Comstock Resources, Inc. Reports Fourth Quarter and Annual 2011 Financial and Operating Results

Feb 06, 2012, 09:10 ET from Comstock Resources, Inc.

FRISCO, Texas, Feb. 6, 2012 /PRNewswire/ -- Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the three months and year ended December 31, 2011.  

Financial Results for the Three Months and Year Ended December 31, 2011

Comstock reported a net loss of $41.1 million or 89 cents per share for the three months ended December 31, 2011 as compared to a net loss of $20.6 million or 45 cents per share for the three months ended December 31, 2010.  The fourth quarter 2011 financial results include an impairment charge to write-down proved oil and gas properties of $60.8 million ($39.5 million after tax or 86 cents per share) and a gain realized from the sale of marketable securities of $2.9 million ($1.9 million after tax or 4 cents per share).  Financial results for the fourth quarter of 2010 included a loss on disposal of oil and gas properties of $25.8 million ($16.8 million after tax or 37 cents per share) and a gain on sale of marketable securities of $10.8 million ($7.0 million after tax, or 15 cents per share).

Comstock produced 25.5 billion cubic feet of natural gas equivalent ("Bcfe") in the fourth quarter of 2011, an increase of 48% over the 17.3 Bcfe produced in the fourth quarter of 2010.  Daily average production increased to 277 million cubic feet of natural gas equivalent ("MMcfe") from 188 MMcfe per day in the fourth quarter of 2010.  Crude oil production increased to 8% of total production in the fourth quarter of 2011 as compared to 4% in the third quarter of 2011.  Production from the Company's Eagle Ford shale operations increased 123% from the third quarter of 2011, averaging 3,300 barrels of oil equivalent per day in the fourth quarter and accounting for 7% of the Company's total production.  Production from the Company's Haynesville shale operations of 184 MMcfe per day in the fourth quarter of 2011 comprised 66% of the Company's total production.  

Comstock's average realized natural gas price decreased 9% to $3.40 per Mcf in the fourth quarter of 2011 as compared to $3.73 per Mcf in the fourth quarter of 2010.  The Company's average realized oil price improved by 34% to $100.18 per barrel in the fourth quarter of 2011 as compared to $74.75 per barrel in the fourth quarter of 2010.  Oil and gas sales increased by 58% to $114.5 million in the fourth quarter of 2011 as compared to 2010's fourth quarter sales of $72.7 million.  Operating cash flow (before changes in working capital accounts) increased 75% to $78.8 million in the fourth quarter of 2011 from $44.9 million in 2010's fourth quarter and EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses in the quarter was up 75% to $89.9 million from $51.3 million in 2010's fourth quarter.

With weak natural gas prices and strong crude oil prices persisting, Comstock is redirecting most of its drilling activity to unconventional oil prospects.  In 2012, 92% of the net wells drilled by the Company are expected to be oil wells.  Comstock expects to spend 77% of its 2012 capital budget for oil prospects in its Eagle Ford shale properties in South Texas and its Permian basin properties in West Texas.  On December 31, 2011, 16% of the Company's production (based on a six Mcf to one barrel conversion) is attributable to oil and approximately 2% is attributable to natural gas liquids.  At the beginning of 2011 only 4% of the Company's production was oil.

Comstock reported a net loss of $33.5 million or 73 cents per share for the year ended December 31, 2011 as compared to a net loss of $19.6 million or 43 cents per share for the year ended December 31, 2010.  The financial results for the year ended December 31, 2011 include impairment charges of $70.6 million ($45.9 million after tax or $1.00 per share), a gain realized from the sale of marketable securities of $35.1 million ($22.8 million after tax or 50 cents per share), and a loss on early retirement of debt of $1.1 million ($0.7 million after taxes or 2 cents per share).  The net loss for the year ended December 31, 2010 included a loss on disposal of oil and gas properties of $25.8 million ($16.8 million after tax or 37 cents per share) and a gain realized from sale of marketable securities of $16.5 million ($10.7 million after tax or 24 cents per share).

Comstock's production in 2011 increased by 31% to 95.6 Bcfe as compared to the 73.3 Bcfe produced in 2010.  Natural gas prices continued to weaken in 2011.  Comstock's average realized natural gas price decreased 10% to $3.91 per Mcf for 2011 as compared to $4.35 per Mcf for 2010.  Oil prices continued to be very strong in 2011 and the Company's average realized oil price increased by 40% to $95.73 per barrel as compared to $68.35 per barrel for 2010.  The 31% increase in production and stronger oil prices overcame the lower natural gas prices, resulting in Comstock's oil and gas sales increasing by 24% to $434.4 million in 2011 as compared to 2010's sales of $349.1 million.  Operating cash flow (before changes in working capital accounts) increased 35% to $297.6 million in 2011 from 2010's operating cash flow of $219.7 million.  Higher sales and lower operating cost per Mcfe produced account for the operating cash flow growth.  EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses, also increased 35% to $336.3 million in 2011 from EBITDAX of $249.1 million in 2010.

2011 Drilling Results

Comstock reported on the results of its 2011 drilling program.  The Company spent $573.4 million in 2011 on its drilling activities.  Also in 2011, Comstock spent $218.7 million to acquire 163.7 Bcfe in proved reserves primarily in the Permian basin in West Texas and $255.7 million to acquire exploratory acreage in the Permian basin, the Eagle Ford shale in South Texas, and the Haynesville shale in North Louisiana.  In 2011, Comstock drilled 87 wells (47.7 net) and completed 105 wells (59.8 net).  As of December 31, 2011 the Company also had three wells (1.6 net) in the process of being drilled.

In the East Texas/North Louisiana region, Comstock drilled 64 wells (28.3 net) during 2011, sixty-two of which were Haynesville or Bossier shale horizontal wells.  During 2011, Comstock completed 84 (42.3 net) Haynesville or Bossier shale horizontal wells, including 33 wells (22.2 net) that were drilled in 2010.  Wells drilled and completed in 2011 were put on production at an average per well initial production rate of 10.7 MMcfe per day.  As of December 31, 2011, Comstock had 14 (9.8 net) Haynesville or Bossier horizontal wells waiting on completion.  

In the South Texas region, the Company drilled 20 (19.2 net) horizontal Eagle Ford shale wells in 2011.  Comstock completed 17 wells (17.0 net) including one well that was drilled in 2010. These wells had an average per well initial production rate of 820 barrels of oil equivalent ("BOE") per day. Four wells (3.2 net) were awaiting completion at year end.  Since the last update, Comstock has completed four additional wells in its Eagle Ford shale program.  The Gloria Wheeler "A" #1H was drilled to a vertical depth of 11,358 feet with a 6,725 foot lateral.  This well was tested at an initial rate of 1,070 barrels of oil per day and 1.1 MMcf of natural gas per day or 1,254 BOE per day.  The Gloria Wheeler "B" #1H was drilled to a vertical depth of 10,908 feet with a 5,175 foot lateral.  This well was tested at an initial rate of 916 barrels of oil per day and 1.0 MMcf of natural gas per day or 1,085 BOE per day.  The Donnell "A" #1H was drilled to a vertical depth of 9,404 feet with a 6,481 foot lateral.  This well was tested at an initial rate of 646 barrels of oil per day and 0.2 MMcf of natural gas per day or 686 BOE per day.  The Cutter Creek #2H was drilled to a vertical depth of 10,013 feet with a 5,541 foot lateral.  This well was tested at an initial rate of 471 barrels of oil per day and 0.4 MMcf of natural gas per day or 541 BOE per day.  All of the reported well results were obtained while following Comstock's restricted choke program.  

During December 2011, production from the wells acquired as part of Comstock's Permian basin acquisition averaged 1,000 barrels of oil and 1.9 MMcf of natural gas per day.  At year end 2011 there were three wells (0.8 net) in the process of being drilled and four wells (2.5 net) that were awaiting completion on these West Texas properties.

Comstock has planned a conference call for 2:00 p.m. Eastern Time on February 6, 2012, to discuss the operational and financial results for the fourth quarter of 2011.  Investors wishing to participate should visit the Company's website at www.comstockresources.com for a live web cast or dial 1-866-362-5158 (international dial-in use 617-597-5397) and provide access code 53956340 when prompted.  A slide presentation on the financial results will be available on Comstock's website at www.comstockresources.com.  Click on "Presentations" to view the slides.  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 5:00 p.m. ET February 6, 2012 and will continue until 11:59 p.m. February 13, 2012.  To hear the replay, call 888-286-8010 (617-801-6888 if calling from outside the US).  The conference call ID number is 11275509.

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 and is engaged in oil and gas acquisitions, exploration and development primarily in Texas and Louisiana.  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 December 31,

Year Ended December 31,

2011

2010

2011

2010

Revenues:

Oil and gas sales                                           

$

114,456

$

72,650

$

434,367

$

349,141

Operating expenses:

Production taxes                                            

1,440

351

3,670

9,894

Gathering and transportation                                   

8,151

4,948

28,491

17,256

Lease operating                                             

10,040

12,375

46,552

53,525

Exploration                                                 

82

99

10,148

2,605

Depreciation, depletion and amortization                         

78,244

50,206

290,776

213,809

Impairment of oil and gas properties                             

60,817

11

60,817

224

Loss on sale of properties                                     

25,835

57

26,632

General and administrative                                    

9,199

8,235

35,172

37,200

Total operating expenses                                 

167,973

102,060

475,683

361,145

Operating loss                                                   

(53,517)

(29,410)

(41,316)

(12,004)

Other income (expenses):

Interest and other income                                     

210

91

790

499

Interest expense                                            

(12,006)

(6,905)

(42,688)

(29,456)

Gain on sale of marketable securities                            

2,905

10,837

35,118

16,529

Total other income (expenses)                             

(8,891)

4,023

(6,780)

(12,428)

Loss before income taxes                                         

(62,408)

(25,387)

(48,096)

(24,432)

Benefit from income taxes                                         

21,274

4,778

14,624

4,846

Net loss                                                       

$

(41,134)

$

(20,609)

$

(33,472)

$

(19,586)

Net loss per share:

Basic                                                     

$

(0.89)

$

(0.45)

$

(0.73)

$

(0.43)

Diluted                                                    

$

(0.89)

$

(0.45)

$

(0.73)

$

(0.43)

Weighted average shares outstanding:

Basic                                                     

46,011

45,631

45,997

45,561

Diluted                                                    

46,011

45,631

45,997

45,561

COMSTOCK RESOURCES, INC. OPERATING RESULTS (In thousands)

Three Months Ended December 31,

Year Ended December 31,

2011

2010

2011

2010

OPERATING CASH FLOW:

Net loss

$

(41,134)

$

(20,609)

$

(33,472)

$

(19,586)

Reconciling items:  

Deferred income taxes                                         

(21,245)

(4,748)

(14,652)

(4,617)

Depreciation, depletion and amortization                           

78,244

50,206

290,776

213,809

Dry hole costs and lease impairments                             

9,819

Impairment of oil and gas properties                              

60,817

11

60,817

224

(Gain) loss on sale of assets                                   

(2,905)

14,998

(35,061)

10,103

Debt issuance costs and discount amortization                     

949

602

4,300

2,436

Stock-based compensation                                     

4,074

4,447

15,032

17,377

Operating cash flow                                       

78,800

44,907

297,559

219,746

Excess income taxes from stock-based   compensation

12

612

(1,491)

Increase in accounts receivable                           

(4,088)

(12,528)

(9,046)

(4,432)

Decrease (increase) in other current assets

1,036

(1,358)

3,311

48,070

Increase (decrease) in accounts payable and   accrued expenses

(8,393)

31,393

(7,532)

49,769

Net cash provided by operating activities

$

67,355

$

62,426

$

284,904

$

311,662

EBITDAX:

Net loss                                                     

$

(41,134)

$

(20,609)

$

(33,472)

$

(19,586)

Interest expense                                             

12,006

6,905

42,688

29,456

Income tax benefit                                             

(21,274)

(4,778)

(14,624)

(4,846)

Depreciation, depletion and amortization                           

78,244

50,206

290,776

213,809

Exploration                                                   

82

99

10,148

2,605

Impairment of oil and gas properties                               

60,817

11

60,817

224

(Gain) loss on sale of assets                                    

(2,905)

14,998

(35,061)

10,103

Stock-based compensation                                     

4,074

4,447

15,032

17,377

EBITDAX                                           

$

89,910

$

51,279

$

336,304

$

249,142

As of December 31,

2011

2010

BALANCE SHEET DATA:

Cash and cash equivalents                                           

$

8,460

$

1,732

Marketable securities                                                

47,642

84,637

Other current assets                                                 

56, 988

49,362

Property and equipment, net                                           

2,509,845

1,816,248

Other                                                             

16,949

12,235

Total assets                                                    

$

2,639,884

$

1,964,214

Current liabilities                                                    

$

187,207

$

155,064

Long-term debt                                                     

1,196,908

513,372

Deferred income taxes                                               

201,705

217,993

Other non-current liabilities                                           

16,439

9,254

Stockholders' equity                                                 

1,037,625

1,068,531

Total liabilities and stockholders' equity                               

$

2,639,884

$

1,964,214

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

For the Three Months Ended December 31, 2011

For the Three Months Ended December 31, 2010

East Texas/

North

Louisiana

South

Texas

West

Texas

Other

Total

East Texas/

North

Louisiana

South

Texas

Other

Total

Oil production (thousand   barrels)

28

312

6

346

33

43

82

158

Gas production (MMcf)  

20,177

2,659

595

23,431

12,637

3,130

549

16,316

Total production (MMcfe) 

20,348

4,537

624

25,509

12,835

3,383

1,042

17,260

Oil sales              

$

2,614

$

31,638

$

453

$

34,705

$

2,667

$

3,517

$

5,573

$

11,757

Gas sales             

65,959

11,331

2,461

79,751

45,356

13,278

2,259

60,893

Total oil and gas sales 

$

68,573

$

42,969

$

2,914

$

114,456

$

48,023

$

16,795

$

7,832

$

72,650

Average oil price (per barrel)

$

92.25

$

101.10

$

88.26

$

100.18

$

80.63

$

83.16

$

68.03

$

74.75

Average gas price (per Mcf) 

$

3.27

$

4.26

$

4.14

$

3.40

$

3.59

$

4.24

$

4.11

$

3.73

Average price (per Mcfe)

$

3.37

$

9.47

$

4.67

$

4.49

$

3.74

$

4.96

$

7.52

$

4.21

Production taxes       

$

(949)

$

2,228

$

161

$

1,440

$

(781)

$

682

$

450

$

351

Gathering and transportation 

$

7,741

$

294

$

116

$

8,151

$

4,189

$

643

$

116

$

4,948

Lease operating       

$

7,236

$

1,992

$

812

$

10,040

$

6,162

$

3,667

$

2,546

$

12,375

Production taxes (per Mcfe) 

$

(0.05)

$

0.49

$

0.26

$

0.06

$

(0.06)

$

0.20

$

0.43

$

0.02

Gathering and transportation   (per Mcfe)

$

0.38

$

0.06

$

0.19

$

0.32

$

0.33

$

0.19

$

0.11

$

0.29

Lease operating (per Mcfe) 

$

0.36

$

0.44

$

1.30

$

0.39

$

0.48

$

1.09

$

2.45

$

0.71

Oil and Gas Capital Expenditures:

Acquisitions        

$

16,879

$

$

201,782

$

$

218,661

$

$

$

$

Exploratory leasehold

12,064

43,860

147,532

203,456

4,310

2,073

6,383

Development leasehold   

420

420

1,077

27

15

1,119

Exploratory drilling   

2,290

2,131

4,421

9,718

19,185

28,903

Development drilling  

46,713

76,726

160

123,599

96,913

7,441

101

104,455

Other development   

532

345

92

969

34

210

78

322

Total            

$

78,898

$

123,062

$

349,314

$

252

$

551,526

$

112,052

$

28,936

$

194

$

141,182

For the Year Ended December 31, 2011

For the Year Ended December 31, 2010

East Texas/

North

Louisiana

South

Texas

West

Texas

Other

Total

East Texas/

North

Louisiana

South

Texas

Other

Total

Oil production (thousand   barrels)

117

697

24

838

147

157

411

715

Gas production (MMcf)  

76,883

11,153

2,557

90,593

52,038

14,437

2,498

68,973

Total production (MMcfe) 

77,585

15,338

2,699

95,622

52,920

15,376

4,966

73,262

Oil sales              

$

10,614

$

67,523

$

2,107

$

80,244

$

11,237

$

12,088

$

25,524

$

48,849

Gas sales             

290,028

51,789

12,306

354,123

219,387

68,915

11,990

300,292

Total oil and gas sales 

$

300,642

$

119,312

$

14,413

$

434,367

$

230,624

$

81,003

$

37,514

$

349,141

Average oil price (per barrel)

$

90.74

$

96.81

$

88.63

$

95.73

$

76.37

$

77.21

$

62.10

$

68.35

Average gas price (per Mcf) 

$

3.77

$

4.64

$

4.81

$

3.91

$

4.22

$

4.77

$

4.80

$

4.35

Average price (per Mcfe)

$

3.87

$

7.78

$

5.34

$

4.54

$

4.36

$

5.27

$

7.55

$

4.77

Production taxes       

$

(1,958)

$

4,881

$

747

$

3,670

$

5,837

$

1,990

$

2,067

$

9,894

Gathering and transportation 

$

26,581

$

1,476

$

434

$

28,491

$

14,762

$

2,086

$

408

$

17,256

Lease operating       

$

30,419

$

12,443

$

3,690

$

46,552

$

28,000

$

14,027

$

11,498

$

53,525

Production taxes (per Mcfe)

$

(0.03)

$

0.32

$

0.28

$

0.04

$

0.11

$

0.13

$

0.42

$

0.14

Gathering and transportation    (per Mcfe)

$

0.34

$

0.10

$

0.16

$

0.30

$

0.28

$

0.14

$

0.08

$

0.24

Lease operating (per Mcfe) 

$

0.40

$

0.81

$

1.37

$

0.48

$

0.53

$

0.91

$

2.31

$

0.72

Oil and Gas Capital Expenditures:

Acquisitions        

$

16,879

$

$

201,782

$

$

218,661

$

$

$

$

Exploratory leasehold 

37,682

66,263

151,754

255,699

53,288

81,440

134,728

Development leasehold   

695

103

798

2,500

535

173

3,208

Exploratory drilling   

33,381

48,647

82,028

59,579

25,561

85,140

Development drilling  

330,090

152,036

1,690

483,816

294,399

9,506

1,505

305,410

Other development   

4,089

1,966

461

6,516

2,251

2,559

838

5,648

Total              

$

422,816

$

269,015

$

353,536

$

2,151

$

1,047,518

$

412,017

$

119,601

$

2,516

$

534,134

SOURCE Comstock Resources, Inc.



RELATED LINKS

http://www.comstockresources.com