0.18 4.25 0.51
$(2.15) $0.48 $5.53 $1.54
Weighted average shares outstanding:
Basic 44,751 43,544 44,524 43,415
Diluted 44,751(1) 44,583 45,440 44,405
(1) Diluted shares outstanding are the same as basic due to the net loss.
COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands)
Three Months Ended Year Ended
December 31, December 31,
2008 2007 2008 2007
OPERATING CASH FLOW:
Income (loss) from continuing
operations $(96,377) $13,166 $58,217 $45,644
Reconciling items:
Deferred income taxes (41,551) 8,903 43,620 25,543
Dry hole costs and lease
impairments -- 3,388 4,113 6,846
Depreciation, depletion and
amortization 50,309 34,328 182,179 125,349
Gain on sale of assets -- -- (26,560) --
Marketable securities
impairment 162,672 -- 162,672 --
Oil and gas properties
impairment 922 -- 922 482
Debt issuance cost
amortization 202 202 810 810
Stock-based compensation 3,295 2,884 12,263 10,789
Operating cash flow 79,472 62,871 438,236 215,463
Excess tax benefit from
stock-based compensation -- (5,920) (8,805) (6,522)
Decrease (increase) in
accounts receivable 21,156 (5,856) 6,418 (11,605)
Decrease (increase) in
other current assets (888) 2,527 (9,646) (230)
Increase (decrease) in
accounts payable and
accrued expenses 19,757 (942) 24,330 4,433
Net cash provided by
operating activities
from continuing
operations $119,497 $52,680 $450,533 $201,539
EBITDAX:
Income (loss) from
continuing operations $(96,377) $13,166 $58,217 $45,644
Gain on sales of assets -- -- (26,560) --
Interest expense 2,088 9,461 25,336 32,293
Income tax expense (51,392) 9,043 38,611 29,223
Depreciation, depletion
and amortization 50,309 34,328 182,179 125,349
Marketable securities
impairment 162,672 -- 162,672 --
Oil and gas properties
impairment 922 -- 922 482
Stock-based compensation 3,295 2,884 12,263 10,789
Exploration -- 3,388 5,032 7,039
EBITDAX from
continuing operations $71,517 $72,270 $458,672 $250,819
As of December 31,
2008 2007
Balance Sheet Data:
Cash and cash equivalents $6,281 $5,565
Other current assets 74,879 52,638
Marketable securities 48,868 --
Property and equipment, net 1,444,715 1,310,559
Assets of discontinued operations -- 981,682
Other 3,147 3,943
Total assets $1,577,890 $2,354,387
Accounts payable and accrued expenses $114,455 $83,467
Long-term debt 210,000 680,000
Deferred income taxes 185,870 92,088
Asset retirement obligation 5,480 7,512
Liabilities and minority interest of
discontinued operations -- 719,676
Stockholders' equity 1,062,085 771,644
Total liabilities and stockholders' equity $1,577,890 $2,354,387
COMSTOCK RESOURCES, INC.
REGIONAL OPERATING RESULTS
(In thousands, except per unit amounts)
For the Three Months Ended December 31, 2008
East Texas/
North South
Louisiana Texas Other Total
Oil production (thousand
barrels) 73 37 124 234
Gas production
(million cubic feet - Mmcf) 7,927 4,903 830 13,660
Total production (Mmcfe) 8,365 5,126 1,577 15,068
Oil sales $ 4,477 $ 2,252 $5,509 $ 12,238
Gas sales 51,285 29,668 4,415 85,368
Gas hedging gains -- 2,548 -- 2,548
Total gas sales 51,285 32,216 4,415 87,916
Total oil and gas sales $55,762 $34,468 $9,924 $100,154
Average oil price (per barrel) $61.30 $60.68 $44.26 $52.16
Average gas price
(per thousand cubic feet - Mcf) $6.47 $6.05 $5.32 $6.25
Average gas price including
hedging (per Mcf) $6.47 $6.57 $5.32 $6.44
Average price
(per Mcf equivalent) $6.67 $6.23 $6.29 $6.48
Average price including hedging
(per Mcf equivalent) $6.67 $6.72 $6.29 $6.65
Lifting cost(1) $10,888 $5,366 $4,356 $20,610(1)
Lifting cost
(per Mcf equivalent) $1.30 $1.05 $2.76 $1.37
Oil and Gas Capital Expenditures:
Acquisitions $ -- $ -- $ -- $ --
Leasehold costs 7,711 547 67 8,325
Exploratory drilling 43,544 12,170 2,221 57,935
Development drilling 33,269 14,922 31 48,222
Other development 3 1,320 97 1,420
Total $84,527 $28,959 $2,416 $115,902
For the Three Months Ended December 31, 2007
East Texas/
North South
Louisiana Texas Other Total
Oil production (thousand
barrels) 40 56 146 242
Gas production
(million cubic feet - Mmcf) 6,559 3,364 846 10,769
Total production (Mmcfe) 6,800 3,702 1,724 12,226
Oil sales $ 3,552 $ 5,068 $ 9,861 $18,481
Gas sales 46,133 25,117 5,788 77,038
Gas hedging gains -- -- -- --
Total gas sales 46,133 25,117 5,788 77,038
Total oil and gas sales $49,685 $30,185 $15,649 $95,519
Average oil price (per barrel) $88.80 $90.50 $67.54 $76.10
Average gas price
(per thousand cubic feet - Mcf) $7.03 $7.47 $6.84 $7.15
Average gas price including
hedging (per Mcf) $7.03 $7.47 $6.84 $7.15
Average price
(per Mcf equivalent) $7.31 $8.15 $9.08 $7.81
Average price including hedging
(per Mcf equivalent) $7.31 $8.15 $9.08 $7.81
Lifting cost(1) $6,710 $4,772 $4,600 $16,082(1)
Lifting cost
(per Mcf equivalent) $0.99 $1.29 $2.67 $1.32
Oil and Gas Capital Expenditures:
Acquisitions $ -- $160,101 $ -- $160,101
Leasehold costs 576 789 71 1,436
Exploratory drilling -- 3,916 (51) 3,865
Development drilling 56,454 11,922 2,111 70,487
Other development 798 1,710 515 3,023
Total $57,828 $178,438 $2,646 $238,912
For the Year Ended December 31, 2008
East Texas/
North South
Louisiana Texas Other Total
Oil production (thousand
barrels) 299 179 531 1,009
Gas production
(million cubic feet - Mmcf) 29,322 21,536 3,009 53,867
Total production (Mmcfe) 31,117 22,611 6,195 59,923
Oil sales $ 29,690 $ 18,264 $40,003 $ 87,957
Gas sales 263,740 192,661 24,201 480,602
Gas hedging losses -- (4,810) -- (4,810)
Total gas sales 263,740 187,851 24,201 475,792
Total oil and gas sales $293,430 $206,115 $64,204 $563,749
Average oil price (per barrel) $99.23 $101.96 $75.34 $87.15
Average gas price
(per thousand cubic feet - Mcf) $8.99 $8.95 $8.04 $8.92
Average gas price including
hedging (per Mcf) $8.99 $8.72 $8.04 $8.83
Average price
(per Mcf equivalent) $9.43 $9.33 $10.36 $9.49
Average price including hedging
(per Mcf equivalent) $9.43 $9.12 $10.36 $9.41
Lifting cost(2) $39,021 $27,678 $20,031 $86,730(2)
Lifting cost
(per Mcf equivalent) $1.25 $1.22 $3.23 $1.45
Oil and Gas Capital Expenditures:
Acquisitions $ -- $ -- $ -- $ --
Leasehold costs 116,931 2,159 175 119,265
Exploratory drilling 43,544 14,953 2,616 61,113
Development drilling 170,612 57,955 2,037 230,604
Other development 1,454 9,388 3,406 14,248
Total $332,541 $84,455 $8,234 $425,230
For the Year Ended December 31, 2007
East Texas/
North South
Louisiana Texas Other Total
Oil production (thousand
barrels) 162 214 632 1,008
Gas production
(million cubic feet - Mmcf) 24,407 11,790 3,034 39,231
Total production (Mmcfe) 25,378 13,077 6,827 45,282
Oil sales $ 11,052 $ 15,189 $35,233 $ 61,474
Gas sales 164,926 85,427 19,786 270,139
Gas hedging losses -- -- -- --
Total gas sales 164,926 85,427 19,786 270,139
Total oil and gas sales $175,978 $100,616 $55,019 $331,613
Average oil price (per barrel) $68.22 $70.98 $55.75 $60.96
Average gas price
(per thousand cubic feet - Mcf) $6.76 $7.25 $6.52 $6.89
Average gas price including
hedging (per Mcf) $6.76 $7.25 $6.52 $6.89
Average price
(per Mcf equivalent) $6.93 $7.69 $8.06 $7.32
Average price including hedging
(per Mcf equivalent) $6.93 $7.69 $8.06 $7.32
Lifting cost(2) $29,527 $16,832 $18,432 $64,791(2)
Lifting cost
(per Mcf equivalent) $1.16 $1.29 $2.70 $1.43
Oil and Gas Capital Expenditures:
Acquisitions $ -- $191,290 $ -- $191,290
Leasehold costs 3,377 2,755 2,850 8,982
Exploratory drilling -- 11,910 2,379 14,289
Development drilling 215,593 61,738 25,024 302,355
Other development 2,620 3,337 2,841 8,798
Total $221,590 $271,030 $33,094 $525,714
(1) Includes production taxes of $1,755 and $3,319 for the three months
ended December 31, 2008 and 2007, respectively.
(2) Includes production taxes of $20,648 and $13,830 for the year ended
December 31, 2008 and 2007, respectively.
SOURCE Comstock Resources, Inc.
http://www.comstockresources.com