EX-99.1 2 d85385exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
     
(COMSTOCK RESOURCES LOGO)
  5300 Town and Country Blvd., Suite 500
Frisco, Texas 75034
Telephone: (972) 668-8800
Contact: Roland O. Burns
Sr. Vice President and Chief Financial Officer
Web Site: www.comstockresources.com
NEWS RELEASE
For Immediate Release
COMSTOCK RESOURCES, INC. REPORTS
THIRD QUARTER 2011 FINANCIAL AND OPERATING RESULTS
AND 2012 DRILLING BUDGET
FRISCO, TEXAS, October 31, 2011 — 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, 2011.
Financial Results for the Three Months and Nine Months Ended September 30, 2011
Comstock reported net income of $1.3 million or 3¢ per diluted share for the three months ended September 30, 2011 as compared to a net loss of $4.7 million or 10¢ per share for the three months ended September 30, 2010. The financial results include a gain realized from the sale of marketable securities of $2.5 million ($1.6 million after tax or 4¢ per share) for the three months ended September 30, 2011.
Comstock produced 26.2 billion cubic feet of natural gas equivalent (“Bcfe”) in the third quarter of 2011, an increase of 53% over the 17.2 Bcfe produced in the third quarter of 2010. Comstock’s daily production rate, which averaged 285 million cubic feet of natural gas equivalent (“MMcfe”) per day, grew 8% over the production rate in the second quarter of 2011, which averaged 263 MMcfe per day. Production from the Company’s Haynesville shale operations increased 15% from the prior quarter, averaging 200 MMcfe per day in the third quarter and accounting for 70% of the Company’s total production.
Comstock’s average realized natural gas price decreased 4% to $4.09 per Mcf in the third quarter of 2011 as compared to $4.24 per Mcf in the third quarter of 2010. The Company’s average realized oil price improved by 35% to $87.55 per barrel in the third quarter of 2011 as compared to $64.97 per barrel in the third quarter of 2010. The higher production level allowed the Company’s oil and gas sales to increase by 50% to $119.4 million in the third quarter of 2011 as compared to 2010’s third quarter sales of $79.7 million. Operating cash flow (before changes in working capital accounts) increased 81% to $85.5 million in the third quarter of 2011 from $47.3 million in 2010’s third quarter and EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses in the quarter was up 72% to $94.2 million from $54.6 million in 2010’s third quarter.

 

 

Comstock had net income of $7.7 million or 16¢ per diluted share for the first nine months of 2011 as compared to net income of $1.0 million or 2¢ per diluted share for the nine months ended September 30, 2010. The financial results for the nine months ended September 30, 2011 include a gain realized from the sale of marketable securities of $32.2 million ($20.9 million after tax or 46¢ per share), impairments of leasehold costs of $9.8 million ($6.4 million after tax or 14¢ per share) and a loss on early retirement of debt of $1.1 million ($0.7 million after taxes or 2¢ per share). Net income for the nine months ended September 30, 2010 included a gain realized from sale of marketable securities of $5.7 million ($3.7 million after tax or 8¢ per share).
Comstock’s production in the first nine months of 2011 of 70.1 billion Bcfe was 25% higher than the 56.0 Bcfe produced in the first nine months of 2010. Natural gas prices have been weaker in the first nine months of 2011 as compared to 2010’s first nine months. Comstock’s average realized natural gas price decreased 10% to $4.09 per Mcf for the first nine months of 2011 as compared to $4.55 per Mcf for the first nine months of 2010. The Company’s average realized oil price improved by 39% to $92.59 per barrel for the first three quarters of 2011 as compared to $66.54 per barrel for the first three quarters of 2010. With higher production and lower natural gas prices, oil and gas sales increased by 16% to $319.9 million in the first nine months of 2011 as compared to 2010’s first nine months sales of $276.5 million. Operating cash flow (before changes in working capital accounts) of $218.8 million in the first nine months of 2011 increased 25% from 2010’s first nine months operating cash flow of $174.8 million. EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses, increased 25% to $246.4 million in 2011’s first nine months from EBITDAX of $197.9 million for the same period in 2010.
2011 Drilling Results
Comstock reported on the results to date of its 2011 drilling program. During the first nine months of 2011, Comstock spent $443.4 million on its drilling program and $52.6 million to acquire acreage to support future exploration and development activity. The Company is expecting to spend a total of $575.0 million in 2011 to drill 88 wells (47.4 net) and to complete 35 (23.4 net) Haynesville shale wells drilled in 2010. Comstock expects to spend a total of $125.0 million on acreage acquisitions in 2011. In the first three quarters of 2011, Comstock has drilled 67 wells (33.9 net) and completed 77 wells (44.2 net). As of September 30, 2011 the Company also had nine wells (4.9 net) in the process of being drilled.
In the East Texas/North Louisiana region, Comstock has drilled 52 wells (21.6 net) in 2011, 51 of which were Haynesville or Bossier shale wells. During the first nine months of 2011, Comstock completed 65 (35.7 net) of its Haynesville or Bossier shale wells. Wells completed in the first nine months of the year were put on production at an average per well initial production rate of 10 MMcfe per day. As of September 30, 2011, Comstock had 21 (8.9 net) Haynesville or Bossier wells waiting on completion, down from 35 wells (23.4 net) at December 31, 2010.
In the South Texas region, the Company has drilled twelve Eagle Ford shale wells (12.0 net) in the first nine months of 2011. Comstock completed eight wells (8.0 net) including one well that was drilled in 2010. These wells had an average per well initial production rate of 683 barrels of oil equivalent (“BOE”) per day. In the third quarter of 2011, Comstock completed four wells in the Eagle Ford shale. The Cutter Creek #1H was drilled to a vertical depth of 9,970 feet with a 4,824 foot lateral. This well was tested at an initial rate of 575 barrels of oil per day and 0.2 MMcf of natural gas per day or 608 BOE per day. The Forrest Wheeler #1H was drilled to a vertical depth of 11,142 feet with a 5,458 foot lateral.

 

 

This well was tested at an initial rate of 480 barrels of oil per day and 0.7 MMcf of natural gas per day or 597 BOE per day. The Rancho Tres Hijos “A” #1H was drilled to a vertical depth of 10,911 feet with a 4,512 foot lateral. This well was tested at an initial rate of 465 barrels of oil per day and 0.6 MMcf of natural gas per day or 565 BOE per day. The Jupe “A” #1H was drilled to a vertical depth of 8,282 feet with a 7,101 foot lateral. This well was tested at an initial rate of 197 barrels of oil per day and 0.1 MMcf of natural gas per day or 218 BOE per day. All of the reported well results were obtained while following Comstock’s restricted choke program. Currently, Comstock also has five Eagle Ford shale wells that are being completed. Comstock has increased its Eagle Ford shale acreage in South Texas that is prospective for oil to approximately 28,000 net acres. Comstock completed lease acquisitions in the Eagle Ford shale that added approximately 6,000 net acres during October 2011.
2012 Capital Budget
Comstock also announced that it plans to spend approximately $396.0 million in 2012 for drilling and completion activities. Comstock expects to reduce the number of rigs drilling for natural gas in its Haynesville shale program to one from the three rigs that it is currently using. Comstock will add one drilling rig during 2012 to the two which are currently drilling for oil in its Eagle Ford shale development program in South Texas.
Comstock has budgeted to drill 71 wells (43.2 net) in 2012 as well as complete an additional 23 wells (20.3 net) which were drilled in 2011. Comstock plans to spend $104.0 million in its East Texas/North Louisiana operating region to drill 38 wells (13.3 net) which includes 37 (12.6 net) Haynesville or Bossier shale wells. $65.0 million will be spent to complete 17 wells (14.7 net) that were drilled in 2011. Comstock has budgeted to spend $207.0 million in its South Texas region to drill 32 (28.9 net) Eagle Ford shale horizontal wells in 2012 and $14.0 million to complete six wells (5.6 net) that were drilled in 2011. The remaining $6.0 million of expenditures in 2012 are budgeted for exploration and developmental activity on the Company’s other properties.
“Our 2012 drilling program will focus much of our drilling activity on growing our oil production while at the same time staying within the operating cash flow that we should generate,” stated M. Jay Allison, Chairman and Chief Executive Officer of Comstock. “To the extent that natural gas prices improve, we have the flexibility to increase our drilling activity in either the Eagle Ford shale or Haynesville shale depending on where we can generate the best returns.”
Comstock has planned a conference call for 9:30 a.m. Central Time on November 1, 2011, to discuss the operational and financial results for the third quarter of 2011. Investors wishing to participate should visit the Company’s website at www.comstockresources.com for a live web cast or dial 1-866-700-7101 (international dial-in use 617-213-8837) and provide access code 54819845 when prompted. A slide presentation on the financial results will be available on Comstock’s website at www.comstockresources.com. Click on “Presentations” to view the slides. 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 1:30 p.m. ET November 1, 2011 and will continue until 11:59 p.m. November 8, 2011. To hear the replay, call 888-286-8010 (617-801-6888 if calling from outside the US). The conference call ID number is 60253347.

 

 

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 September 30,     Nine Months Ended September 30,  
    2011     2010     2011     2010  
Revenues:
                                
Oil and gas sales
   $ 119,422     $ 79,720     $ 319,911     $ 276,491  
 
                                
Operating expenses:
                                
Production taxes
     141       3,062       2,230       9,543  
Gathering and transportation
     8,101       4,101       20,340       12,308  
Lease operating
     12,527       13,002       36,512       41,150  
Exploration
     447       1,238       10,066       2,506  
Depreciation, depletion and amortization
     77,518       46,796       212,532       163,603  
Impairment of oil and gas properties
     —       26       —       213  
(Gain) loss on sale of properties
     (26 )     —       57       797  
General and administrative
     8,628       9,400       25,973       28,965  
 
                        
 
                                
Total operating expenses
     107,336       77,625       307,710       259,085  
 
                        
 
                                
Operating income
     12,086       2,095       12,201       17,406  
 
                                
Other income (expenses):
                                
Interest and other income
     187       105       580       408  
Interest expense
     (9,988 )     (7,108 )     (30,682 )     (22,551 )
Gain on sale of marketable securities
     2,484       —       32,213       5,692  
 
                            
 
                                
Total other income (expenses)
     (7,317 )     (7,003 )     2,111       (16,451 )
 
                        
 
                                
Income (loss) before income taxes
     4,769       (4,908 )     14,312       955  
Benefit from (provision for) income taxes
     (3,460 )     208       (6,650 )     68  
 
                        
Net income (loss)
   $ 1,309     $ (4,700 )   $ 7,662     $ 1,023  
 
                        
 
                                
Net income (loss) per share:
                                
Basic
   $ 0.03     $ (0.10 )   $ 0.16     $ 0.02  
 
                        
Diluted
   $ 0.03     $ (0.10 )   $ 0.16     $ 0.02  
 
                        
 
                                
Weighted average shares outstanding:
                                
Basic
     46,011       45,623       45,992       45,537  
 
                        
Diluted
     46,011       45,623       45,992       45,589  
 
                        

 

 

COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands)
                                 
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2011     2010     2011     2010  
OPERATING CASH FLOW:
                                
Net income (loss)
   $ 1,309     $ (4,700 )   $ 7,662     $ 1,023  
Reconciling items:
                                
Deferred income taxes
     3,972       174       6,593       131  
Depreciation, depletion and amortization
     77,518       46,796       212,532       163,603  
Dry hole costs and lease impairments
     365       —       9,819       —  
Impairment of oil and gas properties
     —       26       —       213  
Gain on sale of assets
     (2,510 )     —       (32,156 )     (4,895 )
Debt issuance costs and discount amortization
     948       608       3,351       1,834  
Stock-based compensation
     3,946       4,388       10,958       12,930  
 
                        
Operating cash flow
     85,548       47,292       218,759       174,839  
Excess income taxes from stock-based compensation
     —       28       612       (1,503 )
Decrease (increase) in accounts receivable
     1,673       9,550       (4,958 )     8,096  
Decrease (increase) in other current assets
     10,729       (8 )     2,275       49,428  
Increase (decrease) in accounts payable and accrued expenses
     1,697       (6,850 )     861       18,376  
 
                        
 
                                
Net cash provided by operating activities
   $ 99,647     $ 50,012     $ 217,549     $ 249,236  
 
                        
 
                                
EBITDAX:
                                
Net income (loss)
   $ 1,309     $ (4,700 )   $ 7,662     $ 1,023  
Interest expense
     9,988       7,108       30,682       22,551  
Income taxes expense (benefit)
     3,460       (208 )     6,650       (68 )
Depreciation, depletion and amortization
     77,518       46,796       212,532       163,603  
Exploration
     447       1,238       10,066       2,506  
Impairment of oil and gas properties
     —       26       —       213  
Gain on sale of assets
     (2,510 )     —       (32,156 )     (4,895 )
Stock-based compensation
     3,946       4,388       10,958       12,930  
 
                        
 
                                
EBITDAX
   $ 94,158     $ 54,648     $ 246,394     $ 197,863  
 
                        
                 
    As of September 30,  
    2011     2010  
BALANCE SHEET DATA:
                
 
                
Cash and cash equivalents
   $ 4,544     $ 4,350  
Marketable securities
     31,707       70,661  
Other current assets
     53,477       35,761  
Property and equipment, net
     2,090,554       1,817,962  
Other
     15,863       7,856  
 
            
 
                
Total assets
   $ 2,196,145     $ 1,936,590  
 
            
 
                
Current liabilities
   $ 153,352     $ 104,577  
Long-term debt
     746,774       528,238  
Deferred income taxes
     223,237       224,686  
Other non-current liabilities
     9,649       9,575  
Stockholders’ equity
     1,063,133       1,069,514  
 
            
 
                
Total liabilities and stockholders’ equity
   $ 2,196,145     $ 1,936,590  
 
            

 

 

COMSTOCK RESOURCES, INC.
REGIONAL OPERATING RESULTS
(In thousands, except per unit amounts)
                                                                 
    For the Three Months Ended September 30, 2011     For the Three Months Ended September 30, 2010  
    East Texas/                             East Texas/                    
    North     South                     North     South              
    Louisiana     Texas     Other     Total     Louisiana     Texas     Other     Total  
Oil production (thousand barrels)
     26       163       6       195       27       33       111       171  
Gas production (MMcf)
     21,710       2,714       633       25,057       12,134       3,404       616       16,154  
Total production (MMcfe)
     21,862       3,691       671       26,224       12,295       3,602       1,288       17,185  
 
                                                                
Oil sales
   $ 1,963     $ 14,520     $ 543     $ 17,026     $ 1,932     $ 2,434     $ 6,797     $ 11,163  
Gas sales
     86,075       13,138       3,183       102,396       50,183       15,578       2,796       68,557  
 
                                                
Total oil and gas sales
   $ 88,038     $ 27,658     $ 3,726     $ 119,422     $ 52,115     $ 18,012     $ 9,593     $ 79,720  
 
                                                
 
                                                                
Average oil price (per barrel)
   $ 76.93     $ 89.18     $ 88.54     $ 87.55     $ 71.71     $ 74.05     $ 60.68     $ 64.97  
Average gas price (per Mcf)
   $ 3.96     $ 4.84     $ 5.03     $ 4.09     $ 4.14     $ 4.58     $ 4.54     $ 4.24  
Average price (per Mcfe)
   $ 4.03     $ 7.49     $ 5.55     $ 4.55     $ 4.24     $ 5.00     $ 7.45     $ 4.64  
 
                                                                
Production taxes
   $ (1,103 )   $ 1,155     $ 89     $ 141     $ 1,832     $ 700     $ 530     $ 3,062  
Gathering and transportation
   $ 7,630     $ 369     $ 102     $ 8,101     $ 3,574     $ 433     $ 94     $ 4,101  
Lease operating
   $ 8,188     $ 3,464     $ 875     $ 12,527     $ 7,076     $ 3,031     $ 2,895     $ 13,002  
Production taxes (per Mcfe)
   $ (0.05 )   $ 0.31     $ 0.13     $ 0.01     $ 0.15     $ 0.19     $ 0.41     $ 0.18  
Gathering and transportation
(per Mcfe)
   $ 0.35     $ 0.10     $ 0.15     $ 0.31     $ 0.29     $ 0.12     $ 0.07     $ 0.24  
Lease operating (per Mcfe)
   $ 0.37     $ 0.94     $ 1.31     $ 0.47     $ 0.58     $ 0.85     $ 2.25     $ 0.75  
 
                                                                
Oil and Gas Capital Expenditures:
                                                                
Leasehold costs
   $ 10,509     $ 3,241     $ 2,911     $ 16,661     $ 11,023     $ 57,031     $ 30     $ 68,084  
Exploratory drilling
     4,201       7,721       —       11,922       26,423       6,376       —       32,799  
Development drilling
     64,350       50,969       757       116,076       44,992       (105 )     1,404       46,291  
Other development
     1,706       512       77       2,295       342       1,026       259       1,627  
 
                                                
Total
   $ 80,766     $ 62,443     $ 3,745     $ 146,954     $ 82,780     $ 64,328     $ 1,693     $ 148,801  
 
                                                
                                                                 
    For the Nine Months Ended September 30, 2011     For the Nine Months Ended September 30, 2010  
    East Texas/                             East Texas/                    
    North     South                     North     South              
    Louisiana     Texas     Other     Total     Louisiana     Texas     Other     Total  
Oil production (thousand barrels)
     89       385       18       492       114       114       329       557  
Gas production (MMcf)
     56,706       8,494       1,962       67,162       39,401       11,307       1,949       52,657  
Total production (MMcfe)
     57,237       10,801       2,075       70,113       40,085       11,993       3,924       56,002  
 
                                                                
Oil sales
   $ 8,000     $ 35,885     $ 1,654     $ 45,539     $ 8,570     $ 8,571     $ 19,951     $ 37,092  
Gas sales
     224,069       40,458       9,845       274,372       174,031       55,637       9,731       239,399  
 
                                                
Total oil and gas sales
   $ 232,069     $ 76,343     $ 11,499     $ 319,911     $ 182,601     $ 64,208     $ 29,682     $ 276,491  
 
                                                
 
                                                                
Average oil price (per barrel)
   $ 90.25     $ 93.32     $ 88.73     $ 92.59     $ 75.14     $ 75.01     $ 60.62     $ 66.54  
Average gas price (per Mcf)
   $ 3.95     $ 4.76     $ 5.02     $ 4.09     $ 4.42     $ 4.92     $ 4.99     $ 4.55  
Average price (per Mcfe)
   $ 4.05     $ 7.07     $ 5.54     $ 4.56     $ 4.56     $ 5.35     $ 7.56     $ 4.94  
 
                                                                
Production taxes
   $ (1,009 )   $ 2,653     $ 586     $ 2,230     $ 6,618     $ 1,308     $ 1,617     $ 9,543  
Gathering and transportation
   $ 18,840     $ 1,182     $ 318     $ 20,340     $ 10,573     $ 1,443     $ 292     $ 12,308  
Lease operating
   $ 23,183     $ 10,451     $ 2,878     $ 36,512     $ 21,838     $ 10,360     $ 8,952     $ 41,150  
Production taxes (per Mcfe)
   $ (0.02 )   $ 0.25     $ 0.28     $ 0.03     $ 0.17     $ 0.11     $ 0.41     $ 0.17  
Gathering and transportation
(per Mcfe)
   $ 0.33     $ 0.11     $ 0.15     $ 0.29     $ 0.26     $ 0.12     $ 0.07     $ 0.22  
Lease operating (per Mcfe)
   $ 0.41     $ 0.96     $ 1.39     $ 0.52     $ 0.54     $ 0.86     $ 2.29     $ 0.73  
 
                                                                
Oil and Gas Capital Expenditures:
                                                                
Leasehold costs
   $ 25,893     $ 22,506     $ 4,222     $ 52,621     $ 50,401     $ 79,875     $ 158     $ 130,434  
Exploratory drilling
     31,091       46,516       —       77,607       49,861       6,376       —       56,237  
Development drilling
     283,377       75,310       1,530       360,217       197,486       2,065       1,404       200,955  
Other development
     3,557       1,621       369       5,547       2,217       2,349       760       5,326  
 
                                                
Total
   $ 343,918     $ 145,953     $ 6,121     $ 495,992     $ 299,965     $ 90,665     $ 2,322     $ 392,952