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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): May 7, 2003
COMSTOCK RESOURCES, INC.
(Exact Name of Registrant as Specified in Charter)
STATE OF NEVADA 000-16741 94-1667468
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction incorporation) Identification Number)
5300 Town And Country Boulevard
Suite 500
Frisco, Texas 75034
(Address of principal executive offices)
(972) 668-8800
(Registrant's Telephone No.)
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits.
The following Exhibits are hereby filed as part of this Current Report on
Form 8-K:
Exhibit 99.1 Press Release dated May 7, 2003 with respect to the
Registrant's financial results for the first quarter ended
March 31, 2003
Item 9. Regulation FD Disclosure
The information included in this section is intended to be furnished under
"Item 12. Disclosure of Results of Operations and Financial Condition" and is
included under this Item 9 in accordance with SEC Release No. 33-8216. The
information in this Form 8-K and the Exhibit attached hereto shall not be deemed
"filed" for purposes of Section 18 of the Securities Act of 1934, nor shall it
be deemed incorporated by reference in any filing under the Securities Act of
1933, except as shall be expressly set forth by specific reference in such
filing.
On May 7, 2003, Comstock Resources, Inc. ("Comstock") announced financial
results for the first quarter ended March 31, 2003. A copy of the press release
announcing Comstock's earnings results for the first quarter ended March 31,
2003 is attached hereto as Exhibit 99.1.
The earnings press release contains financial measures that are not in
accordance with generally accepted accounting principles in the United States
("GAAP"). Comstock has provided reconciliations within the earnings release of
the non-GAAP financial measures to the most directly comparable GAAP financial
measures. Operating cash flow is presented in the earnings release because
management believes it to be useful to investors. EBITDAX is presented in the
earnings release because management believes that EBITDAX, which represents
Comstock's results from operations before interest, income taxes, and certain
non-cash items, including depreciation, depletion and amortization and
exploration expense, is a common alternative measure of operating performance
used by certain investors and financial analysts. The non-GAAP financial
measures described above should be considered in addition to, but not as a
substitute for, measures of financial performance prepared in accordance with
GAAP that are presented in the earnings release.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: May 7, 2003
COMSTOCK RESOURCES, INC.
By: /s/ M. Jay Allison
- -------------------------
M. JAY ALLISON
President and Chief Executive Officer
Exhibit Index
Exhibit 99.1 Press Release dated May 7, 2003
COMSTOCK RESOURCES, INC. REPORTS FIRST QUARTER 2003
FINANCIAL AND OPERATING RESULTS
FRISCO, TEXAS, May 7, 2003 - Comstock Resources, Inc. (NYSE:CRK) today reported
the highest oil and gas sales and the second highest net income of any quarter
in the Company's history. Comstock also reported excellent drilling results from
its 2003 exploration program.
First Quarter 2003 Financial Results
Driven by soaring natural gas prices and a higher production level, Comstock
earned $20.8 million or 62(cent)per share in 2003's first quarter($20.2 million
or 60(cent)per share, excluding the cumulative effect of adopting a new
accounting standard which changed the Company's accounting for future
abandonment costs of its oil and gas properties), as compared to a net loss from
continuing operations of $4.7 million or 16(cent)per share in the first quarter
of 2002. Oil and gas sales for the first quarter of 2003 reached $68.6 million,
the highest in any quarter in the Company's history, for an increase of 159%
over first quarter 2002 oil and gas sales of $26.5 million. Comstock generated
$47.9 million in operating cash flow (before changes in working capital
accounts) in 2003's first quarter, an increase of 325% over 2002's first quarter
operating cash flow of $11.3 million. EBITDAX or earnings from continuing
operations before interest, taxes, depreciation, depletion and amortization,
exploration expense and other noncash expenses including unrealized derivative
gains and losses, and gains and losses on property sales was $55.8 million in
2003's first quarter. This represents a 210% increase from 2002's first quarter
EBITDAX of $18.0 million.
The strong financial results were driven primarily by higher natural gas and
crude prices. Comstock's average natural gas price for the first quarter of 2003
was $6.54 per thousand cubic feet ("Mcf") 176% higher than 2002's first
quarter's average gas price of $2.36 per Mcf. Comstock's realized oil prices
averaged $33.75 per barrel for 2003's first quarter, a 63% increase compared to
the first quarter 2002's average oil price of $20.67 per barrel. Oil and gas
production also increased in the first quarter. Comstock produced 10.8 billion
cubic feet equivalent of natural gas (120.4 million cubic feet equivalent per
day or "MMcfe/day") in the first quarter of 2003, an increase of 6 MMcfe/day
from 2002's first quarter production and an increase of 11 MMcfe/day from 2002's
fourth quarter production.
The cash flow generated in the first quarter of 2003 allowed Comstock to improve
its balance sheet by paying down $15 million of its debt. As a result of debt
reduction and profits generated, Comstock's debt as a percentage of Comstock's
capitalization on a book basis has decreased to 59% as compared to 63% at the
end of 2002.
First Quarter 2003 Drilling Results
In the first quarter of 2003, Comstock drilled fourteen wells, (8.7 net). Four
of these wells (1.4 net wells) were drilled in the gulf of Mexico under its
exploration program with Bois d' Arc Offshore Ltd. All of these wells were
successful. The OCS-G 22705 #1 well was drilled to a total depth of 11,150 feet
at Ship Shoal Block 146, was a successful discovery and was recently placed on
production at a daily production rate of 16.9 Mmcfe/d. Comstock has a 40%
working interest in this well. The second successful well was drilled at South
Pelto Block 22. As reported on April 8th, the OCS-G 18054 #2 well was drilled to
test the Can of Corn prospect to a depth of 18,869 feet and found approximately
520 feet of net pay in eleven separate reservoirs. Early indications are that
this is a significant deep shelf discovery. A second well is planned to be
drilled late in the second quarter or early in the third quarter to further
delineate this discovery and to test approximately 1,000 feet of section beneath
the sands found productive in the first well. Comstock owns a 29% working
interest in this well. Comstock and Bois d' Arc made a discovery at Vermillion
Block 122 with the OCS-G 22620 #1 well which was drilled to a depth of 14,072
feet and found approximately 70 true vertical feet of net pay in three separate
reservoirs. Comstock owns a 40% working interest in this well. Comstock and Bois
d' Arc also drilled a successful development well at South Timbalier Block 34.
Comstock owns a 33% working interest in this well.
Comstock drilled three wells, 0.9 net wells, in its South Texas exploration
program in the first quarter of 2003. Two of these wells were successful
discoveries on the Ball Ranch in Kenedy County, Texas. The Clark Sain #6 well
was drilled to a total depth of 16,176 feet and found approximately 45 feet of
net pay. The Ball #2 well was drilled to a total depth of 16,380 feet and found
approximately 74 feet of net pay. Completion operations are under way for both
of these wells. The third well drilled on the Comstock's Katz-Slick prospect was
unsuccessful.
The remaining wells drilled in the first quarter included one successful
development well drilled in North Louisiana and six shallow wells drilled in the
New Albany Shale Gas field in Kentucky which are currently being tested.
This press release may contain "forward-looking statements" as that term is
defined in the Private Securities Litigation Reform Act of 1995. Such statements
are based on management's current expectations and are subject to a number of
factors and uncertainties which could cause actual results to differ materially
from those described herein. Although the Company believes that the expectations
in such statements to be reasonable, there can be no assurance that such
expectations will prove to be correct.
Comstock Resources, Inc. is a growing independent energy company based in
Frisco, Texas and is engaged in oil and gas acquisitions, exploration and
development primarily in Texas, Louisiana and the Gulf of Mexico. The company's
stock is traded on the New York Stock Exchange under the symbol CRK.
COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands, except per share amounts)
Three Months Ended
March 31,
2003 2002
-------- --------
Oil and Gas Sales ..................................................... $ 68,576 $ 26,490
Operating Expenses:
Oil and gas operating ............................................ 11,365 8,115
Exploration ...................................................... 1,636 1,953
Depreciation, depletion and amortization ......................... 15,187 13,458
General and administrative, net .................................. 1,528 930
-------- --------
Total operating expenses ................................ 29,716 24,456
-------- --------
Income from operations ................................................ 38,860 2,034
Other Income (Expenses):
Interest income .................................................. 20 9
Interest expense ................................................. (7,308) (6,810)
Loss from derivatives ............................................ (3) (1,964)
Other income ..................................................... 50 111
-------- --------
Total other income (expenses) ........................... (7,241) (8,654)
-------- --------
Income (loss) from continuing operations before income taxes .......... 31,619 (6,620)
Income tax benefit (expense) .................................... (11,067) 2,317
-------- --------
Net income (loss) from continuing operations .......................... 20,552 (4,303)
Discontinued operations including loss on disposal, net of income taxes -- (726)
Cumulative effect of change in accounting principle ................... 675 --
-------- --------
Net income (loss) ..................................................... 21,227 (5,029)
Preferred stock dividends ....................................... (395) (395)
-------- --------
Net income (loss) attributable to common stock ........................ $ 20,832 $ (5,424)
======== ========
Basic net income (loss) per share:
From continuing operations ................................... $ 0.70 $ (0.16)
Discontinued operations....................................... -- (0.03)
Cumulative effect of change in accounting principle........... 0.02 --
-------- --------
$ 0.72 $ (0.19)
======== ========
Diluted net income (loss) per share:
From continuing operations ................................... $ 0.60
Discontinued operations....................................... --
Cumulative effect of change in accounting principle........... 0.02
--------
$ 0.62
========
Weighted average shares outstanding:
Basic.......................................................... 28,923 28,559
======== ========
Diluted........................................................... 34,475
========
COMSTOCK RESOURCES, INC.
OTHER FINANCIAL DATA
(In thousands, except per unit amounts)
Three Months Ended
March 31,
2003 2002
-------- --------
Cash Flow From Operations:
Net cash provided by operating activities .................. $ 32,300 $ 7,814
Increase (decrease) in accounts receivable ................. 20,009 (4,986)
Increase in other current assets ........................... 2,218 1,077
Decrease (increase) in accounts payable and accrued expenses (6,630) 7,352
-------- --------
Cash flow from operations ...................... $ 47,897 $ 11,257
======== ========
EBITDAX:
Net income (loss) from continuing operations ............ $ 20,552 $ (4,303)
Interest ................................................... 7,308 6,810
Income tax expense (benefit) ............................... 11,067 (2,317)
Depreciation, depletion and amortization ................... 15,187 13,458
Exploration ................................................ 1,636 1,953
Unrealized loss from derivatives ........................... 3 2,356
-------- --------
EBITDAX ........................................ $ 55,753 $ 17,957
======== ========
COMSTOCK RESOURCES, INC.
SUMMARY BALANCE SHEET
(In thousands, except per unit amounts)
As of March 31,
2003 2002
-------- --------
Balance Sheet Data:
Current assets ............................ $ 62,670 $ 31,287
Property and equipment, net ............... 665,641 637,024
Other ..................................... 6,796 6,628
-------- --------
Total assets ............................. $735,107 $674,939
======== ========
Current liabilities ....................... $ 56,248 $ 31,673
Long-term debt ............................ 351,002 378,002
Other ..................................... 79,678 53,995
Stockholders' equity ...................... 248,179 211,269
-------- --------
Total liabilities and stockholders' equity $735,107 $674,939
======== ========
COMSTOCK RESOURCES, INC.
REGIONAL OPERATING RESULTS
(In thousands, except per unit amounts)
For the Three Months ended March 31, 2003
East Texas/ South
Gulf of North Southeast Texas /
Mexico Louisiana Texas Other Total
-------- -------- -------- -------- --------
Oil production (thousand barrels).............. 290 23 73 29 415
Gas production (million cubic feet - Mmcf)..... 2,110 2,782 2,339 1,115 8,346
Total production (Mmcfe)....................... 3,851 2,922 2,777 1,289 10,838
Oil sales...................................... $ 9,834 $ 747 $ 2,409 $ 1,024 $ 14,014
Gas sales...................................... 14,647 17,407 15,378 7,130 54,562
-------- -------- -------- -------- ---------
Total oil and gas sales.................... $ 24,481 $ 18,154 $ 17,787 $ 8,154 $ 68,576
======== ======== ======== ======== ========
Average oil price (per barrel)................. $ 33.90 $ 32.05 $ 33.00 $ 35.54 $ 33.75
Average gas price (per thousand cubic feet - Mcf) $ 6.94 $ 6.26 $ 6.57 $ 6.40 $ 6.54
Average price (per Mcf equivalent)............. $ 6.36 $ 6.21 $ 6.41 $ 6.33 $ 6.33
Lifting cost................................... $ 3,821 $ 2,698 $ 2,513 $ 2,333 $ 11,365
Lifting cost (per Mcf equivalent).............. $ 0.99 $ 0.92 $ 0.90 $ 1.81 $ 1.05
Capital expenditures........................... $ 9,500 $ 1,771 $ 1,785 $ 3,214 $ 16,270