COMSTOCK RESOURCES, INC. REPORTS THIRD QUARTER 2022 FINANCIAL AND OPERATING RESULTS AND ANNOUNCES REINSTATEMENT OF QUARTERLY DIVIDEND


FRISCO, TX, Nov. 01, 2022 (GLOBE NEWSWIRE) -- Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter ended September 30, 2022.

Highlights of 2022's Third Quarter

  • Generated highest quarterly operating cash flow in the Company's history of $533 million or $1.92 per diluted share.
  • Free cash flow from operations was $286 million in the quarter.
  • Retired $250 million of debt in the third quarter and reduced leverage to under 1x.
  • Adjusted net income to common stockholders for the quarter was $326 million or $1.18 per diluted share.
  • Adjusted EBITDAX increased 93% in the quarter to a record high $598 million.
  • Oil and gas sales, including realized hedging losses, were $692 million, 76% higher than 2021's third quarter.
  • Strong results from Haynesville shale drilling program with 17 (15.2 net) operated wells turned to sales since our last update with an average initial production of 29 MMcf per day.
  • Board of directors approved reinstatement of a quarterly common stock dividend to commence in the fourth quarter.

Commenting on the quarter, Jay Allison, the Company's Chief Executive Officer said, "Comstock delivered record cash flow and free cash flow from operations in the third quarter. The record-setting financial results we have had so far this year have repositioned our balance sheet to be a strength of the Company and has allowed us to reinstate our quarterly cash dividend."

Financial Results for the Three Months Ended September 30, 2022

Comstock's revenues in the third quarter of 2022 totaled $692.4 million (after realized hedging losses of $304.5 million). Net cash provided by operating activities (excluding changes in working capital) generated in the third quarter was $532.9 million, and net income available to common stockholders for the third quarter of 2022 was $351.2 million or $1.28 per share. Reported net income in the quarter included a pre-tax $33.2 million unrealized gain on hedging contracts held for risk management. Excluding this item and certain other items, adjusted net income available to common stockholders for the third quarter of 2022 was $325.6 million, or $1.18 per diluted share.

Comstock's production cost per Mcfe in the third quarter averaged $0.82 per Mcfe, which was comprised of $0.35 for gathering and transportation costs, $0.22 for lease operating costs, $0.19 for production and other taxes and $0.06 for cash general and administrative expenses. Production cost was $0.74 per Mcfe in the second quarter of 2022 and $0.65 in the third quarter of 2021. The increase in production cost in the quarter is attributable to the higher natural gas prices realized this year which has resulted in higher production tax and higher gathering and transportation expenses. Comstock's unhedged operating margin was 89% in the third quarter of 2022 and 85% after hedging. Comstock's margin is one of the highest in the industry.

Financial Results for the Nine Months Ended September 30, 2022

Revenues for the nine months ended September 30, 2022 totaled $1.7 billion (after realized hedging losses of $679.0 million). Net cash provided by operating activities (excluding changes in working capital) generated during the first nine months of 2022 was $1.3 billion, and income available to common stockholders was $608.0 million or $2.24 per share. Net income during the first nine months of 2022 included a pre-tax $102.6 million unrealized loss on hedging contracts held for risk management and a $46.8 million loss on early retirement of debt. Excluding these items and certain other items, adjusted net income available to common stockholders for the nine months ended September 30, 2022 was $735.0 million or $2.68 per diluted share.

Comstock's production cost per Mcfe during the nine months ended September 30, 2022 averaged $0.75 per Mcfe, which was comprised of $0.31 for gathering and transportation costs, $0.22 for lease operating costs, $0.16 for production and other taxes and $0.06 for cash general and administrative expenses. Production cost was $0.61 per Mcfe for the nine months ended September 30, 2021. The higher 2022 production costs are attributable to higher 2022 realized natural gas prices. Comstock's unhedged operating margin was 88% during the first nine months of 2022 and 84% after hedging.

Drilling Results

Comstock drilled 21 (14.8 net) operated horizontal Haynesville/Bossier shale wells in the third quarter of 2022 which had an average lateral length of 10,275 feet. The Company also participated in an additional seven (0.7 net) non-operated Haynesville shale wells in the third quarter of 2022. Comstock turned 17 (15.2 net) operated wells and 18 (0.6 net) non-operated wells to sales in the third quarter of 2022 and currently expects to turn an additional 11 (8.7 net) operated wells to sales in the fourth quarter of 2022.

Since its last operational update in August, Comstock has turned 17 (15.2 net) 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 9,899 feet.

Reinstatement of Quarterly Dividend

Comstock's Board of Directors approved the reinstatement of the Company's quarterly cash dividend, with the first dividend to be paid in the fourth quarter of 2022, at an annual dividend rate of $0.50 per share ($0.125 per quarter). Comstock last paid a common dividend in 2014. The fourth quarter dividend will be payable on December 15, 2022 to stockholders of record at the close of business on December 1, 2022.

Earnings Call Information

Comstock has planned a conference call for 9:00 a.m. Central Time on November 2, 2022, to discuss the third quarter 2022 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/BI39ce5cb8026c4144ae9a888f217e28ae. 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/uhgfab48.

If you are unable to participate in the original conference call, a web replay will be available for twelve months beginning at 12:00 p.m. CT on November 2, 2022. The replay of the conference can be accessed using the webcast link: https://edge.media-server.com/mmc/p/uhgfab48.

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
September 30,
 Nine Months Ended
September 30,
  2022   2021   2022   2021 
  
Revenues:       
Natural gas sales$        994,979          $        488,303          $        2,376,774          $        1,133,783         
Oil sales         1,936                   22,873                   6,324                   61,571         
Total oil and gas sales         996,915                   511,176                   2,383,098                   1,195,354         
Gas services         193,090                   —                   322,575                   —         
Total revenues         1,190,005                   511,176                   2,705,673                   1,195,354         
Operating expenses:       
Production and ad valorem taxes         24,531                   16,675                   60,080                   36,468         
Gathering and transportation         44,740                   35,402                   113,797                   96,596         
Lease operating         28,608                   26,576                   79,873                   77,150         
Exploration         —                   —                   3,363                   —         
Depreciation, depletion and amortization         129,065                   128,739                   354,994                   359,313         
Gas services         181,818                   —                   305,271                   —         
General and administrative         10,165                   8,052                   27,451                   23,952         
Gain on sale of assets         —                   (14)          (21)          (93)
Total operating expenses         418,927                   215,430                   944,808                   593,386         
Operating income         771,078                   295,746                   1,760,865                   601,968         
Other income (expenses):       
Loss from derivative financial instruments         (271,335)          (510,319)          (781,654)          (756,026)
Other income         56                   197                   506                   1,008         
Interest expense         (41,393)          (49,954)          (132,204)          (170,645)
Loss on early retirement of debt         —                   —                   (46,840)          (352,599)
Total other expenses         (312,672)          (560,076)          (960,192)          (1,278,262)
Income (loss) before income taxes         458,406                   (264,330)          800,673                   (676,294)
(Provision for) benefit from income taxes         (102,810)          (23,976)          (179,610)          74,168         
Net income (loss)         355,596                   (288,306)          621,063                   (602,126)
Preferred stock dividends         (4,411)          (4,411)          (13,089)          (13,089)
Net income (loss) available to common stockholders$        351,185          $        (292,717) $        607,974          $        (615,215)
        
Net income (loss) per share:       
Basic$        1.50          $        (1.26) $        2.61          $        (2.66)
Diluted$        1.28          $        (1.26) $        2.24          $        (2.66)
Weighted average shares outstanding:       
Basic         232,482                   231,747                   232,170                   231,519         
Diluted         277,715                   231,747                   277,605                   231,519         

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

 Three Months Ended September 30, Nine Months Ended September 30,
    2021     2021 
  2022  Pro
Forma (3)
 As Reported  2022  Pro
Forma (3)
 As Reported
Gas production (MMcf)         128,902                   127,121                   128,896                   367,758                   361,248                   366,272         
Oil production (Mbbls)         21                   29                   346                   66                   75                   1,034         
Total production (MMcfe)         129,025                   127,296                   130,968                   368,152                   361,700                   372,474         
            
Natural gas sales$        994,979          $        484,012          $        488,303          $        2,376,774          $        1,123,967          $        1,133,783         
Natural gas hedging settlements (1)         (304,489)          (114,538)          (114,538)          (679,038)          (138,907)          (138,907)
Total natural gas including hedging         690,490                   369,474                   373,765                   1,697,736                   985,060                   994,876         
Oil sales         1,936                   1,941                   22,873                   6,324                   4,684                   61,571         
Oil hedging settlements (1)         —                   —                   (2,606)          —                   —                   (5,489)
Total oil including hedging         1,936                   1,941                   20,267                   6,324                   4,684                   56,082         
Total oil and gas sales including hedging$        692,426          $        371,415          $        394,032          $        1,704,060          $        989,744          $        1,050,958         
            
Average gas price (per Mcf)$        7.72          $        3.81          $        3.79          $        6.46          $        3.11          $        3.10         
Average gas price including hedging (per Mcf)$        5.36          $        2.91          $        2.90          $        4.62          $        2.73          $        2.72         
Average oil price (per barrel)$        92.19          $        66.93          $        66.11          $        95.82          $        62.45          $        59.55         
Average oil price including hedging (per barrel)$        92.19          $        66.93          $        58.58          $        95.82          $        62.45          $        54.24         
Average price (per Mcfe)$        7.73          $        3.82          $        3.90          $        6.47          $        3.12          $        3.21         
Average price including hedging (per Mcfe)$        5.37          $        2.92          $        3.01          $        4.63          $        2.74          $        2.82         
            
Production and ad valorem taxes$        24,531          $        14,508          $        16,675          $        60,080          $        30,589          $        36,468         
Gathering and transportation         44,740                   35,349                   35,402                   113,797                   96,543                   96,596         
Lease operating         28,608                   23,747                   26,576                   79,873                   67,613                   77,150         
Cash general and administrative (2)         8,323                   6,250                   6,250                   22,533                   18,661                   18,661         
Total production costs$        106,202          $        79,854          $        84,903          $        276,283          $        213,406          $        228,875         
            
Production and ad valorem taxes (per Mcfe)$        0.19          $        0.11          $        0.13          $        0.16          $        0.08          $        0.09         
Gathering and transportation (per Mcfe)         0.35                   0.28                   0.27                   0.31                   0.27                   0.26         
Lease operating (per Mcfe)         0.22                   0.19                   0.20                   0.22                   0.19                   0.21         
Cash general and administrative (per Mcfe)         0.06                   0.05                   0.05                   0.06                   0.05                   0.05         
Total production costs (per Mcfe)$        0.82          $        0.63          $        0.65          $        0.75          $        0.59          $        0.61         
            
Unhedged operating margin 89%  84%  83%  88%  81%  81%
Hedged operating margin 85%  79%  78%  84%  78%  78%
            
Oil and gas capital expenditures:           
Proved property acquisitions$        —          $        —          $        —          $        205          $        —          $        —         
Unproved property acquisitions         12,214                   5,248                   5,248                   37,396                   18,649                   18,649         
Total oil and gas properties acquisitions$        12,214          $        5,248          $        5,248          $        37,601          $        18,649          $        18,649         
Exploration and development:           
Development leasehold$        3,011          $        721          $        733          $        8,298          $        6,759          $        6,794         
Exploratory drilling and completion         18,606                   —                   —                   49,003                   —                   —         
Development drilling and completion         204,954                   141,637                   141,637                   619,373                   454,524                   454,524         
Other development costs         15,563                   17,171                   18,719                   52,500                   22,511                   26,795         
Total exploration and development capital expenditures$        242,134          $        159,529          $        161,089          $        729,174          $        483,794          $        488,113         


 

(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 September 30, Nine Months Ended
September 30,
  2022   2021   2022   2021 
ADJUSTED NET INCOME AVAILABLE TO COMMON STOCKHOLDERS:       
Net income (loss) available to common stockholders$        351,185          $        (292,717) $        607,974          $        (615,215)
Unrealized (gain) loss from derivative financial instruments         (33,154)          392,870                   102,616                   610,764         
Loss on early retirement of debt         —                   —                   46,840                   352,599         
Non-cash interest amortization from adjusting debt assumed in
acquisition to fair value
         —                   2,565                   4,174                   9,962         
Exploration expense         —                   —                   3,363                   —         
Gain on sale of assets         —                   (14)          (21)          (93)
Adjustment to (provision for) benefit from income taxes         7,580                   (11,169)          (29,959)          (153,777)
Adjusted net income available to common stockholders (1)$        325,611          $        91,535          $        734,987          $        204,240         
        
Adjusted net income available to common stockholders per share (2)$        1.18          $        0.35          $        2.68          $        0.79         
        
Diluted shares outstanding         277,715                   276,886                   277,605                   276,368         


ADJUSTED EBITDAX:       
Net income (loss)$        355,596          $        (288,306) $        621,063          $        (602,126)
Interest expense (3)         41,393                   50,259                   132,204                   171,511         
Income taxes         102,810                   23,976                   179,610                   (74,168)
Depreciation, depletion, and amortization         129,065                   128,739                   354,994                   359,313         
Exploration         —                   —                   3,363                   —         
Unrealized (gain) loss from derivative financial instruments         (33,154)          392,870                   102,616                   610,764         
Stock-based compensation         1,842                   1,802                   4,918                   5,291         
Loss on early extinguishment of debt         —                   —                   46,840                   352,599         
Gain on sale of assets         —                   (14)          (21)          (93)
Total Adjusted EBITDAX (4)$        597,552          $        309,326          $        1,445,587          $        823,091         


 

(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 September 30, Nine Months Ended
September 30,
  2022   2021   2022   2021 
OPERATING CASH FLOW(1):       
Net income (loss)$        355,596          $        (288,306) $        621,063          $        (602,126)
Reconciling items:       
Unrealized (gain) loss from derivative financial instruments         (33,154)          392,870                   102,616                   610,764         
Deferred income taxes (benefit)         78,060                   16,339                   148,389                   (84,942)
Depreciation, depletion and amortization         129,065                   128,739                   354,994                   359,313         
Loss on early retirement of debt         —                   —                   46,840                   352,599         
Amortization of debt discount and issuance costs         1,444                   4,012                   8,542                   17,587         
Stock-based compensation         1,842                   1,802                   4,918                   5,291         
Gain on sale of assets         —                   (14)          (21)          (93)
Operating cash flow$        532,853          $        255,442          $        1,287,341          $        658,393         
Increase in accounts receivable         (155,682)          (57,189)          (359,600)          (97,379)
(Increase) decrease in other current assets         (15,494)          (4,678)          (25,214)          850         
Increase in accounts payable and accrued expenses         156,873                   39,395                   301,956                   56,689         
Net cash provided by operating activities$        518,550          $        232,970          $        1,204,483          $        618,553         
        


 Three Months Ended September 30, Nine Months Ended
September 30,
  2022   2021   2022   2021 
FREE CASH FLOW(2):        
Operating cash flow$        532,853          $        255,442          $        1,287,341          $        658,393         
Less:       
Exploration and development capital expenditures         (242,134)          (161,089)          (729,174)          (488,113)
Other capital expenditures         (603)          (23)          (713)          (69)
Preferred dividends         (4,411)          (4,411)          (13,089)          (13,089)
Free cash flow from operations$        285,705          $        89,919          $        544,365          $        157,122         
Acquisitions         (12,347)          (5,248)          (54,492)          (18,649)
Proceeds from divestitures         —                   50                   93                   261         
Free cash flow after acquisition and divestiture activity$        273,358          $        84,721          $        489,966          $        138,734         
        


 

(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)

 September 30,
2022
 December 31, 2021
ASSETS   
Cash and cash equivalents$        38,648         $        30,663         
Accounts receivable         627,338                  267,738         
Derivative financial instruments         2,368                  5,258         
Other current assets         40,470                  15,077         
Total current assets         708,824                  318,736         
Property and equipment, net         4,440,022                  4,007,146         
Goodwill         335,897                  335,897         
Operating lease right-of-use assets         99,622                  6,450         
 $        5,584,365         $        4,668,229         
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
Accounts payable$        617,463         $        314,569         
Accrued costs         150,327                  135,026         
Operating leases         38,024                  2,444         
Derivative financial instruments         285,713                  181,945         
Total current liabilities         1,091,527                  633,984         
Long-term debt         2,261,697                  2,615,235         
Deferred income taxes         345,806                  197,417         
Derivative financial instruments         —                  4,042         
Long-term operating leases         61,676                  4,075         
Asset retirement obligation         29,235                  25,673         
Other non-current liabilities         8                  24         
Total liabilities         3,789,949                  3,480,450         
Mezzanine Equity:   
Preferred stock         175,000                  175,000         
Stockholders' Equity:   
Common stock         116,879                  116,462         
Additional paid-in capital         1,098,605                  1,100,359         
Accumulated earnings (deficit)         403,932                  (204,042)
Total stockholders' equity         1,619,416                  1,012,779         
 $        5,584,365         $        4,668,229         

 

Coordonnées