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

News Releases Details

COMSTOCK RESOURCES, INC. REPORTS FOURTH QUARTER 2022 FINANCIAL AND OPERATING RESULTS

FRISCO, TX, Feb. 14, 2023 (GLOBE NEWSWIRE) -- Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter and year ended December 31, 2022.

Highlights

  • Generated free cash flow from operations of $673 million in 2022, including $129 million in the fourth quarter.
  • Production in the fourth quarter increased 7% from last year to 1,445 MMcfe per day.
  • Oil and gas sales, including realized hedging losses, were $2.3 billion in 2022 and $558 million in the fourth quarter and were 58% and 47% higher than 2021 and 2021's fourth quarter.
  • Cash flow from operations in 2022 was $1.7 billion or $6.21 per diluted share, including $434 million in the fourth quarter or $1.57 per diluted share.
  • Adjusted EBITDAX in 2022 increased 72% to $1.9 billion and in the fourth quarter increased 61% to $478 million.
  • Adjusted net income to common stockholders in 2022 was $1.0 billion or $3.73 per diluted share and $288 million or $1.05 per diluted share in the fourth quarter.
  • Drilled 73 (57.0 net) successful Haynesville and Bossier shale operated horizontal wells in 2022 with an average lateral length of 10,044 feet and connected 66 (53.6 net) operated wells to sales with an average initial production rate of 26 MMcf per day.
  • Drilled two successful wells in Comstock's Western Haynesville exploratory play.
  • 2022 drilling program drove 9% reserve growth with 1.1 Tcfe of drilling related reserve additions achieving an overall finding cost of 95¢ per Mcfe.
  • Improved balance sheet with retirement of $506 million of debt and conversion of preferred stock.
  • Resumed quarterly dividend of $0.125 per share in December 2022.
     

Financial Results for the Three Months Ended December 31, 2022

Comstock's natural gas and oil sales in the fourth quarter of 2022 totaled $557.9 million (after realized hedging losses of $183.7 million). Net cash provided by operating activities (excluding changes in working capital) generated in the fourth quarter was $434.5 million, and net income available to common stockholders for the fourth quarter of 2022 was $516.9 million or $1.87 per share. Reported net income in the quarter included a pre-tax $302.8 million unrealized gain on hedging contracts held for risk management. Excluding this item and certain other items, adjusted net income available to common stockholders for the fourth quarter of 2022 was $287.7 million, or $1.05 per diluted share.

Comstock's production cost per Mcfe in the fourth quarter was $0.76 per Mcfe, which was comprised of $0.32 for gathering and transportation costs, $0.24 for lease operating costs, $0.12 for production and other taxes and $0.08 for cash general and administrative expenses. Production cost was $0.82 per Mcfe in the third quarter of 2022 and $0.67 in the fourth quarter of 2021. Comstock's unhedged operating margin was 86% in the fourth quarter of 2022 and 82% after hedging.

Financial Results for the Year Ended December 31, 2022

Natural gas and oil sales for the year ended December 31, 2022 totaled $2.3 billion (after realized hedging losses of $862.7 million). Net cash provided by operating activities (excluding changes in working capital) was $1.7 billion, and the Company reported net income available to common stockholders for the year ended December 31, 2022 of $1.1 billion, or $4.11 per share. Net income during the year included a pre-tax $200.2 million unrealized gain on hedging contracts held for risk management and a $46.8 million loss on the early retirement of debt. Excluding these items and certain other items, adjusted net income available to common stockholders for 2022 was $1.0 billion, or $3.73 per diluted share.

Drilling Results

Comstock drilled 73 (57.0 net) operated horizontal Haynesville/Bossier shale wells in 2022 which had an average lateral length of 10,044 feet. The Company also participated in an additional 42 (3.4 net) non-operated Haynesville shale wells in 2022. Comstock turned 66 (53.6 net) operated wells and 38 (1.8 net) non-operated wells to sales in 2022 and currently expects to turn an additional 17 (10.5 net) operated wells to sales in the first quarter of 2023.

Since its last operational update in November, Comstock has turned 19 (13.1 net) operated Haynesville/Bossier shale wells to sales. These wells had initial daily production rates that averaged 25 MMcf per day. The completed lateral length of these wells averaged 10,186 feet. Included in these results was the second successful exploratory well drilled in the Western Haynesville area, the Cazey Black A #1, which had an initial production rate of 42 MMcf per day.

2023 Drilling Budget

In response to the current lower natural gas prices, Comstock is releasing two of its nine operated drilling rigs and currently plans to spend approximately $950 million to $1.15 billion in 2023 on drilling and completion activities primarily focused on the continued development of its Haynesville/Bossier shale properties and delineation of its Western Haynesville play. Comstock also expects to spend $75 million to $125 million on infrastructure, including upgrades to its Western Haynesville pipeline and processing facilities, and for other development costs. Under its current operating plan, Comstock expects to drill 67 (50.5 net) and complete 69 (49.2 net) operated horizontal wells in 2023, including eight (8.0 net) wells in the Western Haynesville area. Comstock also expects to spend an additional $25 million to $35 million on lease acquisitions in 2023.

Declaration of Quarterly Dividend

On February 13, 2023, Comstock's Board of Directors declared a quarterly dividend of $0.125 per common share. The dividend will be payable on March 15, 2023 to stockholders of record at the close of business on March 1, 2023.

Other Matters

Comstock has planned a conference call for 10:00 a.m. Central Time on February 15, 2023, to discuss the fourth quarter of 2022 operational and financial results. Investors wishing to participate should visit the Company's website at www.comstockresources.com for a live webcast. Investors wishing to participate in the conference call telephonically will need to register at https://register.vevent.com/register/BId7bb63a06a2246038d691f84bbfe8331. Upon registering to participate in the conference call, participants will receive the dial-in number and a personal PIN number to access the conference call. On the day of the call, please dial in at least 15 minutes in advance to ensure a timely connection to the call. The conference call will also be broadcast live in listen-only mode and can be accessed via the website URL: https://edge.media-server.com/mmc/p/trvtnedj.

If you are unable to participate in the original conference call, a web replay will be available for twelve months beginning at 1:00 p.m. Central Time on February 15, 2023. The replay of the conference call can be accessed using the webcast link: https://edge.media-server.com/mmc/p/trvtnedj.

This press release may contain "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties which could cause actual results to differ materially from those described herein. Although the Company believes the expectations in such statements to be reasonable, there can be no assurance that such expectations will prove to be correct. Information concerning the assumptions, uncertainties and risks that may affect the actual results can be found in the Company’s filings with the Securities and Exchange Commission (“SEC”) available on the Company’s website or the SEC’s website at sec.gov.

Comstock Resources, Inc. is a leading independent natural gas producer with operations focused on the development of the Haynesville shale in North Louisiana and East Texas. The Company's stock is traded on the New York Stock Exchange under the symbol CRK.

COMSTOCK RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

  Three Months Ended December 31,   Year Ended
December 31,
    2022       2021       2022       2021  
Revenues:              
Natural gas sales $         740,320             $         641,985             $         3,117,094             $         1,775,768          
Oil sales           1,273                       13,391                       7,597                       74,962          
Total oil and gas sales           741,593                       655,376                       3,124,691                       1,850,730          
Gas services           180,791                       —                       503,366                       —          
Total revenues           922,384                       655,376                       3,628,057                       1,850,730          
Operating expenses:              
Production and ad valorem taxes           17,837                       12,673                       77,917                       49,141          
Gathering and transportation           41,882                       34,344                       155,679                       130,940          
Lease operating           31,261                       26,317                       111,134                       103,467          
Depreciation, depletion and amortization           134,456                       110,075                       489,450                       469,388          
Gas services           159,773                       —                       465,044                       —          
General and administrative           11,954                       10,991                       39,405                       34,943          
Exploration           4,924                       —                       8,287                       —          
(Gain) loss on sale of assets           (319 )             162,170                       (340 )             162,077          
Total operating expenses           401,768                       356,570                       1,346,576                       949,956          
Operating income           520,616                       298,806                       2,281,481                       900,774          
Other income (expenses):              
Gain (loss) from derivative financial instruments           119,132                       195,378                       (662,522 )             (560,648 )
Other income (expense)           410                       (372 )             916                       636          
Interest expense           (38,888 )             (47,840 )             (171,092 )             (218,485 )
Loss on early retirement of debt           —                       —                       (46,840 )             (352,599 )
Total other income (expenses)           80,654                       147,166                       (879,538 )             (1,131,096 )
Income (loss) before income taxes           601,270                       445,972                       1,401,943                       (230,322 )
Provision for income taxes           (81,451 )             (85,571 )             (261,061 )             (11,403 )
Net income (loss)           519,819                       360,401                       1,140,882                       (241,725 )
Preferred stock dividends and accretion           (2,925 )             (4,411 )             (16,014 )             (17,500 )
Net income (loss) available to common stockholders $         516,894             $         355,990             $         1,124,868             $         (259,225 )
               
Net income (loss) per share:              
Basic $         2.08             $         1.53             $         4.75             $         (1.12 )
Diluted $         1.87             $         1.30             $         4.11             $         (1.12 )
Weighted average shares outstanding:              
Basic           247,543                       231,972                       236,045                       231,633          
Diluted           277,032                       276,713                       277,465                       231,633          
Dividends per share $         0.125             $         —             $         0.125             $         —          

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

  As of December 31,
    2022     2021  
ASSETS      
Cash and cash equivalents $         54,652           $         30,663          
Accounts receivable           510,127                     267,738          
Derivative financial instruments           23,884                     5,258          
Other current assets           56,324                     15,077          
Total current assets           644,987                     318,736          
Property and equipment, net           4,622,655                     4,007,146          
Goodwill           335,897                     335,897          
Operating lease right-of-use assets           90,716                     6,450          
  $         5,694,255           $         4,668,229          
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Accounts payable $         530,195           $         314,569          
Accrued costs           183,111                     135,026          
Operating leases           38,411                     2,444          
Derivative financial instruments           4,420                     181,945          
Total current liabilities           756,137                     633,984          
Long-term debt           2,152,571                     2,615,235          
Deferred income taxes           425,734                     197,417          
Derivative financial instruments           —                     4,042          
Long-term operating leases           52,385                     4,075          
Asset retirement obligation           29,114                     25,673          
Other non-current liabilities           —                     24          
Total liabilities           3,415,941                     3,480,450          
Mezzanine Equity:      
Preferred stock           —                     175,000          
Stockholders' Equity:      
Common stock           138,759                     116,462          
Additional paid-in capital           1,253,417                     1,100,359          
Accumulated earnings (deficit)           886,138                     (204,042 )
Total stockholders' equity           2,278,314                     1,012,779          
  $         5,694,255           $         4,668,229          

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

  Three Months Ended December 31,   Year Ended
December 31,
    2022       2021       2022       2021  
Gas production (MMcf)           132,858                       123,002                       500,616                       489,274          
Oil production (Mbbls)           16                       176                       82                       1,210          
Total production (MMcfe)           132,955                       124,060                       501,107                       496,534          
               
Natural gas sales $         740,320             $         641,985             $         3,117,094             $         1,775,768          
Natural gas hedging settlements (1)           (183,677         )             (272,891         )             (862,715         )             (411,798         )
Total natural gas including hedging           556,643                       369,094                       2,254,379                       1,363,970          
Oil sales           1,273                       13,391                       7,597                       74,962          
Oil hedging settlements (1)           —                       (2,588         )             —                       (8,077         )
Total oil including hedging           1,273                       10,803                       7,597                       66,885          
Total oil and gas sales including hedging $         557,916             $         379,897             $         2,261,976             $         1,430,855          
               
Average gas price (per Mcf) $         5.57             $         5.22             $         6.23             $         3.63          
Average gas price including hedging (per Mcf) $         4.19             $         3.00             $         4.50             $         2.79          
Average oil price (per barrel) $         79.56             $         76.09             $         92.65             $         61.95          
Average oil price including hedging (per barrel) $         79.56             $         61.38             $         92.65             $         55.28          
Average price (per Mcfe) $         5.58             $         5.28             $         6.24             $         3.73          
Average price including hedging (per Mcfe) $         4.20             $         3.06             $         4.51             $         2.88          
               
Production and ad valorem taxes $         17,837             $         12,673             $         77,917             $         49,141          
Gathering and transportation           41,882                       34,344                       155,679                       130,940          
Lease operating           31,261                       26,317                       111,134                       103,467          
Cash general and administrative (2)           10,262                       9,484                       32,795                       28,145          
Total production costs $         101,242             $         82,818             $         377,525             $         311,693          
               
Production and ad valorem taxes (per Mcfe) $         0.12             $         0.10             $         0.16             $         0.10          
Gathering and transportation (per Mcfe)           0.32                       0.28                       0.31                       0.26          
Lease operating (per Mcfe)           0.24                       0.21                       0.22                       0.21          
Cash general and administrative (per Mcfe)           0.08                       0.08                       0.07                       0.06          
Total production costs (per Mcfe) $         0.76             $         0.67             $         0.76             $         0.63          
               
Unhedged operating margin           86         %             87         %             88         %             83         %
Hedged operating margin           82         %             78         %             83         %             78         %
               
Oil and Gas Capital Expenditures:              
Proved property acquisitions $         295             $         21,781             $         500             $         21,781          
Unproved property acquisitions           16,724                       17,222                       54,120                       35,871          
Total oil and gas properties acquisitions $         17,019             $         39,003             $         54,620             $         57,652          
Exploration and Development:              
Development leasehold $         5,429             $         6,159             $         13,727             $         12,953          
Exploratory drilling and completion           14,517                       6,966                       63,520                       6,966          
Development drilling and completion           281,653                       114,617                       901,026                       569,141          
Other development costs           1,193                       12,373                       53,693                       39,168          
Total exploration and development capital expenditures $         302,792             $         140,115             $         1,031,966             $         628,228          

 

 

(1)   Included in gain (loss) from derivative financial instruments in operating results.

(2)   Excludes stock-based compensation.

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

  Three Months Ended December 31,   Year Ended
December 31,		  
    2022       2021       2022       2021    
ADJUSTED NET INCOME AVAILABLE TO COMMON STOCKHOLDERS:                
Net income (loss) available to common stockholders $         516,894             $         355,990             $         1,124,868             $         (259,225 )  
Unrealized (gain) loss from derivative financial instruments           (302,809 )             (469,830 )             (200,193 )             140,934            
Non-cash interest amortization from adjusting debt assumed in
acquisition to fair value		           —                       2,659                       4,174                       12,621            
(Gain) loss on sale of assets           (319 )             162,170                       (340 )             162,077            
Loss on early retirement of debt           —                       —                       46,840                       352,599            
Exploration expense           4,924                       —                       8,287                       —            
Adjustment to (provision for) benefit from income taxes           68,970                       47,777                       39,011                       (106,000 )  
Adjusted net income available to common stockholders (1) $         287,660             $         98,766             $         1,022,647             $         303,006            
Adjusted net income available to common stockholders per share (2) $         1.05             $         0.37             $         3.73             $         1.16            
Diluted shares outstanding           277,032                       276,713                       277,464                       275,663            

 

ADJUSTED EBITDAX:                
Net income (loss) $         519,819             $         360,401             $         1,140,882             $         (241,725 )  
Interest expense (3)           38,888                       46,811                       171,092                       218,322            
Income taxes           81,451                       85,571                       261,061                       11,403            
Depreciation, depletion, and amortization           134,456                       110,075                       489,450                       469,388            
Exploration           4,924                       —                       8,287                       —            
Unrealized (gain) loss from derivative financial instruments           (302,809 )             (469,830 )             (200,193 )             140,934            
Stock-based compensation           1,692                       1,508                       6,610                       6,799            
Loss on early extinguishment of debt           —                       —                       46,840                       352,599            
(Gain) loss on sale of assets           (319 )             162,170                       (340 )             162,077            
Total Adjusted EBITDAX (4) $         478,102             $         296,706             $         1,923,689             $         1,119,797            

 

 

(1)   Adjusted net income available to common stockholders is presented because of its acceptance by investors and by Comstock management as an indicator of the Company's profitability excluding loss on early retirement of debt, non-cash unrealized gains and losses on derivative financial instruments, gains and losses on sales of assets and other unusual items.

(2)   Adjusted net income available to common stockholders per share is calculated to include the dilutive effects of unvested restricted stock pursuant to the two-class method and performance stock units and preferred stock pursuant to the treasury stock method.

(3)   Includes realized gains or losses from interest rate derivative financial instruments.

(4)   Adjusted EBITDAX is presented in the earnings release because management believes that adjusted EBITDAX, which represents Comstock's results from operations before interest, income taxes, and certain non-cash items, including loss on early retirement of debt, depreciation, depletion and amortization and exploration expense, is a common alternative measure of operating performance used by certain investors and financial analysts.

COMSTOCK RESOURCES, INC.
NON-GAAP FINANCIAL MEASURES
(In thousands)

  Three Months Ended December 31,   Year Ended
December 31,
    2022       2021       2022       2021  
OPERATING CASH FLOW(1):              
Net income (loss) $         519,819             $         360,401             $         1,140,882             $         (241,725 )
Reconciling items:              
Unrealized (gain) loss from derivative financial instruments           (302,809 )             (469,830 )             (200,193 )             140,934          
Deferred income taxes (benefit)           79,928                       81,377                       228,317                       (3,565 )
Depreciation, depletion and amortization           134,456                       110,075                       489,450                       469,388          
Loss on early retirement of debt           —                       —                       46,840                       352,599          
Amortization of debt discount and issuance costs           1,713                       4,116                       10,255                       21,703          
Stock-based compensation           1,692                       1,508                       6,610                       6,799          
(Gain) loss on sale of assets           (319 )             162,170                       (340 )             162,077          
Operating cash flow $         434,480             $         249,817             $         1,721,821             $         908,210          
(Increase) decrease in accounts receivable           117,211                       (24,573 )             (242,389 )             (121,952 )
Increase in other current assets           (10,655 )             (2,883 )             (10,296 )             (2,033 )
Increase (decrease) in accounts payable and accrued expenses           (72,704 )             18,091                       229,252                       74,780          
Net cash provided by operating activities $         468,332             $         240,452             $         1,698,388             $         859,005          
               

 

  Three Months Ended December 31,   Year Ended
December 31,
    2022       2021       2022       2021  
FREE CASH FLOW(2):              
Operating cash flow $         434,480             $         249,817             $         1,721,821             $         908,210          
Less:              
Preferred stock dividends           (2,925 )             (4,411 )             (16,014 )             (17,500 )
Exploration and development capital expenditures           (302,792 )             (140,115 )             (1,031,966 )             (628,228 )
Other capital expenditures           (147 )             (123 )             (803 )             (192 )
Free cash flow from operations $         128,616             $         105,168             $         673,038             $         262,290          
Acquisitions of proved and unproved properties           (17,019 )             (39,003 )             (54,620 )             (57,652 )
Other assets acquisitions           (1,025 )             —                       (17,973 )             —          
Proceeds from divestitures           4,093                       138,133                       4,186                       138,394          
Free cash flow after acquisition and divestiture activity $         114,665             $         204,298             $         604,631             $         343,032          
               

 

 

(1)   Operating cash flow is presented in the earnings release because management believes it to be useful to investors as a common alternative measure of cash flows which excludes changes to other working capital accounts.

(2)   Free cash flow from operations and free cash flow after acquisition and divestiture activity are presented in the earnings release because management believes them to be useful indicators of the Company's ability to internally fund acquisitions, debt maturities and dividends after exploration and development capital expenditures, preferred dividend payments, proved and unproved property acquisitions and proceeds from divestiture of oil and gas properties.

 


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

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Source: Comstock Resources, Inc.