EX-99.2 3 d27914exv99w2.htm PRESS RELEASE DATED AUGUST 10, 2005 exv99w2
 

Exhibit 99.2
     
(COMMON STOCK 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. CORRECTS REPORTED
SECOND QUARTER 2005 FINANCIAL RESULTS
FRISCO, TEXAS, August 10, 2005 – Comstock Resources, Inc. (“Comstock” or the “Company”) (NYSE: CRK) today announced a correction to its previously reported net income for the quarter and six months ended June 30, 2005. The corrected results are a net loss of $10.9 million or 27¢ per diluted share for the three months ended June 30, 2005 rather than $12.7 million of net income or 30¢ per diluted share, as originally reported. For the six months ended June 30, 2005, the corrected results are a net income of $5.0 million or 12¢ per diluted share rather than $28.6 million of net income or 72¢ per diluted share, as originally reported. The correction to net income is due to a change in the accounting for the Company’s share of a one time provision for income taxes by Bois d’Arc Energy, Inc. (NYSE: BDE) (“Bois d’Arc”) that was recorded by Bois d’Arc in connection with its conversion from a limited liability company to a corporation and to reflect the gain recognized by Comstock in connection with Bois d’Arc’s initial public offering. There were no other changes to the results reported in the Company’s August 8, 2005 press release. Excluding these one-time adjustments for Bois d’Arc’s conversion to a corporation and its initial public offering, Comstock’s net income for the three months and six months ended June 30, 2005 would be the same as was previously reported.
Comstock will hold an open conference call at 1:00 p.m. central/2:00 p.m. eastern to discuss the revision. Please call: 866-686-6743 (847-413-3136 international) – confirmation number 12443404.
Financial Results for the Three Months and Six Months Ended June 30, 2005
Comstock reported a net loss of $10.9 million or 27¢ per diluted share for the three months ended June 30, 2005 as compared to net income of $18.7 million or 52¢ per diluted share in the same quarter of 2004. Excluding the one time adjustments to reflect Bois d’Arc’s conversion to a corporation and initial public offering, Comstock’s net income would have been $12.7 million or 30¢ per diluted share for the three months ended June 30, 2005. Comstock had $68.5 million in oil and gas sales in 2005’s second quarter, an increase of 3% over 2004’s second quarter oil and gas sales of $66.5 million. Comstock generated $47.3 million in operating cash flow (before changes in working capital accounts) in 2005’s second quarter, which represents a 4% increase over 2004’s second quarter cash flow of $45.4 million. EBITDAX or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses was $53.8 million in 2005’s second quarter as compared to 2004’s second quarter EBITDAX of $52.5 million. On May 10, 2005, Comstock began accounting for its interest in Bois d’Arc under the equity method and subsequent to that date no longer is including its share of Bois d’Arc’s revenues, EBITDAX and cash flow in its consolidated results.

 


 

For the six months ended June 30, 2005, Comstock’s oil and gas sales totaled $138.4 million, as compared to oil and gas sales of $127.3 million for the same period in 2004. Net income for the six months ended June 30, 2005 was $5.0 million, or 12¢ per diluted share, as compared to net income of $18.7 million or 52¢ per diluted share in 2004. Excluding the one time adjustments to reflect Bois d’Arc’s conversion to a corporation and its initial public offering, Comstock’s net income would have been $28.6 million, or 72¢ per diluted share for the six months ended June 30, 2005. Operating cash flow (before changes in working capital accounts) generated by Comstock was $93.9 million for the first six months of 2005, a 13% increase from the first six months of 2004’s cash flow of $82.9 million. For the six months ended June 30, 2005, EBITDAX was $108.8 million as compared to EBITDAX of $98.7 million for the same period in 2004.
Production from Comstock’s onshore fields in the second quarter of 2005 totaled 8.4 Bcf equivalent of natural gas (“Bcfe”), a 15% increase from 2004’s second quarter production of 7.3 Bcfe. For the first six months of 2005, Comstock produced 15.3 Bcfe from its onshore operations, an increase of 3% as compared to production in the same period of 2004 of 14.8 Bcfe. During the second quarter of 2005, the Company’s share of offshore production from its ownership interest in Bois d’Arc of 3.5 Bcfe was 0.5 Bcfe less than last year’s production of 4.0 Bcfe. The decrease was attributable to the reduction in Comstock’s ownership in Bois d’Arc, which decreased from 60% to 48% in May 2005. Offshore production for the six months ended June 30, 2005 of 7.2 Bcfe was comparable to production in the same period last year.
The Company’s realized natural gas price averaged $6.66 per Mcf in 2005’s second quarter as compared to $5.77 per Mcf in 2004’s second quarter. Realized oil prices in the second quarter of 2005 averaged $46.74 per barrel as compared to $37.55 per barrel for 2004. For the first six months of 2005, Comstock’s realized natural gas price averaged $6.46 per Mcf as compared to 2004’s average natural gas price of $5.71 per Mcf. For the first six months of 2005, Comstock’s realized oil price was $47.26 per barrel as compared to $36.24 per barrel in 2004.
During the second quarter, Comstock completed several strategic transactions. These transactions will accelerate its future growth and have strengthened the Company’s balance sheet. On April 4, 2005, Comstock closed a public offering of its common stock and issued 4.5 million shares at $27.50 per share for net proceeds of $121.2 million. On May 12, 2005, Comstock closed an acquisition of producing properties in Texas, Louisiana and Mississippi from EnSight for $191.6 million. The acquisition added proved reserves of 120.2 Bcfe and added 18.1 Mmcfe to the Company’s daily production rate. On May 11, 2005, Bois d’Arc completed its initial public offering of its common stock and used the proceeds to repay Comstock $158.0 million which Comstock had loaned Bois d’Arc on its formation on July 16, 2004. As a result of these transactions, as well as the Company’s second quarter results, Comstock’s total debt fell from $429.3 million at the end of the first quarter to $307.0 million at the end of the second quarter. Comstock’s total stockholders equity increased from $380.9 million at the end of the first quarter to $492.2 million at June 30, 2005. Debt as a percent of total book capitalization fell from 53% at March 31, 2005 to 38% at June 30, 2005.
Year to Date 2005 Drilling Results
Comstock also announced the results to date of its 2005 drilling program. Onshore, Comstock has drilled 42 wells (26.1 net) in the first six months of 2005. Thirty-nine (24.7 net) of the wells drilled were development wells; all of which were successful. Comstock drilled 28 successful development wells (20.8 net) in its East Texas/North Louisiana region. These wells have been tested at a per well average

 


 

rate of 1.6 Mmcfe per day and are part of Comstock’s expanded drilling program planned in this region for 2005. Comstock currently has three rigs under contract drilling in this region and is working to add a fourth rig.
Comstock also drilled 11 successful development wells (3.9 net) in South Texas and in its other regions in the first half of 2005. Five of the wells (2.2 net) were in South Texas which were tested at a per well average rate of 2.6 Mmcfe per day. The South Texas wells include Comstock’s third successful well drilled in the Javelina field, the Dixie Mortgage Pawalak #3 which was drilled to a total depth of 12,230 feet and is currently producing 4.8 Mmcfe per day. Comstock has a 50% working interest in this well. Comstock also drilled two successful wells (1.1 net) in the Gragg field in Arkansas which were tested at a per well average rate of 2.2 Mmfe per day and participated in drilling four successful coal bed methane wells (0.6 net) in San Juan Basin in New Mexico.
In addition to the development wells, Comstock drilled three exploratory wells (1.4 net) in the first half of 2005. Two of those were dry holes (1.2 net) and one was successful. The successful well was drilled in Hidalgo County, Texas. The Kotara Aldridge #3 was drilled to a depth of 17,174 feet and is currently producing 1.7 Mmcfe per day. Comstock had a 20% working interest in this well.
The unsuccessful exploratory wells include a shallow test well drilled in West Texas and the previously reported unsuccessful exploratory well drilled to test the “Big Sandy” prospect in Polk County, Texas. The well failed to encounter sufficient pay sand to justify a completion. The total costs of the project of $14.3 million (before income taxes) was written off in the second quarter of 2005 and is included in exploration expense.
Comstock’s offshore operations are conducted exclusively through its 48% ownership of Bois d’Arc. Bois d’Arc has drilled twelve offshore wells (10.2 net) in the Gulf of Mexico to date in 2005 with a 92% success rate. Five of the wells were exploratory and seven were developmental. All of the exploration wells were successful and six of the seven developmental wells were successful. The reserves added as a result of these eleven successful wells are expected to more than replace Bois d’Arc’s 2005 estimated annual production. The larger discoveries were at Ship Shoal blocks 92 and 111 and South Pelto 5. Two successful wells at Ship Shoal 92 proved up the “Paddlefish” Prospect. A discovery well drilled at Ship Shoal 111 proved up the “Laker” Prospect. The first “Laker” well was placed on production in July at a rate of 5.9 Mmcfe per day, while the “Paddlefish” wells at Ship Shoal 92 are expected to be on production in September. Other successes include three discoveries at Ship Shoal 98 and 99 and a deep well at South Pelto 5. The South Pelto well was placed on production in May at a rate of 7.1 Mmcfe per day. The other wells are expected to be on production in the third quarter.
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 managements 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 that 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 growing independent energy company based in Frisco, Texas and is engaged in oil and gas acquisitions, exploration and development primarily in Louisiana and Texas and in the Gulf of Mexico through its ownership of Bois dArc Energy, Inc. (NYSE: BDE). The companys stock is traded on the New York Stock Exchange under the symbol CRK.

 


 

COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands, except per share amounts)
                                 
    Six Months Ended June 30, 2005     Three Months Ended June 30, 2005  
            As Previously             As Previously  
    As Corrected     Reported     As Corrected     Reported  
Oil and gas sales
  $ 138,351     $ 138,351     $ 68,529     $ 68,529  
Operating expenses:
                               
Oil and gas operating
    26,066       26,066       12,879       12,879  
Exploration
    17,286       17,286       15,201       15,201  
Depreciation, depletion and amortization
    33,332       33,332       15,979       15,979  
General and administrative, net
    7,957       7,957       3,769       3,769  
 
                         
Total operating expenses
    84,641       84,641       47,828       47,828  
 
                         
Income from operations
    53,710       53,710       20,701       20,701  
Other income (expenses):
                               
Other income
    136       136       32       32  
Interest income
    1,207       1,207       459       459  
Interest expense
    (10,517 )     (10,517 )     (4,719 )     (4,719 )
Equity in loss of Bois d’Arc Energy
    (61,225 )     3,370       (61,225 )     3,370  
Gain on sale of stock by Bois d’Arc Energy
    28,797             28,797        
Gain (loss) on derivatives
    (3,231 )     (3,231 )     7       7  
 
                         
Total other expenses
    (44,833 )     (9,035 )     (36,649 )     (851 )
 
                         
Income before income taxes
    8,877       44,675       (15,948 )     19,850  
Provision for income taxes
    (3,867 )     (16,108 )     5,070       (7,171 )
 
                         
Net income (loss)
  $ 5,010     $ 28,567     $ (10,878 )   $ 12,679  
 
                       
Net income (loss) per share:
                               
Basic
  $ 0.13     $ 0.76     $ (0.27 )   $ 0.32  
 
                       
Diluted
  $ 0.12     $ 0.72     $ (0.27 )   $ 0.30  
 
                       
Weighted average common and common stock equivalent shares outstanding:
                               
Basic
    37,393       37,393       39,762       39,762  
 
                       
Diluted
    39,570       39,570       41,757       41,757  
 
                       

 


 

COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands, except per share amounts)
                                 
    Six Months Ended June 30, 2005     Three Months Ended June 30, 2005  
            As Previously             As Previously  
    As Corrected     Reported     As Corrected     Reported  
Cash flow from operations:
                               
Net cash provided by operating activities
  $ 99,597     $ 99,597     $ 53,876     $ 53,876  
Increase (decrease) in accounts receivable
    (2,719 )     (2,719 )     1,128       1,128  
Increase (decrease) in other current assets
    4       4       (966 )     (966 )
Decrease (increase) in accounts payable and accrued expenses
    (3,009 )     (3,009 )     (6,703 )     (6,703 )
 
                       
Cash flow from operations
  $ 93,873     $ 93,873     $ 47,335     $ 47,335  
 
                       
EBITDAX:
                               
Net income (loss)
  $ 5,010     $ 28,567     $ (10,878 )   $ 12,679  
Interest expense
    10,517       10,517       4,719       4,719  
Gain on sale of stock by Bois d’Arc Energy
    (28,797 )           (28,797 )      
Equity in loss of Bois d’Arc Energy
    61,225       (3,370 )     61,225       (3,370 )
Income tax expense
    3,867       16,108       (5,070 )     7,171  
Depreciation, depletion and amortization
    33,332       33,332       15,979       15,979  
Stock-based compensation
    3,178       3,178       1,383       1,383  
Exploration expense
    17,286       17,286       15,201       15,201  
Loss (gain) on derivatives
    3,231       3,231       (7 )     (7 )
 
                       
EBITDAX
  $ 108,849     $ 108,849     $ 53,755     $ 53,755  
 
                       
                 
    As of June 30, 2005  
            As Previously  
    As Corrected     Reported  
    (In thousands)  
Balance Sheet Data:
               
Current assets
  $ 36,066     $ 36,066  
Property and equipment, net
    666,616       666,616  
Investment in Bois d’Arc Energy
    240,770       276,568  
Other
    5,382       5,382  
 
           
Total assets
  $ 948,834     $ 984,632  
 
           
Current liabilities
  $ 49,191     $ 49,191  
Long-term debt
    307,000       307,000  
Other
    100,455       112,696  
Stockholders’ equity
    492,188       515,745  
 
           
Total liabilities and stockholders’ equity
  $ 948,834     $ 984,632  
 
           

 


 

COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands, except per share amounts)
                                 
    Six Months Ended June 30,     Three Months Ended June 30,  
    2005     2004     2005     2004  
Oil and gas sales
  $ 138,351     $ 127,269     $ 68,529     $ 66,508  
Operating expenses:
                               
Oil and gas operating
    26,066       25,106       12,879       12,456  
Exploration
    17,286       5,179       15,201       1,797  
Depreciation, depletion and amortization
    33,332       31,537       15,979       15,728  
General and administrative, net
    7,957       5,972       3,769       2,882  
 
                       
Total operating expenses
    84,641       67,794       47,828       32,863  
 
                       
Income from operations
    53,710       59,475       20,701       33,645  
Other income (expenses):
                               
Other income
    136       86       32       47  
Interest income
    1,207       34       459       18  
Interest expense
    (10,517 )     (10,791 )     (4,719 )     (4,526 )
Equity in loss of Bois d’Arc Energy
    (61,225 )           (61,225 )      
Gain on sale of stock by Bois d’Arc Energy
    28,797             28,797        
Loss on early extinguishment of debt
          (19,599 )           (18 )
Gain (loss) on derivatives
    (3,231 )           7        
 
                       
Total other expenses
    (44,833 )     (30,270 )     (36,649 )     (4,479 )
 
                       
Income before income taxes (loss)
    8,877       29,205       (15,948 )     29,166  
Provision for income taxes
    (3,867 )     (10,514 )     5,070       (10,500 )
 
                       
Net income (loss)
  $ 5,010     $ 18,691     $ (10,878 )   $ 18,666  
 
                       
Net income (loss) per share:
                               
Basic
  $ 0.13     $ 0.55     $ (0.27 )   $ 0.55  
 
                       
Diluted
  $ 0.12     $ 0.52     $ (0.27 )   $ 0.52  
 
                       
Weighted average common and common stock equivalent shares outstanding:
                               
Basic
    37,393       33,977       39,762       34,111  
 
                       
Diluted
    39,570       35,990       41,757       36,133  
 
                       

 


 

COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands, except per share amounts)
                                 
    Six Months Ended June 30,     Three Months Ended June 30,  
    2005     2004     2005     2004  
Cash flow from operations:
                               
Net cash provided by operating activities
  $ 99,597     $ 67,819     $ 53,876     $ 47,418  
Increase (decrease) in accounts receivable
    (2,719 )     (4,673 )     1,128       4,471  
Increase (decrease) in other current assets
    4       (839 )     (966 )     31  
Decrease (increase) in accounts payable and accrued expenses
    (3,009 )     20,596       (6,703 )     (6,499 )
 
                       
Cash flow from operations
  $ 93,873     $ 82,903     $ 47,335     $ 45,421  
 
                       
EBITDAX:
                               
Net income (loss)
  $ 5,010     $ 18,691     $ (10,878 )   $ 18,666  
Interest expense
    10,517       10,791       4,719       4,526  
Loss from early extinguishment of debt
          19,599             18  
Equity in loss of Bois d’Arc Energy
    61,225             61,225        
Gain on sale of stock by Bois d’Arc Energy
    (28,797 )           (28,797 )      
Income tax expense
    3,867       10,514       (5,070 )     10,500  
Depreciation, depletion and amortization
    33,332       31,537       15,979       15,728  
Stock-based compensation
    3,178       2,376       1,383       1,222  
Exploration expense
    17,286       5,179       15,201       1,797  
Loss (gain) on derivatives
    3,231             (7 )      
 
                       
EBITDAX
  $ 108,849     $ 98,687     $ 53,755     $ 52,457  
 
                       
                 
    As of June 30,  
    2005     2004  
    (In thousands)  
Balance Sheet Data:
               
Current assets
  $ 36,066     $ 45,974  
Property and equipment, net
    666,616       740,240  
Investment in Bois d’Arc Energy
    240,770        
Other
    5,382       7,840  
 
           
Total assets
  $ 948,834     $ 794,054  
 
           
Current liabilities
  $ 49,191     $ 44,568  
Long-term debt
    307,000       324,000  
Other
    100,455       108,189  
Stockholders’ equity
    492,188       317,297  
 
           
Total liabilities and stockholders’ equity
  $ 948,834     $ 794,054  
 
           

 


 

COMSTOCK RESOURCES, INC.
SELECTED OPERATING AND FINANCIAL RESULTS
(In thousands, except as noted and per unit amounts)
For the Three Months ended June 30, 2005
                                 
    Comstock             Equity Method        
    Resources(1)     Bois d’Arc(2)     Adjustments     Total  
Oil production (thousand barrels)
    204       192       (100 )     296  
Gas production (million cubic feet – Mmcf)
    7,135       2,316       (1,234 )     8,217  
Total production (Mmcfe)
    8,356       3,468       (1,835 )     9,989  
Oil sales
  $ 9,286     $ 9,528     $ (4,980 )   $ 13,834  
Gas sales
    46,743       16,398       (8,446 )     54,695  
 
                       
Total oil and gas sales
  $ 56,029     $ 25,926     $ (13,426 )   $ 68,529  
 
                       
Average oil price (per barrel)
  $ 45.63     $ 49.63             $ 46.74  
Average gas price (per thousand cubic feet – Mcf)
  $ 6.55     $ 7.08             $ 6.66  
Average price (per Mcf equivalent)
  $ 6.70     $ 7.48             $ 6.86  
Lifting cost
  $ 10,795     $ 4,397     $ (2,313 )   $ 12,879  
Lifting cost (per Mcf equivalent)
  $ 1.29     $ 1.27             $ 1.29  
For the Six Months ended June 30, 2005
                                 
    Comstock             Equity Method        
    Resources(1)     Bois d’Arc(2)     Adjustments     Total  
Oil production (thousand barrels)
    293       402       (100 )     595  
Gas production (million cubic feet – Mmcf)
    13,547       4,741       (1,234 )     17,054  
Total production (Mmcfe)
    15,306       7,153       (1,835 )     20,624  
Oil sales
  $ 13,574     $ 19,526     $ (4,980 )   $ 28,120  
Gas sales
    86,248       32,429       (8,446 )     110,231  
 
                       
Total oil and gas sales
  $ 99,822     $ 51,955     $ (13,426 )   $ 138,351  
 
                       
Average oil price (per barrel)
  $ 46.30     $ 48.58             $ 47.26  
Average gas price (per thousand cubic feet – Mcf)
  $ 6.37     $ 6.84             $ 6.46  
Average price (per Mcf equivalent)
  $ 6.52     $ 7.26             $ 6.71  
Lifting cost
  $ 19,367     $ 9,012     $ (2,313 )   $ 26,066  
Lifting cost (per Mcf equivalent)
  $ 1.27     $ 1.26             $ 1.26  
 
(1)   Excludes Bois d’Arc Energy.
 
(2)   Comstock owned 59.9% of Bois d’Arc Energy through May 10, 2005 and 48.3% thereafter.

 


 

COMSTOCK RESOURCES, INC.
SELECTED OPERATING AND FINANCIAL RESULTS
(In thousands, except as noted and per unit amounts)
Three Months ended June 30, 2005
                                 
    East Texas/                    
    North Louisiana     Southeast Texas     Other     Total Onshore  
Oil production (thousand barrels)
    22       43       139       204  
Gas production (million cubic feet – Mmcf)
    3,314       1,678       2,143       7,135  
Total production (Mmcfe)
    3,443       1,938       2,975       8,356  
Oil sales
  $ 1,120     $ 2,192     $ 5,974     $ 9,286  
Gas sales
    21,425       11,915       13,403       46,743  
 
                       
Total oil and gas sales
  $ 22,545     $ 14,107     $ 19,377     $ 56,029  
 
                       
Average oil price (per barrel)
  $ 50.91     $ 50.98     $ 42.98     $ 45.63  
Average gas price (per thousand cubic feet – Mcf)
  $ 6.46     $ 7.10     $ 6.25     $ 6.55  
Average price (per Mcf equivalent)
  $ 6.55     $ 7.28     $ 6.51     $ 6.70  
Lifting cost
  $ 5,056     $ 1,983     $ 3,756     $ 10,796  
Lifting cost (per Mcf equivalent)
  $ 1.47     $ 1.02     $ 1.26     $ 1.29  
Acquisition, development and exploration expenditures
  $ 139,358     $ 5,703     $ 79,198     $ 224,259  
Six Months ended June 30, 2005
                                 
    East Texas/                    
    North Louisiana     Southeast Texas     Other     Total Onshore  
Oil production (thousand barrels)
    40       86       167       293  
Gas production (million cubic feet – Mmcf)
    5,924       3,535       4,088       13,547  
Total production (Mmcfe)
    6,163       4,052       5,091       15,306  
Oil sales
  $ 1,953     $ 4,243     $ 7,378     $ 13,574  
Gas sales
    36,947       23,587       25,714       86,248  
 
                       
Total oil and gas sales
  $ 38,900     $ 27,830     $ 33,092     $ 99,822  
 
                       
Average oil price (per barrel)
  $ 48.83     $ 49.34     $ 44.18     $ 46.30  
Average gas price (per thousand cubic feet – Mcf)
  $ 6.24     $ 6.67     $ 6.29     $ 6.37  
Average price (per Mcf equivalent)
  $ 6.31     $ 6.87     $ 6.50     $ 6.52  
Lifting cost
  $ 8,639     $ 4,082     $ 6,647     $ 19,367  
Lifting cost (per Mcf equivalent)
  $ 1.40     $ 1.01     $ 1.31     $ 1.27  
Acquisition, development and exploration expenditures
  $ 150,931     $ 12,962     $ 83,955     $ 247,848