COMSTOCK RESOURCES, INC. REPORTS FIRST QUARTER 2022 FINANCIAL AND OPERATING RESULTS


FRISCO, TX, May 03, 2022 (GLOBE NEWSWIRE) -- Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter ended March 31, 2022.

Highlights of 2022's First Quarter

  • Generated free cash flow from operations of $68 million in the quarter.
  • Paid down $85 million of debt in the quarter.
  • Adjusted EBITDAX increased 27% to $333 million.
  • Operating cash flow (excluding working capital changes) increased 44% to $297 million or $1.07 per diluted share.
  • Revenues, after realized hedging losses, were $408 million, 23% higher than 2021's first quarter.
  • Adjusted net income to common stockholders was $136 million for the quarter or $0.51 per diluted share.
  • Strong results from Haynesville drilling program with 15 (12.0 net) operated wells turned to sales with an average initial production of 29 MMcf per day.

Financial Results for the Three Months Ended March 31, 2022

Revenues in the first quarter of 2022 totaled $407.7 million (inclusive of realized hedging losses of $117.2 million). Net cash provided by operating activities (excluding changes in working capital) generated in the first quarter was $296.5 million, and net loss available to common stockholders for the first quarter of 2022 was $115.7 million or $(0.50) per share. Net loss in the quarter included a pre-tax $320.3 million unrealized loss on hedging contracts held for risk management. Excluding this item and certain other items, adjusted net income available to common stockholders for the first quarter of 2022 was $135.8 million, or $0.51 per diluted share.
Comstock's production cost per Mcfe in the first quarter was $0.69 per Mcfe, which was comprised of $0.28 for gathering and transportation costs, $0.23 for lease operating costs, $0.12 for production and other taxes and $0.06 for cash general and administrative expenses. Production cost was $0.67 per Mcfe in the fourth quarter of 2021 and $0.60 in the first quarter of 2021. Comstock's unhedged operating margin was 85% in the first quarter of 2022 and 81% after hedging.

First Quarter 2022 Drilling Results

Comstock drilled 15 (13.1 net) operated horizontal Haynesville/Bossier shale wells in the first quarter of 2022 which had an average lateral length of 10,186 feet. The Company also participated in an additional 14 (0.7 net) non-operated Haynesville shale wells in the first quarter of 2022. Comstock turned 33 (15.2 net) wells to sales in the first quarter of 2022 and currently expects to turn an additional 14 (12.7 net) wells to sales in the second quarter of 2022.

Since its last operational update in February, Comstock has turned 15 (12.0 net) new operated Haynesville/Bossier shale wells to sales. These wells had initial daily production rates that averaged 29 MMcf per day. The completed lateral length of these wells averaged 10,115 feet.

Other Matters

Comstock has planned a conference call for 10:00 a.m. Central Time on May 4, 2022, to discuss the first quarter of 2022 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 2547726 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 on May 4, 2022 and will continue until 1:00 p.m. CT on May 11, 2022. To hear the replay, call 855-859-2056 (404-537-3406 if calling from outside the US). The conference call access code is 2547726.

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
March 31,
  2022   2021 
  
Revenues:   
Natural gas sales$        522,957          $        323,960         
Oil sales         1,884                   16,525         
Total oil and gas sales         524,841                   340,485         
Operating expenses:   
Production and ad valorem taxes         13,820                   9,652         
Gathering and transportation         32,093                   29,458         
Lease operating         26,186                   24,563         
Exploration         1,021                   —         
Depreciation, depletion and amortization         106,728                   109,128         
General and administrative         8,223                   8,028         
Gain on sale of assets         (2)          (70)
Total operating expenses         188,069                   180,759         
Operating income         336,772                   159,726         
Other income (expenses):   
Loss from derivative financial instruments         (437,493)          (21,749)
Other income         4,166                   281         
Interest expense         (46,491)          (63,811)
Loss on early retirement of debt         —                   (238,539)
Total other expenses         (479,818)          (323,818)
Loss before income taxes         (143,046)          (164,092)
Benefit from income taxes         31,622                   29,967         
Net loss         (111,424)          (134,125)
Preferred stock dividends         (4,315)          (4,315)
Net loss available to common stockholders$        (115,739) $        (138,440)
    
Net loss per share:   
Basic$        (0.50) $        (0.60)
Diluted$        (0.50) $        (0.60)
Weighted average shares outstanding:   
Basic         231,976                   231,377         
Diluted         231,976                   231,377         

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

 Three Months Ended
March 31,
    2021 
  2022  Pro Forma (3) As Reported
Gas production (MMcf)         114,906                   111,804                   113,293         
Oil production (Mbbls)         21                   17                   326         
Total production (MMcfe)         115,035                   111,908                   115,246         
      
Natural gas sales$        522,957          $        322,795          $        323,960         
Natural gas hedging settlements (1)         (117,186        )          (7,490        )          (7,490        )
Total natural gas including hedging         405,771                   315,305                   316,470         
Oil sales         1,884                   951                   16,525         
Oil hedging settlements (1)         —                   —                   (918        )
Total oil including hedging         1,884                   951                   15,607         
Total oil and gas sales including hedging$        407,655          $        316,256          $        332,077         
      
Average gas price (per Mcf)$        4.55          $        2.89          $        2.86         
Average gas price including hedging (per Mcf)$        3.53          $        2.82          $        2.79         
Average oil price (per barrel)$        89.71          $        55.94          $        50.69         
Average oil price including hedging (per barrel)$        89.71          $        55.94          $        47.87         
Average price (per Mcfe)$        4.56          $        2.89          $        2.95         
Average price including hedging (per Mcfe)$        3.54          $        2.83          $        2.88         
      
Production and ad valorem taxes$        13,820          $        8,048          $        9,652         
Gathering and transportation         32,093                   29,458                   29,458         
Lease operating         26,186                   21,059                   24,563         
Cash general and administrative (2)         6,728                   6,338                   6,338         
Total production costs$        78,827          $        64,903          $        70,011         
      
Production and ad valorem taxes (per Mcfe)$        0.12          $        0.07          $        0.08         
Gathering and transportation (per Mcfe)         0.28                   0.26                   0.26         
Lease operating (per Mcfe)         0.23                   0.19                   0.21         
Cash general and administrative (per Mcfe)         0.06                   0.06                   0.05         
Total production costs (per Mcfe)$        0.69          $        0.58          $        0.60         
      
Unhedged operating margin         85        %          80        %          79        %
Hedged operating margin         81        %          79        %          79        %
      
Oil and Gas Capital Expenditures:     
Proved property acquisitions$        274          $        —          $        —         
Unproved property acquisitions         3,631                   5,776                   5,776         
Total oil and gas properties acquisitions$        3,905          $        5,776          $        5,776         
Exploration and Development:     
Development leasehold$        4,632          $        4,043          $        4,056         
Exploratory drilling and completion         11,557                   —                   —         
Development drilling and completion         189,048                   155,239                   155,239         
Other development costs         18,612                   2,389                   3,452         
Total exploration and development capital expenditures$        223,849          $        161,671          $        162,747         


 

(1)   Included in gain (loss) from derivative financial instruments in operating results.
(2)   Excludes stock-based compensation.
(3)   Excludes results of the Company's Bakken shale assets, which were sold in October 2021.

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

 Three Months Ended March 31,
  2022   2021 
ADJUSTED NET INCOME AVAILABLE TO COMMON STOCKHOLDERS:   
Net loss available to common stockholders$        (115,739) $        (138,440)
Unrealized loss from derivative financial instruments         320,307                   13,072         
Non-cash interest amortization from adjusting debt assumed in
acquisition to fair value
         2,760                   4,927         
Exploration expense         1,021                   —         
Gain on sale of assets         (2)          (70)
Loss on early retirement of debt         —                   238,539         
Adjustment to provision for income taxes         (72,589)          (54,733)
Adjusted net income available to common stockholders (1)$        135,758          $        63,295         
    
Adjusted net income available to common stockholders per share (2)$        0.51          $        0.25         
    
Diluted shares outstanding         277,058                   275,127         


ADJUSTED EBITDAX:   
Net loss$        (111,424) $        (134,125)
Interest expense (3)         46,491                   64,080         
Income taxes         (31,622)          (29,967)
Depreciation, depletion, and amortization         106,728                   109,128         
Exploration         1,021                   —         
Unrealized loss from derivative financial instruments         320,307                   13,072         
Stock-based compensation         1,495                   1,690         
Loss on early extinguishment of debt         —                   238,539         
Gain on sale of assets         (2)          (70)
Total Adjusted EBITDAX (4)$        332,994          $        262,347         


 

(1)   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 loss on early retirement of debt, 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 available to common stockholders 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)   Includes realized gains or losses from interest rate derivative financial instruments.

(4)   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 loss on early retirement of debt, 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 March 31,
  2022   2021 
OPERATING CASH FLOW (1):   
Net loss$        (111,424) $        (134,125)
Reconciling items:   
Unrealized loss from derivative financial instruments         320,307                   13,072         
Deferred income tax benefit         (24,788)          (30,150)
Depreciation, depletion and amortization         106,728                   109,128         
Loss on early retirement of debt         —                   238,539         
Amortization of debt discount and issuance costs         4,225                   8,489         
Stock-based compensation         1,495                   1,690         
Gain on sale of assets         (2)          (70)
Operating cash flow$        296,541          $        206,573         
(Increase) decrease in accounts receivable         28,125                   (7,032)
Decrease in other current assets         1,406                   4,778         
Decrease in accounts payable and accrued expenses         (42,033)          (11,047)
Net cash provided by operating activities$        284,039          $        193,272         
    


 Three Months Ended March 31,
  2022   2021 
FREE CASH FLOW (2):    
Operating cash flow$        296,541          $        206,573         
Less:   
Exploration and development capital expenditures         (223,849)          (162,747)
Preferred dividends         (4,315)          (4,315)
Free cash flow from operations$        68,377          $        39,511         
Acquisitions of oil and gas properties         (3,905)          (5,776)
Free cash flow after acquisition and divestiture activity$        64,472          $        33,735         
    


 

(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 from operations and free cash flow 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, preferred dividend payments, proved and unproved property acquisitions and proceeds from divestiture of oil and gas properties.

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

 As of
 March 31, 2022 December 31, 2021
ASSETS   
Cash and cash equivalents$        12,137          $        30,663         
Accounts receivable         239,613                   267,738         
Derivative financial instruments         2,601                   5,258         
Other current assets         13,671                   15,077         
Total current assets         268,022                   318,736         
Property and equipment, net         4,128,894                   4,007,146         
Goodwill         335,897                   335,897         
Derivative financial instruments         10,008                   —         
Operating lease right-of-use assets         6,879                   6,450         
 $        4,749,700          $        4,668,229         
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
Accounts payable$        318,736          $        314,569         
Accrued costs         103,322                   135,026         
Operating leases         2,784                   2,444         
Derivative financial instruments         513,645                   181,945         
Total current liabilities         938,487                   633,984         
Long-term debt         2,534,460                   2,615,235         
Deferred income taxes         172,629                   197,417         
Derivative financial instruments         —                   4,042         
Long-term operating leases         4,167                   4,075         
Asset retirement obligation         26,416                   25,673         
Other non-current liabilities         24                   24         
Total liabilities         3,676,183                   3,480,450         
Mezzanine Equity:   
Preferred stock         175,000                   175,000         
Stockholders' Equity:   
Common stock         116,460                   116,462         
Additional paid-in capital         1,101,838                   1,100,359         
Accumulated deficit         (319,781)          (204,042)
Total stockholders' equity         898,517                   1,012,779         
 $        4,749,700          $        4,668,229         

 

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