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

Aug 01, 2011, 16:05 ET from Comstock Resources, Inc.

FRISCO, Texas, Aug. 1, 2011 /PRNewswire/ -- Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the three months and six months ended June 30, 2011.  

Financial Results for the Three Months and Six Months Ended June 30, 2011

Comstock reported net income of $3.9 million or 8 cents per diluted share for the three months ended June 30, 2011 as compared to a net loss of $1.6 million or 4 cents per share for the three months ended June 30, 2010.  The financial results include gains realized from the sale of marketable securities of $8.5 million ($5.5 million after tax or 12 cents per share) for the three months ended June 30, 2011 and $5.7 million ($3.7 million after tax or 8 cents per share) for the three months ended June 30, 2010.

Comstock produced 24.0 billion cubic feet of natural gas equivalent ("Bcfe") in the second quarter of 2011, an increase of 20% over the 20.0 Bcfe produced in the second quarter of 2010.  Production in the quarter was 25% higher than 2010 second quarter production adjusted to exclude production from properties sold in 2010.  Comstock's daily production rate, which averaged 263 million cubic feet of natural gas equivalent ("MMcfe") per day, grew 19% over the production rate in the first quarter of 2011, which averaged 222 MMcfe per day.  Production from the Company's Haynesville shale operations increased 32% from the prior quarter, averaging 176 MMcfe per day in the second quarter and accounting for 67% of the Company's total production.  

Comstock's average realized natural gas price increased 2% to $4.19 per Mcf in the second quarter of 2011 as compared to $4.09 per Mcf in the second quarter of 2010.  The Company's average realized oil price improved by 50% to $101.02 per barrel in the second quarter of 2011 as compared to $67.37 per barrel in the second quarter of 2010.  Higher production and improved oil and natural gas prices caused oil and gas sales to increase by 24% to $112.5 million in the second quarter of 2011 as compared to 2010's second quarter sales of $90.7 million.  Operating cash flow (before changes in working capital accounts) increased to $77.1 million in the second quarter of 2011 and EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses, was $87.1 million.  

Comstock reported net income of $6.4 million or 13 cents per diluted share for the first six months of 2011 as compared to net income of $5.7 million or 12 cents per share for the six months ended June 30, 2010.  

Comstock's production in the first half of 2011 of 43.9 billion Bcfe increased 13% over the 38.8 Bcfe produced in the first half of 2010.  Natural gas prices were weaker in the first six months of 2011 as compared to 2010's first six months.  Comstock's average realized natural gas price decreased 13% to $4.08 per Mcf for the first six months of 2011 as compared to $4.68 per Mcf for the first six months of 2010.  The Company's average realized oil price improved by 43% to $95.89 per barrel for the first half of 2011 as compared to $67.24 per barrel for the first half of 2010.  Oil and gas sales increased by 2% to $200.5 million in the first six months of 2011 as compared to 2010's first six months sales of $196.8 million.  The higher production level in the first half of this year was partially offset by lower natural gas prices.  Operating cash flow (before changes in working capital accounts) of $133.2 million in the first six months of 2011 increased 4% from 2010's first six months operating cash flow of $127.5 million.  EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses, increased 6.3% to $152.2 million in 2011's first six months from 2010's first six months EBITDAX of $143.2 million.  

2011 Drilling Results

Comstock reported on the results to date of its 2011 drilling program.  During the first six months of 2011, Comstock spent $313.1 million on its drilling program and $36.0 million to acquire exploration acreage.  Comstock drilled 39 wells (20.8 net) and completed 45 wells (28.2 net) in the first half of 2011.  As of June 30, 2011 the Company also had nine wells (3.0 net) in the process of being drilled.

In the East Texas/North Louisiana region, Comstock has drilled 31 wells (14.8 net) in 2011, all of which were Haynesville or Bossier shale wells.  During the first half of 2011, Comstock completed 41 (24.2 net) of its Haynesville or Bossier shale wells.  As of June 30, 2011, Comstock had 16 wells (7.7 net) Haynesville or Bossier wells waiting on completion, down from 35 wells (23.4 net) at December 31, 2010.  Wells completed in the first half of the year were put on production at an average per well initial production rate of 10 MMcfe per day.  

In the South Texas region, the Company has drilled six Eagle Ford shale wells (6.0 net) in the first six months of 2011.  Comstock completed four wells (4.0 net) including one well that was drilled in 2010.  These wells had an average per well initial production rate of 870 barrels of oil equivalent ("BOE") per day.  In the second quarter of 2011, Comstock drilled four (4.0 net) Eagle Ford shale wells in its South Texas region in McMullen County.  The Company drilled the Hill #1H to a vertical depth of 11,264 feet with a 4,642 foot lateral.  This well was tested at an initial rate of 865 barrels of oil per day and 1.4 MMcf of natural gas per day or 1,095 BOE per day.  The initial production rate was based on flowing the well at a restricted rate on an 18/64th choke.  The Cutter Creek #1H was drilled to a vertical depth of 10,020 feet with a 4,650 foot lateral.  This well is currently in the process of being completed.  The Forrest Wheeler #1H well was drilled to a vertical depth of 11,142 feet with a 5,147 foot lateral.  The Rancho Tres Hijos "A" #1H was drilled to a vertical depth of 10,911 feet with a 4,893 foot lateral.  Both of these wells are awaiting completion.  

Comstock has planned a conference call for 9:30 a.m. Central Time on August 2, 2011, to discuss the operational and financial results for the second quarter of 2011.  Investors wishing to participate should visit the Company's website at www.comstockresources.com for a live web cast or dial 1-866-804-6925 (international dial-in use 857-350-1671) and provide access code 27198959 when prompted.  A slide show presentation on the financial results will be available on Comstock's website at www.comstockresources.com.  Click on "Presentations" to view the slide show.  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 1:30 p.m. ET August 2, 2011 and will continue until 11:59 p.m. August 9, 2011.  To hear the replay, call 888-286-8010 (617-801-6888 if calling from outside the US).  The conference call ID number is 11607359.

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 June 30,

Six Months Ended June 30,

2011

2010

2011

2010

Revenues:

Oil and gas sales                                         

$

112,451

$

90,682

$

200,489

$

196,771

Operating expenses:

Production taxes                                         

1,363

4,806

2,089

6,481

Gathering and transportation                                

6,611

3,679

12,239

8,207

Lease operating                                          

12,437

13,988

23,985

28,148

Exploration                                              

82

99

9,619

1,268

Depreciation, depletion and amortization                       

74,689

57,398

135,014

116,807

Impairment of oil and gas properties                           

28

187

(Gain) loss on sale of properties                             

(26)

797

83

797

General and administrative                                 

8,917

9,764

17,345

19,565

Total operating expenses                               

104,073

90,559

200,374

181,460

Operating income                                             

8,378

123

115

15,311

Other income (expenses):

Interest income                                           

119

258

Other income                                            

83

25

393

45

Interest expense                                         

(10,410)

(7,599)

(20,694)

(15,443)

Gain on sale of marketable securities                         

8,480

5,692

29,729

5,692

Total other income (expenses)                           

(1,847)

(1,763)

9,428

(9,448)

Income (loss) before income taxes                               

6,531

(1,640)

9,543

5,863

Benefit from (provision for) income taxes                           

(2,582)

21

(3,190)

(140)

Net income (loss)                                             

$

3,949

$

(1,619)

$

6,353

$

5,723

Net income (loss) per share:

Basic                                                   

$

0.08

$

(0.04)

$

0.13

$

0.12

Diluted                                                 

$

0.08

$

(0.04)

$

0.13

$

0.12

Weighted average shares outstanding:

Basic                                                   

45,992

45,579

45,983

45,594

Diluted                                                 

45,992

45,579

45,983

45,571

COMSTOCK RESOURCES, INC. OPERATING RESULTS (In thousands)

Three Months Ended June 30,

Six Months Ended June 30,

2011

2010

2011

2010

OPERATING CASH FLOW:

Net income (loss)                                            

$

3,949

$

(1,619)

$

6,353

$

5,723

Reconciling items:  

Deferred income taxes                                      

2,172

12

2,621

(43)

Depreciation, depletion and amortization                         

74,689

57,398

135,014

116,807

Impairments                                               

28

9,454

187

Gain on sale of assets                                      

(8,506)

(4,895)

(29,646)

(4,895)

Debt issuance costs and discount amortization                   

938

624

2,403

1,226

Stock-based compensation                                   

3,850

4,309

7,012

8,542

Operating cash flow                                     

77,092

55,857

133,211

127,547

Excess income taxes from stock-based compensation       

125

(41)

612

(1,531)

Decrease (increase) in accounts receivable               

(1,332)

3,332

(6,631)

(1,454)

Decrease (increase) in other current assets               

(7,338)

3,619

(8,454)

49,436

Increase (decrease) in accounts payable and accrued expenses

(1,572)

11,721

(836)

25,226

Net cash provided by operating activities               

$

66,975

$

74,488

$

117,902

$

199,224

EBITDAX:

Net income (loss)                                           

$

3,949

$

(1,619)

$

6,353

$

5,723

Interest expense                                           

10,410

7,599

20,694

15,443

Income taxes expense (benefit)                               

2,582

(21)

3,190

140

Depreciation, depletion and amortization                         

74,689

57,398

135,014

116,807

Exploration                                                

82

99

9,619

1,268

Impairments                                               

28

187

Gain on sale of assets                                       

(8,506)

(4,895)

(29,646)

(4,895)

Stock-based compensation                                   

3,850

4,309

7,012

8,542

EBITDAX                                         

$

87,056

$

62,898

$

152,236

$

143,215

As of June 30,

2011

2010

Balance Sheet Data:

Cash and cash equivalents                                           

$

3,556

$

42,651

Marketable securities                                                

62,482

53,535

Other current assets                                                 

64,447

45,303

Property and equipment, net                                           

2,021,287

1,715,099

Other                                                             

16,677

13,955

Total assets                                                    

$

2,168,449

$

1,870,543

Current liabilities                                                    

$

172,024

$

109,814

Long-term debt                                                     

691,640

468,104

Deferred income taxes                                               

217,992

224,484

Other non-current liabilities                                           

9,508

9,419

Stockholders' equity                                                 

1,077,285

1,058,722

Total liabilities and stockholders' equity                               

$

2,168,449

$

1,870,543

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

For the Three Months Ended June 30, 2011

For the Three Months Ended June 30, 2010

East Texas/

East Texas/

North

South

North

South

Louisiana

Texas

Other

Total

Louisiana

Texas

Other

Total

Oil production (thousand barrels)

29

128

2

159

50

39

121

210

Gas production (MMcf)

19,552

2,915

529

22,996

14,288

3,790

631

18,709

Total production (MMcfe)

19,728

3,679

547

23,954

14,590

4,024

1,356

19,970

Oil sales

$

3,092

$

12,726

$

305

$

16,123

$

3,894

$

2,953

$

7,309

$

14,156

Gas sales

79,384

14,170

2,774

96,328

57,381

16,334

2,811

76,526

Total oil and gas sales

$

82,476

$

26,896

$

3,079

$

112,451

$

61,275

$

19,287

$

10,120

$

90,682

Average oil price (per barrel)

$

105.40

$

99.88

$

107.06

$

101.02

$

77.25

$

75.57

$

60.59

$

67.37

Average gas price (per Mcf)

$

4.06

$

4.86

$

5.24

$

4.19

$

4.02

$

4.31

$

4.45

$

4.09

Average price (per Mcfe)

$

4.18

$

7.31

$

5.63

$

4.69

$

4.20

$

4.79

$

7.46

$

4.54

Production taxes

$

65

$

1,116

$

182

$

1,363

$

3,670

$

526

$

610

$

4,806

Gathering and transportation

$

6,134

$

356

$

121

$

6,611

$

3,339

$

237

$

103

$

3,679

Lease operating

$

7,796

$

3,620

$

1,021

$

12,437

$

6,814

$

3,861

$

3,313

$

13,988

Production taxes (per Mcfe)

$

$

0.30

$

0.33

$

0.06

$

0.25

$

0.13

$

0.45

$

0.24

Gathering and transportation (per Mcfe)

$

0.31

$

0.10

$

0.22

$

0.28

$

0.23

$

0.06

$

0.08

$

0.18

Lease operating (per Mcfe)

$

0.40

$

0.98

$

1.87

$

0.51

$

0.47

$

0.96

$

2.44

$

0.71

Oil and Gas Capital Expenditures:

 Leasehold costs

$

4,409

$

17,585

$

1,311

$

23,305

$

29,523

$

22,844

$

72

$

52,439

 Exploratory drilling

10,046

18,367

28,413

6,407

6,407

 Development drilling

123,439

12,803

675

136,917

89,252

576

89,828

 Other development

998

1,015

198

2,211

841

694

255

1,790

Total

$

138,892

$

49,770

$

2,184

$

190,846

$

126,023

$

24,114

$

327

$

150,464

For the Six Months Ended June 30, 2011

For the Six Months Ended June 30, 2010

East Texas/

East Texas/

North

South

North

South

Louisiana

Texas

Other

Total

Louisiana

Texas

Other

Total

Oil production (thousand barrels)

63

222

12

297

87

81

218

386

Gas production (MMcf)

34,996

5,780

1,329

42,105

27,267

7,903

1,333

36,503

Total production (MMcfe)

35,375

7,110

1,404

43,889

27,790

8,391

2,636

38,817

Oil sales

$

6,037

$

21,365

$

1,111

$

28,513

$

6,638

$

6,137

$

13,154

$

25,929

Gas sales

137,994

27,320

6,662

171,976

123,848

40,059

6,935

170,842

Total oil and gas sales

$

144,031

$

48,685

$

7,773

$

200,489

$

130,486

$

46,196

$

20,089

$

196,771

Average oil price (per barrel)

$

95.64

$

96.36

$

88.82

$

95.89

$

76.19

$

75.39

$

60.59

$

67.24

Average gas price (per Mcf)

$

3.94

$

4.73

$

5.01

$

4.08

$

4.54

$

5.07

$

5.20

$

4.68

Average price (per Mcfe)

$

4.07

$

6.85

$

5.54

$

4.57

$

4.70

$

5.51

$

7.62

$

5.07

Production taxes

$

94

$

1,498

$

497

$

2,089

$

4,786

$

608

$

1,087

$

6,481

Gathering and transportation

$

11,210

$

813

$

216

$

12,239

$

6,999

$

1,010

$

198

$

8,207

Lease operating

$

14,995

$

6,987

$

2,003

$

23,985

$

14,762

$

7,329

$

6,057

$

28,148

Production taxes (per Mcfe)

$

$

0.21

$

0.35

$

0.05

$

0.17

$

0.07

$

0.41

$

0.17

Gathering and transportation (per Mcfe)

$

0.32

$

0.11

$

0.15

$

0.28

$

0.25

$

0.12

$

0.08

$

0.21

Lease operating (per Mcfe)

$

0.42

$

0.99

$

1.43

$

0.54

$

0.54

$

0.88

$

2.30

$

0.72

Oil and Gas Capital Expenditures:

 Leasehold costs

$

15,384

$

19,265

$

1,311

$

35,960

$

39,378

$

22,844

$

128

$

62,350

 Exploratory drilling

26,890

38,795

65,685

23,438

23,438

 Development drilling

219,027

24,341

773

244,141

152,494

2,170

154,664

 Other development

1,851

1,109

292

3,252

1,875

1,323

501

3,699

Total

$

263,152

$

83,510

$

2,376

$

349,038

$

217,185

$

26,337

$

629

$

244,151

SOURCE Comstock Resources, Inc.



RELATED LINKS

http://www.comstockresources.com