Comstock Resources, Inc. Reports Fourth Quarter and Annual 2010 Financial and Operating Results

News provided by

Comstock Resources, Inc.

Feb 07, 2011, 04:10 ET

FRISCO, Texas, Feb. 7, 2011 /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, 2010.  

Financial Results for the Three Months and Year Ended December 31, 2010

Comstock reported a net loss of $20.6 million or 45 cents per share for the three months ended December 31, 2010 as compared to a net loss of $6.8 million or 15 cents per share for the three months ended December 31, 2009.  Included in the net loss for the fourth quarter of 2010 is a loss of $25.8 million before income taxes ($16.8 million after tax) resulting from the sale of the Company's Mississippi properties in the quarter.  Excluding this loss on the divestiture, the net loss for the fourth quarter of 2010 would have been $3.8 million or 8 cents per share.

Production in the fourth quarter of 2010 was 17.3 billion cubic feet of natural gas equivalent ("Bcfe").  Production from the Company's Haynesville shale wells of 94.2 million cubic feet of natural gas equivalent ("MMcfe") per day accounted for 50% of the Company's total production of 187.6 MMcfe per day in the fourth quarter of 2010, as compared to 83.6 MMcfe per day (40%) during the fourth quarter of 2009.  Comstock completed eleven Haynesville shale wells during the fourth quarter of 2010, overcoming the shortage of pressure pumping completion services which impacted completion activity in the second and third quarters of 2010.  The increased Haynesville shale production was offset in part by the effect of 5 MMcfe per day of well shut-ins during the fourth quarter.

Natural gas prices declined in the fourth quarter of 2010 as compared to natural gas prices during the fourth quarter of 2009.  Comstock's average realized natural gas price decreased 16% to $3.73 per Mcf for the fourth quarter of 2010 as compared to $4.43 per Mcf in the fourth quarter of 2009.  The Company's average realized oil price increased by 15% to $74.75 per barrel for the fourth quarter of 2010 as compared to $64.76 per barrel in the fourth quarter of 2009.  The lower natural gas prices resulted in a 21% decrease in oil and gas sales which were $72.7 million in the fourth quarter of 2010 as compared to 2009's fourth quarter sales of $91.9 million.  Operating cash flow (before changes in working capital accounts) was $44.9 million in the fourth quarter of 2010 and EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses, was $51.3 million.  

Comstock reported a net loss of $19.6 million or 43 cents per share for the year ended December 31, 2010 as compared to a net loss of $36.5 million or 81 cents per share for the year ended December 31, 2009.  Excluding the loss resulting from the sale of the Mississippi properties, the net loss for the year ended December 31, 2010 would have been $2.8 million or 6 cents per share.  Production in 2010 increased 12% to 73.3 Bcfe as compared to the 65.5 Bcfe produced during 2009.  Comstock averaged $4.35 per Mcf for sales of its natural gas production in 2010, 5% higher than the $4.16 per Mcf realized during 2009.  Realized oil prices in 2010 averaged $68.35 per barrel, 34% higher than the $50.94 per barrel in 2009.  The higher production and improved oil and gas prices resulted in a 19% increase in oil and gas sales for 2010, which were $349.1 million as compared with $292.6 million in 2009.  Operating cash flow (before changes in working capital accounts) generated by Comstock for 2010 was $219.7 million while EBITDAX was $249.1 million.  

2010 Drilling Results

Comstock reported on the results of its 2010 drilling program.  The Company spent $537 million during 2010 on its exploration and development activities, $396 million of which was spent on drilling activities, $138 million of which was spent to acquire leases and $3 million of which was spent to acquire seismic data.  During 2010 Comstock drilled 78 wells (49.3 net wells).  The drilling program added 431 Bcfe of proved reserves in 2010 and were the primary driver of the Company's 45% growth in proved oil and gas reserves achieved in 2010.  As of December 31, 2010, the Company also had seven wells in the process of drilling, including six in the Haynesville or Bossier shale and one in the Eagle Ford shale.

In the East Texas/North Louisiana region, Comstock drilled 73 wells (45.5 net) during 2010.  Seventy-two of the wells were Haynesville or Bossier shale wells.  Thirty-seven of the 72 Haynesville or Bossier shale wells drilled in 2010 were completed and put on production at an average per well initial production rate of 10.4 MMcfe per day.  Comstock had 35 (23.4 net) wells that were drilled in 2010 but were not completed due to unavailability of pressure pumping completion services.  Comstock has secured sufficient completion services in 2011 to allow the Company to complete these wells.  Comstock operates 26 (22.1 net) of the uncompleted wells.

In addition to its Haynesville shale horizontal drilling program, Comstock drilled two vertical wells during 2010.  Comstock successfully completed a Cotton Valley well in its Blocker field in East Texas and also completed the Julian Pasture #4 in its Ball Ranch field in South Texas.

Comstock also reported early results from its drilling program on its Eagle Ford shale acreage in South Texas.  Comstock has drilled three wells (3.0 net), one in each of Atascosa, Karnes and McMullen counties.  These wells were all located in the oil window of the Eagle Ford shale play.  The NWR #1H was drilled in Atascosa County to a vertical depth of 8,706 feet with a 5,209 foot lateral.  After frac, this well produced an initial rate of 381 barrels of oil per day and is currently producing to sales on a restricted choke and is on a very shallow production decline.  The Rancho Tres Hijos #1H well was drilled in McMullen County to a vertical depth of 8,715 feet with a 4,091 foot lateral.  After frac, this well flowed at an initial rate approaching 432 barrels of oil per day and is currently producing to sales on a restricted choke and it is also on a very shallow production decline.  The third well, the Coates #1, was drilled in Karnes County to a vertical depth of 9,706 feet with a 5,422 foot lateral.  This well is currently flowing back frac fluids after its completion.

Comstock has planned a conference call for 9:30 a.m. Central Time on Tuesday, February 8, 2011, to discuss the operational and financial results for the fourth quarter of 2010.  Investors wishing to participate should visit the Company's website at www.comstockresources.com for a live web cast or dial 1-866-277-1181 (international dial-in use 617-597-5358) and provide access code 20977380 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.

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,


2010

2009

2010

2009

















Revenues:















Oil and gas sales                                           

$

72,650

$

91,921

$

349,141

$

292,583

Gain on sale of properties                    

—


213


—


213

Operating expenses:















Production taxes                                            

351


3,157


9,894


8,643

Gathering and transportation                                   

4,948


4,734


17,256


8,696

Lease operating                                             

12,375


12,545


53,525


53,560

Exploration                                                 

99


536


2,605


907

Depreciation, depletion and amortization                         

50,206


61,237


213,809


213,238

Impairment of oil and gas properties                             

11


—


224


115

Loss on sale of properties                                     

25,835


—


26,632


—

General and administrative                                    

8,235


11,613


37,200


39,172

















Total operating expenses                                 

102,060


93,822


361,145


324,331

















Operating loss                                                   

(29,410)


(1,688)


(12,004)


(31,535)

















Other income (expenses):















Interest income                                             

—


210


263


245

Other income                                               

91


18


236


133

Gain on sale of marketable securities                            

10,837


—


16,529


—

Interest expense                                            

(6,905)


(7,779)


(29,456)


(16,086)

















Total other income (expenses)                             

4,023


(7,551)


(12,428)


(15,708)

















Loss before income taxes                                         

(25,387)


(9,239)


(24,432)


(47,243)

Benefit from income taxes                                         

4,778


2,472


4,846


10,772

Net loss                                                       

$

(20,609)

$

(6,767)

$

(19,586)

$

(36,471)

















Net loss per share:















Basic                                                     

$

(0.45)

$

(0.15)

$

(0.43)

$

(0.81)

Diluted                                                    

$

(0.45)

$

(0.15)

$

(0.43)

$

(0.81)

















Weighted average shares outstanding:















Basic                                                     

45,631


45,042


45,561


45,004

Diluted(1)                                                  

45,631


45,042


45,561


45,004

(1)  Basic and diluted shares are the same due to the net loss.

COMSTOCK RESOURCES, INC.

OPERATING RESULTS

(In thousands)



Three Months Ended
December 31,

Year Ended
December 31,


2010

2009

2010

2009

















OPERATING CASH FLOW:















Net loss                                                       

$

(20,609)

$

(6,767)

$

(19,586)

$

(36,471)

Reconciling items:  















Deferred income taxes                                         

(4,748)


8,478


(4,617)


30,796

Depreciation, depletion and amortization                            

50,206


61,237


213,809


213,238

Impairment of oil and gas properties                               

11


—


224


115

(Gain) loss on sale of assets                                     

14,998


(213)


10,103


(213)

Debt issuance costs and discount amortization                       

602


554


2,436


1,162

Stock-based compensation                                       

4,447


4,250


17,377


15,783

Operating cash flow                                        

44,907


67,539


219,746


224,410

Excess tax benefit from stock-based compensation             

12


(123)


(1,491)


(1,097)

Decrease (increase) in accounts receivable                   

(12,528)


(10,046)


(4,432)


1,997

Decrease (increase) in other current assets                   

(1,358)


(4,549)


48,070


(27,927)

Increase (decrease) in accounts payable and accrued expenses 

31,393


5,586


49,769


(21,126)

















Net cash provided by operating activities                   

$

62,426

$

58,407

$

311,662

$

176,257

















EBITDAX:















Net loss                                                      

$

(20,609)

$

(6,767)

$

(19,586)

$

(36,471)

Interest expense                                               

6,905


7,779


29,456


16,086

Income tax benefit                                              

(4,778)


(2,472)


(4,846)


(10,772)

Depreciation, depletion and amortization                             

50,206


61,237


213,809


213,238

Impairment of oil and gas properties                                

11


—


224


115

(Gain) loss on sale of assets                                     

14,998


(213)


10,103


(213)

Stock-based compensation                                       

4,447


4,250


17,377


15,783

Exploration                                                   

99


536


2,605


907

















EBITDAX                                            

$

51,279

$

64,350

$

249,142

$

198,673





















As of December 31,


2010

2009









BALANCE SHEET DATA:







Cash and cash equivalents                                           

$

1,732

$

90,472

Income taxes receivable                                             

—


42,402

Marketable securities                                                

84,637


95,973

Other current assets                                                 

49,362


44,539

Property and equipment, net                                           

1,816,248


1,576,287

Other                                                             

12,235


9,288









Total assets                                                    

$

1,964,214

$

1,858,961









Accounts payable and accrued expenses                               

$

155,064

$

94,771

Long-term debt                                                     

513,372


470,836

Deferred income taxes                                               

217,993


220,682

Other non-current liabilities                                           

9,254


6,561

Stockholders' equity                                                 

1,068,531


1,066,111









Total liabilities and stockholders' equity                               

$

1,964,214

$

1,858,961

COMSTOCK RESOURCES, INC.

REGIONAL OPERATING RESULTS

(In thousands, except per unit amounts)



For the Three Months Ended
December 31, 2010

For the Three Months Ended
December 31, 2009


East
Texas/










East
Texas/











North

South







North

South








Louisiana

Texas

Other

Total

Louisiana

Texas

Other

Total

Oil production (thousand barrels)

33


43


82


158


43


42


106


191

Gas production (MMcf)

12,637


3,130


549


16,316


12,770


4,356


817


17,943

Total production (MMcfe)

12,835


3,383


1,042


17,260


13,031


4,603


1,454


19,088

































Oil sales

$

2,667

$

3,517

$

5,573

$

11,757

$

3,125

$

3,034

$

6,199

$

12,358

Gas sales

45,356


13,278


2,259


60,893


50,623


19,279


3,671


73,573

Gas hedging gains

—


—


—


—


—


5,990


—


5,990

Total gas sales

45,356


13,278


2,259


60,893


50,623


25,269


3,671


79,563

Total oil and gas sales

$

48,023

$

16,795

$

7,832

$

72,650

$

53,748

$

28,303

$

9,870

$

91,921

































Average oil price (per barrel)

$

80.63

$

83.16

$

68.03

$

74.75

$

72.04

$

73.78

$

58.31

$

64.76

Average gas price (per Mcf)

$

3.59

$

4.24

$

4.11

$

3.73

$

3.96

$

4.43

$

4.49

$

4.10

Average gas price including hedging (per Mcf)

$

3.59

$

4.24

$

4.11

$

3.73

$

3.96

$

5.80

$

4.49

$

4.43

Average price (per Mcfe)

$

3.74

$

4.96

$

7.52

$

4.21

$

4.12

$

4.85

$

6.79

$

4.50

Average price including hedging
(per Mcfe)

$

3.74

$

4.96

$

7.52

$

4.21

$

4.12

$

6.15

$

6.79

$

4.82

































Production taxes

$

(781)

$

682

$

450

$

351

$

2,906

$

(329)

$

580

$

3,157

Gathering and transportation

$

4,189

$

643

$

116

$

4,948

$

4,031

$

587

$

116

$

4,734

Lease operating

$

6,162

$

3,667

$

2,546

$

12,375

$

6,207

$

3,478

$

2,860

$

12,545

Production taxes (per Mcfe)

$

(0.06)

$

0.20

$

0.43

$

0.02

$

0.22

$

(0.07)

$

0.40

$

0.17

Gathering and transportation
(per Mcfe)

$

0.33

$

0.19

$

0.11

$

0.29

$

0.31

$

0.13

$

0.08

$

0.25

Lease operating (per Mcfe)

$

0.48

$

1.09

$

2.45

$

0.71

$

0.48

$

0.75

$

1.97

$

0.65

































Oil and Gas Capital Expenditures:































Leasehold costs

$

5,387

$

2,100

$

15

$

7,502

$

17,343

$

173

$

79

$

17,595

Exploratory drilling

9,718


19,185


—


28,903


10,196


4


—


10,200

Development drilling

96,913


7,441


101


104,455


61,162


846


152


62,160

Other development

34


210


78


322


538


430


17


985

Total

$

112,052

$

28,936

$

194

$

141,182

$

89,239

$

1,453

$

248

$

90,940



For the Year Ended
December 31, 2010

For the Year Ended
December 31, 2009


East
Texas/










East
Texas/











North

South







North

South








Louisiana

Texas

Other

Total

Louisiana

Texas

Other

Total

Oil production (thousand barrels)

147


157


411


715


210


164


401


775

Gas production (MMcf)

52,038


14,437


2,498


68,973


39,048


18,921


2,851


60,820

Total production (MMcfe)

52,920


15,376


4,966


73,262


40,309


19,902


5,257


65,468

































Oil sales

$

11,237

$

12,088

$

25,524

$

48,849

$

11,310

$

9,344

$

18,802

$

39,456

Gas sales

219,387


68,915


11,990


300,292


141,632


74,572


10,601


226,805

Gas hedging gains

—


—


—


—


—


26,322


—


26,322

Total gas sales

219,387


68,915


11,990


300,292


141,632


100,894


10,601


253,127

Total oil and gas sales

$

230,624

$

81,003

$

37,514

$

349,141

$

152,942

$

110,238

$

29,403

$

292,583

































Average oil price (per barrel)

$

76.37

$

77.21

$

62.10

$

68.35

$

53.83

$

57.19

$

46.88

$

50.94

Average gas price (per Mcf)

$

4.22

$

4.77

$

4.80

$

4.35

$

3.63

$

3.94

$

3.72

$

3.73

Average gas price including hedging (per Mcf)

$

4.22

$

4.77

$

4.80

$

4.35

$

3.63

$

5.33

$

3.72

$

4.16

Average price (per Mcfe)

$

4.36

$

5.27

$

7.55

$

4.77

$

3.79

$

4.22

$

5.59

$

4.07

Average price including hedging
(per Mcfe)

$

4.36

$

5.27

$

7.55

$

4.77

$

3.79

$

5.54

$

5.59

$

4.47

































Production taxes

$

5,837

$

1,990

$

2,067

$

9,894

$

4,862

$

2,041

$

1,740

$

8,643

Gathering and transportation

$

14,762

$

2,086

$

408

$

17,256

$

5,475

$

2,773

$

448

$

8,696

Lease operating

$

28,000

$

14,027

$

11,498

$

53,525

$

26,696

$

14,536

$

12,328

$

53,560

Production taxes (per Mcfe)

$

0.11

$

0.13

$

0.42

$

0.14

$

0.12

$

0.10

$

0.33

$

0.13

Gathering and transportation
(per Mcfe)

$

0.28

$

0.14

$

0.08

$

0.24

$

0.14

$

0.14

$

0.09

$

0.13

Lease operating (per Mcfe)

$

0.53

$

0.91

$

2.31

$

0.72

$

0.66

$

0.73

$

2.34

$

0.82

































Oil and Gas Capital Expenditures:































Leasehold costs

$

55,788

$

81,975

$

173

$

137,936

$

26,887

$

817

$

234

$

27,938

Exploratory drilling

59,579


25,561


—


85,140


99,113


1,936


—


101,049

Development drilling

294,399


9,506


1,505


305,410


178,349


27,279


273


205,901

Other development

2,251


2,559


838


5,648


4,574


4,662


343


9,579

Total

$

412,017

$

119,601

$

2,516

$

534,134

$

308,923

$

34,694

$

850

$

344,467

SOURCE Comstock Resources, Inc.

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