FRISCO, TX, Feb. 16, 2021 (GLOBE NEWSWIRE) -- Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter and year ended December 31, 2020.
Financial Results for the Three Months Ended December 31, 2020
For the fourth quarter of 2020, Comstock reported net income available to common stockholders of $77.5 million or $0.30 per diluted share. The quarter results included a $80.2 million unrealized gain on the mark-to-market value of the Company's derivative financial instruments that are held to hedge oil and natural gas prices. The adjusted net income available to common stockholders excluding the unrealized gain on the hedge contracts and other non-recurring items for the fourth quarter of 2020 was $34.6 million or $0.14 per diluted share.
Comstock produced 109.0 billion cubic feet ("Bcf") of natural gas and 0.3 million barrels ("Bbls") of oil or 111.1 billion cubic feet of natural gas equivalent ("Bcfe") in the fourth quarter of 2020. Natural gas production averaged 1.2 million cubic feet ("MMcf") per day, an increase of 6% over natural gas production in the third quarter of 2020. Oil production in the fourth quarter of 2020 averaged 3,694 Bbls of oil per day as compared to 3,851 Bbls per day produced in the third quarter of 2020.
Comstock's average realized natural gas price in the fourth quarter of 2020, including realized hedging gains, was $2.40 per Mcf as compared to $2.30 per Mcf realized in the fourth quarter of 2019 and $1.95 per Mcf realized in the third quarter of 2020. The Company's average realized oil price in the fourth quarter of 2020, including realized hedging gains, was $44.47 per Bbl as compared to $50.36 per Bbl in the fourth quarter of 2019 and $33.52 per Bbl in the third quarter of 2020. Oil and gas sales were $276.8 million (including realized hedging gains) in the fourth quarter of 2020 as compared to $308.6 million in the fourth quarter of 2019. Adjusted EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses was $210.8 million in the fourth quarter of 2020 as compared to adjusted EBITDAX of $234.8 million for the fourth quarter of 2019. The Company's operating cash flow generated in the fourth quarter of 2020 was $154.6 million as compared to $187.9 million in the fourth quarter of 2019.
Financial Results for the Year Ended December 31, 2020
For the year ended December 31, 2020, Comstock reported a net loss available to common stockholders of $83.4 million or $0.39 per diluted share. The loss was primarily due to a $124.5 million unrealized loss related to the mark-to-market valuation of derivative financial instruments. Adjusted net income available to common stockholders excluding the unrealized loss on hedges and other non-recurring items for the year ended December 31, 2020 was $49.6 million or $0.23 per diluted share.
Comstock produced 450.8 Bcf of natural gas and 1.5 million Bbls of oil or 459.9 Bcfe for the year ended December 31, 2020 as compared to 292.8 Bcf of natural gas, 2.7 million Bbls of oil or 308.9 Bcfe for the year ended December 31, 2019. Natural gas production averaged 1.2 MMcf per day in 2020, an increase of 54% over natural gas production in 2019. Oil production averaged 4,120 Bbls of oil per day in 2020 compared to 7,356 Bbls of oil per day in 2019. Comstock's average realized natural gas price, including realized hedging gains, was $2.07 per Mcf for the year ended December 31, 2020, as compared to $2.35 per Mcf realized for the year ended December 31, 2019. The Company's average realized oil price in 2020, including realized hedging gains, was $40.88 per barrel as compared to $49.64 per barrel in 2019. Oil and gas sales were $993.1 million, including realized hedging gains, for the year ended December 31, 2020 as compared to oil and gas sales of $821.4 million in 2019. Adjusted EBITDAX of $722.2 million in 2020 was 18% higher than adjusted EBITDAX of $613.6 million in 2019. The Company's operating cash flow generated for the year ended December 31, 2020 of $521.2 million increased 11% over operating cash flow of $468.3 million for the year ended December 31, 2019.
Drilling Results
Comstock spent $483.6 million during 2020 for drilling and development activities in 2020. Comstock also spent $7.9 million on leasing activity. $476.9 million was spent to develop its Haynesville and Bossier shale properties, comprised of $436.1 million on drilling and completing wells and an additional $40.8 million on other development activity. Comstock drilled 55 (46.1 net) operated horizontal Haynesville shale wells during the year ended December 31, 2020, which had an average lateral length of 9,247 feet. Comstock also participated in 16 (1.3 net) non-operated Haynesville shale wells in 2020. During the year ended December 31, 2020, Comstock turned 76 (43.7 net) Haynesville shale wells to sales and currently expects to turn 14 (13.0 net) operated wells to sales in the first quarter of 2021.
Since its last operational update, Comstock completed an additional 20 (17.7 net) Haynesville shale wells. The average initial production rate of these wells was 24 MMcf per day and had an average completed lateral length of 9,288 feet.
2020 Proved Oil & Gas Reserves
Comstock also announced that proved natural gas and oil reserves as of December 31, 2020 were estimated at 5.6 trillion cubic feet ("Tcf") of natural gas and 11.0 million Bbls of oil, or 5.6 Tcfe as compared to total proved reserves of 5.4 Tcfe as of December 31, 2019. The reserve estimates were determined under the SEC guidelines and were audited by the Company's independent reserve engineering firms. The 5.6 Tcfe of proved reserves at December 31, 2020 were 36% developed and 97% were operated by Comstock. The present value, using a 10% discount rate, or the future net cash flows before income taxes of the proved reserves (the "PV-10 Value") was approximately $2.0 billion, using average first of month 2020 prices of $1.99 per Mcf of natural gas and $39.57 per Bbl of oil. The PV-10 Value was impacted by the much lower oil and gas prices required under the SEC methodology. The natural gas and oil prices used in determining the December 31, 2020 proved reserves estimates were 23% lower for natural gas and 29% lower for oil as compared to prices used at December 31, 2019. The PV-10 Value using NYMEX reference prices of $2.75 per Mcf for natural gas and $50.00 per barrel for oil less the Company’s differentials would have been $4.4 billion.
The following table reflects the changes in the proved reserve estimates since the end of 2019:
| Oil (MMBbls) | Natural Gas (Bcf) | Total (Bcfe) | ||||||||||
| Proved Reserves: | ||||||||||||
| Proved Reserves at December 31, 2019 | 16.7 | 5,341.5 | 5,442.0 | |||||||||
| Production | (1.5 | ) | (450.8 | ) | (459.9 | ) | ||||||
| Extensions and discoveries | — | 365.7 | 365.7 | |||||||||
| Revisions: | ||||||||||||
| Price | (2.9 | ) | (68.2 | ) | (85.3 | ) | ||||||
| Performance and Other | (1.3 | ) | 374.7 | 366.4 | ||||||||
| Proved Reserves at December 31, 2020 | 11.0 | 5,562.9 | 5,628.9 | |||||||||
Despite the low prices used to determine proved reserves, Comstock replaced 159% of its 2020 production excluding price revisions and 141% including them. Based on the 2020 proved reserve additions, Comstock’s "all-in" finding costs were approximately $0.66 per Mcfe excluding price-related revisions ($0.75 per Mcfe including price-related revisions).
2021 Drilling Budget
The Company currently plans to spend approximately $510 million to $550 million in 2021 on drilling and completion activities primarily focused on development of its Haynesville/Bossier shale properties and $7 million to $10 million on its leasing program. Under its current operating plan, Comstock expects to drill 62 (51.0 net) and complete 58 (50.5 net) operated horizontal wells utilizing five to six rigs during 2021.
Other Matters
Comstock has planned a conference call for 10:00 a.m. Central Time on February 17, 2021, to discuss the fourth quarter of 2020 operational and financial results. Investors wishing to participate should visit the Company's website at www.comstockresources.com for a live webcast or dial 844-776-7840 (international dial-in use 661-378-9538) and provide access code 8399473 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 February 17, 2021 and will continue until 1:00 p.m. February 24, 2021. To hear the replay, call 855-859-2056 (404-537-3406) if calling from outside the US). The conference call access code is 8399473.
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 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 December 31, | Twelve Months Ended December 31, | ||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
| Revenues: | |||||||||||||||||||
| Natural gas sales | $ | 261,424 | $ | 260,206 | $ | 809,399 | $ | 635,795 | |||||||||||
| Oil sales | 13,347 | 29,042 | 48,796 | 132,894 | |||||||||||||||
| Total oil and gas sales | 274,771 | 289,248 | 858,195 | 768,689 | |||||||||||||||
| Operating expenses: | |||||||||||||||||||
| Production and ad valorem taxes | 9,199 | 12,999 | 36,967 | 35,702 | |||||||||||||||
| Gathering and transportation | 29,159 | 29,957 | 106,582 | 71,303 | |||||||||||||||
| Lease operating | 23,342 | 26,285 | 102,452 | 80,762 | |||||||||||||||
| Depreciation, depletion and amortization | 104,284 | 111,842 | 417,112 | 276,526 | |||||||||||||||
| General and administrative | 6,049 | 6,484 | 32,040 | 29,244 | |||||||||||||||
| Exploration | — | — | 27 | 241 | |||||||||||||||
| (Gain) loss on sale of assets | (1 | ) | — | (17 | ) | 25 | |||||||||||||
| Total operating expenses | 172,032 | 187,567 | 695,163 | 493,803 | |||||||||||||||
| Operating income | 102,739 | 101,681 | 163,032 | 274,886 | |||||||||||||||
| Other income (expenses): | |||||||||||||||||||
| Gain from derivative financial instruments | 81,929 | 19,790 | 9,951 | 51,735 | |||||||||||||||
| Other income | 287 | 282 | 1,080 | 622 | |||||||||||||||
| Transaction costs | — | 90 | — | (41,010 | ) | ||||||||||||||
| Interest expense | (66,065 | ) | (54,107 | ) | (234,829 | ) | (161,541 | ) | |||||||||||
| Loss on early extinguishment of debt | — | — | (861 | ) | — | ||||||||||||||
| Total other income (expenses) | 16,151 | (33,945 | ) | (224,659 | ) | (150,194 | ) | ||||||||||||
| Income (loss) before income taxes | 118,890 | 67,736 | (61,627 | ) | 124,692 | ||||||||||||||
| Benefit from (provision for) income taxes | (36,967 | ) | (12,620 | ) | 9,210 | (27,803 | ) | ||||||||||||
| Net income (loss) | 81,923 | 55,116 | (52,417 | ) | 96,889 | ||||||||||||||
| Preferred stock dividends and accretion | (4,400 | ) | (14,287 | ) | (30,996 | ) | (22,415 | ) | |||||||||||
| Net income (loss) available to common stockholders | $ | 77,523 | $ | 40,829 | $ | (83,413 | ) | $ | 74,474 | ||||||||||
| Net income (loss) per share: | |||||||||||||||||||
| Basic | $ | 0.34 | $ | 0.22 | $ | (0.39 | ) | $ | 0.52 | ||||||||||
| Diluted | $ | 0.30 | $ | 0.19 | $ | (0.39 | ) | $ | 0.52 | ||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||
| Basic | 231,377 | 187,280 | 215,194 | 142,750 | |||||||||||||||
| Diluted | 275,127 | 284,100 | 215,194 | 187,378 | |||||||||||||||
COMSTOCK RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
| As of | |||||
| December 31, 2020 | December 31, 2019 | ||||
| ASSETS | |||||
| Cash and cash equivalents | $ | 30,272 | $ | 18,532 | |
| Accounts receivable | 145,786 | 180,341 | |||
| Derivative financial instruments | 8,913 | 75,304 | |||
| Income taxes receivable | — | 5,109 | |||
| Other current assets | 14,839 | 10,399 | |||
| Total current assets | 199,810 | 289,685 | |||
| Property and equipment, net | 4,084,550 | 4,008,803 | |||
| Goodwill | 335,897 | 335,897 | |||
| Income taxes receivable | — | 5,109 | |||
| Derivative financial instruments | 661 | 13,888 | |||
| Operating lease right-of-use assets | 3,025 | 3,509 | |||
| Other assets | 40 | 231 | |||
| $ | 4,623,983 | $ | 4,657,122 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
| Accounts payable | $ | 259,284 | $ | 252,994 | |
| Accrued costs | 133,019 | 137,166 | |||
| Operating leases | 2,284 | 1,994 | |||
| Derivative financial instruments | 47,005 | 222 | |||
| Total current liabilities | 441,592 | 392,376 | |||
| Long-term debt | 2,517,149 | 2,500,132 | |||
| Deferred income taxes | 200,583 | 211,772 | |||
| Derivative financial instruments | 2,364 | 4,220 | |||
| Long-term operating leases | 740 | 1,515 | |||
| Asset retirement obligation | 19,290 | 18,151 | |||
| Other non-current liabilities | 492 | 6,351 | |||
| Total liabilities | 3,182,210 | 3,134,517 | |||
| Mezzanine Equity: | |||||
| Preferred stock | 175,000 | 379,583 | |||
| Stockholders' Equity: | |||||
| Common stock | 116,206 | 95,003 | |||
| Additional paid-in capital | 1,095,384 | 909,423 | |||
| Accumulated earnings | 55,183 | 138,596 | |||
| Total stockholders' equity | 1,266,773 | 1,143,022 | |||
| $ | 4,623,983 | $ | 4,657,122 | ||
COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands, except per unit amounts)
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Gas production (MMcf) | 109,013 | 121,521 | 450,836 | 292,834 | |||||||||||
| Oil production (Mbbls) | 340 | 577 | 1,508 | 2,685 | |||||||||||
| Total production (MMcfe) | 111,052 | 124,980 | 459,883 | 308,944 | |||||||||||
| Natural gas sales | $ | 261,424 | $ | 260,206 | $ | 809,399 | $ | 635,795 | |||||||
| Natural gas hedging settlements (1) | 240 | 19,302 | 122,036 | 52,297 | |||||||||||
| Total natural gas including hedging | 261,664 | 279,508 | 931,435 | 688,092 | |||||||||||
| Oil sales | 13,347 | 29,042 | 48,796 | 132,894 | |||||||||||
| Oil hedging settlements (1) | 1,767 | — | 12,849 | 387 | |||||||||||
| Total oil including hedging | 15,114 | 29,042 | 61,645 | 133,281 | |||||||||||
| Total oil and gas sales including hedging | $ | 276,778 | $ | 308,550 | $ | 993,080 | $ | 821,373 | |||||||
| Average gas price (per Mcf) | $ | 2.40 | $ | 2.14 | $ | 1.80 | $ | 2.17 | |||||||
| Average gas price including hedging (per Mcf) | $ | 2.40 | $ | 2.30 | $ | 2.07 | $ | 2.35 | |||||||
| Average oil price (per barrel) | $ | 39.27 | $ | 50.36 | $ | 32.36 | $ | 49.49 | |||||||
| Average oil price including hedging (per barrel) | $ | 44.47 | $ | 50.36 | $ | 40.88 | $ | 49.64 | |||||||
| Average price (per Mcfe) | $ | 2.47 | $ | 2.31 | $ | 1.87 | $ | 2.49 | |||||||
| Average price including hedging (per Mcfe) | $ | 2.49 | $ | 2.47 | $ | 2.16 | $ | 2.66 | |||||||
| Production and ad valorem taxes | $ | 9,199 | $ | 12,999 | $ | 36,967 | $ | 35,702 | |||||||
| Gathering and transportation | $ | 29,159 | $ | 29,957 | $ | 106,582 | $ | 71,303 | |||||||
| Lease operating | $ | 23,342 | $ | 26,285 | $ | 102,452 | $ | 80,762 | |||||||
| Production and ad valorem taxes (per Mcfe) | $ | 0.09 | $ | 0.10 | $ | 0.08 | $ | 0.11 | |||||||
| Gathering and transportation (per Mcfe) | $ | 0.26 | $ | 0.24 | $ | 0.23 | $ | 0.23 | |||||||
| Lease operating (per Mcfe) | $ | 0.21 | $ | 0.21 | $ | 0.22 | $ | 0.27 | |||||||
| Oil and Gas Capital Expenditures: | |||||||||||||||
| Acquisitions | $ | — | $ | 41,828 | $ | — | $ | 2,097,451 | |||||||
| Exploratory leasehold | 6,492 | — | 7,949 | — | |||||||||||
| Development leasehold | 5,659 | 890 | 13,022 | 7,603 | |||||||||||
| Development drilling and completion | 155,691 | 150,960 | 436,074 | 493,625 | |||||||||||
| Other development | 8,062 | 3,121 | 34,525 | 9,339 | |||||||||||
| Total | $ | 175,904 | $ | 196,799 | $ | 491,570 | $ | 2,608,018 | |||||||
(1) Included in gain from derivative financial instruments in operating results.
COMSTOCK RESOURCES, INC.
NON-GAAP FINANCIAL MEASURES
(In thousands, except per share amounts)
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
| ADJUSTED NET INCOME (LOSS) TO COMMON STOCKHOLDERS: | |||||||||||||||||||
| Net income (loss) available to common stockholders | $ | 77,523 | $ | 40,829 | $ | (83,413 | ) | $ | 74,474 | ||||||||||
| (Gain) loss on sale of assets | (1 | ) | — | (17 | ) | 25 | |||||||||||||
| Unrealized (gain) loss on derivative financial instruments | (80,158 | ) | (488 | ) | 124,545 | 949 | |||||||||||||
| Loss on early extinguishment of debt | — | — | 861 | — | |||||||||||||||
| Non-cash interest amortization from adjusting debt assumed in acquisition to fair value | 5,811 | 5,065 | 22,112 | 9,143 | |||||||||||||||
| Non-cash accretion from adjusting preferred stock issued in acquisition to fair value | — | 4,583 | 5,417 | 4,583 | |||||||||||||||
| Impairment of unevaluated oil and gas properties | — | — | 27 | — | |||||||||||||||
| Transaction costs | — | (90 | ) | — | 41,010 | ||||||||||||||
| Covey Park July 2019 hedging settlements | — | — | — | 4,574 | |||||||||||||||
| Adjusted benefit (provision) for income taxes | 31,408 | (836 | ) | (19,930 | ) | (12,420 | ) | ||||||||||||
| Adjusted net income available to common stockholders (1) | $ | 34,583 | $ | 49,063 | $ | 49,602 | $ | 122,338 | |||||||||||
| Adjusted net income available to common stockholders per diluted share | $ | 0.14 | $ | 0.22 | $ | 0.23 | $ | 0.77 | |||||||||||
| ADJUSTED EBITDAX: | ||||||||||||||||||
| Net income (loss) | $ | 81,923 | $ | 55,116 | $ | (52,417 | ) | $ | 96,889 | |||||||||
| Interest expense | 66,065 | 54,107 | 234,829 | 161,541 | ||||||||||||||
| Income taxes | 36,967 | 12,620 | (9,210 | ) | 27,803 | |||||||||||||
| Depreciation, depletion, and amortization | 104,284 | 111,842 | 417,112 | 276,526 | ||||||||||||||
| Unrealized (gain) loss from derivative financial instruments | (80,158 | ) | (488 | ) | 124,545 | 949 | ||||||||||||
| Exploration | — | — | 27 | 241 | ||||||||||||||
| Stock-based compensation | 1,730 | 1,661 | 6,464 | 4,020 | ||||||||||||||
| Loss on early extinguishment of debt | — | — | 861 | — | ||||||||||||||
| Transaction costs | — | (90 | ) | — | 41,010 | |||||||||||||
| Covey Park July 2019 hedging settlements | — | — | — | 4,574 | ||||||||||||||
| (Gain) loss on sale of assets | (1 | ) | — | (17 | ) | 25 | ||||||||||||
| Total Adjusted EBITDAX (2) | $ | 210,810 | $ | 234,768 | $ | 722,194 | $ | 613,578 | ||||||||||
- Adjusted net income available to common stockholders 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 and other unusual items.
- 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 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 December 31, | Twelve Months Ended December 31, | ||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
| OPERATING CASH FLOW: | |||||||||||||||||||
| Net income (loss) | $ | 81,923 | $ | 55,116 | $ | (52,417 | ) | $ | 96,889 | ||||||||||
| Reconciling items: | |||||||||||||||||||
| Deferred income taxes | 37,034 | 12,821 | (9,409 | ) | 28,026 | ||||||||||||||
| Depreciation, depletion and amortization | 104,284 | 111,842 | 417,112 | 276,526 | |||||||||||||||
| Unrealized (gain) loss from derivative financial instruments | (80,158 | ) | (488 | ) | 124,545 | 949 | |||||||||||||
| Amortization of debt discount and issuance costs | 9,807 | 7,068 | 34,038 | 16,274 | |||||||||||||||
| Stock-based compensation | 1,730 | 1,661 | 6,464 | 4,020 | |||||||||||||||
| Loss on early extinguishment of debt | — | — | 861 | — | |||||||||||||||
| Transaction costs | — | (90 | ) | — | 41,010 | ||||||||||||||
| Covey Park July 2019 hedging settlements | — | — | — | 4,574 | |||||||||||||||
| Exploration | — | — | 27 | — | |||||||||||||||
| (Gain) loss on sale of assets | (1 | ) | — | (17 | ) | 25 | |||||||||||||
| Operating cash flow (1) | $ | 154,619 | $ | 187,930 | $ | 521,204 | $ | 468,293 | |||||||||||
| Net cash provided by operating activities | $ | 185,746 | $ | 168,431 | $ | 575,701 | $ | 451,237 | |||||||||||
| Transaction costs | — | (90 | ) | — | 41,010 | ||||||||||||||
| Covey Park July 2019 hedging settlements | — | — | — | 4,574 | |||||||||||||||
| Increase (decrease) in accounts receivable | 44,827 | 45,184 | (34,555 | ) | (3,220 | ) | |||||||||||||
| Increase (decrease) in other current assets | 1,272 | (2,686 | ) | (7,019 | ) | (9,823 | ) | ||||||||||||
| Increase in accounts payable and accrued expenses | (77,226 | ) | (22,909 | ) | (12,923 | ) | (15,485 | ) | |||||||||||
| Operating cash flow (1) | $ | 154,619 | $ | 187,930 | $ | 521,204 | $ | 468,293 | |||||||||||
(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.