COMSTOCK RESOURCES, INC. REPORTS FIRST QUARTER 2020 FINANCIAL AND OPERATING RESULTS


FRISCO, TX, May 06, 2020 (GLOBE NEWSWIRE) -- Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter ended March 31, 2020. On July 16, 2019, Comstock completed the acquisition of Covey Park Energy LLC ("Covey Park"). The Company's financial results include the results of operations of Covey Park in the first quarter of 2020.

Financial Results for the Three Months Ended March 31, 2020

For the first quarter of 2020, Comstock reported net income available to common stockholders of $30.0 million or $0.15 per diluted share. Net income available to common stockholders as adjusted to exclude certain items not related to normal operating activities for the first quarter of 2020 was $23.6 million or $0.12 per diluted share. These items included $5.3 million in non-cash interest amortization resulting from adjusting debt assumed in the Covey Park acquisition to fair value; $2.5 million of non-cash accretion resulting from adjusting the preferred stock issued in connection with the Covey Park acquisition to fair value; and $16.5 million in unrealized hedging gains. 

Comstock produced 122.8 billion cubic feet ("Bcf") of natural gas and 454,495 barrels of oil or 125.5 billion cubic feet of natural gas equivalent ("Bcfe") in the first quarter of 2020. Natural gas production averaged 1,349 million cubic feet ("MMcf") per day, an increase of 270% over natural gas production in the first quarter of 2019. The growth in natural gas production was primarily attributable to the Covey Park acquisition and the successful results from Comstock's Haynesville shale drilling activities in 2019 and 2020. Oil production in the first quarter of 2020 decreased to 4,994 barrels of oil per day from 9,005 barrels per day produced in the first quarter of 2019 due primarily to expected production declines from the Bakken Shale properties acquired in 2018. 

Comstock's average realized natural gas price in the first quarter of 2020, including hedging, decreased to $2.04 per Mcf as compared to $2.87 per Mcf realized in the first quarter of 2019. The Company's average realized oil price in the first quarter of 2020, including hedging, increased to $46.31 per barrel as compared to $45.78 per barrel in the first quarter of 2019. Oil and gas sales were $271.3 million (including realized hedging gains) in the first quarter of 2020 as compared to sales of $132.3 million in the first quarter of 2019. EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses, of $201.6 million in the first quarter of 2020 increased by 108% over EBITDAX of $96.9 million for the first quarter of 2019. The Company's operating cash flow generated in the first quarter of 2020 of $156.0 million increased 120% over operating cash flow of $70.8 million in the first quarter of 2019.

Drilling Results

Total expenditures in the first quarter of 2020 for drilling and development activities were $130.5 million. Comstock spent $128.3 million to develop its Haynesville and Bossier shale properties, including $122.1 million on drilling and completing wells and an additional $6.2 million on other development activity. Comstock drilled 13 (9.6 net) horizontal operated Haynesville shale wells during the first three months of 2020, which had an average lateral length of approximately 9,200 feet. Comstock also participated in 7 (0.4 net) non-operated Haynesville shale wells in the first quarter of 2020. During the first quarter of 2020, Comstock had 21 (11.5 net) Haynesville shale wells turn to sales and had 32 (13.5 net) wells in the process of being completed or waiting to be completed.
     
Since its last operational update, Comstock reported on an additional twenty Haynesville shale wells. The average initial production rate of these wells was 24 MMcf per day. The wells had completed lateral lengths ranging from 4,574 feet to 9,885 feet, with an average completed lateral length of 8,758 feet.  Each well was tested at initial production rates of 15 to 32 MMcf per day.

Other Matters

“Our natural gas operations in East Texas and North Louisiana have not been adversely impacted by COVID-19 virus pandemic”, stated M. Jay Allison, Chief Executive Officer of the Company. “We have modified our procedures and practices to minimize unnecessary risk of exposure and prevent infection among our employees and our contractors. Our operations team has continued to execute on our drilling program with little disruption and production operations have not been impacted. While natural gas prices are expected to remain low in the near-term as we manage through an oversupplied market resulting from the winter heating season, we anticipate a much healthier supply and demand balance for natural gas later this year and in 2021. Our improved outlook for the natural gas markets is primarily driven by our expectation for significant declines in natural gas supply in 2020 and 2021 due to a continued reduction in natural gas directed drilling and completion activity and less associated gas production from reduced activity in oil basins driven by the very low oil prices post COVID-19.”

Following the end of the quarter, the Company completed its scheduled semi-annual borrowing base redetermination under its revolving bank credit facility, resulting in the bank group decreasing the borrowing base from $1.575 billion to $1.4 billion. The commitment level was reduced from $1.5 billion to $1.4 billion. The decrease is related to lowered oil and natural gas prices that the banks used to determine the borrowing base.

Comstock has planned a conference call for 10:00 a.m. Central Time on May 7, 2020, to discuss the first quarter of 2020 operational and financial results. Investors wishing to participate should visit the Company's website at www.comstockresources.com for a live web cast or dial 844-776-7840 (international dial-in use 661-378-9538) and provide access code 8355627 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 1:00 p.m. CT May 7, 2020 and will continue until 1:00 p.m. May 14, 2020. To hear the replay, call 855-859-2056 (404-537-3406 if calling from outside the US). The conference call access code is 8355627.

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 engaged in oil and gas acquisitions, exploration and development, and its assets are primarily located in Texas, Louisiana and North Dakota. 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 March 31, 
  2020  2019 
Revenues:        
Natural gas sales $207,239  $90,132 
Oil sales  18,639   36,749 
Total oil and gas sales  225,878   126,881 
Operating expenses:        
Production taxes  5,567   5,939 
Gathering and transportation  28,411   7,430 
Lease operating  28,712   14,885 
Exploration  27    
Depreciation, depletion and amortization  110,425   37,590 
General and administrative  8,719   7,814 
Gain on sale of oil and gas properties     (1)
Total operating expenses  181,861   73,657 
Operating income  44,017   53,224 
Other income (expenses):        
Gain (loss) from derivative financial instruments  61,899   (7,657)
Other income  313   93 
Interest expense  (52,810)  (27,851)
Total other income (expenses)  9,402   (35,415)
Income before income taxes  53,419   17,809 
Provision for income taxes  (11,391)  (4,234)
Net income  42,028   13,575 
Preferred stock dividends and accretion  (12,072)   
Net income available to common stockholders $29,956  $13,575 
         
Net income per share:        
Basic $0.16  $0.13 
Diluted $0.15  $0.13 
Weighted average shares outstanding:        
Basic  188,916   105,457 
Diluted  285,166   105,457 

                                                                                                                                                                                       

COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands)

  Three Months Ended March 31, 
OPERATING CASH FLOW: 2020  2019 
    
Net income $42,028  $13,575 
Reconciling items:        
Deferred and non-current income taxes  11,330   4,352 
Depreciation, depletion and amortization  110,425   37,590 
Unrealized (gain) loss from derivative financial instruments  (16,483)  13,045 
Amortization of debt discount, premium and issuance costs  7,199   1,574 
Stock-based compensation  1,430   648 
Exploration  27    
Gain on sale of oil and gas properties     (1)
Operating cash flow  155,956   70,783 
Decrease in accounts receivable  54,297   10,783 
(Increase) decrease in other current assets  (3,828)  1,577 
Decrease in accounts payable and accrued expenses  (56,306)  (8,428)
Net cash provided by operating activities $150,119  $74,715 
         
EBITDAX:        
Net income $42,028  $13,575 
Interest expense  52,810   27,851 
Income taxes  11,391   4,234 
Depreciation, depletion, and amortization  110,425   37,590 
Unrealized (gain) loss from derivative financial instruments  (16,483)  13,045 
Exploration  27    
Stock-based compensation  1,430   648 
Gain on sale of oil and gas properties     (1)
Total EBITDAX $201,628  $96,942 
         
  As of  As of 
BALANCE SHEET: March 31, 2020  December 31, 2019 
Cash and cash equivalents $15,527  $18,532 
Derivative financial instruments  108,656   89,192 
Other current assets  150,489   195,849 
Property and equipment, net  4,029,113   4,008,803 
Other  339,956   344,746 
Total assets $4,643,741  $4,657,122 
         
Current liabilities $327,619  $392,376 
Derivative financial instruments  4,380   4,220 
Long-term debt  2,507,284   2,500,132 
Deferred income taxes  223,104   211,772 
Asset retirement obligation  18,613   18,151 
Other non-current liabilities  6,265   7,866 
Preferred stock  382,083   379,583 
Stockholders' equity  1,174,393   1,143,022 
Total liabilities and stockholders' equity $4,643,741  $4,657,122 

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

  For the Three Months Ended March 31, 2020 
  Haynesville  Bakken  Other  Total 
Gas production (MMcf)  115,585   2,348   4,853   122,786 
Oil production (Mbbls)  3   426   25   454 
Total Production (MMcfe)  115,601   4,908   5,004   125,513 
                 
Natural gas sales $198,146  $962  $8,131  $207,239 
Natural gas hedging settlements (a)           43,005 
Total natural gas including hedging  198,146   962   8,131   250,244 
Oil sales  114   17,472   1,053   18,639 
Oil hedging settlements (a)           2,410 
Total oil including hedging  114   17,472   1,053   21,049 
Total oil and gas sales including hedging $198,260  $18,434  $9,184  $271,293 
                 
Average gas price (per Mcf) $1.71  $0.41  $1.68  $1.69 
Average gas price including hedging (per Mcf)             $2.04 
Average oil price (per barrel) $43.48  $40.96  $42.13  $41.01 
Average oil price including hedging (per barrel)             $46.31 
Average price (per Mcfe) $1.72  $3.76  $1.84  $1.80 
Average price including hedging (per Mcfe)             $2.16 
                 
Production taxes $3,011  $1,902  $654  $5,567 
Gathering and transportation $26,293  $  $2,118  $28,411 
Lease operating $18,157  $4,430  $6,125  $28,712 
                 
Production taxes (per Mcfe) $0.03  $0.39  $0.13  $0.04 
Gathering and transportation (per Mcfe) $0.23  $  $0.42  $0.23 
Lease operating (per Mcfe) $0.15  $0.90  $1.23  $0.23 
                 
Oil and Gas Capital Expenditures:                
Development leasehold $3,747  $8  $126  $3,881 
Development drilling and completion  122,058         122,058 
Other development  2,481   1,264   816   4,561 
Total $128,286  $1,272  $942  $130,500 

                                                                                               

(a)    Included in gain from derivative financial instruments in operating results.
      


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

  For the Three Months Ended March 31, 2019 
  Haynesville  Bakken  Other  Total 
Gas production (MMcf)  31,364   768   1,017   33,149 
Oil production (Mbbls)     799   11   810 
Total Production (MMcfe)  31,364   5,562   1,086   38,012 
                 
Natural gas sales $85,738  $1,500  $2,894  $90,132 
Natural gas hedging settlements (a)           5,033 
Total natural gas including hedging  85,738   1,500   2,894   95,165 
Oil sales  4   36,147   598   36,749 
Oil hedging settlements (a)           355 
Total oil including hedging  4   36,147   598   37,104 
Total oil and gas sales including hedging $85,742  $37,647  $3,492  $132,269 
                 
Average gas price (per Mcf) $2.73  $1.95  $2.85  $2.72 
Average gas price including hedging (per Mcf)             $2.87 
Average oil price (per barrel) $49.47  $45.24  $54.36  $45.34 
Average oil price including hedging (per barrel)             $45.78 
Average price (per Mcfe) $2.73  $6.77  $3.22  $3.34 
Average price including hedging (per Mcfe)             $3.48 
                 
Production taxes $1,732  $4,073  $134  $5,939 
Gathering and transportation $7,273  $  $157  $7,430 
Lease operating $4,933  $6,519  $3,433  $14,885 
                 
Production taxes (per Mcfe) $0.06  $0.73  $0.12  $0.16 
Gathering and transportation (per Mcfe) $0.23  $  $0.14  $0.20 
Lease operating (per Mcfe) $0.15  $1.17  $3.17  $0.38 
                 
Oil and Gas Capital Expenditures:                
Development leasehold $1,857        $1,857 
Development drilling and completion  82,638   (953)  5,648   87,333 
Other development  3,279         3,279 
Total $87,774  $(953) $5,648  $92,469 

                                                                                               

(a)    Included in gain from derivative financial instruments in operating results.
      


            

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