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

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COMSTOCK RESOURCES, INC. REPORTS SECOND QUARTER 2020 FINANCIAL AND OPERATING RESULTS

FRISCO,TX, Aug. 05, 2020 (GLOBE NEWSWIRE) -- Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter ended June 30, 2020.

Financial Results for the Three Months Ended June 30, 2020

For the second quarter of 2020, Comstock reported net loss available to common stockholders of $60.0 million or $0.29 per share. The loss was primarily related to an unrealized loss on the mark to market value of the Company's derivative financial instruments as future natural gas prices have improved substantially since March 31, 2020.  Net income available to common stockholders as adjusted to exclude the unrealized hedging losses and  certain items not related to normal operating activities for the second quarter of 2020 was $1.7 million or $0.01 per diluted share. The unrealized derivative loss was $65.6 million in the second quarter and the other items include $5.4 million in non-cash interest amortization resulting from adjusting debt assumed in the Covey Park acquisition to fair value; $2.9 million of non-cash accretion resulting from adjusting the preferred stock issued in connection with the Covey Park acquisition to fair value; and $0.9 million for a loss on early extinguishment of debt.

Comstock produced 116.5 billion cubic feet ("Bcf") of natural gas and 359,142 barrels of oil or 118.6 billion cubic feet of natural gas equivalent ("Bcfe") in the second quarter of 2020. Natural gas production averaged 1,280 million cubic feet ("MMcf") per day, an increase of 185% over natural gas production in the second quarter of 2019. The growth in natural gas production was primarily attributable to the Covey Park acquisition completed in July 2019 and the successful results from Comstock's Haynesville shale drilling activities in 2019 and 2020. Oil production in the second quarter of 2020 decreased to 3,947 barrels of oil per day from 7,628 barrels per day produced in the second quarter of 2019 due primarily to the expected production decline of the Bakken Shale properties acquired in 2018 as wells as oil production shut-in in the second quarter due to low oil prices. 23% of the Company's net oil production was shut in or curtailed during the second quarter.

Comstock's average realized natural gas price in the second quarter of 2020, including realized hedging gains, decreased to $1.88 per Mcf as compared to $2.29 per Mcf realized in the second quarter of 2019. The Company's average realized oil price in the second quarter of 2020, including realized hedging gains, decreased to $37.89 per barrel as compared to $52.12 per barrel in the second quarter of 2019. Oil and gas sales were $232.8 million (including realized hedging gains) in the second quarter of 2020 as compared to $130.1 million in the second quarter of 2019. EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses, of $162.1 million in the second quarter of 2020 increased by 74% over EBITDAX of $93.2 million for the second quarter of 2019. The Company's operating cash flow generated in the second quarter of 2020 of $117.5 million increased 77% over operating cash flow of $66.3 million in the second quarter of 2019.

Financial Results for the Six Months Ended June 30, 2020

For the first six months of 2020, Comstock reported net loss available to common stockholders of $30.0 million or $0.15 per share. Net income available to common stockholders as adjusted to exclude certain items not related to normal operating activities for the first six months of 2020 was $28.0 million or $0.14 per diluted share. These items included $49.1 million in unrealized hedging losses, $10.7 million in non-cash interest amortization resulting from adjusting debt assumed in the Covey Park acquisition to fair value; $5.4 million of non-cash accretion resulting from adjusting the preferred stock issued in connection with the Covey Park acquisition to fair value and $0.9 million for a loss on early extinguishment of debt.

Comstock produced 239.3 Bcf of natural gas and 813,637 barrels of oil or 244.1 Bcfe in the first six months of 2020. Natural gas production averaged 1,315 MMcf per day, an increase of 221% over natural gas production in the first six months of 2019. Oil production in the first six months of 2020 decreased to 4,471 barrels of oil per day from 8,313 barrels per day produced in first six months of 2019. 19% of the Company's net oil production was shut-in or curtailed in the first six months of 2020.

Comstock's average realized natural gas price in the first six months of 2020, including realized hedging gains, decreased to $1.96 per Mcf as compared to $2.55 per Mcf realized in the first six months of 2019. The Company's average realized oil price in the first six months of 2020, including realized hedging gains, decreased to $42.59 per barrel as compared to $48.71 per barrel in the first six months of 2019. Oil and gas sales were $504.1 million (including realized hedging gains) in the first six months of 2020 as compared to sales of $262.3 million in the first six months of 2019. EBITDAX of $363.7 million in the first six months of 2020 increased by 91% over EBITDAX of $190.2 million for the first six months of 2019. The Company's operating cash flow generated in the first six months of 2020 of $273.4 million increased 100% over operating cash flow of $137.0 million in the first six months of 2019.

Drilling Results

Total expenditures during the first six months of 2020 for drilling and development activities were $205.2 million, including $74.7 million spent in the second quarter. Comstock spent $201.3 million to develop its Haynesville and Bossier shale properties, comprised of $183.5 million on drilling and completing wells and an additional $17.8 million on other development activity. Comstock drilled 26 (20.1 net) horizontal operated Haynesville shale wells during the first six months of 2020, which had an average lateral length of approximately 8,996 feet. Comstock also participated in 12 (1.0 net) non-operated Haynesville shale wells in the first six months of 2020. During the first six months of 2020, Comstock turned 36 (17.3 net) Haynesville shale wells to sales.

Since its last operational update, Comstock has not put any new Haynesville Shale wells on production. In April, Comstock released its completion crews in order to delay new production coming on line during the summer months given the expectations for low natural gas prices. As a result of the low activity in the second quarter, Comstock currently has 35 (18.9 net) wells drilled but not completed.  Completion activity has been resumed in the third quarter and Comstock currently expects to turn approximately 25.0 net wells to sales in the last six months of 2020.

 

Other Matters

Comstock has planned a conference call for 10:00 a.m. Central Time on August 6, 2020, to discuss the second quarter of 2020 operational and financial results. Investors wishing to participate should visit the Company's website at www.comstockresources.com for a live webcast or dial 844-776-7840 (international dial-in use 661-378-9538) and provide access code 8184639 when prompted. If you are unable to participate in the original conference call, a web replay will be available approximately 24 hours following the completion of the call on Comstock's website at www.comstockresources.com. The web replay will be available for approximately one week. A replay of the conference call will be available beginning at 1:00 p.m. CT August 6, 2020 and will continue until 1:00 p.m. August 13, 2020. To hear the replay, call 855-859-2056 (404-537-3406) if calling from outside the US). The conference call access code is 8184639.

This press release may contain "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties which could cause actual results to differ materially from those described herein. Although the Company believes the expectations in such statements to be reasonable, there can be no assurance that such expectations will prove to be correct.

Comstock Resources, Inc. is an independent energy company based in Frisco, Texas engaged in oil and gas acquisitions, exploration and development, and its assets are primarily located in Texas, Louisiana and North Dakota. The Company's stock is traded on the New York Stock Exchange under the symbol CRK.

 

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

    Three Months Ended June 30,     Six Months Ended June 30,  
    2020     2019     2020     2019  
Revenues:                                
Natural gas sales   $ 172,362     $ 91,951     $ 379,601     $ 182,083  
Oil sales     7,173       36,165       25,812       72,914  
Total oil and gas sales     179,535       128,116       405,413       254,997  
Operating expenses:                                
Production taxes     6,445       5,827       12,012       11,766  
Gathering and transportation     26,590       10,502       55,001       17,932  
Lease operating     30,944       14,452       59,656       29,337  
Exploration     —       —       27       —  
Depreciation, depletion and amortization     103,347       46,847       213,772       84,437  
General and administrative     8,298       6,841       17,017       14,655  
Loss on sale of oil and gas properties     —       26       —       25  
Total operating expenses     175,624       84,495       357,485       158,152  
Operating income     3,911       43,621       47,928       96,845  
Other income (expenses):                                
Gain (loss) from derivative financial instruments     (12,298 )     14,744       49,601       7,087  
Other income (expense)     (9 )     155       304       248  
Interest expense     (52,064 )     (28,568 )     (104,874 )     (56,419 )
Loss on early extinguishment of debt     (861 )     —       (861 )     —  
Transaction costs     —       (1,443 )     —       (1,443 )
Total other income (expenses)     (65,232 )     (15,112 )     (55,830 )     (50,527 )
Income (loss) before income taxes     (61,321 )     28,509       (7,902 )     46,318  
Benefit from (provision for) income taxes     11,445       (7,102 )     54       (11,336 )
Net income (loss)     (49,876 )     21,407       (7,848 )     34,982  
Preferred stock dividends and accretion     (10,126 )     —       (22,198 )     —  
Net income (loss) available to common stockholders   $ (60,002 )   $ 21,407     $ (30,046 )   $ 34,982  
                                 
Net income (loss) per share:                                
Basic   $ (0.29 )   $ 0.20     $ (0.15 )   $ 0.33  
Diluted   $ (0.29 )   $ 0.20     $ (0.15 )   $ 0.33  
Weighted average shares outstanding:                                
Basic     208,904       105,457       198,910       105,457  
Diluted     208,904       105,457       198,910       105,457  

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

    Three Months Ended June 30,     Six Months Ended June 30,  
    2020     2019     2020     2019  
Gas production (MMcf)     116,477       40,928       239,263       74,077  
Oil production (Mbbls)     360       695       814       1,505  
Total production (MMcfe)     118,631       45,093       244,144       83,105  
                                 
Natural gas sales   $ 172,362     $ 91,951     $ 379,601     $ 182,083  
Natural gas hedging settlements (1)     46,791       1,932       89,796       6,965  
Total natural gas including hedging     219,153       93,883       469,397       189,048  
Oil sales     7,173       36,165       25,812       72,914  
Oil hedging settlements (1)     6,434       15       8,844       370  
Total oil including hedging     13,607       36,180       34,656       73,284  
Total oil and gas sales including hedging   $ 232,760     $ 130,063     $ 504,053     $ 262,332  
                                 
Average gas price (per Mcf)   $ 1.48     $ 2.25     $ 1.59     $ 2.46  
Average gas price including hedging (per Mcf)   $ 1.88     $ 2.29     $ 1.96     $ 2.55  
Average oil price (per barrel)   $ 19.97     $ 52.10     $ 31.72     $ 48.46  
Average oil price including hedging (per barrel)   $ 37.89     $ 52.12     $ 42.59     $ 48.71  
Average price (per Mcfe)   $ 1.51     $ 2.84     $ 1.66     $ 3.07  
Average price including hedging (per Mcfe)   $ 1.96     $ 2.88     $ 2.06     $ 3.16  
                                 
Production taxes   $ 6,445     $ 5,827     $ 12,012     $ 11,766  
Gathering and transportation   $ 26,590     $ 10,502     $ 55,001     $ 17,932  
Lease operating   $ 30,944     $ 14,452     $ 59,656     $ 29,337  
                                 
Production taxes (per Mcfe)   $ 0.05     $ 0.13     $ 0.05     $ 0.14  
Gathering and transportation (per Mcfe)   $ 0.22     $ 0.23     $ 0.23     $ 0.22  
Lease operating (per Mcfe)   $ 0.27     $ 0.32     $ 0.24     $ 0.35  
                                 
Oil and Gas Capital Expenditures:                                
Development leasehold   $ 2,455     $ 2,449     $ 6,336     $ 4,306  
Development drilling and completion     61,422       85,585       183,480       172,918  
Other development     10,857       1,437       15,418       4,716  
Total   $ 74,734     $ 89,471     $ 205,234     $ 181,940  

                                                                 

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

 

COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands)

    Three Months Ended June 30,     Six Months Ended June 30,  
    2020     2019     2020     2019  
OPERATING CASH FLOW:            
Net income (loss)   $ (49,876 )   $ 21,407     $ (7,848 )   $ 34,982  
Reconciling items:                                
Deferred income taxes     (11,536 )     7,078       (206 )     11,430  
Depreciation, depletion and amortization     103,347       46,847       213,772       84,437  
Unrealized (gain) loss from derivative financial instruments     65,585       (12,797 )     49,102       248  
Amortization of debt discount and issuance costs     7,527       1,623       14,726       3,197  
Stock-based compensation     1,552       623       2,982       1,271  
Loss on early extinguishment of debt     861       —       861       —  
Transaction costs     —       1,443       —       1,443  
Exploration     —       —       27       —  
Loss on sale of oil and gas properties     —       26       —       25  
Operating cash flow     117,460       66,250       273,416       137,033  
Transaction costs     —       (1,443 )     —       (1,443 )
Decrease in accounts receivable     28,875       9,951       83,172       20,734  
Decrease (increase) in other current assets     1,025       15       (2,803 )     1,592  
Increase (decrease) in accounts payable and accrued expenses     (31,388 )     23,538       (87,694 )     15,110  
Net cash provided by operating activities   $ 115,972     $ 98,311     $ 266,091     $ 173,026  
                                 
EBITDAX:                                
Net income (loss)   $ (49,876 )   $ 21,407     $ (7,848 )   $ 34,982  
Interest expense     52,064       28,568       104,874       56,419  
Income taxes     (11,445 )     7,102       (54 )     11,336  
Depreciation, depletion, and amortization     103,347       46,847       213,772       84,437  
Unrealized (gain) loss from derivative financial instruments     65,585       (12,797 )     49,102       248  
Exploration     —       —       27       —  
Stock-based compensation     1,552       623       2,982       1,271  
Loss on early extinguishment of debt     861       —       861       —  
Transaction costs     —       1,443       —       1,443  
Loss on sale of oil and gas properties     —       26       —       25  
Total EBITDAX   $ 162,088     $ 93,219     $ 363,716     $ 190,161  
                                 
    As of                  
BALANCE SHEET:   June 30, 2020     December 31, 2019                  
Cash and cash equivalents   $ 11,595     $ 18,532                  
Derivative financial instruments     60,471       89,192                  
Other current assets     120,589       195,849                  
Property and equipment, net     4,000,643       4,008,803                  
Other     340,120       344,746                  
Total assets   $ 4,533,418     $ 4,657,122                  
                                 
Current liabilities   $ 290,966     $ 392,376                  
Derivative financial instruments     13,058       4,220                  
Long-term debt     2,501,803       2,500,132                  
Deferred income taxes     211,566       211,772                  
Asset retirement obligation     18,994       18,151                  
Other non-current liabilities     4,530       7,866                  
Preferred stock     175,000       379,583                  
Stockholders' equity     1,317,501       1,143,022                  
Total liabilities and stockholders' equity   $ 4,533,418     $ 4,657,122                  

      

 

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

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Source: Comstock Resources, Inc.