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): November 5, 2003
COMSTOCK RESOURCES, INC.
(Exact name of registrant as specified in its charter)
| NEVADA |
000-16741 |
94-1667468 |
| (State or other jurisdiction incorporation) |
(Commission of 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.)
Not applicable
(Former name or former address, if changed since last report)
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits.
The following Exhibits are hereby filed as part of this Current Report on Form 8-K:
| Exhibit 99.1 | Press Release dated November 5, 2003 with respect to the Registrant’s financial results for three months and nine months ended September 30, 2003 |
Item 12. Results of Operations and Financial Condition
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 Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
On November 5, 2003, Comstock Resources, Inc. (“Comstock”) announced financial results for three months and nine months ended September 30, 2003. A copy of the press release announcing Comstock’s earnings results for three months and nine months ended September 30, 2003 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. Operating cash flow is presented in the earnings release because management believes it to be useful to investors. EBITDAX is presented in the earnings release because management believes that EBITDAX, which represents Comstock’s results from operations before interest, income taxes, and certain non-cash items, including depreciation, depletion and amortization and exploration expense, is a common alternative measure of operating performance used by certain investors and financial analysts. The non-GAAP financial measures described above 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.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: November 5, 2003
| COMSTOCK RESOURCES, INC. By:/s/ M. Jay Allison |
||
| _________________________ |
||
| M. JAY ALLISON President and Chief Executive Officer |
Exhibit Index
Exhibit 99.1 Press Release dated November 5, 2003
| 5300 Town and Country Blvd., Suite 500 Frisco, Texas 75034 Telephone:(972) 668-8800 Contact: Roland O. Burns Sr.Vice President and Chief Financial Officer Web Site: www.comstockresources.com |
| For Immediate Release | NEWS RELEASE | |
|---|---|---|
COMSTOCK RESOURCES,
INC. REPORTS THIRD QUARTER 2003
FINANCIAL AND OPERATING RESULTS
FRISCO, TEXAS, November 5, 2003 – Comstock Resources, Inc. (NYSE:CRK) today reported financial and operating results for the quarter and the nine months ended September 30, 2003.
Financial Results for the Three Months and Nine Months Ended September 30, 2003
Higher production and strong oil and natural gas prices contributed to Comstock’s profit of $12.9 million or 36¢ per share in 2003‘s third quarter ending September 30, 2003. The 2003 results reflect a substantial improvement from earnings from continuing operations of $3.0 million or 10¢ per share for the third quarter of 2002. Oil and gas sales reached $56.9 million for the third quarter of 2003, a 60% increase over 2002‘s third quarter oil and gas sales of $35.6 million. Comstock generated $36.2 million in operating cash flow (before changes in working capital accounts) in 2003‘s third quarter, an increase of 124% over 2002‘s third quarter operating cash flow of $16.2 million. EBITDAX or earnings from continuing operations before interest, taxes, depreciation, depletion and amortization, exploration expense and other noncash expenses including unrealized derivative gains and losses, and gains and losses on property sales was $43.6 million in 2003‘s third quarter. This represented an 82% increase from 2002‘s third quarter EBITDAX of $24.0 million.
For the nine months ended September 30, 2003, Comstock’s oil and gas sales totaled $182.6 million, an 83% increase over oil and gas sales for the same period in 2002 of $100.0 million. Net income from continuing operations for the nine months ended September 30, 2003 totaled $47.0 million, or $1.36 per share, (excluding the cumulative effect of adopting a new accounting standard which changed the Company’s accounting for future abandonment costs of its oil and gas properties) as compared to a net profit from continuing operations of $1.5 million, or 5¢ per share for the nine months ended September 30, 2002. Operating cash flow (before changes in working capital accounts) generated by Comstock reached $121.5 million for the first nine months of 2003, a 150% increase from the first nine months of 2002‘s cash flow of $48.5 million. EBITDAX grew 105% to $144.1 million for the first nine months of 2003 over EBITDAX of $70.4 million for the first nine months of 2002.
The strong financial results in 2003 were products of Comstock’s production growth combined with higher natural gas and crude oil prices. Comstock produced 11.3 billion cubic feet equivalent (“Bcfe”) of natural gas in the third quarter of 2003, a 13% increase from 2002‘s third quarter production of 10.1 Bcfe. For the first nine months of 2003, Comstock produced 33.0 Bcfe as compared to 30.9 Bcfe produced in the same period in 2002, which represented an increase of 7%. Comstock’s average natural gas price for the third quarter of 2003 was $5.04 per thousand cubic feet (“Mcf”), 52% higher than 2002‘s third quarter’s average gas price of $3.31 per Mcf. Comstock’s realized oil prices averaged $29.50 per barrel for 2003‘s third quarter, 8% higher than the third quarter 2002‘s average oil price of $27.30 per barrel. For the first nine months of 2003, Comstock’s realized gas price was $5.65 per Mcf as compared to $3.06 per Mcf in the first nine months of 2002. For the first nine months of 2003 Comstock’s realized oil price was $30.79 per barrel as compared to $24.16 per barrel in the first nine months of 2002.
During the first nine months of 2003, Comstock generated cash flow from operations in excess of its $62.2 million in capital expenditures. Comstock used the excess cash flow to pay down $55 million in debt. As a result of this debt reduction and profits generated, Comstock’s total debt at September 30, 2003 has fallen to $311.0 million and book equity has grown to $280.1 million. Debt as a percentage of Comstock’s capitalization on a book basis was reduced to 53% at September 30, 2003 as compared to 63% at September 30, 2002.
Year to Date 2003 Drilling Results
Comstock has drilled 42 wells, (20.3 net) so far in 2003. Of the wells drilled, 26 were successful, four were dry holes and twelve are currently being evaluated or tested.
Twelve of these wells (4.5 net wells) were drilled in the Gulf of Mexico under Comstock’s exploration program with Bois d’ Arc Offshore Ltd. and all twelve were successful. In addition to the nine offshore wells reported on earlier, Comstock drilled two successful deep offshore wells and one successful shallow development well since the end of the second quarter. One of these wells was a successful delineation well at the “Can of Corn” Prospect discovery at South Pelto Block 22. The OCS-G 18054 No. 3 Well was drilled to a total depth of 18,155 feet at a bottom hole location approximately 1,700 feet southwest of the discovery well. The No. 3 appraisal well logged 205 net feet of pay in eight sands in a fault block adjacent to the fault block that was tested by the No. 2 discovery well. Following the completion of the No. 3 well, the drilling rig will move to drill the OCS-G 18054 No. 4 well from a surface location adjacent to the No. 2. The No. 4 well is planned to be drilled to a total depth of 18,000 feet updip from the No. 2 discovery well. A four-pile production facility is currently under construction and is anticipated to be installed in the first quarter of 2004 to allow production start up from the No. 2 and 3 wells and the No. 4 well if it is successful. Additional exploration in South Pelto Block 22 is planned in 2004 along the same major fault that traps the discovery. Comstock has a 29% working interest in the South Pelto Block 22 No. 2 and No. 3 wells which are operated by Comstock’s partner, Bois d’Arc Offshore Ltd. Comstock also has another deep shelf discovery at a nearby block in South Pelto. The discovery well has been drilled to a depth of 16,200 feet with the first two objectives demonstrating the presence of commercial hydrocarbons. Protective casing will be set over the pay found to date and drilling will resume in the next several days to deepen the well by another 1,000 feet. Comstock has a 24.9% working interest in this well which is operated by Bois d’ Arc Offshore, Ltd. Comstock also announced that its first well of a planned redevelopment and exploration program at the Ship Shoal 113 Unit was successful. The OCS-G 00040 #5 well was drilled to a total depth of 8,000 feet and logged approximately 63 net feet of pay in three sands. Comstock has a 72% working interest and operates this well. Through the end of the year Comstock plans to drill seven additional offshore wells including the No. 4 well at South Pelto 22.
Comstock has drilled twelve wells, 4.3 net wells, in its South Texas exploration program in the first nine months of 2003. Eight of the 12 wells were successful, three were dry holes and one is still being evaluated. Seven of the South Texas discoveries have been tested at an average production rate of 7.1 million cubic feet of natural gas equivalent (“Mmcfe”) per day. Through the end of the year, an additional two exploratory wells are planned to be drilled in this region.
In its Southeast Texas Region, Comstock has drilled two wells (1.2 net) so far in 2003 to continue to delineate the Hamman discovery made last year in Polk County, Texas. The Collins #2 well was put on production in September and has averaged 5.6 Mmcfe in daily production since that date. The Hamman #1, Collins #1 and the Collins #2 wells are currently producing a combined 35.1 Mmcfe per day. Comstock owns a 58% working interest and is the operator of these wells. Two additional delineation wells are planned by year-end to further develop the Hamman discovery.
Comstock drilled five wells (2.4 net) in its East Texas and North Louisiana region in the first nine months of 2003. Four of these wells were successful development wells and one was unsuccessful. These wells have been tested at a per well average rate of 1.7 Mmcfe per day. One additional development well is planned to be drilled in this region by year-end.
The remaining wells drilled to date in 2003 by Comstock include a development well in Kansas, six shallow wells drilled in the New Albany Shale Gas field in Kentucky and four shallow pilot wells in the Company’s coal bed methane project in the San Juan Basin in New Mexico which are currently being tested. Another eight shallow development wells are planned to be drilled in Kentucky by year-end.
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 September 30, |
Six Months Ended September 30, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2003 |
2002 |
2003 |
2002 | |||||||||||
| Oil and gas sales | $ | 56,866 | $ | 35,550 | $ | 182,603 | $ | 100,044 | ||||||
| Operating expenses: | ||||||||||||||
| Oil and gas operating | 11,812 | 7,944 | 33,708 | 24,526 | ||||||||||
| Exploration | 1,225 | 411 | 3,366 | 3,392 | ||||||||||
| Depreciation, depletion and amortization | 15,163 | 12,866 | 44,867 | 39,791 | ||||||||||
| General and administrative, net | 1,508 | 935 | 4,983 | 2,942 | ||||||||||
| Total operating expenses | 29,708 | 22,156 | 86,924 | 70,651 | ||||||||||
| Income from operations | 27,158 | 13,394 | 95,679 | 29,393 | ||||||||||
| Other income (expenses): | ||||||||||||||
| Interest income | 16 | 72 | 59 | 90 | ||||||||||
| Interest expense | (7,370 | ) | (8,205 | ) | (22,648 | ) | (23,307 | ) | ||||||
| Loss from derivatives | -- | (126 | ) | (3 | ) | (2,294 | ) | |||||||
| Other income | 73 | 56 | 167 | 237 | ||||||||||
| (7,281 | ) | (8,203 | ) | (22,425 | ) | (25,274 | ) | |||||||
| Income from continuing operations before income taxes | 19,877 | 5,191 | 73,254 | 4,119 | ||||||||||
| Provision for income taxes | (6,957 | ) | (1,817 | ) | (25,639 | ) | (1,442 | ) | ||||||
| Net income from continuing operations | 12,920 | 3,374 | 47,615 | 2,677 | ||||||||||
| Discontinued operations including loss on | ||||||||||||||
| disposal, net of income taxes | -- | 57 | -- | (1,072 | ) | |||||||||
| Cumulative effect of change in accounting principle | -- | -- | 675 | -- | ||||||||||
| Net income | 12,920 | 3,431 | 48,290 | 1,605 | ||||||||||
| Preferred stock dividends | -- | (404 | ) | (573 | ) | (1,199 | ) | |||||||
| Net income attributable to common stock | $ | 12,920 | $ | 3,027 | $ | 47,717 | $ | 406 | ||||||
| Basic net income per share: | ||||||||||||||
| From continuing operations | $ | 0.38 | $ | 0.10 | $ | 1.50 | $ | 0.05 | ||||||
| Discontinued operations | -- | -- | -- | (0.04 | ) | |||||||||
| Cumulative effect of change in accounting principle | -- | -- | 0.02 | -- | ||||||||||
| $ | 0.38 | $ | 0.10 | $ | 1.52 | $ | 0.01 | |||||||
| Diluted net income per share: | ||||||||||||||
| From continuing operations | $ | 0.36 | $ | 0.10 | $ | 1.36 | $ | .05 | ||||||
| Discontinued operations | -- | -- | -- | (0.04 | ) | |||||||||
| Cumulative effect of change in accounting principle | -- | -- | 0.02 | -- | ||||||||||
| $ | 0.36 | $ | 0.10 | $ | 1.38 | $ | 0.01 | |||||||
| Weighted average common and common stock | ||||||||||||||
| equivalent shares outstanding: | ||||||||||||||
| Basic | 33,562 | 28,835 | 31,336 | 28,731 | ||||||||||
| Diluted | 35,398 | 33,755 | 34,964 | 29,433 | ||||||||||
COMSTOCK RESOURCES, INC.
OTHER FINANCIAL DATA
(In thousands, except per share amounts)
| Three Months Ended September 30, |
Six Months Ended September 30, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2003 |
2002 |
2003 |
2002 | |||||||||||
| Cash flow from operations: | ||||||||||||||
| Net cash provided by operating activities | $ | 50,298 | $ | 33,408 | $ | 119,109 | $ | 54,217 | ||||||
| Increase (decrease) in accounts receivable | (4,806 | ) | 1,310 | 6,583 | 563 | |||||||||
| Increase (decrease) in other current assets | (1,426 | ) | (7,790 | ) | (213 | ) | (5,099 | ) | ||||||
| Decrease in accounts payable and accrued expenses | (7,884 | ) | (10,773 | ) | (3,971 | ) | (1,147 | ) | ||||||
| Cash flow from operations | $ | 36,182 | $ | 16,155 | $ | 121,508 | $ | 48,534 | ||||||
| EBITDAX: | ||||||||||||||
| Net income from continuing operations | $ | 12,920 | $ | 3,374 | $ | 47,615 | $ | 2,677 | ||||||
| Interest | 7,370 | 8,205 | 22,648 | 23,307 | ||||||||||
| Income tax expense (benefit) | 6,957 | 1,817 | 25,639 | 1,442 | ||||||||||
| Depreciation, depletion and amortization | 15,163 | 12,866 | 44,867 | 39,791 | ||||||||||
| Exploration | 1,225 | 411 | 3,366 | 3,392 | ||||||||||
| Unrealized losses from derivatives | -- | (2,688 | ) | -- | (189 | ) | ||||||||
| EBITDAX | $ | 43,635 | $ | 23,985 | $ | 144,135 | $ | 70,420 | ||||||
| As of September 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2003 |
2002 | |||||||
| Balance Sheet Data: | ||||||||
| Current assets | $ | 50,362 | $ | 31,254 | ||||
| Property and equipment, net | 683,824 | 648,054 | ||||||
| Other | 6,329 | 6,072 | ||||||
| Total assets | $ | 740,515 | $ | 685,380 | ||||
| Current liabilities | $ | 54,487 | $ | 39,148 | ||||
| Long-term debt | 311,002 | 372,002 | ||||||
| Other | 94,923 | 56,235 | ||||||
| Stockholders' equity | 280,103 | 217,995 | ||||||
| Total liabilities and stockholders' equity | $ | 740,515 | $ | 685,380 | ||||
COMSTOCK RESOURCES,INC.
REGIONAL OPERATING RESULTS
(In thousands,except per unit amounts)
For the Three Months ended September 30, 2003
| Gulf of Mexico |
East Texas/ North Louisiana |
Southeast Texas |
South Texas / Other |
Total | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Oil production (thousand barrels) | 270 | 21 | 71 | 15 | 377 | ||||||||||||
| Gas production (million cubic feet - Mmcf) | 1,940 | 2,489 | 2,853 | 1,798 | 9,080 | ||||||||||||
| Total production (Mmcfe) | 3,560 | 2,615 | 3,279 | 1,889 | 11,343 | ||||||||||||
| Oil sales | $ | 7,987 | $ | 625 | $ | 2,074 | $ | 440 | $ | 11,126 | |||||||
| Gas sales | 9,817 | 12,520 | 14,412 | 8,991 | 45,740 | ||||||||||||
| Total oil and gas sales | $ | 17,804 | $ | 13,145 | $ | 16,486 | $ | 9,431 | $ | 56,866 | |||||||
| Average oil price (per barrel) | $ | 29.58 | $ | 29.76 | $ | 29.21 | $ | 29.33 | $ | 29.50 | |||||||
| Average gas price (per thousand cubic feet - Mcf) | $ | 5.06 | $ | 5.03 | $ | 5.05 | $ | 5.00 | $ | 5.04 | |||||||
| Average price (per Mcf equivalent) | $ | 5.00 | $ | 5.03 | $ | 5.03 | $ | 4.99 | $ | 5.01 | |||||||
| Lifting cost | $ | 4,149 | $ | 2,544 | $ | 2,973 | $ | 2,146 | $ | 11,812 | |||||||
| Lifting cost (per Mcf equivalent) | $ | 1.17 | $ | 0.97 | $ | 0.91 | $ | 1.14 | $ | 1.04 | |||||||
| Development and exploration expenditures | $ | 14,184 | $ | 1,356 | $ | 2,374 | $ | 3,454 | $ | 21,368 | |||||||
For the Nine Months ended September 30, 2003
| Gulf of Mexico |
East Texas/ North Louisiana |
Southeast Texas |
South Texas / Other |
Total | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Oil production (thousand barrels) | 829 | 67 | 210 | 68 | 1,174 | |||||||||||||
| Gas production (million cubic feet - Mmcf) | 6,250 | 7,917 | 7,737 | 4,008 | 25,912 | |||||||||||||
| Total production (Mmcfe) | 11,223 | 8,318 | 8,996 | 4,417 | 32,954 | |||||||||||||
| Oil sales | $ | 25,645 | $ | 2,011 | $ | 6,412 | $ | 2,064 | $ | 36,132 | ||||||||
| Gas sales | 37,026 | 43,413 | 44,253 | 21,779 | 146,471 | |||||||||||||
| Total oil and gas sales | $ | 62,671 | $ | 45,424 | $ | 50,665 | $ | 23,843 | $ | 182,603 | ||||||||
| Average oil price (per barrel) | $ | 30.93 | $ | 30.01 | $ | 30.53 | $ | 30.35 | $ | 30.79 | ||||||||
| Average gas price (per thousand cubic feet - Mcf) | $ | 5.92 | $ | 5.48 | $ | 5.72 | $ | 5.43 | $ | 5.65 | ||||||||
| Average price (per Mcf equivalent) | $ | 5.58 | $ | 5.46 | $ | 5.63 | $ | 5.40 | $ | 5.54 | ||||||||
| Lifting cost | $ | 12,344 | $ | 7,771 | $ | 7,804 | $ | 5,789 | $ | 33,708 | ||||||||
| Lifting cost (per Mcf equivalent) | $ | 1.10 | $ | 0.93 | $ | 0.87 | $ | 1.31 | $ | 1.02 | ||||||||
| Development and exploration expenditures | $ | 36,316 | $ | 5,284 | $ | 6,729 | $ | 12,224 | $ | 60,553 | ||||||||