UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

Commission File No. 0-16741

COMSTOCK RESOURCES, INC.

5300 Town and Country Blvd., Suite 500, Frisco, Texas 75034
(Address of principal executive offices)

Telephone No.: (972) 668-8800

     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 filing requirements for the past 90 days.

Yes þ No o

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes þ No o

     The number of shares outstanding of the registrant’s common stock, par value $.50, as of August 6, 2004 was 34,730,262.

COMSTOCK RESOURCES, INC.

QUARTERLY REPORT

For The Quarter Ended June 30, 2004

INDEX

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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

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COMSTOCK RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(Unaudited)

The accompanying notes are an integral part of these statements.

4

COMSTOCK RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

The accompanying notes are an integral part of these statements.

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COMSTOCK RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
For the Six Months Ended June 30, 2004
(Unaudited)

The accompanying notes are an integral part of these statements.

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COMSTOCK RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

The accompanying notes are an integral part of these statements.

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COMSTOCK RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2004
(Unaudited)

     Basis of Presentation

     In management’s opinion, the accompanying unaudited consolidated financial statements contain all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial position of Comstock Resources, Inc. and subsidiaries (“Comstock” or the “Company”) as of June 30, 2004 and the related results of operations and cash flows for the six months ended June 30, 2004 and 2003.

     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, 2003.

     The results of operations for the six months ended June 30, 2004 are not necessarily an indication of the results expected for the full year.

     Income Taxes

     Deferred income taxes are provided to reflect the future tax consequences or benefits of differences between the tax basis of assets and liabilities and their reported amounts in the financial statements using enacted tax rates.

     The following is an analysis of the consolidated income tax expense:

     Stock-Based Compensation

     Prior to January 1, 2004, Comstock accounted for employee stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). Under the intrinsic method, compensation cost for stock options is measured as the excess, if any, of the fair value of the Company’s common stock at the date of the grant over the amount an employee must pay to acquire the common stock. Effective January 1, 2004, the Company changed its method of accounting for employee stock-based compensation to the preferable fair value based method prescribed in Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”). Under the fair value based method, compensation cost is measured at the grant date based on the fair value of the award and is recognized over the award vesting period. The fair

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COMSTOCK RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

value of each award is estimated as of the date of grant using the Black-Scholes options pricing model. Under the modified prospective transition method selected by Comstock as described in Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure,” stock-based compensation expense recognized for the three months and six months ended June 30, 2004, is the same as that which would have been recognized had the fair value method of SFAS 123 been applied from its original effective date. During the three months and six months ended June 30, 2004, the Company recorded $1.2 million and $2.4 million, respectively, in stock-based compensation expense in general and administrative expenses.

In accordance with the modified prospective transition method, results for years prior to 2004 have not been restated. For the three months and six months ended June 30, 2003, the Company accounted for stock-based compensation for employees under APB 25 and related interpretations, under which no compensation cost was recognized for employee stock options. If compensation costs had been determined in accordance with SFAS 123, the Company’s net income and earnings per share would approximate the following pro forma amounts:

Asset Retirement Obligations

Comstock adopted Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations” (“SFAS 143”), on January 1, 2003. This statement required Comstock to record a liability in the period in which an asset retirement obligation (“ARO”) is incurred, in an amount equal to the discounted estimated fair value of the obligation that is capitalized. Thereafter, each quarter, this liability is accreted up to the final retirement cost. The adoption of SFAS 143 on January 1, 2003 resulted in a cumulative effect adjustment to record (i) a $3.7 million decrease in the carrying value of oil and gas properties, (ii) a $3.3 million decrease in accumulated depletion, depreciation and amortization, (iii) a $1.5 million decrease in reserve for future abandonment, and (iv) a gain of $675,000, net of income taxes, which was reflected as the cumulative effect of a change in accounting principle.

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COMSTOCK RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Comstock’s primary asset retirement obligations relate to future plugging and abandonment expenses on its oil and gas properties and related facilities disposal. As of June 30, 2004, Comstock had $1.7 million held in an escrow account from which funds are released only for reimbursement of plugging and abandonment expenses on certain offshore oil and gas properties. This amount is included in Other Assets in the consolidated balance sheet. The following table summarizes the changes in Comstock’s total estimated liability during the six months ended June 30, 2004 and 2003:

Earnings Per Share

Basic earnings per share is determined without the effect of any outstanding potentially dilutive stock options or other convertible securities and diluted earnings per share is determined with the effect of outstanding stock options and other convertible securities that are potentially dilutive. Basic and diluted earnings per share for the three and six months ended June 30, 2004 and 2003, were determined as follows:

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COMSTOCK RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Derivative Instruments and Hedging Activities

Comstock periodically uses swaps, floors and collars to hedge oil and natural gas prices and interest rates. Swaps are settled monthly based on differences between the prices specified in the instruments and the settlement prices of futures contracts. Generally, when the applicable settlement price is less than the price specified in the contract, Comstock receives a settlement from the counter party based on the difference multiplied by the volume or amounts hedged. Similarly, when the applicable settlement price exceeds the price specified in the contract, Comstock pays the counter party based on the difference. Comstock generally receives a settlement from the counter party for floors when the applicable settlement price is less than the price specified in the contract, which is based on the difference multiplied by the volumes amounts hedged. For collars, generally Comstock receives a settlement from the counter party when the settlement price is below the floor and pays a settlement to the counter party when the settlement price exceeds the cap. No settlement occurs when the settlement price falls between the floor and cap.

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COMSTOCK RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Comstock had no derivative financial instruments outstanding as of June 30, 2004 and had none of its oil and gas production or floating rate debt hedged during the six months ended June 30, 2004 and 2003.

Comstock had an interest rate swap agreement covering $25.0 million of its floating rate debt in place during the three months and six months ended June 30, 2003, which resulted in a realized loss of $22,000 and $36,000, respectively, which was included in the interest expense.

Supplementary Information With Respect to the Consolidated Statements of Cash Flows -

At June 30, 2004, Comstock’s long-term debt was comprised of the following:

Comstock had $220.0 million in principal amount of 11 1/4% Senior Notes due 2007 (the “1999 Notes”) outstanding on January 1, 2004. Pursuant to a tender offer, on February 25, 2004, Comstock repurchased $197.7 million in principal amount of the 1999 Notes for $212.2 million plus accrued interest. On May 1, 2004, Comstock redeemed the remaining $22.3 million in principal amount of the 1999 Notes outstanding for $23.6 million plus accrued interest. The early extinguishment of the 1999 Notes resulted in a loss of $19.6 million which was comprised of the premium paid for repurchase of the 1999 Notes together with the write-off of unamortized debt issuance costs related to the 1999 Notes.

In connection with the repurchase of the 1999 Notes, Comstock sold $175.0 million of its senior notes in an underwritten public offering. The new senior notes are due March 1, 2012 and bear interest at 6 7/8%, which is payable semiannually on March 1 and September 1, commencing September 1, 2004. The senior notes are unsecured obligations of the Company and are currently guaranteed by all of its subsidiaries.

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COMSTOCK RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

On February 25, 2004, Comstock also entered into a new $400.0 million bank credit facility with Bank of Montreal, as the administrative agent. The new credit facility is a four-year revolving credit commitment that matures on February 25, 2008. Borrowings under the new credit facility are limited to a borrowing base that was $300.0 million as of June 30, 2004. Borrowings under the new credit facility were used to refinance amounts outstanding under the prior bank credit facility and to fund the repurchase of the 1999 Notes.

Indebtedness under the new credit facility is secured by substantially all of Comstock’s and its subsidiaries’ assets and is guaranteed by all of the subsidiaries. The new credit facility is subject to borrowing base availability, which is redetermined semiannually based on the banks’ estimates of the future net cash flows of the Company’s oil and natural gas properties. The borrowing base may be affected by the performance of Comstock’s properties and changes in oil and natural gas prices. The determination of the borrowing base is at the sole discretion of the administrative agent and the bank group. Borrowings under the new credit facility bear interest, based on the utilization of the borrowing base, at Comstock’s option at either LIBOR plus 1.25% to 1.75% or the base rate (which is the higher of the prime rate or the federal funds rate) plus 0% to 0.5%. A commitment fee of 0.375% is payable on the unused borrowing base. The new credit facility contains covenants that, among other things, restrict the payment of cash dividends, limit the amount of consolidated debt that Comstock may incur and limit the Company’s ability to make certain loans and investments. The only financial covenants are the maintenance of a current ratio and maintenance of a minimum tangible net worth. The Company was in compliance with these covenants as of June 30, 2004.

On December 8, 1997, Comstock acquired certain oil and natural gas properties from and entered into a joint exploration venture with Bois d’Arc Offshore, Ltd. (“Bois d’Arc”) which covers the state coastal waters of Louisiana and Texas and corresponding federal offshore waters in the Gulf of Mexico. On July 16, 2004, Comstock contributed its interests in substantially all of its oil and natural gas properties located in the state and federal waters in the Gulf of Mexico (which were either acquired from or developed with Bois d’Arc under the joint exploration venture), net of $102.8 million in related debt, to Bois d’Arc Energy, LLC, a recently-formed Nevada limited liability company (“Bois d’Arc Energy”). Bois d’Arc, as well as several other persons and entities, also contributed their interests in certain oil and natural gas properties that were developed under the joint exploration venture to Bois d’Arc Energy. As a result of these transactions, Comstock holds approximately 59.9% equity interest in Bois d’Arc Energy. Comstock will account for its interest in the joint venture based on its proportionate ownership.

In connection with the formation of the new venture, Comstock has made available to Bois d’Arc Energy a revolving line of credit in a maximum outstanding amount of $200.0 million, of which approximately $152.0 million was outstanding on the formation date. Bois d’Arc Energy and its subsidiaries each became guarantors of Comstock’s bank credit facility and the 6 7/8% senior notes. Bois d’Arc Energy expects to refinance the amounts outstanding under the credit facility provided by Comstock in the near future. The refinancing may include an initial public offering of its common stock, depending on market conditions and various other factors. Comstock anticipates that it will have a significant ownership interest in Bois d’Arc Energy after the refinancing. If Bois d’Arc Energy does not complete a financing transaction which generates sufficient proceeds to repay all of the amounts outstanding under the line of credit with Comstock by December 1, 2004 (or such later date as is determined by Bois d’Arc Energy’s Board of Managers), Bois d’Arc Energy will be dissolved and liquidated in a manner designed to put the contributors in a position as near as possible to the same economic position that the contributors would have been in if the contributors had never formed Bois d’Arc Energy and instead had continued to own their respective properties individually.

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INDEPENDENT ACCOUNTANTS’ REVIEW REPORT

We have reviewed the consolidated balance sheet of Comstock Resources, Inc. and subsidiaries (a Nevada corporation) (the Company) as of June 30, 2004, and the related consolidated statements of income for the three-month and six-month periods ended June 30, 2004 and 2003, and the condensed consolidated statements of cash flows for the six-month periods ended June 30, 2004 and 2003. These financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated interim financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Comstock Resources, Inc. and subsidiaries as of December 31, 2003, and the related consolidated statements of income, shareholders’ equity, and cash flows for the year then ended [not presented herein], and in our report dated February 26, 2004 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2003, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Ernst & Young LLP

Dallas, Texas
August 4, 2004

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This report contains forward-looking statements that involve risks and uncertainties that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those anticipated in our forward-looking statements due to many factors. The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included in this report and in our annual report filed on Form 10-K for the year ended December 31, 2003.

Results of Operations

The following table reflects certain summary operating data for the periods presented:

Revenues -

     Our oil and gas sales increased $9.3 million (16%) in the second quarter of 2004 to $66.5 million, from $57.2 million in 2003’s second quarter due to an increase in our production and higher crude oil and natural gas prices. Our average natural gas price increased by 6% and our average crude oil price increased by 30% in the second quarter of 2004 as compared to the same period in 2003. Our production in the second quarter of 2004 increased by 5% over the second quarter of 2003 due to new production from our successful drilling activity.

     For the first six months of 2004, our oil and gas sales increased $1.5 million (1%) to $127.3 million from $125.7 million for the six months ended June 30, 2003. The increase is primarily attributable to a 2% increase in our production in 2004 which was offset by 1% lower price realizations.

Costs and Expenses -

     Our oil and gas operating expenses, including production taxes, increased $1.9 million (18%) to $12.5 million in the second quarter of 2004 from $10.5 million in the second quarter of 2003. Oil and gas operating expenses per equivalent Mcf produced increased $0.13 to $1.10 in the second quarter of 2004 from $0.98 in the second quarter of 2003. Oil and gas operating costs for the six months ended June 30, 2004 increased

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$3.2 million (15%) to $25.1 million from $21.9 million for the six months ended June 30, 2003. Oil and gas operating expenses per equivalent Mcf produced increased $0.13 to $1.14 for six months ended June 30, 2004 from $1.01 for the same period in 2003. The increase in operating expenses in 2004 is primarily related to the additional fixed operating costs relating to our Ship Shoal 113 Unit in which we acquired an additional working interest in late 2003.

     In the second quarter of 2004, we had a $1.8 million provision for exploration expense as compared to a $0.5 million in 2003’s second quarter. The provision in the second quarter of 2004 primarily relates to an exploratory dry hole drilled in South Texas together with expenditures made for the acquisition of seismic data. For the six months ended June 30, 2004, we had a provision for exploration expense totaling $5.2 million as compared to $2.1 million in the same period in 2003. The 2004 provision primarily related to four exploratory dry holes combined with expenditures relating to the acquisition of seismic data in 2004.

     Depreciation, depletion and amortization (“DD&A”) increased $0.6 million (4%) to $15.7 million in the second quarter of 2004 from $15.1 million in the second quarter of 2003 due primarily to the 5% increase in our production. DD&A per equivalent Mcf produced for the three months ended June 30, 2004 was $1.35, the same rate that we had for the quarter ended June 30, 2003. For the six months ended June 30, 2004, DD&A increased $1.2 million (4%) to $31.5 million from $30.3 million for the six months ended June 30, 2003. The increase is due to the 2% increase in production and our higher average amortization rate. DD&A per equivalent Mcf increased by $0.05 to $1.40 for the six months ended June 30, 2004 from $1.35 for the six months ended June 30, 2003.

     General and administrative expenses, which are reported net of overhead reimbursements, of $2.9 million for the second quarter of 2004 were 48% higher than general and administrative expenses of $1.9 million for the second quarter of 2003. For the first six months of 2004, general and administrative expenses increased to $6.0 million from $3.5 million for the six months ended June 30, 2003. The increases are primarily related to stock-based compensation expense that we recorded in the three months and six months ended June 30, 2004 of $1.2 million and $2.4 million, respectfully, resulting from our adoption of a fair value-based method of accounting for employee stock-based compensation including our employee stock options on January 1, 2004.

     Interest expense decreased $2.8 million (39%) to $4.5 million for the second quarter of 2004 from $7.4 million in the second quarter of 2003. The decrease is related to the early retirement of $220.0 million of principal amount of our 11 1/4% senior notes which were refinanced with $175.0 million new 6f% senior notes along with borrowings under a new bank credit facility. The average interest rate on the outstanding borrowings under the credit facility also decreased to 2.6% in the second quarter of 2004 as compared to 3.1% in the second quarter of 2003. Interest expense for the six months ended June 30, 2004 decreased $3.9 million (26%) to $10.8 million from $14.7 million for the six months ended June 30, 2003. The decrease is also attributable to refinancing of the 11 1/4% senior notes. The average interest rate under the bank credit facility decreased to 2.6% in the first half of 2004 as compared to 3.1% in the first half of 2003.

     We reported net income of $18.7 million for the three months ended June 30, 2004, as compared to net income of $14.1 million for the three months ended June 30, 2003. Net income per share for the second quarter of 2004 was $0.52 on weighted average diluted shares outstanding of 36.1 million as compared to $0.40 for the second quarter of 2003 on weighted average diluted shares outstanding of 35.0 million. Net income for the six months ended June 30, 2004 was $18.7 million, as compared to net income of $35.4 million for the six months ended June 30, 2003. Net income per common share for the six months ended June 30, 2004 was $0.52 as compared to net income of $1.02 for the six months ended June 30, 2003. Net income for the six months ended June 30, 2003 included $0.7 million in income ($0.02 per share) related to the cumulative effect of a change in our accounting for future abandonment cost for our oil and gas properties. The 2004 results include a charge of $19.6 million ($12.5 million after income taxes or 35¢ per diluted share) relating to the early retirement of our 11 1/4% senior notes.

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     Critical Accounting Policies

     The information included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies” in our annual report filed on Form 10-K for the year ended December 31, 2003 is incorporated herein by reference. There have been no material changes to our accounting policies during the six months ended June 30, 2004 with the exception of our adoption of a fair value-based method of accounting for stock-based compensation including employee stock options as discussed in Note 1 to the accompanying financial statements.

     Liquidity and Capital Resources

     Funding for our activities has historically been provided by our operating cash flow, debt or equity financings or asset dispositions. For the six months ended June 30, 2004, our net cash flow provided by operating activities totaled $67.8 million and we received proceeds of $175.0 million from a public offering of eight-year senior notes. We also borrowed $164.0 million under a new four-year bank credit facility and $6.0 million under a previous bank credit facility.

     Our primary needs for capital, in addition to funding our ongoing operations, relate to the acquisition, development and exploration of our oil and gas properties and the repayment of our debt. In the first half of 2004, we incurred capital expenditures of $72.3 million primarily for our development and exploration activities and we retired $343.6 million of our debt, including our 11 1/4% senior notes.

     The following table summarizes our capital expenditure activity for the six months ended June 30, 2004 and 2003:

     The timing of most of our capital expenditures is discretionary because we have no material long-term capital expenditure commitments. Consequently, we have a significant degree of flexibility to adjust the level of our capital expenditures as circumstances warrant. We spent $72.1 million and $39.2 million on development and exploration activities in the six months ended June 30, 2004 and 2003, respectively. We have budgeted approximately $150.0 million for development and exploration projects in 2004 including our 59.9% share of Bois d’Arc Energy’s capital expenditures for the last six months of 2004. We expect to use internally generated cash flow to fund our development and exploration activity.

     We do not have a specific acquisition budget for 2004 since the timing and size of acquisitions are not predictable. We intend to use borrowings under our bank credit facility, or other debt or equity financings to the extent available, to finance significant acquisitions. The availability and attractiveness of these sources of financing will depend upon a number of factors, some of which will relate to our financial condition and performance and some of which will be beyond our control, such as prevailing interest rates, oil and natural gas prices and other market conditions.

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     We had $220.0 million in principal amount of our 11 1/4% senior notes which were due in 2007 (the “1999 Notes”) outstanding on January 1, 2004. Pursuant to a tender offer, on February 25, 2004, we repurchased $197.7 million in principal amount of the 1999 Notes for $212.2 million plus accrued interest. On May 1, 2004, we redeemed the remaining $22.3 million in principal amount of the 1999 Notes outstanding for $23.6 million plus accrued interest. The early extinguishment of the 1999 Notes resulted in a loss of $19.6 million which was comprised of the premium paid for repurchase the of 1999 Notes together with the write-off of unamortized debt issuance costs related to the 1999 Notes.

     In connection with the repurchase of the 1999 Notes, we sold $175.0 million of senior notes in an underwritten public offering. The new senior notes are due March 1, 2012 and bear interest at 6 7/8%, which is payable semiannually on March 1 and September 1, commencing September 1, 2004. The senior notes are unsecured obligations and are currently guaranteed by all of our subsidiaries.

     On February 25, 2004, we also entered into a new $400.0 million bank credit facility with Bank of Montreal, as the administrative agent. The new credit facility is a four-year revolving credit commitment that matures on February 25, 2008. Borrowings under the new credit facility are limited to a borrowing base that was set at $300.0 million upon the retirement of the 1999 Notes. Borrowings under the new credit facility were used to refinance amounts outstanding under our prior bank credit facility and to fund the repurchase of the 1999 Notes.

     Indebtedness under the new credit facility is secured by substantially all of our and our subsidiaries’ assets and is guaranteed by all of our subsidiaries. The new credit facility is subject to borrowing base availability, which is redetermined semiannually based on the banks’ estimates of the future net cash flows of our oil and natural gas properties. The borrowing base may be affected by the performance of our properties and changes in oil and natural gas prices. The determination of the borrowing base is at the sole discretion of the administrative agent and the bank group. Borrowings under the new credit facility bear interest, based on the utilization of the borrowing base, at our option at either LIBOR plus 1.25% to 1.75% or the base rate (which is the higher of the prime rate or the federal funds rate) plus 0% to 0.5%. A commitment fee of 0.375% is payable on the unused borrowing base. The new credit facility contains covenants that, among other things, restrict the payment of cash dividends, limit the amount of consolidated debt that we may incur and limit our ability to make certain loans and investments. The only financial covenants are the maintenance of a current ratio and maintenance of a minimum tangible net worth. We were in compliance with these covenants as of June 30, 2004.

     On December 8, 1997, Comstock acquired certain oil and natural gas properties from and entered into a joint exploration venture with Bois d’Arc Offshore, Ltd. (“Bois d’Arc”) which covers the state coastal waters of Louisiana and Texas and corresponding federal offshore waters in the Gulf of Mexico. On July 16, 2004, Comstock contributed its interests in substantially all of its oil and natural gas properties located in the state and federal waters in the Gulf of Mexico (which were either acquired from or developed with Bois d’Arc under the joint exploration venture), net of $102.8 million in related debt, to Bois d’Arc Energy, LLC, a recently-formed Nevada limited liability company (“Bois d’Arc Energy”). Bois d’Arc, as well as several other persons and entities, also contributed their interests in certain oil and natural gas properties that were developed under the joint exploration venture to Bois d’Arc Energy. As a result of these transactions, Comstock holds approximately 59.9% equity interest in Bois d’Arc Energy. Comstock will account for its interest in the joint venture based on its proportionate ownership.

     In connection with the formation of the new venture, Comstock has made available to Bois d’Arc Energy a revolving line of credit in a maximum outstanding amount of $200.0 million, of which approximately $152.0 million was outstanding on the formation date. Bois d’Arc Energy and its subsidiaries each became guarantors of Comstock’s bank credit facility and the 6 7/8% senior notes. Bois d’Arc Energy expects to refinance the amounts outstanding under the credit facility provided by Comstock in the near future. The refinancing may include an initial public offering of its common stock, depending on market conditions and various other factors. Comstock anticipates that it will have a significant ownership interest in Bois d’Arc

18

Energy after the refinancing. If Bois d’Arc Energy does not complete a financing transaction which generates sufficient proceeds to repay all of the amounts outstanding under the line of credit with Comstock by December 1, 2004 (or such later date as is determined by Bois d’Arc Energy’s Board of Managers), Bois d’Arc Energy will be dissolved and liquidated in a manner designed to put the contributors in a position as near as possible to the same economic position that the contributors would have been in if the contributors had never formed Bois d’Arc Energy and instead had continued to own their respective properties individually.

     We believe that our cash flow from operations and available borrowings under our bank credit facility will be sufficient to fund our operations and future growth as contemplated under our current business plan. However, if our plans or assumptions change or if our assumptions prove to be inaccurate, we may be required to seek additional capital. We cannot provide any assurance that we will be able to obtain such capital, or if such capital is available, that we will be able to obtain it on terms acceptable to us.

     Oil and Natural Gas Prices

     Our financial condition, results of operations and capital resources are highly dependent upon the prevailing market prices of oil and natural gas. These commodity prices are subject to wide fluctuations and market uncertainties due to a variety of factors, some of which are beyond our control. Factors influencing oil and natural gas prices include the level of global demand for crude oil, the foreign supply of oil and natural gas, the establishment of and compliance with production quotas by oil exporting countries, weather conditions that determine the demand for natural gas, the price and availability of alternative fuels and overall economic conditions. It is impossible to predict future oil and natural gas prices with any degree of certainty. Sustained weakness in oil and natural gas prices may adversely affect our financial condition and results of operations, and may also reduce the amount of oil and natural gas reserves that we can produce economically. Any reduction in our oil and natural gas reserves, including reductions due to price fluctuations, can have an adverse effect on our ability to obtain capital for our exploration and development activities. Similarly, any improvements in oil and natural gas prices can have a favorable impact on our financial condition, results of operations and capital resources. Based on our oil and natural gas production in the six months ended June 30, 2004, a $1.00 change in the price per barrel of oil would have resulted in a change in our cash flow for such period by approximately $0.8 million and a $1.00 change in the price per Mcf of natural gas would have changed our cash flow by approximately $16.1 million.

     Interest Rates

     At June 30, 2004, we had long-term debt of $324.0 million. Of this amount, $175.0 million bears interest at a fixed rate of 6 7/8%. We had $149.0 million outstanding under our bank credit facility, which is subject to floating market rates of interest. Borrowings under the bank credit facility bear interest at a fluctuating rate that is linked to LIBOR or the corporate base rate, at our option. Any increases in these interest rates can have an adverse impact on our results of operations and cash flow.

     As of June 30, 2004, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of June 30, 2004 to provide reasonable assurance that information required to be disclosed by us in the reports filed or submitted by us under the Securities Exchange Act of

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1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to provide reasonable assurance that information required to be disclosed by us is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

     There were no changes in our internal controls over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) that occurred during the quarter ended June 30, 2004, that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

PART II — OTHER INFORMATION

     Other directors of the Company whose term of office as a director continued after the meeting are as follows:

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21

     Form 8-K Reports filed subsequent to March 31, 2004 are as follows:

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, thereunto duly authorized.

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Exhibit 4.1

COMSTOCK RESOURCES, INC.,

GUARANTORS

NAMED HEREIN

and

THE BANK OF NEW YORK TRUST COMPANY, N.A.

Trustee

THIRD SUPPLEMENTAL INDENTURE

dated as of July 16, 2004

to

INDENTURE

dated as of February 25, 2004

6 7/8% Senior Notes due 2012

Exhibit 4.1

     THIS THIRD SUPPLEMENTAL INDENTURE dated as of July 16, 2004 (as originally executed and as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, this “Third Supplemental Indenture”), is among COMSTOCK RESOURCES, INC., a Nevada corporation (hereinafter called the “Company”), the GUARANTORS (as defined in the Indenture) and THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee (hereinafter called the “Trustee”). Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to them in the Indenture (as defined below).

RECITALS OF THE COMPANY

     WHEREAS, the Company, the Guarantors and the Trustee entered into an Indenture dated as of February 25, 2004 (the “Original Indenture”), as the same was amended and supplemented by that certain First Supplemental Indenture dated as of February 25, 2004 (the “First Supplemental Indenture”) and by that certain Second Supplemental Indenture dated as of March 11, 2004 (the “Second Supplemental Indenture,” and together with the Original Indenture and the First Supplemental Indenture, the “Indenture”), providing for the issuance by the Company from time to time, and the establishment of the terms of, the Company’s 6 7/8% Senior Notes due 2012;

     WHEREAS, Section 6.10 of the First Supplemental Indenture provides that each Restricted Subsidiary that guarantees the payment of, assumes or in any other manner becomes liable (whether directly or indirectly) with respect to any Indebtedness of the Company or any other Restricted Subsidiary of the Company, including, without limitation, Indebtedness under the Bank Credit Facility, will execute and deliver a supplemental indenture agreeing to be bound by the terms of the Indenture applicable to a Guarantor and providing for a Guarantee of the Securities;

     WHEREAS, effective July 16, 2004, (i) Comstock Offshore, LLC, a Nevada limited liability company (“Comstock Offshore”) transferred substantially all of its assets to Bois d’Arc Energy, LLC, a Nevada limited liability company (“Newco”), in exchange for membership interests in Newco, (ii) Bois d’Arc Holdings, LLC, a Nevada limited liability company (“BDA Holdings”), became a wholly-owned subsidiary of Newco and owned a 0.1% general partner interest in Bois d’Arc Properties, LP, a Nevada limited partnership (“BDA Properties”), (iii) Bois d’Arc Oil & Gas Company, LLC, a Nevada limited liability company (“BDAOG”), became a wholly-owned subsidiary of Newco and owned a 1% general partnership interest in Bois d’Arc Offshore, Ltd., a Nevada limited partnership (“BDAO”), (iv) Newco owned a 99.9% limited partnership interest in BDA Properties, and (v) Newco owned a 99.0% limited partnership interest in BDAO; and

     WHEREAS, each of Newco, BDA Holdings, BDA Properties, BDAOG and BDAO (collectively, the “Additional Guarantors”) have become Restricted Subsidiaries and desire to execute this Third Supplemental Indenture for the purpose of agreeing to be bound by the terms of the Indenture applicable to a Guarantor and providing for a Guarantee of the Securities.

     NOW, THEREFORE, for the purposes stated herein and for and in consideration of the premises and covenants contained in the Indenture and in this Third Supplemental Indenture and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, it is mutually covenanted and agreed as follows:

ARTICLE I.

     Section 1.1 Additional Guarantors.

     (a) From the date of this Third Supplemental Indenture, in accordance with Section 6.10 of the First Supplemental Indenture, each of the Additional Guarantors shall be subject to the provisions, and agrees to be bound by the terms, of the Indenture applicable to a Guarantor; and each of the Additional Guarantors hereby unconditionally, jointly and severally, guarantees to each Holder of Securities authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, the full and prompt performance of the Company’s obligations under the Indenture and the Securities.

     (b) Notwithstanding the foregoing and the other provisions of the Indenture, the Guarantees of the Additional Guarantors shall be automatically and unconditionally released and discharged upon the terms and conditions set forth in Section 9.3 of the First Supplemental Indenture.

ARTICLE II

     Section 2.1 Ratification of Indenture.

     As supplemented by this Third Supplemental Indenture, the Indenture is in all respects ratified and confirmed, and the Indenture as supplemented by this Third Supplemental Indenture shall be read, taken and construed as one and the same instrument.

     Section 2.2 Conflict with Trust Indenture Act.

     If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Third Supplemental Indenture by any provision of the Trust Indenture Act, such required provisions shall control.

     Section 2.3 Counterparts.

     This Third Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument.

     Section 2.4 Governing Law.

     This Third Supplemental Indenture and the Guarantees contained herein shall be governed by, and construed and enforced in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby.

[Reminder of Page Intentionally Left Blank]

     IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed, all as of the day and year first above written.

[Signature Pages Continue]

[Signature Pages Continue]

[Signature Pages Continue]

Exhibit 10.2

CONTRIBUTION AGREEMENT

by and among

BOIS D’ARC ENERGY, LLC,

BOIS D’ARC PROPERTIES, LP,

BOIS D’ARC RESOURCES, LTD.,

WAYNE L. LAUFER,

GARY W. BLACKIE,

HARO INVESTMENTS LLC,

COMSTOCK OFFSHORE, LLC,

COMSTOCK RESOURCES, INC., and

OTHER PERSONS LISTED ON THE SIGNATURE PAGES HERETO

Dated as of July 16, 2004

TABLE OF CONTENTS

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Table of Contents
(continued)

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Table of Contents
(continued)

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LIST OF EXHIBITS

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CONTRIBUTION AGREEMENT

     This Contribution Agreement (the “Agreement”), dated as of July 16, 2004, is by and among Bois d’Arc Energy, LLC, a Nevada limited liability company (the “Company”), Bois d’Arc Properties, LP, a Nevada limited partnership (the “New Subsidiary”), Bois d’Arc Resources, Ltd., a Texas limited partnership (“BDAR”), Wayne L. Laufer (“Laufer”), Gary W. Blackie (“Blackie”), Haro Investments LLC, a Texas limited liability company (“Haro”), such other persons listed on the signature pages hereto under the caption “BDA Contributors” (collectively, with BDAR, Laufer, Blackie and Haro, “BDA Contributors”), Comstock Offshore, LLC, a Nevada limited liability company (“Comstock Offshore”), and Comstock Resources, Inc., a Nevada corporation (“Comstock Resources” and collectively with Comstock Offshore, the “Comstock Parties”). Each of the above is a “Party” to this Agreement, and collectively they are sometimes referred to as the “Parties.” All capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in Section 10.17 of this Agreement.

     WHEREAS, the Company was formed on June 17, 2004 pursuant to the laws of the State of Nevada upon the filing of articles of organization with the office of the Secretary of State of Nevada;

     WHEREAS, the New Subsidiary was formed on June 22, 2004 pursuant to the laws of the State of Nevada upon the filing of a certificate of limited partnership with the office of the Secretary of State of Nevada; 99.9% of the New Subsidiary’s partnership interest is owned by the Company;

     WHEREAS, Bois d’Arc Holdings, LLC (the “New GP”) was formed on June 21, 2004 pursuant to the laws of the State of Nevada upon the filing of articles of organization with the office of the Secretary of State of Nevada; 100% of the membership interest of the New GP is owned by the Company and the New GP owns a 0.1% general partner interest in the New Subsidiary;

     WHEREAS, Comstock Offshore desires to contribute its interest in certain oil and gas properties to the New Subsidiary at the Closing in accordance with the terms and provisions of this Agreement;

     WHEREAS, Blackie and Laufer each desire to contribute their respective partnership interests in Bois d’Arc Offshore, Ltd., a Texas limited partnership (“BDAO”) and their membership interests in Bois d’Arc Oil & Gas Company, LLC, a Texas limited liability company (“BDAOG”), to the Company at the Closing in accordance with the terms and provisions of this Agreement;

     WHEREAS, the BDA Contributors each desire to contribute their respective interest in certain oil and gas properties to the New Subsidiary at the Closing in accordance with the terms and provisions of this Agreement;

     WHEREAS, the Parties intend that for federal income tax purposes, the above contributions qualify as contributions pursuant to Section 721 of the Code except to the extent any Party receives cash or a promissory note;

     WHEREAS, in addition to the contributions described above, each Party desires to purchase membership interests in the Company as provided herein;

     WHEREAS, each Party is making certain representations, warranties, covenants and indemnities herein as an inducement to the other Parties to enter into this Agreement; and

     WHEREAS, the Contributors will enter into the Operating Agreement in connection with the transactions contemplated hereby.

     NOW, THEREFORE, in consideration of the respective representations, warranties and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

ARTICLE I
CONTRIBUTION AND SALE TRANSACTIONS

     1.1 Contribution by Comstock Offshore. Subject to the terms and conditions of this Agreement, at the Closing, Comstock Offshore shall contribute, convey, assign, transfer, set over and deliver to the New Subsidiary all of its rights, title and interest in and to the oil and gas properties and such other assets listed on Schedule 1.1 in exchange for (i) the number of Class B Units set forth opposite its name on Schedule 1.0 and (ii) the assumption by the Company of the Liabilities set forth opposite Comstock Offshore’s name on Schedule 1.0 (collectively, the “Comstock Contribution”).

     1.2 Sales and Contributions by BDA Contributors. Subject to the terms and conditions of this Agreement, at the Closing, each of the BDA Contributors shall severally and not jointly sell, contribute, convey, assign, transfer, set over and deliver to the New Subsidiary each of their respective rights, title and interest in and to the leases and the interests set forth opposite each of their respective names on Schedule 1.2 as to the oil and gas properties listed on Schedule 1.2 in exchange for the following consideration: (i) the issuance to the applicable BDA Contributor (or to its designee in a Familial Transfer or an Affiliate Transfer (as such terms are defined in the Transfer Restriction Agreement)) of the number of Class B Units set forth opposite such BDA Contributor’s name on Schedule 1.0, (ii) the assumption by the Company of the Liabilities set forth opposite such BDA Contributor’s name on Schedule 1.0, and (iii) the payment to such BDA Contributor of the amount set forth opposite such BDA Contributor’s name on Schedule 1.0, which amount shall be payable in cash at the Closing (collectively, the “BDA Property Contributions”).

     1.3 Contributions by Blackie and Laufer. Subject to the terms and conditions of this Agreement, at the Closing, each of Blackie and Laufer shall contribute, convey, assign, transfer, set over and deliver to the Company all of their respective rights, title and interest in and to the partnership interests in BDAO and the membership interests in BDAOG (collectively, the “BDA Equity Interests”) in exchange for assumption and acceptance by the Company of the Liabilities of BDAO and BDAOG (the “BDA Equity Contributions”).

     1.4 Purchase of Class A Units. Subject to the terms and conditions of this Agreement, at the Closing, each Contributor agrees severally and not jointly to purchase from the Company, and the Company agrees to sell and issue to each such Contributor, the number of

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Class A Units set forth opposite such Contributor’s name on Schedule 1.0 for a consideration of $1.00 per Class A Unit.

     1.5 Closing Transactions.

          (a) As provided in Sections 1.1 and 1.2, the ownership of the Properties shall be sold, transferred and/or assigned from each Contributor to the Company or the New Subsidiary (as applicable) on the Closing Date but effective as of the Effective Time. Subject to the other provisions of this Agreement, each Contributor shall (i) be entitled to all revenues (and related accounts receivable) attributable to the Properties owned by such Contributor (including, without limitation, the right to all production, proceeds of production and other proceeds), and (ii) responsible for the payment of all expenses (and related accounts payable) attributable to the Properties owned by such Contributor in each case to the extent the same relate to the period of time prior to the Effective Time. Subject to the other provisions of this Agreement, the Company or the New Subsidiary (as applicable) shall be entitled to all revenues (and related accounts receivable) attributable to the Properties (including, without limitation, the right to all production, proceeds of production and other proceeds), and shall be responsible for the payment of all expenses (and related accounts payable) attributable to the Properties, in each case to the extent the same relate to the period of time from and after the Effective Time.

          (b) The assignments by Blackie and Laufer of the BDA Equity Interests shall be effective as of the Effective Time, and from and after that time, but not prior thereto, that portion of the net profits or net losses of BDAO and BDAOG allocable to such partnership interests and membership interests, respectively, shall be credited or charged, as the case may be, to the Company, and not Blackie or Laufer (as the case may be), and neither Blackie nor Laufer shall have any interest in or the right to any benefit therefrom.

          (c) Except for the Assumed Liabilities, each Contributor of Properties shall retain responsibility for, and neither the Company nor the New Subsidiary shall assume any Liability of a Contributor with respect to the Properties incurred prior to the Effective Time.

          (d) At the Closing but as of the Effective Time, the Company shall assume from BDAO the Revised Service Contract dated June 1, 2004 between BDAO and Laufer & Associates.

     1.6 The Closing. The consummation of the transactions contemplated by this Agreement (the “Closing”) will take place at the offices of Locke Liddell & Sapp LLP, 2200 Ross Avenue, Suite 2200, Dallas, Texas 75201, on such date as the Parties may agree but in no event not later than July 16, 2004. The date on which the Closing occurs is referred to herein as the “Closing Date.”

     1.7 Closing Deliveries. Subject to the terms and conditions of this Agreement at the Closing:

          (a) Each of Blackie and Laufer will execute and deliver to the Company the following:

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               (i) An assignment in the form attached hereto as Exhibit C-1 with respect to their respective BDA Equity Interests;

               (ii) Certificates of existence and good standing for each of BDAO and BDAOG; and

               (iii) Such other documents as may be reasonably requested by Comstock Offshore.

          (b) Each of the BDA Contributors will execute and deliver to the Company the following:

               (i) assignments in the forms attached hereto as Exhibit C-2 transferring and assigning title to their respective interests in the BDA Properties; and

               (ii) such other documents as may be reasonably requested by Comstock Offshore.

          (c) Comstock Offshore will deliver to the Company the following:

               (i) assignments in the forms attached hereto as Exhibit C-2 transferring and assigning title to its interest in the Comstock Properties;

               (ii) certificates of existence and good standing for each of Comstock Resources and Comstock Offshore; and

               (iii) such other documents as may be reasonably requested by BDAR.

          (d) Each Contributor will deliver to the Company the consideration for the Class A Units as specified in Section 1.4.

          (e) The Company will deliver or cause to be delivered to each of the Contributors or, in the case of any of the Contributors that is an entity, its constituent partners or members (“Distributees”), (i) a certificate or certificates evidencing the Class A Units and Class B Units to be issued to such Contributor or Distributee, (ii) the cash payment (which shall be by wire transfer of immediately available funds) in the amount set forth opposite the respective Contributor’s or Distributee’s name on Schedule 1.0 and (iii) an assumption agreement pursuant to which it assumes the Assumed Liabilities.

          (f) At the Closing, each of the Contributors and Distributees shall enter into the Operating Agreement and the Transfer Restriction Agreement.

     1.8 Post-Closing Adjustment.

          (a) Prior to the Closing, Laufer and Blackie shall cause BDAO to determine the BDAO Working Capital as of the Effective Time (the “Estimated Working Capital”). To the extent the Estimated Working Capital is greater than zero ($0.00), at the Closing, the Company shall pay to Laufer and Blackie an amount equal to the excess; to the extent the Estimated

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Working Capital is less than zero ($0.00), at the Closing Laufer and Blackie shall collectively pay to the Company an amount equal to the deficit (either such payment, the “Estimated Adjustment Amount”).

          (b) Within ninety (90) days following the Closing, Comstock Offshore, Laufer and Blackie shall jointly determine the BDAO Working Capital as of the Effective Time (the “Initial Post-Closing Working Capital Calculation”). To the extent the Initial Post-Closing Working Capital Calculation is greater than zero ($0.00), the Company shall pay to Laufer and Blackie an amount equal to the excess; to the extent the Initial Post-Closing Working Capital Calculation is less than zero ($0.00), Laufer and Blackie shall collectively pay to the Company an amount equal to the deficit, but in either case the amount owing pursuant to this Section 1.8(b) shall be adjusted for the Estimated Adjustment Amount (the “Second Adjustment Amount”).

          (c) Within one hundred eighty (180) days following the Closing, Comstock Offshore, Laufer and Blackie shall jointly make a final determination of the BDAO Working Capital as of the Effective Time (the “Final Post-Closing Working Capital Calculation”). To the extent the Final Post-Closing Working Capital Calculation is greater than zero ($0.00), the Company shall pay to Laufer and Blackie an amount equal to the excess; to the extent the Final Post-Closing Working Capital Calculation is less than zero ($0.00), Laufer and Blackie shall collectively pay to the Company an amount equal to the deficit, but in either case the amount owing pursuant to this Section 1.8(c) shall be adjusted for the Estimated Adjustment Amount and the Second Adjustment Amount.

          (d) Any amount owing by or to Laufer and Blackie pursuant to this Section 1.8 shall be split as directed by them. For purposes of this Section 1.8, the term “BDAO Working Capital” shall mean (i) the sum of (1) cash, accounts receivable, prepaid expenses, (2) unreimbursed seismic costs, leasehold acquisitions costs and other costs incurred by BDAO under the Exploration Agreement, including but not limited to permitting, surveying and geological/geophysical data costs and (3) costs incurred with respect to prospects identified but not drilled as of the Effective Time pursuant to the Exploration Agreement, less (ii) the sum of trade payables and accrued expenses, in each case for BDAO and BDAOG on a combined basis. The BDAO Working Capital shall be calculated in accordance with GAAP.

          (e) Any gas imbalances that exist as of the Effective Time with respect to the Properties will be settled up among the Company and the Contributors of Properties based on the actual price received for the production month(s) in which the imbalance occurred.

ARTICLE II
REPRESENTATIONS AND WARRANTIES CONCERNING
BDAO AND BDAOG

     Laufer and Blackie hereby jointly and severally represent and warrant to the Company, the New Subsidiary and the Comstock Parties as follows:

     2.1 Existence and Good Standing. BDAO is a limited partnership duly formed and validly existing under the laws of the State of Texas. BDAOG is a limited liability company

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duly formed, validly existing and in good standing under the laws of the State of Texas. Each of BDAO and BDAOG has all requisite partnership or limited liability company (as applicable) power and authority to carry on its business as it is now being conducted.

     2.2 No Violation. The consummation of the BDA Equity Contributions by Laufer and Blackie will not (i) violate any of the formation or governing documents of either BDAO or BDAOG, (ii) violate any provision of or result in the breach of or entitle any party to accelerate (whether after the giving of notice or lapse of time or both) any obligation under any lease, contract, license, instrument or any other agreement to which either BDAO or BDAOG is a party, (iii) result in the creation or imposition of any Lien upon any property of either BDAO or BDAOG, or (iv) to the knowledge of either Laufer or Blackie, violate or conflict with any order, award, judgment or decree or other restriction of any law, ordinance or regulation to which either BDAO or BDAOG or any of their respective properties or interests are subject.

     2.3 Consents and Approvals. No prior consent, approval or authorization of, or declaration, filing or registration with any Governmental Authority or other Person is required in connection with the BDA Equity Contributions by Laufer and Blackie.

     2.4 No Properties. Neither BDAO nor BDAOG owns any interest in the BDA Properties or any other oil and gas properties; provided, that to the extent either entity holds record title to any Properties as nominee, the necessary assignments will be prepared as soon as practical after Closing and the executed assignments shall be delivered to the appropriate beneficial owner(s).

     2.5 Absence of Litigation. There is no litigation, suit, claim, action, proceeding or investigation (an “Action”) pending or, to the knowledge of Laufer and Blackie, threatened against either BDAO or BDAOG, or any oil and gas property or asset that is owned or operated by either BDAO or BDAOG (the “BDA Operated Properties”), before any Governmental Authority that could reasonably be expected to have a Material Adverse Effect. Neither BDAO or BDAOG nor any of their respective properties is subject to any continuing order of, consent decree, settlement agreement or similar written agreement with, or continuing investigation by, any Governmental Authority, or any order, writ, judgment, injunction, decree, determination or award of any Governmental Authority that would prevent or materially delay consummation of the transactions contemplated hereby or otherwise prevent or materially delay either BDAO or BDAOG from performing its obligations under this Agreement and the Ancillary Documents.

     2.6 Taxes.

          (a) Each of BDAO and BDAOG has (i) duly filed (or there has been filed on its behalf) on a timely basis (taking into account any extensions of time to file before the date hereof) with the appropriate Governmental Authorities all Tax Returns required to be filed by or with respect to it, and (ii) duly paid or deposited in full on a timely basis or made adequate provisions in accordance with good accounting practices (or there has been paid or deposited or adequate provision has been made on its behalf) for the payment of all Taxes required to be paid by it other than those being contested in good faith by either entity.

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          (b) Except as set forth on Schedule 2.6, (i) each of BDAO and BDAOG has at all times since its inception been properly treated as a partnership for federal income tax purposes; (ii) neither BDAO nor BDAOG is, as of the date hereof, the subject of any audit or other proceeding in respect of payment of Taxes for which it may be directly or indirectly liable and no such proceeding has been threatened; (iii) no claim has ever been made by a Governmental Authority where BDAO and/or BDAOG do not pay Tax or file Tax Returns that BDAO and/or BDAOG are or may be subject to Taxes assessed by such jurisdiction; (iv) as of the date hereof, neither BDAO nor BDAOG has granted any requests, agreements, consents or waivers to extend the statutory period of limitations applicable to the assessment of any Taxes with respect to any Tax Returns of either entity; (v) neither BDAO nor BDAOG is a party to, is bound by or has any obligation under any Tax sharing, allocation or indemnity agreement or any similar agreement or arrangement; (vi) there are no Liens for Taxes on any assets of either entity except for Taxes not yet currently due, with respect to matters being contested by either entity in good faith for which adequate reserves have been made by such entity; (vii) the amounts of Taxes withheld by or on behalf of BDAO and BDAOG with respect to all compensation paid to employees, consultants, independent contractors or other persons for all periods ending on or before the date hereof have been proper and accurate in all respects, and all deposits required with respect to such compensation have been made in compliance in all respects with the provisions of all applicable Tax law; and (viii) neither BDAO nor BDAOG has any obligation for Taxes of any other person or entity.

     2.7 Gas Imbalances. To the knowledge of Laufer and Blackie, except as set forth in Schedule 2.7, neither BDAO nor BDAOG has received any material deficiency payment under any gas contract with respect to the BDA Operated Properties for which any Person has a right to take deficiency gas from either entity, nor has either entity received any material payment for production which is subject to refund or recoupment out of future production.

     2.8 Take or Pay. To the knowledge of Laufer and Blackie, there are no calls (exclusive of market calls) on the oil or gas production with respect to the BDA Operated Properties and neither entity has any obligation to deliver oil or gas pursuant to any take-or-pay, prepayment or similar arrangement without receiving full payment therefor, excluding gas imbalances disclosed in Schedule 2.7.

     2.9 Leases. To the knowledge of Laufer and Blackie, each of the leases regarding the BDA Operated Properties is valid and in full force and effect, each of BDAO and BDAOG has performed all obligations required to be performed under such leases, or any other instruments and agreements relating to the BDA Operated Properties, and neither party is in default thereunder. Notwithstanding the foregoing, no representation or warranty is given with respect to any undrilled leases.

     2.10 Rentals Paid. To the knowledge of Laufer and Blackie, all rentals, bonuses and royalties on the production from the BDA Operated Properties, and any other interests payable out of such production, have been timely and fully paid and discharged, and all conditions necessary, and all conditions necessary to keep the leases regarding the BDA Operated Properties in full force have been performed and no proceeds from the sale of production attributable to the BDA Operated Properties are currently being held in suspense by any purchase

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thereof. Notwithstanding the foregoing, no representation or warranty is given with respect to any undrilled leases.

     2.11 Equity Ownership. Blackie and Laufer legally and beneficially own the BDA Equity Interests set forth opposite their respective names on Schedule 1.2, free and clear of any Liens. BDAOG legally and beneficially owns a 1.0% general partner interest in BDAO free and clear of any Liens.

     2.12 Employee Benefit Plans. Except as set forth on Schedule 2.12, neither BDAO, BDAOG nor the BDA Controlled Group sponsors, maintains, or contributes to or participates in any Benefit Arrangement, and there are no Benefit Plans.

     2.13 Labor Matters. Each of BDAO and BDAOG (i) has been and is in compliance in all material respects with all Laws respecting employment and employment practices, terms and conditions of employment and wages and hours; and (ii) is not liable for any arrears of wages or penalties for failure to comply with any of the foregoing.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BDA CONTRIBUTORS

     Each of the BDA Contributors severally and not jointly makes the following representations and warranties to the Company, the New Subsidiary and the Comstock Parties, as to itself, himself or herself and as to its, his or her respective interest in the BDA Properties:

     3.1 Existence and Good Standing. To the extent that such BDA Contributor is not a natural person, such BDA Contributor is a limited partnership, limited liability company or corporation (as applicable), duly formed and validly existing under the laws of the jurisdiction of its organization. Such BDA Contributor has all requisite partnership, limited liability company or corporate (as applicable) power and authority to carry on its business as it is now being conducted.

     3.2 Authority. Such BDA Contributor has all requisite partnership, limited liability company or corporate (as applicable) power and authority to execute, deliver and perform its obligations under this Agreement and the Ancillary Documents, to the extent a party hereto or thereto. This Agreement and each of the Ancillary Documents have been duly and validly executed and delivered by such BDA Contributor and, assuming the due authorization, execution and delivery hereof and thereof by the other parties hereto and thereto, constitutes the valid and binding obligation of such BDA Contributor, enforceable against such BDA Contributor in accordance with its respective terms, subject to the effect of bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to creditors’ rights generally and general equitable principles.

     3.3 No Violation. The execution and delivery of this Agreement and each of the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby by such BDA Contributor (to the extent a party thereto) will not (i) violate any of the formation or governing documents of the such BDA Contributor (if applicable), (ii) violate any provision of or result in the breach of or entitle any party to accelerate (whether after the giving of notice or lapse of time or both) any obligation under any lease, contract, license, instrument or

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any other agreement to which such BDA Contributor is a party, (iii) result in the creation or imposition of any Lien upon the BDA Properties or any other property of such BDA Contributor, or (iv) to the knowledge of such BDA Contributor, violate or conflict with any order, award, judgment or decree or other restriction of any law, ordinance or regulation to which such BDA Contributor or any of its, his or her properties or interest is subject.

     3.4 Consents and Approvals. No prior consent, approval or authorization of, or declaration, filing or registration with any Governmental Authority or other Person is required in connection with the execution, delivery and performance by such BDA Contributor of this Agreement and the Ancillary Documents and the transactions contemplated hereby and thereby.

     3.5 Title to Properties. Except for items disclosed in Schedule 3.5 and goods and other property sold, used or otherwise disposed of in the ordinary course of business, such BDA Contributor has Good and Marketable Title in and to all BDA Properties owned by it, him or her free and clear of any Liens, except for: (i) Liens for current Taxes not yet due and payable, (ii) materialman’s, mechanic’s, repairman’s, employee’s, contractors, operator’s, and other similar Liens arising in the ordinary course of business (A) if they have not been perfected pursuant to law, (B) if perfected, they have not yet become due and payable or payment is being withheld as provided by law, or (C) if their validity is being contested in good faith by appropriate action, (iii) all rights to consent by, required notices to, filings with, or other actions by Governmental Authority in connection with the sale or conveyance of oil and gas leases or interests if they are customarily obtained subsequent to the sale or conveyance, and (iv) such imperfections of title, easements and Liens which have not had, or would not reasonably be expected to have, a Material Adverse Effect. All major items of operating equipment used in connection with the BDA Properties over which such BDA Contributor has operating rights are in good operating condition and in a state of reasonable maintenance and repair, ordinary wear and tear excepted, except as has not had, and would not reasonably be expected to have, a Material Adverse Effect on such BDA Properties.

     3.6 Absence of Litigation. There is no Action pending or, to the knowledge of such BDA Contributor, threatened against such BDA Contributor or involving any of the BDA Properties, before any Governmental Authority that could reasonably be expected to have a Material Adverse Effect. Such BDA Contributor nor its, his or her BDA Property is subject to any continuing order of, consent decree, settlement agreement or similar written agreement with, or continuing investigation by, any Governmental Authority, or any order, writ, judgment, injunction, decree, determination or award of any Governmental Authority that would prevent or materially delay consummation of the transactions contemplated hereby or otherwise prevent or materially delay such BDA Contributor from performing its, his or her obligations under this Agreement and the Ancillary Documents.

     3.7 Taxes. All Tax Returns of such BDA Contributor required to be filed by law where the failure to file such Tax Returns on a duly and timely basis could result in a Lien on the BDA Properties or the imposition on the Company or the New Subsidiary of any liability for Taxes have been duly and timely filed in the proper form with the appropriate Governmental Authority. All Taxes due or payable pursuant to such Returns or otherwise have been paid, except for such amounts as are being contested diligently, in the appropriate forum and in good faith, where the failure to pay or contest such amounts could result in a Lien on the BDA

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Properties or the imposition on the Company or the New Subsidiary of any liability for any Taxes. No federal, state, local or foreign audits or other administrative or court proceedings are presently pending with respect to any Tax Return or Tax of the representing BDA Contributor, and such BDA Contributor has not received written notice from any Governmental Authority of the expected commencement of any such proceeding, which could result in a Lien on the BDA Properties or the imposition on the Company or the New Subsidiary of any liability for Taxes. All Taxes based on or measured by the ownership of BDA Properties owned by such BDA Contributor or the production of oil or gas therefrom or the receipt of proceeds therefrom, which have become due and payable prior to the date hereof with respect to such BDA Properties have been properly paid, and such Taxes which become due and payable prior to the Closing shall be properly paid by such BDA Contributor.

     3.8 Gas Imbalances. To the knowledge of the applicable BDA Contributor, except as set forth in Schedule 3.8, such BDA Contributor has not has received any material deficiency payment under any gas contract with respect to the BDA Properties for which any Person has a right to take deficiency gas from such BDA Contributor, nor has such BDA Contributor received any material payment for production which is subject to refund or recoupment out of future production.

     3.9 Take or Pay. To the knowledge of the applicable BDA Contributor, there are no calls (exclusive of market calls) on the oil or gas production with respect to such BDA Contributor’s interest in the BDA Properties and such BDA Contributor has no obligation to deliver oil or gas pursuant to any take-or-pay, prepayment or similar arrangement without receiving full payment therefor, excluding gas imbalances disclosed in Schedule 3.8.

     3.10 Leases. To the knowledge of the applicable BDA Contributor, each of the leases regarding the BDA Properties owned by such BDA Contributor is valid and in full force and effect, and such BDA Contributor has performed all obligations required to be performed under such leases, or any other instruments and agreements relating to the BDA Properties, and is not in default thereunder.

     3.11 Rentals Paid. To the knowledge of the applicable BDA Contributor, all rentals, bonuses and royalties on the production from the BDA Properties owned by such BDA Contributor, and any other interests payable out of such production, have been timely and fully paid and discharged, and all conditions necessary, and all conditions necessary to keep the leases regarding such BDA Properties in full force have been performed and no proceeds from the sale of production attributable to such BDA Properties are currently being held in suspense by any purchase thereof.

ARTICLE IV
REPRESENTATIONS OF COMSTOCK PARTIES

     The Comstock Parties hereby jointly and severally represent and warrant to each of the Company, the New Subsidiary and the BDA Contributors as follows:

     4.1 Existence and Good Standing. Comstock Offshore is a limited liability company, duly formed and validly existing under the laws of the State of Nevada. Comstock Offshore has all requisite limited liability company power and authority to carry on its business as it is now

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being conducted. Comstock Resources is a corporation, duly formed and validly existing under the laws of the State of Nevada. Comstock Resources has all requisite corporate power and authority to carry on its business as it is now being conducted.

     4.2 Authority. Each Comstock Party has all requisite limited liability company power and authority to execute, deliver and perform this Agreement and the Ancillary Documents to the extent a party hereto or thereto. This Agreement and the Ancillary Documents have been duly and validly executed and delivered by each Comstock Party (to the extent a party thereto) and, assuming the due authorization, execution and delivery hereof and thereof by the other parties hereto and thereto, constitutes the valid and binding obligation of each Comstock Party (to the extent a party thereto), enforceable against it in accordance with its respective terms, subject to the effect of bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to creditors’ rights generally and general equitable principles.

     4.3 No Violation. The execution and delivery of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby by each Comstock Party will not (i) violate any of the formation or governing documents of either Comstock Party, (ii) violate any provision of or result in the breach of or entitle any party to accelerate (whether after the giving of notice or lapse of time or both) any obligation under any lease, contract, license, instrument or any other agreement to which either Comstock Party is a party, (iii) result in the creation or imposition of any Lien upon the Comstock Properties or any other property of either Comstock Party, or (iv) to the knowledge of the Comstock Parties, violate or conflict with any order, award, judgment or decree or other restriction of any law, ordinance or regulation to which either Comstock Party or any of their respective properties or interests are subject.

     4.4 Consents and Approvals. No prior consent, approval or authorization of, or declaration, filing or registration with any Governmental Authority or other Person is required in connection with the execution, delivery and performance by the Comstock Parties of this Agreement and the Ancillary Documents by Comstock Offshore and the transactions contemplated hereby and thereby, except for those that have been obtained prior to the date hereof.

     4.5 Title to Properties. Except for items disclosed in Schedule 4.5 and goods and other property sold, used or otherwise disposed of in the ordinary course of business, Comstock Offshore has Good and Marketable Title in and to all Comstock Properties, free and clear of any Liens, except for: (i) Liens for current Taxes not yet due and payable, (ii) materialman’s, mechanic’s, repairman’s, employee’s, contractors, operator’s, and other similar Liens arising in the ordinary course of business (A) if they have not been perfected pursuant to law, (B) if perfected, they have not yet become due and payable or payment is being withheld as provided by law, or (C) if their validity is being contested in good faith by appropriate action, (iii) all rights to consent by, required notices to, filings with, or other actions by Governmental Authority in connection with the sale or conveyance of oil and gas leases or interests if they are customarily obtained subsequent to the sale or conveyance, and (iv) such imperfections of title, easements and Liens which have not had, or would not reasonably be expected to have, a Material Adverse Effect.

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     4.6 Absence of Litigation. There is no Action pending or, to the knowledge of the Comstock Parties, threatened against either Comstock Party or involving any of the Comstock Properties before any Governmental Authority that could reasonably be expected to have a Material Adverse Effect. Neither of the Comstock Parties nor any of the Comstock Properties is subject to any continuing order of, consent decree, settlement agreement or similar written agreement with, or continuing investigation by, any Governmental Authority, or any order, writ, judgment, injunction, decree, determination or award of any Governmental Authority that would prevent or materially delay consummation of the transactions contemplated hereby or otherwise prevent or materially delay either Comstock Party from performing its respective obligations under this Agreement and the Ancillary Documents.

     4.7 Taxes. All Tax Returns required to be filed by law where the failure to file such Tax Returns on a duly and timely basis could result in a Lien on the Comstock Properties or the imposition on the Company or the New Subsidiary of any liability for Taxes have been duly and timely filed in the proper form with the appropriate Governmental Authority. All Taxes due or payable pursuant to such Tax Returns or otherwise have been paid, except for such amounts as are being contested diligently, in the appropriate forum and in good faith, where the failure to pay or contest such amounts could result in a Lien on the Comstock Properties or the imposition on the Company or the New Subsidiary of any liability for any Taxes. No federal, state, local or foreign audits or other administrative or court proceedings are presently pending with respect to any Tax Return or Tax of the Comstock Parties, and the Comstock Parties have not received written notice from any Governmental Authority of the expected commencement of any such proceeding, which could result in a Lien on the Comstock Properties or the imposition on the Company or the New Subsidiary of any liability for Taxes. All Taxes based on or measured by the ownership of Comstock Properties or the production of oil or gas therefrom or the receipt of proceeds therefrom, which have become due and payable prior to the date hereof with respect to the Comstock Properties have been properly paid, and Comstock Offshore’s allocable share of such Taxes which become due and payable prior to the Closing shall be properly paid by Comstock Offshore.

     4.8 Gas Imbalances. To the knowledge of the Comstock Parties, except as set forth in Schedule 4.8, Comstock Offshore has not received any material deficiency payment under any gas contract with respect to the Comstock Properties for which any Person has a right to take deficiency gas from Comstock Offshore, nor has it received any material payment for production which is subject to refund or recoupment out of future production.

     4.9 Take or Pay. To the knowledge of the Comstock Parties, there are no calls (exclusive of market calls) on the oil or gas production with respect to Comstock Offshore’s interest in the Comstock Properties and Comstock Offshore has no obligation to deliver oil or gas pursuant to any take-or-pay, prepayment or similar arrangement without receiving full payment therefor, excluding gas imbalances disclosed in Schedule 4.8.

     4.10 Leases. To the knowledge of the Comstock Parties, each of the leases regarding the Comstock Properties is valid and in full force and effect, and Comstock Offshore has performed all obligations required to be performed under such leases, or any other instruments and agreements relating to the Comstock Properties, and is not in default thereunder.

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     4.11 Rentals Paid. To the knowledge of the Comstock Parties, all rentals, bonuses and royalties on the production from the Comstock Properties, and any other interests payable out of such production, have been timely and fully paid and discharged, and all conditions necessary, and all conditions necessary to keep the leases regarding the Comstock Properties in full force have been performed and no proceeds from the sale of production attributable to the Comstock Properties are currently being held in suspense by any purchase thereof.

     4.12 Comstock Credit Facility. No event of default currently exists under the Comstock Credit Facility or would result from the transactions contemplated hereby.

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ALL OF THE CONTRIBUTORS
AND DISTRIBUTEES

     Each Contributor and Distributee hereby severally and not jointly represents and warrants to the Company and each other Contributor and Distributee as follows:

     5.1 Acquisition Entirely for Own Account. This Agreement is made with the other Contributors and Distributees and the Company in reliance upon its or his representation, which by its or his execution of this Agreement is hereby confirmed, that the Units to be acquired or received by such Contributor or Distributee will be acquired for investment for such Contributor’s or Distributee’s own account, and not with a view toward the distribution of any part thereof, and that such Contributor or Distributee has no present intention of selling, granting any participation in, or otherwise distributing the same in a manner contrary to the Securities Act or applicable state securities laws except as may be permitted pursuant to the Transfer Restriction Agreement.

     5.2 Disclosure of Information; Due Diligence. Each Contributor and Distributee has received the Private Placement Memorandum dated July 14, 2004 from the Company, and has had the opportunity to ask questions of and receive answers from the Company regarding the Company and the terms and conditions of the offering of the Units hereunder and has received all information that the Contributor or the Distributee has requested from the Company concerning the Company and the transactions contemplated hereby.

     5.3 Investment Experience; Accredited Purchaser Status. Each Contributor or Distributee is able to fend for itself or himself in the transactions contemplated by this Agreement, can bear the economic risk of its or his investment (including the possible complete loss of such investment) for an indefinite period of time and has such knowledge and experience in financial or business matters that he or it is capable of evaluating the merits and risks of the investment in the Units or is relying on his or its own Purchaser Representative in making his or its investment decision. Each Contributor or Distributee understands that the Units to be acquired hereunder have not been registered under the Securities Act, or under the securities laws of any jurisdiction and such are being issued, by reason of reliance upon certain exemptions, and that the reliance on such exemptions is predicated, in part, upon the accuracy of the Contributors’ or the Distributee’s representations and warranties in this Article V. “Purchaser Representative” shall mean any person who (1) is not an Affiliate, manager, officer or other employee of the Company, or beneficial owner of 10% or more of the equity interest in

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the Company, (2) has such knowledge and experience in financial and business matters that he is capable of evaluating, alone or together with other purchaser representatives of the Contributor or the Distributee, or together with the Contributor or the Distributee, the merits and risks of the investment in Units, (3) is acknowledged by the Contributor or the Distributee in writing during the course of the transactions contemplated hereby to be such Contributor’s or Distributee’s purchaser representative in connection with evaluating the merits and risks of the prospective investment in Units, and (4) discloses to the Contributor or the Distributee in writing a reasonable time prior to the sale of Units any material relationship between such purchaser representative or his Affiliates and the Company or its Affiliates that exists, that is mutually understood to be contemplated, or that has existed at any time during the previous two years, and any compensation received or to be received as a result of such relationship.

          (a) With respect to Comstock Offshore, BDAR, Laufer, Blackie, Haro, and such other Contributors and Distributees identified on Schedule 5.1, each such Contributor or Distributee is familiar with Regulation D promulgated under the Securities Act and each is an “accredited investor” as defined in Rule 501(a) of such Regulation D.

          (b) With respect to each other Contributor and Distributee, (i) such Contributor’s or Distributee’s financial capacity is such that the total cost of such Contributor’s or Distributee’s investment in the Company would not be material when compared to such Contributor’s or Distributee’s total financial capacity (it being presumed that this test will be met if the investment to be made by such Contributor or Distributee is does not exceed 10% of such Contributor’s or Distributee’s net worth or joint net worth with such Contributor’s or Distributee’s spouse), (ii) such Contributor or Distributee has adequate means of providing for such Contributor’s or Distributee’s current needs and personal contingencies and has no need for liquidity in his investment in the Units, (iii) such Contributor or Distributee has substantial experience in making investment decisions of this type or is relying on his or its own Purchaser Representative in making his or its investment decision, (iv) such Contributor or Distributee or his or its Purchaser Representative has knowledge of finance, securities and investments, generally, (v) such Contributor or Distributee or his or its Purchaser Representative has prior experience and skill in investments based upon actual participation and (vi) such Contributor or Distributee has disclosed to the Company in writing any person who will act as his or its Purchaser Representative.

     5.4 Restricted Securities. Each Contributor and Distributee understands that the Units to be acquired hereunder are characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in transactions not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act only in certain limited circumstances and in accordance with the terms and conditions set forth in the Operating Agreement and Restricted Transfer Agreement. Each Contributor and Distributee represents that he, she or it is familiar with Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

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ARTICLE VI
ADDITIONAL COVENANTS

     6.1 Taxes.

          (a) For federal income tax purposes, all Parties will treat the Contributions contemplated by this Agreement as contributions to the Company qualifying under Section 721 of the Code, except that to the extent of the cash payments and the Contribution Notes which will be treated as sales to the Company under Section 707 of the Code. In accordance with the foregoing provision, Contributions to the New Subsidiary shall be treated as contributions or sales, as applicable, to the Company for federal income tax purposes.

          (b) In order to apportion appropriately any Taxes relating to a Straddle Period, each Contributor shall, to the extent permitted under applicable law, elect with each relevant Tax authority to treat for all Tax purposes the Effective Time as the last day of the taxable year or period of, or with respect to, the entities or assets contributed by such Party. Each such Party shall timely prepare and file (or cause to be timely prepared and filed) all Tax Returns relating to the entities or assets contributed by such Party for all Pre-Effective Periods other than Straddle Periods and all other Tax Returns required to be filed on or before the Effective Time. Each party shall timely pay (or cause to be paid) all Taxes shown as due and payable on such Tax Returns. The Company shall timely prepare and file (or cause to be timely prepared and filed) all Tax Returns for any Straddle Periods (“Straddle Returns”). The Company shall timely pay (or cause to be paid) all Taxes shown as due and payable on all Straddle Returns and, with respect to each such Straddle Return, the Party that contributed the asset or entity related thereto shall reimburse the Company for Taxes attributable to the portion of the Straddle Period ending on or before the Effective Time. For this purpose, the portion of any Taxes that are allocable to the portion of the Straddle Period ending on the Effective Time shall be: (1) in the case of Taxes that are imposed on a periodic basis, the amount of such Taxes for the entire relevant Straddle Period (or, in the case of such Taxes determined on an arrears basis (such as real property Taxes), the amount of such Taxes for the immediately preceding period) multiplied by a fraction the numerator of which is the number of calendar days in the Straddle Period prior to and including the Effective Time and the denominator of which is the number of calendar days in the entire Straddle Period; or (2) in the case of all other Taxes (such as Taxes that are either (x) based upon or related to income or receipts, or (y) imposed in connection with any sale or other transfer or assignment of property (real or personal, tangible or intangible)), the amount that would be payable if the taxable year or period ended on the Effective Time. Reimbursements pursuant to this Section 6.1(b) shall be made within thirty (30) days of the Company’s request therefor. After all Tax Returns have been filed as required by this Section 6.1(b), each Party agrees to provide the Company with documentation showing the tax basis of all assets contributed to the Company pursuant to this Agreement.

          (c) Laufer and Blackie will, with respect to the employees of BDAO and BDA Oil and Gas, take the position that BDAO and BDAOG prior to the Closing each meet the definition of “predecessor” and the Company meets the definition of “successor” as defined in Revenue Procedure 96-60, 1996-2 C.B. 399, and Treasury Regulation section 31.3121(a)(1)-1(b). Absent a mutual agreement with the Company to the contrary, each party will use the “Standard Procedure” described in section 4 of Revenue Procedure 96-60. Laufer and Blackie

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shall promptly supply the Company, with respect to all of such employees, all cumulative payroll information as of the Effective Time to comply with Treasury Regulation section 31.3121(a)(1)-1(b).

          (d) All Parties shall cooperate fully, as and to the extent reasonably requested by the Company, in connection with any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the Company’s request) the provision of records and information that are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Each Party agrees (A) to retain all books and records with respect to Tax matters relating to the Party’s Contribution relating to any taxable period beginning before the Effective Time until the expiration of the statute of limitations (including extensions thereof) of the respective taxable periods, and to abide by all record retention agreements entered into with any taxing authority, and (B) to give the Company reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the Company requests, shall allow the Company to take possession of such books and records.

     6.2 Termination of Exploration Agreement. At the Closing, the Exploration Agreement shall be terminated by written agreement of the parties thereto (without any liability to any party thereto) and shall be of no further force and effect. All warrants to purchase common stock of Comstock Resources that are not earned by the Effective Time pursuant to the terms of the Exploration Agreement are hereby cancelled, forfeited and of no further force and effect; provided that Laufer and Blackie shall be entitled to receive the warrants due under the Exploration Agreement on any well that has been spudded prior to the Closing Date as long as the well is a qualifying well under the Exploration Agreement and such well is completed as a successful well as provided therein. Comstock Offshore will be reimbursed for (a) all advances not previously reimbursed and (b) all out of pocket costs incurred with respect to prospects identified but not drilled as of the Effective Time, in each case pursuant to the Exploration Agreement. In the event the Company is dissolved pursuant to Section 17.7 of the Operating Agreement, the Exploration Agreement shall be reinstated in accordance with its terms.

     6.3 Loans by Comstock Resources. Comstock Resources agrees to advance funds from time to time to the Company in such amounts as the Board of Managers of the Company may reasonably request, with an aggregate amount outstanding at any time not to exceed $200 million (the “Loans”). Such Loans shall be pursuant to a Loan Agreement in the form of Exhibit D attached hereto, and shall be secured by a Lien on all of the Properties pursuant to deeds of trust, mortgages and other security documents acceptable to Comstock Resources.

     6.4 Services Agreement. At the Closing, Comstock Resources and the Company shall enter into the Services Agreement in the form attached hereto as Exhibit E.

     6.5 Adoption of Incentive Plan. As of the Closing, the Company shall adopt the Bois d’Arc Energy, LLC Long Term Incentive Plan in the form attached hereto as Exhibit F (the “LTIP”). The initial awards under the LTIP will be as set forth on Schedule 6.5.

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     6.6 Overriding Royalty Incentive Plan. As of the Closing, the Company shall adopt the Bois d’Arc Energy, LLC Overriding Royalty Interest Incentive Plan in the form attached hereto as Exhibit G.

     6.7 Employee Benefit Plans. Comstock Resources shall permit the employees of the Company to participate in its Employee Benefit Plan, a group medical and welfare benefits plan. The Company shall adopt and maintain a 401(k) plan for its employees.

     6.8 Employment Arrangements. At the Closing, (a) the Company and Blackie shall enter into an employment agreement in the form attached hereto as Exhibit H-1 and (b) the Company and Laufer shall enter into an employment agreement in the form attached hereto as Exhibit H-2.

     6.9 Guaranty of Credit Facility Debt. The Parties acknowledge and agree that each of the Company, the New Subsidiary, the New GP, BDAO and BDAOG will become a guarantor under the Comstock Credit Facility, and will deliver all documents contemplated thereby.

     6.10 Guaranty of Indenture Debt. The parties acknowledge and agree that each of the Company, the New Subsidiary, the New GP, BDAO and BDAOG will become a guarantor and restricted subsidiary under the Indenture, and will deliver all documents contemplated thereby.

     6.11 Cooperation with Accountants. Each of the Parties agrees to cooperate with the Company’s accountants and provide such accountants with all books and records as may be requested in connection with the preparation of audited financial statements for the Company that may be necessary for a subsequent financing transaction. Any Party considered a “predecessor” to the Company shall further allow the Company’s accountants to perform audits of its financial statements for prior periods to the extent necessary for a subsequent financing transaction.

     6.12 Expenses. Except as otherwise provided in this Agreement, all expenses involved in the preparation and negotiation of this Agreement and the transactions contemplated hereby shall be borne by the Company. The Company shall reimburse each of the Comstock Parties, Laufer and Blackie any such expenses paid by such Party.

ARTICLE VII
CONDITIONS TO THE CLOSING

     7.1 Conditions to Each Party’s Obligation to Close. The respective obligations of each Party to effect the transactions contemplated by this Agreement shall be subject to the fulfillment or waiver, if permissible, of the following conditions prior to the Closing:

          (a) no preliminary or permanent injunction or other order or decree by any federal or state court which prevents the consummation of the transactions contemplated by this Agreement shall have been issued and remain in effect (each Party hereby agreeing to use its reasonable efforts to have any such injunction, order or decree lifted);

          (b) no action shall have been taken, and no statute, rule or regulation shall have been enacted, by any state or federal government or governmental agency in the United

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States which would prevent the consummation of the transactions contemplated by this Agreement or make the consummation of the transactions contemplated by this Agreement illegal; and

     (c) If Sally Blackie and Bets West, LLC elect to participate in the transactions contemplated by this Agreement, the Company shall have received the necessary instruments in form and substance satisfactory to it from Sally Blackie regarding the relinquishment and cancellation of certain rights and such other matters with respect to the Properties as the Company determines.

ARTICLE VIII
TERMINATION AND WAIVER

     8.1 Termination.

          (a) Any Contributor shall have the right to terminate this Agreement if the transactions contemplated by this Agreement are enjoined by a final, unappealable court order.

          (b) This Agreement may be terminated and the transactions contemplated hereby abandoned at any time prior to the Closing by mutual written agreement of BDAR and Comstock Offshore.

     8.2 Effect of Termination. If this Agreement is terminated by a Party pursuant to the provisions of Section 7.1, this Agreement shall forthwith become void and there shall be no further obligations on the part of any of the Parties, or their respective stockholders, partners, members, directors, officers, managers, employees, agents or representatives other than Section 10.15 and this Section 8.2. Notwithstanding the preceding sentence or any other provision set forth herein, nothing in this Section 8.2 shall relieve any Party from liability for any breach of this Agreement.

     8.3 Extensions; Waiver. At any time prior to the Closing, the Parties may (a) extend the time for the performance of any of the obligations or other acts of the other Parties, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant thereto and (c) waive compliance with any of the agreements or conditions herein. Any agreement on the part of a Party to any such extension or waiver shall be valid if set forth in an instrument in writing signed on behalf of such Party. No waiver, or failure to insist upon strict compliance, by any Party of any condition or any breach of any obligation, term, covenant, representation, warranty or agreement contained in this Agreement, in any one or more instances, shall be construed to be a waiver of, or estoppel with respect to, any other condition or any other breach of the same or any other obligation, term, covenant, representation, warranty or agreement.

ARTICLE IX
REMEDIES

     9.1 Right to Indemnification Not Affected by Knowledge. The right to indemnification in accordance with the provisions of this Article will not be affected by any investigation conducted with respect to, or any Knowledge of the Indemnified Party (as defined

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herein below), whether before or after the execution and delivery of this Agreement or the Closing Date, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant or obligation.

     9.2 Indemnification by Laufer and Blackie. Except as otherwise expressly provided in this Article IX and subject to the limitations stated in this Article IX, Laufer and Blackie severally and not jointly agree to, and shall, defend, indemnify and hold harmless the Company, the New Subsidiary and the Comstock Parties (and their respective officers, directors, employees, agents, shareholders, members and partners) from and against, and shall reimburse the Company, the New Subsidiary and the Comstock Parties (and their respective officers, directors, employees, agents, shareholders, members and partners) for, all Losses incurred by the Company, the New Subsidiary and the Comstock Parties (and their respective officers, directors, employees, agents, shareholders, members and partners), relating to, resulting from or arising out of (including, without limitation, as a result of any allegation by any third party) the following: (a) any inaccuracy in any representation or warranty of either Laufer or Blackie under Article II of this Agreement; (b) any breach or nonfulfillment of any covenant, agreement or other obligation of Laufer or Blackie of any provision of this Agreement; or (c) any Tax of BDAO or BDAOG attributable to a Pre-Effective Period.

     9.3 Indemnification by the BDA Contributors. Except as otherwise expressly provided in this Article IX and subject to the limitations stated in this Article IX, each BDA Contributor agrees to, and shall severally and not jointly, defend, indemnify and hold harmless the Company, the New Subsidiary and the Comstock Parties (and their respective officers, directors, employees, agents, shareholders, members and partners) from and against, and shall reimburse the Company, the New Subsidiary and the Comstock Parties (and their respective officers, directors, employees, agents, shareholders, members and partners) for, all Losses incurred by the Company, the New Subsidiary and the Comstock Parties (and their respective officers, directors, employees, agents, shareholders, members and partners), relating to, resulting from or arising out of (including, without limitation, as a result of any allegation by any third party) the following: (a) any inaccuracy in any representation or warranty of the indemnifying BDA Contributor under Articles III and V of this Agreement; (b) any breach or nonfulfillment of any covenant, agreement or other obligation of the applicable BDA Contributor of any provision of this Agreement; or (c) any Tax attributable to a Pre-Effective Period related to the BDA Properties; or (d) the breach by the BDA Contributor of any of its duties (including duties of disclosure) to its respective Distributees, if applicable, arising in connection with the transactions contemplated by this Agreement; or (e) obligations or liabilities of such BDA Contributor to any of its former partners, members, employees or agents on account of such Person’s present or former interest in or right to participate in the revenues or profits of such BDA Contributor.

     9.4 Indemnification by the Comstock Parties. Except as otherwise expressly provided in this Article IX and subject to the limitations stated in this Article IX, Comstock Offshore and Comstock Resources jointly and severally agree to, and shall, defend, indemnify and hold harmless the Company, the New Subsidiary and the BDA Contributors (and their respective officers, directors, employees, agents, shareholders, members and partners) from and against, and shall reimburse the Company, the New Subsidiary and the BDA Contributors (and their respective officers, directors, employees, agents, shareholders, members and partners) for, each and every Loss incurred by the Company, the New Subsidiary and the BDA Contributors (and

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their respective officers, directors, employees, agents, shareholders, members and partners), relating to, resulting from or arising out of (including, without limitation, as a result of any allegation by any third party) the following: (a) any inaccuracy in any representation or warranty of either Comstock Party under Articles IV and V of this Agreement; (b) any breach or nonfulfillment of any covenant, agreement or other obligation of either Comstock Party under any provision of this Agreement; or (c) any Tax attributable to a Pre-Effective Period related to the Comstock Properties.

     9.5 Notice and Defense of Third-Party Claims. If any judicial, administrative, arbitration or investigatory proceeding or other proceeding, claim or controversy (collectively, a “Proceeding”) shall be brought or asserted under this Article IX against an indemnified party or any successor thereto (the “Indemnified Person”) in respect of which indemnity may be sought under this Article IX from an indemnifying person or any successor thereto (the “Indemnifying Person”), the Indemnified Person shall give prompt written notice of such Proceeding to the Indemnifying Person who shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Person and the payment of all reasonable expenses; provided, that any delay or failure so to notify the Indemnifying Person shall relieve the Indemnifying Person of its obligations hereunder only to the extent, if at all, that it is materially prejudiced by reason of such delay or failure. In no event shall any Indemnified Person be required to make any expenditure or bring any cause of action to enforce the Indemnifying Person’s obligations and Liability under and pursuant to the indemnifications set forth in this Article IX. The Indemnified Person shall have the right to employ separate counsel in any of the foregoing Proceedings and to participate in the defense thereof, but the reasonable fees and expenses of such counsel shall be at the expense of the Indemnified Person unless the Indemnified Person shall in good faith determine that there exist actual or potential conflicts of interest which make representation by the same counsel inappropriate. The Indemnified Person’s right to participate in the defense or response to any Proceeding should not be deemed to limit or otherwise modify its rights or obligations under this Article IX. In the event that the Indemnifying Person, within twenty (20) days after notice of any such Proceeding, fails to assume the defense thereof, the Indemnified Person shall have the right to undertake the defense, compromise or settlement of such Proceeding for the account of and at the expense of the Indemnifying Person. Anything in this Article IX to the contrary notwithstanding, the Indemnifying Person shall not, without the Indemnified Person’s prior written consent (which consent shall not be unreasonably withheld), settle or compromise any Proceeding or consent to the entry of any judgment with respect to any Proceeding; provided, however, the Indemnified Person’s prior written consent is not required if (A) there is no finding or admission of any violation of law, rule, regulation or other legal requirement or any violation of the rights of any person and no effect on any other claims that may be made against the Indemnified Person, (B) the Indemnified Person receives as part of such settlement a legal, binding and enforceable unconditional satisfaction and/or release, in form and substance reasonably satisfactory to it, providing that any claimed liability of the Indemnified Person with respect thereto is being fully satisfied by reason of such compromise or settlement and that the Indemnified Person is being released from any and all obligations or liabilities it may have with respect thereto, and (C) the sole relief provided is monetary damages that are paid in full by the Indemnifying Person.

     9.6 Limitations of Liability. In calculating the amount of any Loss for which any Indemnifying Person is liable under this Article IX there shall be taken into consideration the

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amount of any insurance recoveries from third-party insurers which the Indemnified Person actually receives as a direct consequence of the circumstances to which the Loss related or from which the Loss resulted or arose, except to the extent such insurance recoveries have or are reasonably anticipated to result in future or retroactive premium increases.

     9.7 Specific Performance; Injunctive and Other Equitable Relief. Each Party hereto acknowledges that a violation or attempted violation of any of the covenants and agreements herein will cause such damage to the other Parties as will be irreparable, the exact amount of which would be difficult or impossible to ascertain and for which there will be no adequate remedy at law, agrees that the other Parties hereto shall be entitled as a matter of right to specific performance and injunctive and other equitable relief in case of such violation or attempted violation as well as any injunctive and other equitable relief in case of such violation or attempted violation as well as any and all costs and expenses sustained or incurred in obtaining any such equitable relief, including, without limitation, reasonable attorneys’ fees, and agrees to waive any requirement for the securing or posting of any bond or other security in connection with the obtaining of any such injunction or other equitable relief.

     9.8 Certain Joinder to Indemnification. Laufer hereby joins in and agrees to be bound by the indemnification obligation of Haro under Section 9.3 to the same extent as Haro is bound thereby.

ARTICLE X
MISCELLANEOUS

     10.1 Survival of Representations and Warranties. The Parties agree that all of their respective representations and warranties contained in this Agreement, the Schedules hereto or any certificate, agreement or document delivered under this Agreement shall survive the Closing. Notwithstanding the foregoing, all representations and warranties shall terminate upon consummation of a Financing Transaction.

     10.2 Brokers and Finders. All negotiations on behalf of the Parties relating to this Agreement and the transactions contemplated by this Agreement have been carried on by the Parties and their respective agents directly without the intervention of any other person in such manner as to give rise to any claim against any other Party for financial advisory fees, brokerage or commission fees, finder’s fees or other like payment in connection with the consummation of the transactions contemplated hereby.

     10.3 Entire Agreement; Assignment. This Agreement together with the Ancillary Documents constitute the entire agreement among the Parties with respect to the subject matter hereof, and supersede all other prior agreements and understandings, both written and oral, among the Parties or any of them with respect to the subject matter hereof. This Agreement shall not be assigned (by operation of law or otherwise) by any Party without the prior written consent of all other Parties. No assignment shall relieve the assigning party of any obligation hereunder.

     10.4 Amendment and Modification. This Agreement may be amended, modified or supplemented only by written agreement of all of the Parties.

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     10.5 Further Assurances. From time to time, the Parties shall execute and deliver such further agreements, documents, certificates and other instruments and shall take or cause to be taken such other actions as shall be reasonably necessary or advisable to carry out the purposes of and effect the transactions contemplated by this Agreement.

     10.6 Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect.

     10.7 Address for Notices. All notices, demands, consents and reports provided for in this Agreement shall be in writing and shall be given to the Parties at the addresses set forth herein or at such other addresses as a Party may hereafter specify in writing. Such notices may be delivered by hand or by telecopy or may be mailed, postage prepaid, by certified or registered mail, by a deposit in a depository for the receipt of mail regularly maintained by the United States Postal Service. All notices which are hand delivered or delivered by telecopy shall be deemed given on the date of delivery. Except as otherwise provided herein, all notices which are mailed in the manner provided above shall be deemed given upon receipt.

     if to any BDA Contributor:

     with a copy (which shall not constitute notice) to:

     if to either Comstock Party:

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     10.8 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.

     10.9 Dispute Resolution.

          (a) Negotiation. The Parties shall attempt to resolve any dispute arising out of or relating to this Agreement or the termination, breach, or validity of this Agreement, promptly by good faith negotiation among representatives who have authority to resolve the controversy. Any Party may give the other Parties written notice of any dispute not resolved in the normal course of business. Within ten (10) days after delivery of the notice, the receiving Party shall submit to the others a written response. The notice and the response shall include (a) a statement of the Party’s concerns and perspectives on the issues in dispute, (b) a summary of supporting facts and circumstances and (c) the identity of the representative who will represent such Party. Within fifteen (15) days after delivery of the original notice, the representatives of the Parties shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, to attempt to resolve the dispute. All negotiations pursuant to this clause and clause (b) below are confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence.

          (b) Mediation. If a dispute is not resolved by discussion between or among Parties, any Party may by notice to the other Party with whom such dispute exists require mediation of the dispute, which notice shall identify the names of no fewer than three (3) potential mediators. Each Party among whom the dispute exists agrees to participate in mediation of the dispute and will in good faith attempt to agree upon a mediator. If the Parties are unable to agree upon a mediator within fifteen (15) days after such notice or if such dispute shall not have been resolved by mediation within thirty (30) days after such notice, then any such Party may file for arbitration pursuant to subsection (c) below. All expenses of the mediator shall be equally shared by the Parties among whom the dispute exists.

          (c) Binding Arbitration.

               (i) Any dispute arising out of or relating to this Agreement or the breach, termination, or validity of the Agreement which has not been resolved by mediation within thirty (30) days of the initiation of such procedure, or which has not been resolved prior to the termination of mediation, shall be resolved by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) in effect on the date of this Agreement. If a party to a dispute fails to participate in mediation, the others may initiate arbitration before expiration of the above period. If the amount of the claim asserted by the

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claimant in the arbitration exceeds $1,000,000, the Parties agree that the American Arbitration Association Optional Procedures for Large, Complex Commercial Disputes will be applied to the dispute.

               (ii) The AAA shall suggest a panel of arbitrators, each of whom shall be knowledgeable with respect to the subject matter of the dispute. Arbitration shall be before a sole arbitrator if the disputing Parties agree on the selection of a sole arbitrator. If not, arbitration shall be before three independent and impartial arbitrators, all of whom shall be appointed by the American Arbitration Association in accordance with its rules.

               (iii) The place of arbitration shall be Houston, Texas.