COMSTOCK RESOURCES, INC. REPORTS FIRST QUARTER 2023 FINANCIAL AND OPERATING RESULTS
05/02/2023 - 04:15 PM
FRISCO, TX, May 02, 2023 (GLOBE NEWSWIRE) -- Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter ended March 31, 2023.
Highlights of 2023 's First Quarter
Generated operating cash flow of $255 million or $0.92 per diluted share. Adjusted net income to common stockholders for the quarter was $92 million or $0.33 per diluted share. Adjusted EBITDAX was $293 million . Oil and gas sales, including realized hedging gains, were $390 million . Solid results from Haynesville shale drilling program with 15 (9.8 net) operated wells turned to sales since our last update with an average initial production of 23 MMcf per day. Financial Results for the Three Months Ended March 31, 2023
Comstock's revenues in the first quarter of 2023 totaled $390.4 million (including realized hedging gains of $10.4 million ). Net cash provided by operating activities (excluding changes in working capital) generated in the first quarter of 2023 was $254.9 million , and net income available to common stockholders for the first quarter was $134.5 million or $0.49 per share. Reported net income in the quarter included a pre-tax $56.0 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 first quarter of 2023 was $92.0 million , or $0.33 per diluted share.
Comstock's production cost per Mcfe in the first quarter averaged $0.83 per Mcfe, which was comprised of $0.36 for gathering and transportation costs, $0.27 for lease operating costs, $0.12 for production and other taxes and $0.08 for cash general and administrative expenses. Comstock's unhedged operating margin was 72% in the first quarter of 2023 and 73% after hedging.
Drilling Results
Comstock drilled 18 (13.7 net) operated horizontal Haynesville/Bossier shale wells in the first quarter of 2023 which had an average lateral length of 12,075 feet. The Company also participated in an additional 26 (2.6 net) non-operated Haynesville shale wells in the first quarter of 2023. Comstock turned 19 (11.6 net) operated wells and ten (1.2 net) non-operated wells to sales in the first quarter of 2023 and currently expects to turn an additional 17 (13.0 net) operated wells to sales in the second quarter of 2023.
Since its last operational update in February, Comstock has turned 15 (9.8 net) operated Haynesville/Bossier shale wells to sales. These wells had initial daily production rates that averaged 23 MMcf per day. The completed lateral length of these wells averaged 11,042 feet.
Included in the wells turned to sales was the Campbell #2H, Comstock's third successful Western Haynesville well. This well was drilled to a total vertical depth of 15,700 feet and has a 12,763 foot completed lateral. The well's initial production rate was 36 MMcf per day.
Declaration of Quarterly Dividend
On May 1, 2023, Comstock's Board of Directors declared a quarterly dividend of $0.12 5 per common share. The dividend will be payable on June 15, 2023 to stockholders of record at the close of business on June 1, 2023.
Earnings Call Information
Comstock has planned a conference call for 10:00 a.m. Central Time on May 3, 2023, to discuss the first quarter 2023 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/BI7639b1d21a9745e8b20115 83a0365914 . 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/fobwbsen .
If you are unable to participate in the original conference call, a web replay will be available for twelve months beginning at 1:00 p.m. CT on May 3, 2023. The replay of the conference can be accessed using the webcast link: https://edge.media-server.com/mmc/p/fobwbsen .
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, 2023 2022 Revenues: Natural gas sales $ 378,032 $ 522,957 Oil sales 1,942 1,884 Total natural gas and oil sales 379,974 524,841 Gas services 109,604 — Total revenues 489,578 524,841 Operating expenses: Production and ad valorem taxes 14,906 13,820 Gathering and transportation 45,574 32,093 Lease operating 34,830 26,186 Exploration 1,775 1,021 Depreciation, depletion and amortization 133,983 106,728 Gas services 101,295 — General and administrative 12,368 8,223 Gain on sale of assets (773 ) (2 ) Total operating expenses 343,958 188,069 Operating income 145,620 336,772 Other income (expenses): Gain (loss) from derivative financial instruments 66,409 (437,493 ) Other income 460 4,166 Interest expense (38,270 ) (46,491 ) Total other income (expenses) 28,599 (479,818 ) Income (loss) before income taxes 174,219 (143,046 ) (Provision for) benefit from income taxes (39,716 ) 31,622 Net income (loss) 134,503 (111,424 ) Preferred stock dividends — (4,315 ) Net income (loss) available to common stockholders $ 134,503 $ (115,739 ) Net income (loss) per share: Basic $ 0.49 $ (0.50 ) Diluted $ 0.49 $ (0.50 ) Weighted average shares outstanding: Basic 276,551 231,976 Diluted 276,551 231,976 Dividends per share $ 0.125 $ —
COMSTOCK RESOURCES, INC. OPERATING RESULTS (In thousands, except per unit amounts)
Three Months Ended March 31, 2023 2022 Gas production (MMcf) 127,067 114,906 Oil production (Mbbls) 27 21 Total production (MMcfe) 127,226 115,035 Natural gas sales $ 378,032 $ 522,957 Natural gas hedging settlements (1) 10,383 (117,186 ) Total natural gas including hedging 388,415 405,771 Oil sales 1,942 1,884 Total natural gas and oil sales including hedging $ 390,357 $ 407,655 Average gas price (per Mcf) $ 2.98 $ 4.55 Average gas price including hedging (per Mcf) $ 3.06 $ 3.53 Average oil price (per barrel) $ 71.93 $ 89.71 Average price (per Mcfe) $ 2.99 $ 4.56 Average price including hedging (per Mcfe) $ 3.07 $ 3.54 Production and ad valorem taxes $ 14,906 $ 13,820 Gathering and transportation 45,574 32,093 Lease operating 34,830 26,186 Cash general and administrative (2) 10,321 6,728 Total production costs $ 105,631 $ 78,827 Production and ad valorem taxes (per Mcfe) $ 0.12 $ 0.12 Gathering and transportation (per Mcfe) 0.36 0.28 Lease operating (per Mcfe) 0.27 0.23 Cash general and administrative (per Mcfe) 0.08 0.06 Total production costs (per Mcfe) $ 0.83 $ 0.69 Unhedged operating margin 72 % 85 % Hedged operating margin 73 % 81 % Gas services revenue $ 109,604 $ — Gas services expenses 101,295 — Gas services margin 8,309 — Oil and Gas Capital Expenditures: Proved property acquisitions $ — $ 274 Unproved property acquisitions 40,695 3,631 Total oil and gas properties acquisitions $ 40,695 $ 3,905 Exploration and Development: Development leasehold $ 8,743 $ 4,632 Exploratory drilling and completion 29,690 11,557 Development drilling and completion 280,176 189,048 Other development costs 6,097 18,612 Total exploration and development capital expenditures $ 324,706 $ 223,849
(1) Included in gain (loss) from derivative financial instruments in operating results.
(2) Excludes stock-based compensation.
COMSTOCK RESOURCES, INC. NON-GAAP FINANCIAL MEASURES (In thousands, except per share amounts)
Three Months Ended March 31, 2023 2022 ADJUSTED NET INCOME AVAILABLE TO COMMON STOCKHOLDERS: Net income (loss) available to common stockholders $ 134,503 $ (115,739 ) Unrealized (gain) loss from derivative financial instruments (56,026 ) 320,307 Non-cash interest amortization from adjusting debt assumed in acquisition to fair value — 2,760 Exploration expense 1,775 1,021 Gain on sale of assets (773 ) (2 ) Adjustment to (provision for) benefit from income taxes 12,528 (72,589 ) Adjusted net income available to common stockholders (1) $ 92,007 $ 135,758 Adjusted net income available to common stockholders per share (2) $ 0.33 $ 0.51 Diluted shares outstanding 276,551 277,058
ADJUSTED EBITDAX: Net income (loss) $ 134,503 $ (111,424 ) Interest expense 38,270 46,491 Income taxes 39,716 (31,622 ) Depreciation, depletion, and amortization 133,983 106,728 Exploration 1,775 1,021 Unrealized (gain) loss from derivative financial instruments (56,026 ) 320,307 Stock-based compensation 2,046 1,495 Gain on sale of assets (773 ) (2 ) Total Adjusted EBITDAX (3) $ 293,494 $ 332,994
(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) 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, 2023 2022 OPERATING CASH FLOW (1) : Net income (loss) $ 134,503 $ (111,424 ) Reconciling items: Unrealized (gain) loss from derivative financial instruments (56,026 ) 320,307 Deferred income taxes (benefit) 39,180 (24,788 ) Depreciation, depletion and amortization 133,983 106,728 Amortization of debt discount and issuance costs 1,997 4,225 Stock-based compensation 2,046 1,495 Gain on sale of assets (773 ) (2 ) Operating cash flow $ 254,910 $ 296,541 Decrease in accounts receivable 255,992 28,125 (Increase) decrease in other current assets (1,514 ) 2,985 Decrease in accounts payable and accrued expenses (123,024 ) (42,033 ) Net cash provided by operating activities $ 386,364 $ 285,618
Three Months Ended March 31, 2023 2022 FREE CASH FLOW (2) : Operating cash flow $ 254,910 $ 296,541 Less: Exploration and development capital expenditures (324,706 ) (223,849 ) Other capital expenditures (4,543 ) (22 ) Preferred stock dividends — (4,315 ) Free cash flow from operations $ (74,339 ) $ 68,355 Acquisitions of oil and gas properties (40,695 ) (3,905 ) Proceeds from divestitures 130 45 Free cash flow (deficit) after acquisition and divestiture activity $ (114,904 ) $ 64,495
(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)
March 31, 2023 December 31, 2022 ASSETS Cash and cash equivalents $ 33,677 $ 54,652 Accounts receivable 254,135 510,127 Derivative financial instruments 75,490 23,884 Other current assets 59,522 56,324 Total current assets 422,824 644,987 Property and equipment, net 4,859,699 4,622,655 Goodwill 335,897 335,897 Operating lease right-of-use assets 82,461 90,716 $ 5,700,881 $ 5,694,255 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ 443,501 $ 530,195 Accrued costs 145,779 183,111 Operating leases 39,031 38,411 Derivative financial instruments — 4,420 Total current liabilities 628,311 756,137 Long-term debt 2,154,424 2,152,571 Deferred income taxes 464,914 425,734 Long-term operating leases 43,504 52,385 Asset retirement obligation 29,553 29,114 Total liabilities 3,320,706 3,415,941 Stockholders' Equity: Common stock 138,755 138,759 Additional paid-in capital 1,255,467 1,253,417 Accumulated earnings 985,953 886,138 Total stockholders' equity 2,380,175 2,278,314 $ 5,700,881 $ 5,694,255