Comstock Resources, Inc. Reports Second Quarter 2012 Financial And Operating Results

FRISCO, Texas, July 30, 2012 /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, 2012. 

Financial Results for the Three Months and Six Months Ended June 30, 2012

Low natural gas prices continue to adversely impact the Company's financial results in the second quarter of 2012 as Comstock reported a net loss of $10.3 million or 22¢ per share as compared to net income of $3.9 million or 8¢ per diluted share for the three months ended June 30, 2011.  The second quarter of 2012 results included a $5.3 million ($3.4 million after tax, or 7¢ per diluted share) impairment on certain natural gas properties as well as a gain of $20.3 million ($13.2 million after tax or 28¢ per diluted share) from the sale of oil and gas properties.  Results for the three months ended June 30, 2011 included a gain on sale of marketable securities of $8.5 million ($5.5 million after tax or 12¢ per diluted share). 

Comstock's production in the second quarter of 2012 of 583 thousand barrels of oil and 21.9 billion cubic feet of natural gas or 25.4 billion cubic feet of natural gas equivalent ("Bcfe") increased 6% over the 24.0 Bcfe produced in the second quarter of 2011.  Oil production increased 267% over 2011's second quarter.  Oil production in the second quarter, which averaged 6,400 barrels of oil per day, grew 14% from the 5,600 barrels per day produced in the first quarter of 2012. 

Comstock's average realized natural gas price of $2.03 per Mcf for the second quarter of 2012 was 52% lower than the $4.19 per Mcf realized for the second quarter of 2011.  The Company's average realized oil price for the second quarter of 2012, including hedging gains, was $103.37 per barrel, which was 2% higher than the second quarter of 2011's average price of $101.02Comstock's higher oil production in the second quarter only partially offset the effect of the extraordinarily low natural gas prices as oil and gas sales for the second quarter of 2012 decreased by 7% to $104.7 million as compared to 2011's second quarter sales of $112.5 million.  Oil sales composed 58% of total sales in the quarter as compared to only 14% in the second quarter of 2011.  Operating cash flow (before changes in working capital accounts) of $61.3 million in the second quarter of 2012 was 20% lower than operating cash flow of $77.1 million for the second quarter of 2011, and EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses, of $74.6 million in the second quarter of 2012 decreased 14% from EBITDAX of $87.1 million in the second quarter of 2011.  The lower natural gas prices not only caused revenues, cash flow, EBITDAX and earnings to decline but also resulted in an increase to the Company's depreciation, depletion and amortization expense in the quarter due to the exclusion of a substantial amount of the Company's undeveloped natural gas reserves from proved reserves. 

Comstock reported a net loss of $3.4 million or 7¢ per share for the first six months of 2012 as compared to net income of $6.4 million or 13¢ per diluted share for the six months ended June 30, 2011.  The 2012 results include a gain of $27.1 million ($17.6 million after tax or 38¢ per diluted share) from the sale of oil and gas properties which generated net proceeds of $146.1 million and a gain of $26.6 million ($17.3 million or 37¢ per share) on the sale of marketable securities which generated net proceeds of $37.7 million.  The six months 2012 financial results also included impairments of oil and gas properties and unevaluated leases of $6.7 million ($4.4 million after tax, or 9¢ per diluted share).  Results for the six months ended June 30, 2011 included a gain on sale of marketable securities of $29.7 million ($19.3 million after tax or 42¢ per diluted share), impairments of unevaluated leases of $9.5 million ($6.1 million or 13¢ per share), and a loss on early extinguishment of debt of $1.1 million ($0.7 million or 2¢ per share).

Comstock's production in the first half of 2012 of 50.8 Bcfe increased 16% over the 43.9 Bcfe produced in the first half of 2011.  Oil comprised 13% of production during this period in 2012 as compared to only 4% in 2011.  Natural gas prices were substantially weaker in the first six months of 2012 as compared to 2011's first six months.  Comstock's average realized natural gas price decreased 43% to $2.34 per Mcf for the first six months of 2012 as compared to $4.08 per Mcf for the first six months of 2011.  The Company's average realized oil price for the first six months of 2012 of $102.43 per barrel, including hedging gains, was 7% above 2011's average realized price of $95.89.  Oil and gas sales increased by 7% to $215.0 million in the first six months of 2012 as compared to 2011's first six months sales of $200.5 million.  The higher production level in the first half of 2012 was partially offset by the low natural gas prices.  Operating cash flow (before changes in working capital accounts) of $128.1 million in the first six months of 2012 decreased 4% from 2011's first six months operating cash flow of $133.2 million.  EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses, increased 1% to $153.6 million in 2012's first six months from 2011's first six months EBITDAX of $152.2 million

2012 Drilling Results

Comstock reported on the results to date of its 2012 drilling program.  During the first six months of 2012, Comstock has spent $314.3 million on development and exploration activities and $16.1 million on acreage and other acquisitions.  Comstock drilled 39 wells (31.0 net) and had five wells (3.6 net) drilling at June 30, 2012.  The wells drilled in the second quarter included eight (7.2 net) oil wells in West Texas and eight (7.0 net) oil wells in the Eagle Ford shale in South Texas.  At the end of the second quarter of 2012, the Company's six operated drilling rigs were all drilling oil wells in South Texas and West Texas as the Company has suspended its natural gas drilling operations until natural gas prices improve.

Since the beginning of 2012, the Company has completed 31 oil wells, fifteen in the vertical Wolfbone program in its West Texas region and sixteen in the horizontal Eagle Ford shale program in the South Texas region.  The sixteen Eagle Ford shale wells that were completed had an average per well initial production rate of 565 barrels of oil equivalent ("BOE") per day.  Of the eight new Eagle Ford wells completed this quarter, the Donnell C #1H, the Carlson C #1H and the Hubberd #3 H in McMullen County had the highest initial production rates at 938, 862 and 793 BOE per day, respectively.  These wells are being produced under the Company's restricted choke program.  Longer term production results from the first 29 Eagle Ford shale wells have confirmed the benefit of this program.  The twenty-nine wells, which have been producing for more than 90 days, had an average initial production rate of 679 BOE per day.  The 30 day per well production rate for these wells averaged 514 BOE per day and the 90 day per well production rate averaged 453 BOE per day, or 67% of the initial 24 hour test rate.

Since closing on the acquisition of acreage in Reeves County in West Texas, Comstock has drilled and completed thirteen operated vertical Wolfbone wells.  These wells were drilled to total depths of 11,370 to 12,786 feet and completed with 5 to 11 frac stages.  These wells have an average per well initial production rate of 374 BOE per day (78% oil).  Comstock's vertical Wolfbone wells continue to be some of the best vertical oil wells in the play.  Of the eight new wells reported on this quarter, three wells had initial production rates over 400 BOE per day including the Pat Garrett 38 #1 at 489 BOE, the Buffalo Bill 9 #1 at 517 BOE and the Trigger 40 #1 at 419 BOE.  Comstock is currently drilling its first horizontal well, the Monroe 35 #1-H, targeting the Wolfcamp shale formation.

Comstock has planned a conference call for 9:30 a.m. Central Time on July 31, 2012, to discuss the operational and financial results for the second quarter of 2012.  Investors wishing to participate should visit the Company's website at www.comstockresources.com for a live web cast or dial 866-277-1181 (international dial-in use 617-597-5358) and provide access code 75971610 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 3:00 p.m. ET July 31, 2012 and will continue until 11:59 p.m. August 7, 2012.  To hear the replay, call 888-286-8010 (617-801-6888 if calling from outside the US).  The conference call ID number is 67963510.

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.  For additional information, please visit Comstock's website at www.comstockresources.com.


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

 









Three Months Ended June 30,



Six Months Ended June 30,



2012



2011



2012



2011

















Revenues:
















Oil and gas sales


$

104,690



$

112,451



$

215,025



$

200,489

Gain on sale of oil and gas properties



20,338







27,065




Total revenues



125,028




112,451




242,090




200,489

















Operating expenses:
















Production taxes



3,380




1,363




7,017




2,089

Gathering and transportation



7,338




6,611




15,230




12,239

Lease operating



13,948




12,437




28,697




23,985

Exploration



37




82




1,390




9,619

Depreciation, depletion and amortization



90,083




74,689




169,180




135,014

Impairment of oil and gas properties



5,301







5,350




Loss on sale of oil and gas properties






(26)







83

General and administrative



9,033




8,917




17,831




17,345

Total operating expenses



129,120




104,073




244,695




200,374

















Operating income (loss)



(4,092)




8,378




(2,605)




115

















Other income (expenses):
















Interest expense



(14,529)




(10,410)




(27,766)




(20,694)

Gain on sale of marketable securities






8,480




26,621




29,729

Other income



545




83




522




393

Total other income (expenses)



(13,984)




(1,847)




(623)




9,428

















Income (loss) before income taxes



(18,076)




6,531




(3,228)




9,543

Benefit from (provision for) income taxes



7,772




(2,582)




(217)




(3,190)

Net income (loss)


$

(10,304)



$

3,949



$

(3,445)



$

6,353

















Net income (loss) per share:
















Basic


$

(0.22)



$

0.08



$

(0.07)



$

0.13

Diluted


$

(0.22)



$

0.08



$

(0.07)



$

0.13

















Weighted average shares outstanding:
















Basic



46,426




45,992




46,399




45,983

Diluted



46,426




45,992




46,399




45,983

 

 




 

COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands)









Three Months Ended June 30,



Six Months Ended June 30,



2012



2011



2012



2011

















OPERATING CASH FLOW:
































Net income (loss)


$

(10,304)



$

3,949



$

(3,445)



$

6,353

Reconciling items: 
















Deferred income taxes



(7,656)




2,172




416




2,621

Depreciation, depletion and amortization



90,083




74,689




169,180




135,014

Impairment of oil and gas properties



5,301







5,350




Dry hole costs and leasehold impairments









1,315




9,454

Gain on sale of assets



(20,338)




(8,506)




(53,686)




(29,646)

Debt issuance cost and discount amortization



1,159




938




2,103




2,403

Unrealized loss on derivative financial instruments



(262)










Stock-based compensation



3,325




3,850




6,860




7,012

Operating cash flow



61,308




77,092




128,093




133,211

Excess income taxes from stock-based
                           compensation



265




125




1,670




612

(Increase) decrease in accounts receivable



9,796




(1,332)




11,611




(6,631)

Increase in other current assets



(3,898)




(7,338)




(4,097)




(8,454)

Increase (decrease) in accounts payable and
                         accrued expenses



(58,753)




(1,572)




4,621




(836)

Net cash provided by operating activities


$

8,718



$

66,975



$

141,898



$

117,902

















EBITDAX:
































Net income (loss)


$

(10,304)



$

3,949



$

(3,445)



$

6,353

Interest expense



14,529




10,410




27,766




20,694

Income taxes



(7,772)




2,582




217




3,190

Depreciation, depletion and amortization



90,083




74,689




169,180




135,014

Exploration



37




82




1,390




9,619

Impairments



5,301







5,350




Gain on sale of assets



(20,338)




(8,506)




(53,686)




(29,646)

Unrealized loss on derivative financial instruments



(262)










Stock-based compensation



3,325




3,850




6,860




7,012

EBITDAX


$

74,599



$

87,056



$

153,632



$

152,236

 



As of June 30,



2012



2011









BALANCE SHEET DATA:
















Cash and cash equivalents


$

3,505



$

3,556

Marketable securities



15,204




62,482

Derivative financial instruments



18,536




Other current assets



48,817




64,447

Property and equipment, net



2,547,219




2,021,287

Other



28,031




16,677

Total assets


$

2,661,312



$

2,168,449

















Accounts payable and accrued expenses


$

176,726



$

172,024

Long-term debt



1,223,235




691,640

Deferred income taxes



203,530




217,992

Other non-current liabilities



16,528




9,508

Stockholders' equity



1,041,293




1,077,285

Total liabilities and stockholders' equity


$

2,661,312



$

2,168,449


 

 

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











 

For the Three Months Ended June 30, 2012



For the Three Months Ended June 30, 2011




East Texas/

North

Louisiana




South

Texas




West

Texas




Other




Total




East Texas/

North

Louisiana




South

Texas




Other




Total

Oil production (Mbbls)



20




425




124




14




583




29




128




2




159

Gas production (MMcf)



19,012




2,210




145




526




21,893




19,552




2,915




529




22,996

Total production (MMcfe)



19,129




4,762




885




613




25,389




19,728




3,679




547




23,954





































Oil sales


$

1,860



$

43,970



$

10,169



$

1,503



$

57,502



$

3,092



$

12,726



$

305



$

16,123

Hedging gains






2,220




499







2,719













Total oil including hedging



1,860




46,190




10,668




1,503




60,221




3,092




12,726




305




16,123

Natural gas sales



36,594




5,656




887




1,332




44,469




79,384




14,170




2,774




96,328

Total oil and gas sales


$

38,454



$

51,846



$

11,555



$

2,835



$

104,690



$

82,476



$

26,896



$

3,079



$

112,451









































































Average oil price (per barrel)


$

95.33



$

103.36



$

84.27



$

104.92



$

98.70



$

105.40



$

99.88



$

107.06



$

101.02

Average oil price including hedging
   (per barrel)


$

95.33



$

108.58



$

86.50



$

104.92



$

103.37



$

105.40



$

99.88



$

107.06



$

101.02

Average gas price (per Mcf)


$

1.92



$

2.56



$

6.12



$

2.53



$

2.03



$

4.06



$

4.86



$

5.24



$

4.19

Average price (per Mcfe)


$

2.01



$

10.42



$

12.49



$

4.62



$

4.02



$

4.18



$

7.31



$

5.63



$

4.69

Average price including hedging
   (per Mcfe)


$

2.01



$

10.89



$

13.06



$

4.62



$

4.12



$

4.18



$

7.31



$

5.63



$

4.69





































Production taxes


$

606



$

1,992



$

519



$

263



$

3,380



$

65



$

1,116



$

182



$

1,363

Gathering and transportation


$

6,244



$

735



$

232



$

127



$

7,338



$

6,134



$

356



$

121



$

6,611

Lease operating


$

7,977



$

3,135



$

1,755



$

1,081



$

13,948



$

7,796



$

3,620



$

1,021



$

12,437

Production taxes (per Mcfe)


$

0.03



$

0.42



$

0.59



$

0.43



$

0.13



$



$

0.30



$

0.33



$

0.06

Gathering and transportation
   (per Mcfe)


$

0.33



$

0.15



$

0.26



$

0.21



$

0.29



$

0.31



$

0.10



$

0.22



$

0.28

Lease operating (per Mcfe)


$

0.42



$

0.66



$

1.98



$

1.76



$

0.55



$

0.40



$

0.98



$

1.87



$

0.51





































Oil and Gas Capital Expenditures:


































Acquisitions


$



$



$

(98)



$



$

(98)



$



$



$



$

Exploratory leasehold



1,774




1,611




4,471







7,856




4,224




17,508




1,311




23,043

Development leasehold



84













84




185




77







262

Exploratory drilling



200




1,923










2,123




10,046




18,367







28,413

Development drilling



22,336




71,456




45,209







139,001




123,439




12,803




675




136,917

Other development



(41)




(104)




(15)




(18)




(178)




998




1,015




198




2,211

Total


$

24,353



$

74,886



$

49,567



$

(18)



$

148,788



$

138,892



$

49,770



$

2,184



$

190,846


 

 

 

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











 

For the Six Months Ended June 30, 2012



For the Six Months Ended June 30, 2011




East Texas/

North

Louisiana




South

Texas




West

Texas




Other




Total




East Texas/

North

Louisiana




South

Texas




Other




Total

Oil production (Mbbls)



47




828




197




17




1,089




63




222




12




297

Gas production (MMcf)



38,112




4,870




272




1,061




44,315




34,996




5,780




1,329




42,105

Total production (MMcfe)



38,392




9,837




1,451




1,167




50,847




35,375




7,110




1,404




43,889





































Oil sales


$

4,611



$

86,444



$

17,282



$

1,806



$

110,143



$

6,037



$

21,365



$

1,111



$

28,513

Hedging gains






1,091




274







1,365













Total oil including hedging



4,611




87,535




17,556




1,806




111,508




6,037




21,365




1,111




28,513

Natural gas sales



84,096




14,792




1,691




2,938




103,517




137,994




27,320




6,662




171,976

Total oil and gas sales


$

88,707



$

102,327



$

19,247



$

4,744



$

215,025



$

144,031



$

48,685



$

7,773



$

200,489









































































Average oil price (per barrel)


$

98.91



$

104.41



$

87.92



$

103.10



$

101.17



$

95.64



$

96.36



$

88.82



$

95.89

Average oil price including
    hedging (per barrel)


$

98.91



$

105.73



$

89.31



$

103.10



$

102.43



$

95.64



$

96.36



$

88.82



$

95.89

Average gas price (per Mcf)


$

2.21



$

3.04



$

6.22



$

2.77



$

2.34



$

3.94



$

4.73



$

5.01



$

4.08

Average price (per Mcfe)


$

2.31



$

10.29



$

13.08



$

4.07



$

4.20



$

4.07



$

6.85



$

5.54



$

4.57

Average price including
    hedging (per Mcfe)


$

2.31



$

10.40



$

13.26



$

4.07



$

4.23



$

4.07



$

6.85



$

5.54



$

4.57





































Production taxes


$

1,407



$

4,283



$

909



$

418



$

7,017



$

94



$

1,498



$

497



$

2,089

Gathering and transportation


$

13,077



$

1,507



$

409



$

237



$

15,230



$

11,210



$

813



$

216



$

12,239

Lease operating


$

16,638



$

6,854



$

3,046



$

2,159



$

28,697



$

14,995



$

6,987



$

2,003



$

23,985

Production taxes (per Mcfe)


$

0.04



$

0.44



$

0.63



$

0.36



$

0.14



$



$

0.21



$

0.35



$

0.05

Gathering and transportation
    (per Mcfe)


$

0.34



$

0.15



$

0.28



$

0.20



$

0.30



$

0.32



$

0.11



$

0.15



$

0.28

Lease operating (per Mcfe)


$

0.43



$

0.70



$

2.10



$

1.85



$

0.56



$

0.42



$

0.99



$

1.43



$

0.54





































Oil and Gas Capital Expenditures:


































Acquisitions


$



$



$

3,235



$



$

3,235



$



$



$



$

Exploratory leasehold



3,369




3,099




8,014







14,482




15,069




19,188




1,311




35,568

Development leasehold



429




1,216










1,645




315




77







392

Exploratory drilling



568




2,328










2,896




26,890




38,795







65,685

Development drilling



90,544




135,894




79,725







306,163




219,027




24,341




773




244,141

Other development



985




615




209




131




1,940




1,851




1,109




292




3,252

Total


$

95,895



$

143,152



$

91,183



$

131



$

330,361



$

263,152



$

83,510



$

2,376



$

349,038

 

SOURCE Comstock Resources, Inc.



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