Comstock Resources, Inc. Reports First Quarter 2019 Financial and Operating Results

5/9, 12:45 PM (Source: GlobeNewswire)

Frisco, TX, May 09, 2019 (GLOBE NEWSWIRE) --

COMSTOCK RESOURCES, INC. REPORTS
FIRST QUARTER 2019 FINANCIAL AND OPERATING RESULTS

FRISCO, TEXAS, May 9, 2019 – Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the first quarter of 2019.  On August 14, 2018, the Company completed transactions in which entities controlled by Dallas businessman Jerry Jones and his children contributed their Bakken Shale properties to the Company in exchange for approximately 88.6 million shares of Comstock common stock (the "Jones Contribution") and the Company refinanced its long-term debt.  Results for the three months ended March 31, 2019 reflect the effect of the Jones Contribution, while results for the three months ended March 31, 2018 (the "Predecessor") reflect the historical results of Comstock for that period.  The Company's consolidated financial results are being presented with a blackline division which delineates the lack of comparability between amounts presented for these periods.

Financial Results for the Three Months Ended March 31, 2019

In the first quarter of 2019, Comstock reported net income of $13.6 million or $0.13 per diluted share as compared to a net loss of $41.9 million or $2.78 per share for the Predecessor first quarter of 2018.  The first quarter 2019 results included an unrealized loss from derivative financial instruments held to manage oil and gas price risks of $13.0 million.  Excluding the unrealized loss, the net income for the first quarter of 2019 would have been $23.5 million or $0.22 per share.

Comstock produced 33.1 billion cubic feet of natural gas and 810,470 barrels of oil or 38.0 billion cubic feet of natural gas equivalent ("Bcfe") in the first quarter of 2019.  The Company's natural gas production averaged 368 million cubic feet ("MMcf") per day, an increase of 53% over natural gas production in the Predecessor first quarter of 2018 and 10% higher than the fourth quarter of 2018.  The growth in natural gas production was primarily attributable to the continuing successful results from Comstock's Haynesville shale drilling program.  Oil production in the first quarter of 2019, which averaged 9,005 barrels of oil per day, increased from the 2,110 barrels per day produced in the Predecessor first quarter of 2018 due to production from the Bakken Shale properties.  Oil production in the first quarter of 2018 was primarily attributable to the Company's Eagle Ford shale properties which were sold effective April 1, 2018.

Comstock's average realized natural gas price, including hedging gains, increased 2% to $2.87 per Mcf in the first quarter of 2019 as compared to $2.82 per Mcf realized in the Predecessor first quarter of 2018.  The Company's average realized oil price, including hedging gains, decreased by 33% to $45.78 per barrel in the first quarter of 2019 as compared to $68.71 per barrel in the Predecessor first quarter of 2018.  Oil and gas sales were $132.3 million (including realized hedging gains and losses) in the first quarter of 2019 as compared to the Predecessor 2018 first quarter sales of $74.0 million.  EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses, of $96.9 million in the first quarter of 2019 increased by 81% over EBITDAX of $53.7 million for the Predecessor first quarter of 2018.  The Company's operating cash flow generated in the first quarter of 2019 (before working capital changes) of $70.8 million increased 98% over operating cash flow of $35.7 million in the Predecessor first quarter of 2018. 

Drilling Results

Comstock reported the results to date of its 2019 Haynesville/Bossier shale drilling program.  During the first three months of 2019, Comstock spent $92.5 million on its development activities.  Comstock spent $82.6 million on drilling and completing Haynesville shale wells.  Comstock also spent $5.6 million drilling two (1.1 net) Eagle Ford shale oil wells and an additional $4.3 million primarily on leases and other development activity.  Comstock drilled 11 (8.4 net) horizontal Haynesville/Bossier shale wells during the first three months of 2019, which had an average lateral length of approximately 7,600 feet.  Comstock also completed 17 (5.2 net) wells that were drilled in 2018.  Two (1.6 net) of the wells drilled in the first three months of 2019 were also completed.  Comstock expects to connect 12 (7.8 net) Haynesville wells to sales in the second quarter.

Since the last operational update, Comstock reported on six new Haynesville shale wells.  The average initial production rate of these wells was 26 MMcf per day. The wells had completed lateral lengths ranging from 9,646 feet to 9,913 feet, with an average completed lateral length of 9,799 feet.  Each well was tested at initial production rates of 21 to 30 MMcf per day.  Comstock currently has eight (7.0 net) operated Haynesville shale wells that are in the process of being completed.

With lower drilling and completion contracted rates from its major service providers beginning in April, Comstock announced that it is reducing its 2019 drilling and completion budget to $318 million for its Haynesville/Bossier shale drilling program.  Activity planned for 2019 includes completing 19 (5.2 net) wells drilled in 2018 and drilling 52 (34.6 net) wells in 2019.  Comstock will also spend $27 million in 2019 on its oil properties.


Other

Comstock has planned a conference call for 10:00 a.m. Central Time on May 9, 2019, to discuss the first quarter of 2019 operational and financial results.  Investors wishing to participate should visit the Company's website at www.comstockresources.com for a live web cast or dial 844-776-7840 (international dial-in use 661-378-9538) and provide access code 9766835 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 May 9, 2019 and will continue until 1:00 p.m. May 16, 2019.  To hear the replay, call 855-859-2056 (404-537-3406 if calling from outside the US).  The conference call access code is 9766835.

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)

     Predecessor 
 

Three Months Ended March 31,
2019  2018
    
Revenues:        
Natural gas sales..................................................................................... $90,132  $59,543 
Oil sales....................................................................................................  36,749   13,050 
Total oil and gas sales.................................................................  126,881   72,593 
         
Operating expenses:        
Production taxes.....................................................................................  5,939   1,840 
Gathering and transportation...............................................................  7,430   4,334 
Lease operating......................................................................................  14,885   9,773 
Depreciation, depletion and amortization.........................................  37,590   27,152 
General and administrative..................................................................  7,814   6,016 
(Gain) loss on sale of oil and gas properties......................................  (1)  28,600 
         
Total operating expenses................................................................  73,657   77,715 
         
Operating income (loss).............................................................................  53,224   (5,122)
         
Other income (expenses):        
Gain (loss) from derivative financial instruments............................  (7,657)  2,602 
Other income...........................................................................................  93   66 
Interest expense......................................................................................  (27,851)  (38,850)
         
Total other income (expenses).......................................................  (35,415)  (36,182)
         
Income (loss) before income taxes.........................................................  17,809   (41,304)
Provision for income taxes.......................................................................  (4,234)  (582)
Net income (loss)........................................................................................ $13,575  $(41,886)
         
Net income (loss) per share – basic and diluted............................... $0.13  $(2.78)
         
Weighted average shares outstanding –
basic and diluted....................................................................................
  105,457   15,084 


COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands)

     Predecessor 
 

Three Months Ended March 31,
2019  2018
         
OPERATING CASH FLOW:        
         
Net income (loss)..................................................................................................... $13,575  $(41,886)
Reconciling items:         
Deferred income taxes..........................................................................................  4,352   572 
Depreciation, depletion and amortization..............................................................  37,590   27,152 
Unrealized (gain) loss from derivative financial instruments................................  13,045   (1,198)
Amortization of debt discount and issuance costs................................................  1,574   11,056 
Interest paid in-kind..............................................................................................     9,845 
Stock-based compensation...................................................................................  648   1,601 
(Gain) loss on sale of oil and gas properties.........................................................  (1)  28,600 
Operating cash flow.........................................................................................  70,783   35,742 
Decrease in accounts receivable..................................................................  10,783   1,455 
Decrease in other current assets..................................................................  1,577   472 
Decrease in accounts payable and
accrued expenses......................................................................................
  (8,428)  (16,113)
Net cash provided by operating activities............................................. $74,715  $21,556 
         
EBITDAX:        
         
Net income (loss)..................................................................................................... $13,575  $(41,886)
Interest expense........................................................................................................  27,851   38,850 
Income taxes.............................................................................................................  4,234   582 
Depreciation, depletion and amortization..................................................................  37,590   27,152 
Unrealized (gain) loss from derivative financial instruments....................................  13,045   (1,198)
Stock-based compensation.......................................................................................  648   1,601 
(Gain) loss on sale of oil and gas properties.............................................................  (1)  28,600 
Total EBITDAX................................................................................... $96,942  $53,701 


       
As of
March 31,

2019
As of
December 31,

2018
BALANCE SHEET DATA:        
         
Cash and cash equivalents.......................................................................................................... $29,324  $23,193 
Derivative financial instruments..................................................................................................  2,356   15,401 
Other current assets....................................................................................................................  102,443   120,833 
Property and equipment, net.......................................................................................................  1,722,558   1,667,979 
Other..........................................................................................................................................  365,207   360,434 
Total assets.......................................................................................................................... $2,221,888  $2,187,840 
         
Current liabilities........................................................................................................................ $198,086  $206,853 
Long-term debt...........................................................................................................................  1,265,847   1,244,363 
Deferred income taxes................................................................................................................  166,152   161,917 
Other non-current liabilities........................................................................................................  2,766    
Asset retirement obligation.........................................................................................................  5,243   5,136 
Stockholders' equity...................................................................................................................  583,794   569,571 
Total liabilities and stockholders' equity.............................................................................. $2,221,888  $2,187,840 


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

         
  For the Three Months Ended March 31, 2019 
  Haynesville/ Bossier  Cotton
Valley
 Bakken  Eagle Ford  Other Total 
Gas production (MMcf)............................................................................  31,364   903  768      114  33,149 
Oil production (Mbbls).........................................................................     7  799      4  810 
Total production (MMcfe)........................................................................  31,364   947  5,562      139  38,012 
                       
Natural gas sales................................................................................. $85,738  $2,571 $1,500  $  $323 $90,132 
Natural gas hedging settlements(1)....................................................................               5,033 
Total natural gas including hedging..................................................................  85,738   2,571  1,500      323  95,165 
Oil sales.................................................................................  4   363  36,147      235  36,749 
Oil hedging settlements(1)....................................................................               355 
Total oil including hedging..................................................................  4   363  36,147      235  37,104 
Total oil and gas sales including hedging.................................................................. $85,742  $2,934 $37,647  $  $558 $132,269 
                       
Average gas price (per Mcf)............................................................................... $2.73  $2.85 $1.95  $  $2.83 $2.72 
Average gas price including hedging (per Mcf)...............................................................................                   $2.87 
Average oil price (per barrel)............................................................................ $49.47  $49.47 $45.24  $  $58.34 $45.34 
Average oil price including hedging (per barrel)............................................................................                   $45.78 
Average price (per Mcfe)............................................................................. $2.73  $3.10 $6.77  $  $4.04 $3.34 
Average price including hedging (per Mcfe).............................................................................                   $3.48 
                       
Production taxes................................................................................. $1,732  $95 $4,073  $  $39 $5,939 
Gathering and transportation................................................................. $7,273  $63 $  $  $94 $7,430 
Lease operating.......................................................................... $4,933  $3,235 $6,519  $  $198 $14,885 
                       
Production taxes (per Mcfe)............................................................................. $0.06  $0.10 $0.73  $  $0.28 $0.16 
Gathering and transportation (per Mcfe)............................................................................ $0.23  $0.07 $  $  $0.67 $0.20 
Lease operating (per Mcfe)............................................................................. $0.15  $3.41 $1.17  $  $1.43 $0.38 
                       
Oil and Gas Capital Expenditures:                      
Development leasehold(2)................................................................. $1,857  $ $  $  $ $1,857 
Development drilling and completion.................................................................  82,638     (953)  5,648     87,333 
Other development.................................................................  3,279             3,279 
Total........................................................................... $87,774  $ $(953) $5,648  $ $92,469 

                                                           
(1)    Included in gain (loss) from derivative financial instruments in operating results
(2)    Net of acreage reimbursements

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

  Predecessor 
    

For the Three Months ended March 31, 2018
  Haynesville/ Bossier  Cotton
Valley
 Bakken  Eagle Ford  Other Total 
Gas production (MMcf)............................................................................  19,997   1,062     282   305  21,646 
Oil production (Mbbls).........................................................................     11     173   6  190 
Total production (MMcfe)........................................................................  19,997   1,126     1,323   340  22,786 
                       
Natural gas sales................................................................................. $54,564  $2,913 $  $1,191  $875 $59,543 
Natural gas hedging settlements(1)....................................................................               1,404 
Total natural gas including hedging..................................................................  54,564   2,913     1,191   875  60,947 
Oil sales.................................................................................     646     12,021   383  13,050 
Total oil and gas sales including hedging.................................................................. $54,564  $3,559 $  $13,212  $1,258 $73,997 
                       
Average gas price (per Mcf)............................................................................... $2.73  $2.74 $  $4.22  $2.86 $2.75 
Average gas price including hedging (per Mcf)...............................................................................                   $2.82 
Average oil price (per barrel)............................................................................ $  $60.80 $  $69.30  $65.64 $68.71 
Average price (per Mcfe)............................................................................. $2.73  $3.16 $  $9.99  $3.69 $3.19 
Average price including hedging (per Mcfe).............................................................................                   $3.25 
                       
Production taxes................................................................................. $1,068  $60 $  $630  $82 $1,840 
Gathering and transportation................................................................. $3,706  $209 $  $344  $75 $4,334 
Lease operating.......................................................................... $2,895  $3,198 $  $3,417  $263 $9,773 
                       
Production taxes (per Mcfe)............................................................................. $0.05  $0.05 $  $0.48  $0.24 $0.08 
Gathering and transportation (per Mcfe)............................................................................ $0.19  $0.19 $  $0.26  $0.22 $0.19 
Lease operating (per Mcfe)............................................................................. $0.14  $2.84 $  $2.58  $0.78 $0.43 
                       
Oil and Gas Capital Expenditures:                      
Development leasehold.................................................................... $1,153  $ $  $  $ $1,153 
Development drilling and completion.................................................................  38,539             38,539 
Other development.................................................................  6,327        240   253  6,820 
Total........................................................................... $46,019  $ $  $240  $253 $46,512 

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


Comstock Resources
Gary H. Guyton
Director of Planning and Investor Relations
972-668-8834

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