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COMSTOCK RESOURCES, INC. REPORTS SECOND QUARTER 2023 FINANCIAL AND OPERATING RESULTS

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Comstock Resources, Inc. reported weak second-quarter results due to low natural gas prices. Natural gas and oil sales were $285 million, and operating cash flow was $145 million. Adjusted net income was just over break even. The company had success in its Haynesville shale drilling program with 15 operated wells turned to sales. Comstock declared a quarterly dividend of $0.125 per common share.
Positive
  • Weak natural gas prices negatively impacted Comstock Resources' second-quarter results.
  • Natural gas and oil sales were $285 million for the quarter.
  • Operating cash flow was $145 million or $0.53 per diluted share.
  • Adjusted net income for the quarter was just over break even.
  • Comstock had success in its Haynesville shale drilling program with 15 operated wells turned to sales.
  • Comstock declared a quarterly dividend of $0.125 per common share.
Negative
  • None.

FRISCO, TX, July 31, 2023 (GLOBE NEWSWIRE) -- Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter ended June 30, 2023.

Highlights of 2023's Second Quarter

  • Weak natural gas prices have weighed heavily on the second quarter results.
  • Natural gas and oil sales, including realized hedging gains, were $285 million.
  • Operating cash flow was $145 million or $0.53 per diluted share.
  • Adjusted EBITDAX for the quarter was $182 million.
  • Adjusted net income was just over break even for the quarter.
  • Solid results from Haynesville shale drilling program with 15 (12.0 net) operated wells turned to sales since the Company's last update with an average initial production of 21 MMcf per day.
  • Comstock continues to have success in its Western Haynesville exploratory play. Comstock's fourth and fifth well were recently turned to sales with strong initial production rates.

Financial Results for the Three Months Ended June 30, 2023

Comstock's natural gas and oil sales in the second quarter of 2023 totaled $285.2 million (including realized hedging gains of $55.5 million). Operating cash flow (excluding changes in working capital) generated in the second quarter of 2023 was $145.5 million, and net loss available to common stockholders for the second quarter was $45.7 million or $0.17 per share. The reported net loss in the quarter included a pre-tax $60.0 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 second quarter of 2023 was $1.0 million, or $0.00 per diluted share.

Comstock's production cost per Mcfe in the second quarter averaged $0.84 per Mcfe, which was comprised of $0.36 for gathering and transportation costs, $0.27 for lease operating costs, $0.15 for production and other taxes and $0.06 for cash general and administrative expenses. Comstock's unhedged operating margin was 54% in the second quarter of 2023 and 63% after hedging.

Financial Results for the Six Months Ended June 30, 2023

Natural gas and oil sales for the six months ended June 30, 2023 totaled $675.6 million (including realized hedging gains of $65.9 million). Operating cash flow (excluding changes in working capital) generated during the first six months of 2023 was $400.4 million, and net income available to common stockholders was $88.8 million or $0.32 per share. Net income during the first six months of 2023 included a pre-tax $4.0 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 six months ended June 30, 2023 was $93.0 million or $0.33 per diluted share.

Comstock's production cost per Mcfe during the six months ended June 30, 2023 averaged $0.84 per Mcfe, which was comprised of $0.36 for gathering and transportation costs, $0.27 for lease operating costs, $0.14 for production and other taxes and $0.07 for cash general and administrative expenses. Comstock's unhedged operating margin was 65% during the first six months of 2023 and 69% after hedging.

Drilling Results

Comstock drilled 21 (17.2 net) operated horizontal Haynesville/Bossier shale wells in the second quarter of 2023 which had an average lateral length of 10,887 feet. Comstock turned 17 (13.0 net) operated wells to sales in the second quarter of 2023.

Since its last operational update in May, Comstock has turned 15 (12.0 net) operated Haynesville/Bossier shale wells to sales. These wells had initial daily production rates that averaged 21 MMcf per day. The completed lateral length of these wells averaged 10,671 feet.

Included in the wells turned to sales were the Dinkins JG #1 and the McCullough Ingram A #1, Comstock's fourth and fifth successful Western Haynesville wells. The Dinkins well was drilled to a total vertical depth of 18,042 feet and has a 9,565 foot completed lateral. The well's initial production rate was 34 MMcf per day. The McCullough Ingram well was drilled to a total vertical depth of 17,836 feet and has a 8,256 foot completed lateral. The well's initial production rate was 35 MMcf per day.

Declaration of Quarterly Dividend

On July 31, 2023, Comstock's Board of Directors declared a quarterly dividend of $0.125 per common share. The dividend will be payable on September 15, 2023 to stockholders of record at the close of business on September 1, 2023.

Earnings Call Information

Comstock has planned a conference call for 10:00 a.m. Central Time on August 1, 2023, to discuss the second 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/BId240081b2bc14ea8931c4866b16b9dbd. 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/mtj2p68k.

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 August 1, 2023. The replay of the conference can be accessed using the webcast link: https://edge.media-server.com/mmc/p/mtj2p68k.

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
June 30,
 Six Months Ended
June 30,
  2023   2022   2023   2022 
  
Revenues:       
Natural gas sales$        228,892          $        858,838          $        606,924          $        1,381,795         
Oil sales         860                   2,504                   2,802                   4,388         
Total natural gas and oil sales         229,752                   861,342                   609,726                   1,386,183         
Gas services         58,459                   84,912                   168,063                   129,485         
Total revenues         288,211                   946,254                   777,789                   1,515,668         
Operating expenses:       
Production and ad valorem taxes         19,599                   21,729                   34,505                   35,549         
Gathering and transportation         45,395                   36,964                   90,969                   69,057         
Lease operating         34,031                   25,079                   68,861                   51,265         
Exploration         —                   2,342                   1,775                   3,363         
Depreciation, depletion and amortization         140,177                   119,201                   274,160                   225,929         
Gas services         55,390                   82,778                   156,685                   123,453         
General and administrative         10,038                   9,063                   22,406                   17,286         
Loss (gain) on sale of assets         648                   (19)          (125)          (21)
Total operating expenses         305,278                   297,137                   649,236                   525,881         
Operating income (loss)         (17,067)          649,117                   128,553                   989,787         
Other income (expenses):       
Gain (loss) from derivative financial instruments         (4,495)          (72,826)          61,914                   (510,319)
Other income         598                   182                   1,058                   450         
Interest expense         (39,188)          (44,320)          (77,458)          (90,811)
Loss on early retirement of debt         —                   (46,840)          —                   (46,840)
Total other expenses         (43,085)          (163,804)          (14,486)          (647,520)
Income (loss) before income taxes         (60,152)          485,313                   114,067                   342,267         
(Provision for) benefit from income taxes         14,446                   (108,422)          (25,270)          (76,800)
Net income (loss)         (45,706)          376,891                   88,797                   265,467         
Preferred stock dividends         —                   (4,363)          —                   (8,678)
Net income (loss) available to common stockholders$        (45,706) $        372,528          $        88,797          $        256,789         
        
Net income (loss) per share:       
Basic$        (0.17) $        1.60          $        0.32          $        1.10         
Diluted$        (0.17) $        1.36          $        0.32          $        0.96         
Weighted average shares outstanding:       
Basic         276,669                   232,045                   276,610                   232,011         
Diluted         276,669                   277,614                   276,610                   277,485         
Dividends per share$        0.125          $        —          $        0.25          $        —         

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

 Three Months Ended June 30, Six Months Ended June 30,
  2023   2022   2023   2022 
Natural gas production (MMcf)         126,307                   123,950                   253,374                   238,856         
Oil production (Mbbls)         13                   24                   40                   45         
Total production (MMcfe)         126,386                   124,092                   253,612                   239,127         
        
Natural gas sales$        228,892          $        858,838          $        606,924          $        1,381,795         
Natural gas hedging settlements (1)         55,494                   (257,363)          65,877                   (374,549)
Total natural gas including hedging         284,386                   601,475                   672,801                   1,007,246         
Oil sales         860                   2,504                   2,802                   4,388         
Total natural gas and oil sales including hedging$        285,246          $        603,979          $        675,603          $        1,011,634         
        
Average natural gas price (per Mcf)$        1.81          $        6.93          $        2.40          $        5.79         
Average natural gas price including hedging (per Mcf)$        2.25          $        4.85          $        2.66          $        4.22         
Average oil price (per barrel)$        66.15          $        104.33          $        70.05          $        97.51         
Average price (per Mcfe)$        1.82          $        6.94          $        2.40          $        5.80         
Average price including hedging (per Mcfe)$        2.26          $        4.87          $        2.66          $        4.23         
        
Production and ad valorem taxes$        19,599          $        21,729          $        34,505          $        35,549         
Gathering and transportation         45,395                   36,964                   90,969                   69,057         
Lease operating         34,031                   25,079                   68,861                   51,265         
Cash general and administrative (2)         7,733                   7,482                   18,054                   14,210         
Total production costs$        106,758          $        91,254          $        212,389          $        170,081         
        
Production and ad valorem taxes (per Mcfe)$        0.15          $        0.18          $        0.14          $        0.15         
Gathering and transportation (per Mcfe)         0.36                   0.30                   0.36                   0.29         
Lease operating (per Mcfe)         0.27                   0.20                   0.27                   0.21         
Cash general and administrative (per Mcfe)         0.06                   0.06                   0.07                   0.06         
Total production costs (per Mcfe)$        0.84          $        0.74          $        0.84          $        0.71         
        
Unhedged operating margin 54%  89%  65%  88%
Hedged operating margin 63%  85%  69%  83%
        
Gas services revenue$        58,459          $        84,912          $        168,063          $        129,485         
Gas services expenses         55,390                   82,778                   156,685                   123,453         
Gas services margin         3,069                   2,134                   11,378                   6,032         
        
Natural Gas and Oil Capital Expenditures:       
Proved property acquisitions$        —          $        (69) $        —          $        205         
Unproved property acquisitions         15,953                   21,551                   56,648                   25,182         
Total natural gas and oil properties acquisitions$        15,953          $        21,482          $        56,648          $        25,387         
Exploration and Development:       
Development leasehold$        4,975          $        655          $        13,718          $        5,287         
Exploratory drilling and completion         74,622                   18,840                   104,312                   30,397         
Development drilling and completion         231,038                   225,371                   511,214                   414,419         
Other development costs         11,353                   18,325                   17,450                   36,937         
Total exploration and development capital expenditures$        321,988          $        263,191          $        646,694          $        487,040         


 

(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 June 30, Six Months Ended
June 30,
  2023   2022   2023   2022 
ADJUSTED NET INCOME AVAILABLE TO COMMON STOCKHOLDERS:       
Net income (loss) available to common stockholders$        (45,706) $        372,528          $        88,797          $        256,789         
Unrealized (gain) loss from derivative financial instruments         59,989                   (184,537)          3,963                   135,770         
Loss on early retirement of debt         —                   46,840                   —                   46,840         
Non-cash interest amortization from adjusting debt assumed in
acquisition to fair value
         —                   1,414                   —                   4,174         
Exploration expense         —                   2,342                   1,775                   3,363         
Loss (gain) on sale of assets         648                   (19)          (125)          (21)
Adjustment to (provision for) benefit from income taxes         (13,892)          35,050                   (1,364)          (37,539)
Adjusted net income available to common stockholders (1)$        1,039          $        273,618          $        93,046          $        409,376         
        
Adjusted net income available to common stockholders per share (2)$        —          $        1.00          $        0.33          $        1.50         
        
Diluted shares outstanding         276,669                   277,614                   276,610                   277,484         


ADJUSTED EBITDAX:       
Net income (loss)$        (45,706) $        376,891          $        88,797          $        265,467         
Interest expense         39,188                   44,320                   77,458                   90,811         
Income taxes         (14,446)          108,422                   25,270                   76,800         
Depreciation, depletion, and amortization         140,177                   119,201                   274,160                   225,929         
Exploration         —                   2,342                   1,775                   3,363         
Unrealized (gain) loss from derivative financial instruments         59,989                   (184,537)          3,963                   135,770         
Stock-based compensation         2,305                   1,581                   4,351                   3,076         
Loss on early extinguishment of debt         —                   46,840                   —                   46,840         
Loss (gain) on sale of assets         648                   (19)          (125)          (21)
Total Adjusted EBITDAX (3)$        182,155          $        515,041          $        475,649          $        848,035         


 

(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 June 30, Six Months Ended
June 30,
  2023   2022   2023   2022 
OPERATING CASH FLOW(1):       
Net income (loss)$        (45,706) $        376,891          $        88,797          $        265,467         
Reconciling items:       
Unrealized (gain) loss from derivative financial instruments         59,989                   (184,537)          3,963                   135,770         
Deferred income taxes (benefit)         (13,910)          95,117                   25,270                   70,329         
Depreciation, depletion and amortization         140,177                   119,201                   274,160                   225,929         
Loss on early retirement of debt         —                   46,840                   —                   46,840         
Amortization of debt discount and issuance costs         1,994                   2,873                   3,991                   7,098         
Stock-based compensation         2,305                   1,581                   4,351                   3,076         
Loss (gain) on sale of assets         648                   (19)          (125)          (21)
Operating cash flow$        145,497          $        457,947          $        400,407          $        754,488         
(Increase) decrease in accounts receivable         60,218                   (232,043)          316,210                   (203,918)
(Increase) decrease in other current assets         2,715                   (2,104)          1,201                   881         
Increase in accounts payable and accrued expenses         123,080                   187,116                   56                   145,083         
Net cash provided by operating activities$        331,510          $        410,916          $        717,874          $        696,534         
        


 Three Months Ended June 30, Six Months Ended
June 30,
  2023   2022   2023   2022 
FREE CASH FLOW(2):        
Operating cash flow$        145,497          $        457,947          $        400,407          $        754,488         
Less:       
Exploration and development capital expenditures         (321,988)          (263,191)          (646,694)          (487,040)
Other capital expenditures         (6,970)          (18,057)          (11,513)          (18,079)
Preferred stock dividends         —                   (4,363)          —                   (8,678)
Free cash flow (deficit) from operations$        (183,461) $        172,336          $        (257,800) $        240,691         
Acquisitions of natural gas and oil properties         (15,953)          (21,482)          (56,648)          (25,387)
Proceeds from divestitures         41,165                   48                   41,295                   93         
Free cash flow (deficit) after acquisition and divestiture activity$        (158,249) $        150,902          $        (273,153) $        215,397         
        


 

(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 natural gas and oil properties.

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

 June 30,
2023
 December 31,
2022
ASSETS   
Cash and cash equivalents$        9,919         $        54,652        
Accounts receivable         193,917                  510,127        
Derivative financial instruments         17,553                  23,884        
Other current assets         60,777                  56,324        
Total current assets         282,166                  644,987        
Property and equipment, net         5,026,001                  4,622,655        
Goodwill         335,897                  335,897        
Operating lease right-of-use assets         192,670                  90,716        
 $        5,836,734         $        5,694,255        
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
Accounts payable$        552,315         $        530,195        
Accrued costs         132,057                  183,111        
Operating leases         77,690                  38,411        
Derivative financial instruments         —                  4,420        
Total current liabilities         762,062                  756,137        
Long-term debt         2,176,418                  2,152,571        
Deferred income taxes         451,004                  425,734        
Derivative financial instruments         2,052                  —        
Long-term operating leases         115,048                  52,385        
Asset retirement obligation         29,964                  29,114        
Total liabilities         3,536,548                  3,415,941        
Stockholders' Equity:   
Common stock         139,246                  138,759        
Additional paid-in capital         1,255,382                  1,253,417        
Accumulated earnings         905,558                  886,138        
Total stockholders' equity         2,300,186                  2,278,314        
 $        5,836,734         $        5,694,255        


FAQ

What were Comstock Resources' natural gas and oil sales for the quarter?

Comstock Resources' natural gas and oil sales for the quarter were $285 million.

What was Comstock Resources' operating cash flow for the quarter?

Comstock Resources' operating cash flow for the quarter was $145 million or $0.53 per diluted share.

What was Comstock Resources' adjusted net income for the quarter?

Comstock Resources' adjusted net income for the quarter was just over break even.

How many operated wells did Comstock Resources turn to sales in its Haynesville shale drilling program?

Comstock Resources turned 15 operated wells to sales in its Haynesville shale drilling program.

Did Comstock Resources declare a dividend?

Yes, Comstock Resources declared a quarterly dividend of $0.125 per common share.

Comstock Resources, Inc.

NYSE:CRK

CRK Rankings

CRK Latest News

CRK Stock Data

3.17B
87.12M
69.05%
35.54%
8.67%
Crude Petroleum and Natural Gas Extraction
Mining, Quarrying, and Oil and Gas Extraction
Link
United States of America
FRISCO

About CRK

comstock resources, inc., headquartered in frisco, texas is a growing independent energy company engaged in the acquisition, development, production and exploration of oil and natural gas. our operations are primarily focused in texas, louisiana and the mid-continent area. we are focused on growth, and we are active in tight gas sands, shale gas plays and conventional exploration.