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

29 Oct, 2012, 14:40 ET from Comstock Resources, Inc.

FRISCO, Texas, Oct. 29, 2012 /PRNewswire/ -- Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the three months and nine months ended September 30, 2012. 

Financial Results for the Three Months and Nine Months Ended September 30, 2012

Low natural gas prices continue to adversely impact the Company's financial results for the third quarter of 2012 as Comstock reported a net loss of $26.0 million or 56 cents per share as compared to net income of $1.3 million or 3 cents per diluted share for the three months ended September 30, 2011.  The third quarter of 2012 results include a loss of $2.8 million ($1.8 million after tax or 4 cents per diluted share) from the sale of oil and gas properties and costs incurred in connection with the formation of the Company's Eagle Ford shale joint venture, and impairments of unevaluated properties of $1.4 million ($0.9 million after tax or 2 cents per diluted share).  Results for the three months ended September 30, 2011 included a gain on sale of marketable securities of $2.5 million ($1.6 million after tax or 4 cents per diluted share). 

Comstock's oil production in the third quarter of 2012 increased 238% to 659,000 barrels as compared to 195,000 barrels in 2011's third quarter.  Oil production in the third quarter of 2012, which averaged 7,200 barrels of oil per day, also increased from the 6,400 barrels per day produced in the second quarter of 2012.  The Company's natural gas production decreased 19% to 20 billion cubic feet ("Bcf") as compared to 25 Bcf in 2011's third quarter.  The decrease is due to the sale of 10 million cubic feet ("MMcf") per day in May 2012 and declines resulting from the decrease in the Company's natural gas directed drilling due to the very low natural gas prices in 2012.

Comstock's average realized natural gas price of $2.46 per Mcf for the third quarter of 2012 was 40% lower than the $4.09 per Mcf realized for the third quarter of 2011.  The Company's average realized oil price for the third quarter of 2012, including hedging gains, was $102.08 per barrel, and was 17% higher than the average price of $87.55 per barrel in the third quarter of 2011.  Total oil and gas sales for the third quarter of 2012 decreased by 2% to $117.1 million as compared to 2011's third quarter sales of $119.4 million.  Comstock's oil revenues in the third quarter of 2012 increased by $50.3 million from the third quarter of 2011.  The increase in oil revenues only partially offset the effect of the extraordinarily low natural gas prices, as revenues from natural gas sales decreased by $52.6 million or 51% from the third quarter of 2011.  Oil sales composed 57% of total sales in the third quarter of 2012 as compared to only 14% in the third quarter of 2011.  Operating cash flow (before changes in working capital accounts) of $70.8 million in the third quarter of 2012 was 17% lower than operating cash flow of $85.5 million for the third quarter of 2011, and EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses, of $86.7 million in the third quarter of 2012 decreased 8% from EBITDAX of $94.2 million in the third 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 approximately 434 Bcf of the Company's undeveloped natural gas reserves from proved reserves. 

Comstock reported a net loss of $29.4 million or 63 cents per share for the first nine months of 2012 as compared to net income of $7.7 million or 16 cents per diluted share for the nine months ended September 30, 2011.  The 2012 results include a net gain of $24.3 million ($15.8 million after tax or 34 cents per diluted share) from the sale of oil and gas properties, which generated net proceeds of $142.9 million, and a gain of $26.6 million ($17.3 million or 37 cents per share) on the sale of marketable securities which generated net proceeds of $37.7 million.  The nine months 2012 financial results also include impairments of oil and gas properties and unevaluated leases of $8.0 million ($5.2 million after tax, or 11 cents per diluted share).  Results for the nine months ended September 30, 2011 included a gain on sale of marketable securities of $32.2 million ($20.9 million after tax or 46 cents per diluted share), impairments of unevaluated leases of $9.8 million ($6.4 million after tax or 14 cents per share), and a loss on early extinguishment of debt of $1.1 million ($0.7 million after tax or 2 cents per share).

Comstock's oil production in the first nine months of 2012 of 1.7 million barrels increased by 255% over the oil produced in the first nine months of 2011.  Oil comprised 14% of equivalent production during the first nine months of 2012 as compared to only 4% in 2011.  Natural gas production of 65 Bcf for the nine months ended September 30, 2012 decreased by 4% from the nine months ended September 30, 2011.  Natural gas prices were substantially weaker in the first nine months of 2012 as compared to 2011's first nine months.  Comstock's average realized natural gas price decreased 42% to $2.37 per Mcf for the first nine months of 2012 as compared to $4.09 per Mcf for the first nine months of 2011.  The Company's average realized oil price for the first nine months of 2012 of $102.30 per barrel, including hedging gains, was 10% above 2011's average realized price of $92.59.  Total oil and gas sales increased by 4% to $332.2 million in the first nine months of 2012 as compared to 2011's first nine months sales of $319.9 million.  Revenues from oil sales of $178.8 million for the nine months ended September 30, 2012 increased by $133.3 million or 293% from the nine months ended September 30, 2011, while revenues from natural gas sales decreased by $121.0 million or 44% from the nine months ended September 30, 2011.  Operating cash flow (before changes in working capital accounts) of $198.8 million in the first nine months of 2012 decreased 9% from operating cash flow of $218.8 million in the first nine months of 2011.  EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses, decreased 2% to $240.4 million in 2012's first nine months from 2011's first nine months EBITDAX of $246.4 million

2012 Drilling Results

Comstock reported on the results to date of its 2012 drilling program.  During the first nine months of 2012, Comstock spent $401.9 million on development and exploration activities, net of amounts the Company received from the Eagle Ford shale joint venture, and $27.4 million for acreage and other acquisition costs.  Comstock drilled 56 wells (38.3 net) and had seven wells (4.8 net) drilling at September 30, 2012.  On September 30, 2012, the Company's five operated drilling rigs were all drilling oil wells in South Texas and West Texas as the Company suspended its natural gas drilling operations until natural gas prices improve.

Since the beginning of 2012, the Company has completed 50 oil wells, including 27 vertical Wolfbone wells and one horizontal Wolfcamp shale well in its West Texas region, and 22 wells in the horizontal Eagle Ford shale program in the South Texas region.  The 22 Eagle Ford shale wells that were completed had an average per well initial production rate of 638 barrels of oil equivalent ("BOE") per day.  The six new Eagle Ford wells reported on this quarter averaged 816 BOE per day with the Swenson C #1H, the Hill A #3H and the Hubberd #1H in McMullen County having the highest initial production rates at 1,002, 829 and 786 BOE per day, respectively.  These wells are being produced under the Company's restricted choke program and the initial tests were obtained with a 16/64 inch choke.  The first 35 wells, which have been producing for more than 90 days, had an average initial production rate of 686 BOE per day.  The 30 day per well production rate for these wells averaged 517 BOE per day and the 90 day per well production rate averaged 448 BOE per day, or 65% 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 20 operated vertical Wolfbone wells and one horizontal Wolfcamp shale well.  These vertical wells were drilled to total depths of 11,250 to 12,786 feet and completed with 5 to 11 frac stages.  These wells have an average per well initial production rate of 356 BOE per day (79% oil).  Of the eight new operated wells reported on in the third quarter, the Ponderosa State 25 #1 and the Jesse James 4 #2 each had an initial production rate of 511 BOE per day.  Comstock also participated in five non-operated Wolfbone vertical wells which had an average initial production rate of 350 BOE per day.

Comstock has drilled its first horizontal well, the Monroe 35 #1-H, targeting the Wolfcamp shale formation and the results have been very positive with an initial production rate of 653 BOE per day.  The well was completed with fifteen frac stages over a 3,627 foot lateral.  Comstock's second horizontal well targeting the Wolfcamp shale, the Dale Evans 196 #2H, has reached total depth at 14,584 feet with a 3,428 foot lateral and is currently waiting to be completed.

Comstock has planned a conference call for 9:30 a.m. Central Time on October 30, 2012, to discuss the operational and financial results for the third quarter of 2012.  Investors wishing to participate should visit the Company's website at www.comstockresources.com for a live web cast or dial 800-659-1942 (international dial-in use 617-614-2710) and provide access code 67921574 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 12:30 p.m. ET October 30, 2012 and will continue until 11:59 p.m. November 6, 2012.  To hear the replay, call 888-286-8010 (617-801-6888 if calling from outside the US).  The conference call ID number is 22637143.

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 September 30,

Nine Months Ended September 30,

2012

2011

2012

2011

Oil and gas sales

$

117,129

$

119,422

$

332,154

$

319,911

Operating expenses:

Production taxes

3,856

141

10,873

2,230

Gathering and transportation

6,382

8,101

21,612

20,340

Lease operating

15,503

12,527

44,200

36,512

Exploration

1,407

447

2,797

10,066

Depreciation, depletion and amortization

99,230

77,518

268,410

212,532

General and administrative

8,142

8,628

25,973

25,973

Impairment of oil and gas properties

5,350

(Gain) loss on sale of oil and gas properties

2,794

(26)

(24,271)

57

Total operating expenses

137,314

107,336

354,944

307,710

Operating income (loss)

(20,185)

12,086

(22,790)

12,201

Other income (expenses):

Interest expense

(17,535)

(9,988)

(45,301)

(30,682)

Gain on sale of marketable securities

2,484

26,621

32,213

Other income

153

187

675

580

Total other income (expenses)

(17,382)

(7,317)

(18,005)

2,111

Income (loss) before income taxes

(37,567)

4,769

(40,795)

14,312

Benefit from (provision for) income taxes

11,579

(3,460)

11,362

(6,650)

Net income (loss)

$

(25,988)

$

1,309

$

(29,433)

$

7,662

Net income (loss) per share:

Basic

$

(0.56)

$

0.03

$

(0.63)

$

0.16

Diluted

$

(0.56)

$

0.03

$

(0.63)

$

0.16

Weighted average shares outstanding:

Basic

46,443

46,011

46,414

45,992

Diluted

46,443

46,011

46,414

45,992

 

 

 

COMSTOCK RESOURCES, INC. OPERATING RESULTS (In thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

2012

2011

2012

2011

OPERATING CASH FLOW:

Net income (loss)

$

(25,988)

$

1,309

$

(29,433)

$

7,662

Reconciling items: 

Deferred income taxes

(11,567)

3,972

(11,151)

6,593

Depreciation, depletion and amortization

99,230

77,518

268,410

212,532

Impairment of oil and gas properties

5,350

Dry hole costs and leasehold impairments

1,370

365

2,685

9,819

Loss (gain) on sale of assets

2,794

(2,510)

(50,892)

(32,156)

Debt issuance cost and discount amortization

1,586

948

3,689

3,351

Stock-based compensation

3,329

3,946

10,189

10,958

Operating cash flow

70,754

85,548

198,847

218,759

Excess income taxes from stock-based compensation

11

1,681

612

(Increase) decrease in accounts receivable

(9,785)

1,673

1,826

(4,958)

(Increase) decrease  in other current assets

(962)

10,729

(5,059)

2,275

Increase in accounts payable and accrued expenses

23,782

1,697

28,403

861

Net cash provided by operating activities

$

83,800

$

99,647

$

225,698

$

217,549

EBITDAX:

Net income (loss)

$

(25,988)

$

1,309

$

(29,433)

$

7,662

Interest expense

17,535

9,988

45,301

30,682

Income tax expense (benefit)

(11,579)

3,460

(11,362)

6,650

Depreciation, depletion and amortization

99,230

77,518

268,410

212,532

Exploration

1,407

447

2,797

10,066

Impairment of oil and gas properties

5,350

Loss (gain) on sale of assets

2,794

(2,510)

(50,892)

(32,156)

Stock-based compensation

3,329

3,946

10,189

10,958

EBITDAX

$

86,728

$

94,158

$

240,360

$

246,394

 

As of September 30,

2012

2011

BALANCE SHEET DATA:

Cash and cash equivalents

$

2,569

$

4,544

Marketable securities

15,072

31,707

Derivative financial instruments

10,823

Other current assets

59,565

53,477

Property and equipment, net

2,546,024

2,090,554

Other

23,786

15,863

Total assets

$

2,657,839

$

2,196,145

Accounts payable and accrued expenses

$

200,086

$

153,352

Long-term debt

1,238,809

746,774

Deferred income taxes

190,784

223,237

Other non-current liabilities

16,846

9,649

Stockholders' equity

1,011,314

1,063,133

Total liabilities and stockholders' equity

$

2,657,839

$

2,196,145

 

 

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

 

For the Three Months Ended September 30, 2012

For the Three Months Ended September 30, 2011

East Texas/

North

Louisiana

South

Texas

West

Texas

Other

Total

East Texas/

North

Louisiana

South

Texas

Other

Total

Oil production (Mbbls)

22

457

172

8

659

26

163

6

195

Gas production (MMcf)

17,633

1,937

202

480

20,252

21,710

2,714

633

25,057

Total production (MMcfe)

17,770

4,677

1,235

526

24,208

21,862

3,691

671

26,224

Oil sales

$

2,103

$

45,923

$

15,211

$

776

$

64,013

$

1,963

$

14,520

$

543

$

17,026

Hedging gains

2,501

792

3,293

Total oil, including hedging

2,103

48,424

16,003

776

67,306

1,963

14,520

543

17,026

Natural gas sales

41,342

5,680

1,076

1,725

49,823

86,075

13,138

3,183

102,396

Total oil and gas sales

$

43,445

$

54,104

$

17,079

$

2,501

$

117,129

$

88,038

$

27,658

$

3,726

$

119,422

Average oil price (per barrel)

$

92.33

$

100.58

$

88.33

$

99.77

$

97.09

$

76.93

$

89.18

$

88.54

$

87.55

Average oil price including    hedging (per barrel)

$

92.33

$

106.06

$

92.93

$

99.77

$

102.08

$

76.93

$

89.18

$

88.54

$

87.55

Average gas price (per Mcf)

$

2.34

$

2.93

$

5.33

$

3.59

$

2.46

$

3.96

$

4.84

$

5.03

$

4.09

Average price (per Mcfe)

$

2.44

$

11.03

$

13.19

$

4.75

$

4.70

$

4.03

$

7.49

$

5.55

$

4.55

Average price including    hedging (per Mcfe)

$

2.44

$

11.57

$

13.83

$

4.75

$

4.84

$

4.03

$

7.49

$

5.55

$

4.55

Production taxes

$

699

$

2,243

$

758

$

156

$

3,856

$

(1,103)

$

1,155

$

89

$

141

Gathering and transportation

$

5,503

$

432

$

349

$

98

$

6,382

$

7,630

$

369

$

102

$

8,101

Lease operating

$

8,341

$

3,658

$

2,541

$

963

$

15,503

$

8,188

$

3,464

$

875

$

12,527

Production taxes (per Mcfe)

$

0.04

$

0.48

$

0.61

$

0.30

$

0.16

$

(0.05)

$

0.31

$

0.13

$

0.01

Gathering and transportation

   (per Mcfe)

$

0.31

$

0.09

$

0.28

$

0.19

$

0.26

$

0.35

$

0.10

$

0.15

$

0.31

Lease operating (per Mcfe)

$

0.47

$

0.78

$

2.06

$

1.82

$

0.64

$

0.37

$

0.94

$

1.31

$

0.47

Oil and Gas Capital Expenditures:

Leasehold costs

$

2,015

$

1,903

$

4,135

$

$

8,053

$

10,509

$

3,241

$

2,911

$

16,661

Exploratory drilling

408

497

905

4,201

7,721

11,922

Development drilling

9,418

21,675

58,441

89,534

64,350

50,969

757

116,076

Other development

256

45

122

64

487

1,706

512

77

2,295

Total

$

12,097

$

24,120

(a)

$

62,698

$

64

$

98,979

(a)

$

80,766

$

62,443

$

3,745

$

146,954

(a)

Net of reimbursements received of $23,804 under the Company's Eagle Ford shale joint venture.

 

 

 

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

 

For the Nine Months Ended September 30, 2012

For the Nine Months Ended September 30, 2011

East Texas/

North

Louisiana

South

Texas

West

Texas

Other

Total

East Texas/

North

Louisiana

South

Texas

Other

Total

Oil production (Mbbls)

69

1,285

369

25

1,748

89

385

18

492

Gas production (MMcf)

55,745

6,807

474

1,541

64,567

56,706

8,494

1,962

67,162

Total production (MMcfe)

56,162

14,514

2,686

1,693

75,055

57,237

10,801

2,075

70,113

Oil sales

$

6,714

$

132,367

$

32,493

$

2,582

$

174,156

$

8,000

$

35,885

$

1,654

$

45,539

Hedging gains

3,592

1,066

4,658

Total oil, including hedging

6,714

135,959

33,559

2,582

178,814

8,000

35,885

1,654

45,539

Natural gas sales

125,438

20,472

2,767

4,663

153,340

224,069

40,458

9,845

274,372

Total oil and gas sales

$

132,152

$

156,431

$

36,326

$

7,245

$

332,154

$

232,069

$

76,343

$

11,499

$

319,911

Average oil price (per barrel)

$

96.75

$

103.05

$

88.11

$

102.07

$

99.63

$

90.25

$

93.32

$

88.73

$

92.59

Average oil price including    hedging (per barrel)

$

96.75

$

105.84

$

91.00

$

102.07

$

102.30

$

90.25

$

93.32

$

88.73

$

92.59

Average gas price (per Mcf)

$

2.25

$

3.01

$

5.84

$

3.03

$

2.37

$

3.95

$

4.76

$

5.02

$

4.09

Average price (per Mcfe)

$

2.35

$

10.53

$

13.13

$

4.28

$

4.36

$

4.05

$

7.07

$

5.54

$

4.56

Average price including     hedging (per Mcfe)

$

2.35

$

10.78

$

13.52

$

4.28

$

4.43

$

4.05

$

7.07

$

5.54

$

4.56

Production taxes

$

2,106

$

6,526

$

1,667

$

574

$

10,873

$

(1,009)

$

2,653

$

586

$

2,230

Gathering and transportation

$

18,580

$

1,939

$

758

$

335

$

21,612

$

18,840

$

1,182

$

318

$

20,340

Lease operating

$

24,979

$

10,512

$

5,587

$

3,122

$

44,200

$

23,183

$

10,451

$

2,878

$

36,512

Production taxes (per Mcfe)

$

0.04

$

0.45

$

0.62

$

0.34

$

0.14

$

(0.02)

$

0.25

$

0.28

$

0.03

Gathering and transportation    (per Mcfe)

$

0.33

$

0.13

$

0.28

$

0.20

$

0.29

$

0.33

$

0.11

$

0.15

$

0.29

Lease operating (per Mcfe)

$

0.44

$

0.73

$

2.08

$

1.84

$

0.59

$

0.41

$

0.96

$

1.39

$

0.52

Oil and Gas Capital Expenditures:

Acquisitions

$

$

$

3,235

$

$

3,235

$

$

$

$

Leasehold costs

5,813

6,218

12,149

24,180

25,893

22,506

4,222

52,621

Exploratory drilling

976

2,825

3,801

31,091

46,516

77,607

Development drilling

99,962

157,569

138,166

395,697

283,377

75,310

1,530

360,217

Other development

1,241

660

331

195

2,427

3,557

1,621

369

5,547

Total

$

107,992

$

167,272

(a)

$

153,881

$

195

$

429,340

(a)

$

343,918

$

145,953

$

6,121

$

495,992

(a)

Net of reimbursements received of $23,804 under the Company's Eagle Ford shale joint venture.

 

SOURCE Comstock Resources, Inc.



RELATED LINKS

http://www.comstockresources.com