COMSTOCK RESOURCES, INC. REPORTS SECOND QUARTER 2024 FINANCIAL AND OPERATING RESULTS


FRISCO, TX, July 30, 2024 (GLOBE NEWSWIRE) -- Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter ended June 30, 2024.

Highlights of 2024's Second Quarter

  • Very weak natural gas prices weighed heavily on the second quarter financial results.
  • Natural gas and oil sales, including realized hedging gains, were $278 million.
  • Operating cash flow was $118 million or $0.41 per diluted share.
  • Adjusted EBITDAX for the quarter was $167 million.
  • Adjusted net loss was $58.2 million or $0.20 per share for the quarter.
  • Enhanced liquidity with $400 million, 6.75% senior notes issuance.
  • Steady results from the Haynesville shale drilling program with 15 (14.4 net) operated wells turned to sales since the Company's last update with an average initial production of 21 MMcf per day.

Financial Results for the Three Months Ended June 30, 2024

Comstock's realized gas price for the second quarter of 2024 averaged $1.65 per Mcf without hedging and $2.12 per Mcf after hedging. As a result, Comstock's natural gas and oil sales in the second quarter of 2024 decreased to $278.2 million (including realized hedging gains of $60.6 million) despite a 4% increase in production as compared to the second quarter of 2023. Operating cash flow (excluding changes in working capital) generated in the second quarter of 2024 was $118.1 million, and net loss for the second quarter was $123.2 million or $0.43 per share. Net loss in the quarter included a pre-tax $85.8 million unrealized loss on hedging contracts held for risk management. Excluding this item, adjusted net loss for the second quarter of 2024 was $58.2 million, or $0.20 per share.

Comstock's production cost per Mcfe in the second quarter averaged $0.84 per Mcfe, which was comprised of $0.38 for gathering and transportation costs, $0.27 for lease operating costs, $0.14 for production and other taxes and $0.05 for cash general and administrative expenses. Comstock's unhedged operating margin was 50% in the second quarter of 2024 and 61% after hedging.

Financial Results for the Six Months Ended June 30, 2024

Natural gas and oil sales for the six months ended June 30, 2024 totaled $614.1 million (including realized hedging gains of $108.5 million). Operating cash flow (excluding changes in working capital) generated during the first six months of 2024 was $300.1 million, and net loss was $137.7 million or $0.49 per share. Net loss during the first six months of 2024 included a pre-tax $94.5 million unrealized loss on hedging contracts held for risk management. Excluding this item, adjusted net loss for the six months ended June 30, 2024 was $66.8 million or $0.24 per share.

Comstock's production cost per Mcfe during the six months ended June 30, 2024 averaged $0.79 per Mcfe, which was comprised of $0.36 for gathering and transportation costs, $0.26 for lease operating costs, $0.13 for production and other taxes and $0.04 for cash general and administrative expenses. Comstock's unhedged operating margin was 57% during the first six months of 2024 and 65% after hedging.

Drilling Results

Comstock drilled 11 (9.2 net) operated horizontal Haynesville/Bossier shale wells in the second quarter of 2024 which had an average lateral length of 11,346 feet. Comstock turned 12 (11.7 net) operated wells to sales in the second quarter of 2024.

Since its last operational update in May, Comstock has turned 15 (14.4 net) operated Haynesville/Bossier shale wells to sales. These wells had initial daily production rates that averaged 21 MMcf per day. The completed lateral length of these wells averaged 9,802 feet.

Earnings Call Information

Comstock has planned a conference call for 10:00 a.m. Central Time on July 31, 2024, to discuss the second quarter 2024 operational and financial results. Investors wishing to listen should visit the Company's website at www.comstockresources.com for a live webcast. Investors wishing to participate in the conference call telephonically will need to register at https://register.vevent.com/register/BI3dd152694a074bc28172df7314b38 fa6. Upon registering to participate in the conference call, participants will receive the dial-in number and a personal PIN number to access the conference call. On the day of the call, please dial in at least 15 minutes in advance to ensure a timely connection to the call. The conference call will also be broadcast live in listen-only mode and can be accessed via the website URL: https://edge.media-server.com/mmc/p/w3stws2d.

If you are unable to participate in the original conference call, a web replay will be available for twelve months beginning at 1:00 p.m. CT on July 31, 2024. The replay of the conference can be accessed using the webcast link: https://edge.media-server.com/mmc/p/w3stws2d.

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. Information concerning the assumptions, uncertainties and risks that may affect the actual results can be found in the Company's filings with the Securities and Exchange Commission ("SEC") available on the Company's website or the SEC's website at sec.gov.

Comstock Resources, Inc. is a leading independent natural gas producer with operations focused on the development of the Haynesville shale in North Louisiana and East Texas. The Company's stock is traded on the New York Stock Exchange under the symbol CRK.

COMSTOCK RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

  Three Months Ended
June 30,
  Six Months Ended
June 30,
 
  2024  2023  2024  2023 
Revenues:            
Natural gas sales $216,527  $228,892  $503,610  $606,924 
Oil sales  1,074   860   1,950   2,802 
Total natural gas and oil sales  217,601   229,752   505,560   609,726 
Gas services  29,229   58,459   77,042   168,063 
Total revenues  246,830   288,211   582,602   777,789 
Operating expenses:            
Production and ad valorem taxes  19,244   19,599   37,152   34,505 
Gathering and transportation  49,361   45,395   96,460   90,969 
Lease operating  34,805   34,031   69,877   68,861 
Exploration           1,775 
Depreciation, depletion and amortization  194,242   140,177   384,931   274,160 
Gas services  31,494   55,390   80,174   156,685 
General and administrative  10,177   10,038   19,348   22,406 
(Gain) loss on sale of assets     648      (125)
Total operating expenses  339,323   305,278   687,942   649,236 
Operating income (loss)  (92,493)  (17,067)  (105,340)  128,553 
Other income (expenses):            
Gain (loss) from derivative financial instruments  (25,252)  (4,495)  14,055   61,914 
Other income  322   598   653   1,058 
Interest expense  (51,932)  (39,188)  (101,489)  (77,458)
Total other expenses  (76,862)  (43,085)  (86,781)  (14,486)
Income (loss) before income taxes  (169,355)  (60,152)  (192,121)  114,067 
(Provision for) benefit from income taxes  46,106   14,446   54,398   (25,270)
Net income (loss)  (123,249)  (45,706)  (137,723)  88,797 
Net income attributable to noncontrolling interest  (3,061)     (4,908)   
Net income (loss) available to Comstock $(126,310) $(45,706) $(142,631) $88,797 
             
Net income (loss) per share            
Basic $(0.43) $(0.17) $(0.49) $0.32 
Diluted $(0.43) $(0.17) $(0.49) $0.32 
Weighted average shares outstanding:            
Basic  289,670   276,669   283,816   276,610 
Diluted  289,670   276,669   283,816   276,610 
Dividends per share $  $0.125  $  $0.250 

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

  Three Months Ended June 30,  Six Months Ended June 30, 
  2024  2023  2024  2023 
Natural gas production (MMcf)  130,861   126,307   270,304   253,374 
Oil production (Mbbls)  15   13   27   40 
Total production (MMcfe)  130,949   126,386   270,464   253,612 
             
Natural gas sales $216,527  $228,892  $503,610  $606,924 
Natural gas hedging settlements (1)  60,552   55,494   108,547   65,877 
Total natural gas including hedging  277,079   284,386   612,157   672,801 
Oil sales  1,074   860   1,950   2,802 
Total natural gas and oil sales including hedging $278,153  $285,246  $614,107  $675,603 
             
Average natural gas price (per Mcf) $1.65  $1.81  $1.86  $2.40 
Average natural gas price including hedging (per Mcf) $2.12  $2.25  $2.26  $2.66 
Average oil price (per barrel) $71.60  $66.15  $72.22  $70.05 
Average price (per Mcfe) $1.66  $1.82  $1.87  $2.40 
Average price including hedging (per Mcfe) $2.12  $2.26  $2.27  $2.66 
             
Production and ad valorem taxes $19,244  $19,599  $37,152  $34,505 
Gathering and transportation  49,361   45,395   96,460   90,969 
Lease operating  34,805   34,031   69,877   68,861 
Cash general and administrative (2)  6,095   7,733   11,850   18,054 
Total production costs $109,505  $106,758  $215,339  $212,389 
             
Production and ad valorem taxes (per Mcfe) $0.14  $0.15  $0.13  $0.14 
Gathering and transportation (per Mcfe)  0.38   0.36   0.36   0.36 
Lease operating (per Mcfe)  0.27   0.27   0.26   0.27 
Cash general and administrative (per Mcfe)  0.05   0.06   0.04   0.07 
Total production costs (per Mcfe) $0.84  $0.84  $0.79  $0.84 
             
Unhedged operating margin  50%  54%  57%  65%
Hedged operating margin  61%  63%  65%  69%
             
Gas services revenue $29,229  $58,459  $77,042  $168,063 
Gas services expenses  31,494   55,390   80,174   156,685 
Gas services margin $(2,265) $3,069  $(3,132) $11,378 
             
Natural Gas and Oil Capital Expenditures:            
Unproved property acquisitions $9,694  $15,953  $79,138  $56,648 
Total natural gas and oil properties acquisitions $9,694  $15,953  $79,138  $56,648 
Exploration and Development:            
Development leasehold $2,592  $4,975  $6,530  $13,718 
Exploratory drilling and completion  52,392   74,622   158,848   104,312 
Development drilling and completion  151,350   231,038   297,143   511,214 
Other development costs  14,685   11,353   14,722   17,450 
Total exploration and development capital expenditures $221,019  $321,988  $477,243  $646,694 

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

(2)   Excludes stock-based compensation.

COMSTOCK RESOURCES, INC.
NON-GAAP FINANCIAL MEASURES
(In thousands, except per share amounts)

  Three Months Ended
June 30,
  Six Months Ended
June 30,
 
  2024  2023  2024  2023 
ADJUSTED NET INCOME (LOSS):            
Net income (loss) $(123,249) $(45,706) $(137,723) $88,797 
Unrealized loss from derivative financial instruments  85,804   59,989   94,492   3,963 
Exploration expense           1,775 
(Gain) loss on sale of assets     648      (125)
Adjustment to income taxes  (20,769)  (13,892)  (23,521)  (1,364)
Adjusted net income (loss) $(58,214) $1,039  $(66,752) $93,046 
             
Adjusted net income (loss) per share (2) $(0.20) $0.00  $(0.24) $0.33 
Diluted shares outstanding  289,670   276,669   283,816   276,610 
             
             
ADJUSTED EBITDAX:            
Net income (loss) $(123,249) $(45,706) $(137,723) $88,797 
Interest expense  51,932   39,188   101,489   77,458 
Income taxes  (46,106)  (14,446)  (54,398)  25,270 
Depreciation, depletion, and amortization  194,242   140,177   384,931   274,160 
Exploration           1,775 
Unrealized loss from derivative financial instruments  85,804   59,989   94,492   3,963 
Stock-based compensation  4,082   2,305   7,497   4,351 
(Gain) loss on sale of assets     648      (125)
Total Adjusted EBITDAX (3) $166,705  $182,155  $396,288  $475,649 

(1)   Adjusted net income (loss) is presented because of its acceptance by investors and by Comstock management as an indicator of the Company's profitability excluding non-cash unrealized gains and losses on derivative financial instruments, gains and losses on sales of assets and other unusual items.

(2)   Adjusted net income (loss) per share is calculated to include the dilutive effects of unvested restricted stock pursuant to the two-class method and performance stock units and preferred stock pursuant to the treasury stock method.

(3)   Adjusted EBITDAX is presented in the earnings release because management believes that adjusted EBITDAX, which represents Comstock's results from operations before interest, income taxes, and certain non-cash items, including depreciation, depletion and amortization, unrealized gains and losses on derivative financial instruments and exploration expense, is a common alternative measure of operating performance used by certain investors and financial analysts.

COMSTOCK RESOURCES, INC.
NON-GAAP FINANCIAL MEASURES
(In thousands)

  Three Months Ended
June 30,
  Six Months Ended
June 30,
 
  2024  2023  2024  2023 
OPERATING CASH FLOW (1):            
Net income (loss) $(123,249) $(45,706) $(137,723) $88,797 
Reconciling items:            
Unrealized loss from derivative financial instruments  85,804   59,989   94,492   3,963 
Deferred income taxes  (46,144)  (13,910)  (54,431)  25,270 
Depreciation, depletion and amortization  194,242   140,177   384,931   274,160 
Amortization of debt discount and issuance costs  3,399   1,994   5,383   3,991 
Stock-based compensation  4,082   2,305   7,497   4,351 
(Gain) loss on sale of assets     648      (125)
Operating cash flow $118,134  $145,497  $300,149  $400,407 
(Increase) decrease in accounts receivable  (23,187)  60,218   76,231   316,210 
(Increase) decrease in other current assets  (730)  2,715   4,846   1,201 
Increase (decrease) in accounts payable and accrued expenses  (10,642)  123,080   (126,112)  56 
Net cash provided by operating activities $83,575  $331,510  $255,114  $717,874 


  Three Months Ended
June 30,
  Six Months Ended
June 30,
 
  2024  2023  2024  2023 
FREE CASH FLOW (DEFICIT)(2):            
Operating cash flow $118,134  $145,497  $300,149  $400,407 
Less:            
Exploration and development capital expenditures  (221,019)  (321,988)  (477,243)  (646,694)
Midstream capital expenditures  (11,190)  (6,870)  (16,488)  (11,057)
Other capital expenditures  (942)  (100)  (971)  (456)
Contributions from midstream partner  11,000      17,000    
Free cash deficit from operations $(104,017) $(183,461) $(177,553) $(257,800)
Acquisitions  (9,694)  (15,953)  (79,138)  (56,648)
Proceeds from divestitures     41,165      41,295 
Free cash deficit after acquisition and divestiture activity $(113,711) $(158,249) $(256,691) $(273,153)

(1)   Operating cash flow is presented in the earnings release because management believes it to be useful to investors as a common alternative measure of cash flows which excludes changes to other working capital accounts.

(2)   Free cash flow (deficit) from operations and free cash flow (deficit) after acquisition and divestiture activity are presented in the earnings release because management believes them to be useful indicators of the Company's ability to internally fund acquisitions and debt maturities after exploration and development capital expenditures, midstream and other capital expenditures, contributions from its midstream partner, proved and unproved property acquisitions, and proceeds from divestiture of natural gas and oil properties.

COMSTOCK RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)

  June 30,
2024
  December 31,
2023
 
ASSETS      
Cash and cash equivalents $19,270  $16,669 
Accounts receivable  155,199   231,430 
Derivative financial instruments  79,649   126,775 
Other current assets  69,289   86,619 
Total current assets  323,407   461,493 
Property and equipment, net  5,574,617   5,384,771 
Goodwill  335,897   335,897 
Operating lease right-of-use assets  90,604   71,462 
  $6,324,525  $6,253,623 
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Accounts payable $377,909  $523,260 
Accrued costs  139,414   134,466 
Operating leases  34,952   23,765 
Total current liabilities  552,275   681,491 
Long-term debt  2,856,045   2,640,391 
Deferred income taxes  415,604   470,035 
Derivative financial instruments  47,366    
Long-term operating leases  55,621   47,742 
Asset retirement obligation  31,709   30,773 
Total liabilities  3,958,620   3,870,432 
Stockholders' Equity:      
Common stock  146,130   139,214 
Additional paid-in capital  1,358,549   1,260,930 
Accumulated earnings  815,639   958,270 
Total stockholders' equity attributable to Comstock  2,320,318   2,358,414 
Noncontrolling interest  45,587   24,777 
Total stockholders' equity  2,365,905   2,383,191 
  $6,324,525  $6,253,623 
 

Coordonnées