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

October 30, 2023

FRISCO, TX, Oct. 30, 2023 (GLOBE NEWSWIRE) — Comstock Resources, Inc. (“Comstock” or the “Company”) (NYSE: CRK) today reported financial and operating results for the quarter ended September 30, 2023.

Highlights of 2023‘s Third Quarter

Continued weak natural gas prices weighed heavily on the third quarter results.Natural gas and oil sales, including realized hedging gains, were $316 million.Operating cash flow was $167 million or $0.60 per diluted share.Adjusted EBITDAX for the quarter was $209 million.Adjusted net income was $11.7 million for the quarter.Solid results from the Haynesville shale drilling program with 21 (18.1 net) operated wells turned to sales since the Company’s last update with an average initial production of 29 MMcf per day.Latest two Western Haynesville wells were successful with average initial production rates of 34 and 35 Mmcf per day.Entering into new venture to fund the midstream build-out to support Western Haynesville development.

Financial Results for the Three Months Ended September 30, 2023

Comstock’s natural gas and oil sales in the third quarter of 2023 totaled $315.8 million (including realized hedging gains of $10.3 million). Operating cash flow (excluding changes in working capital) generated in the third quarter of 2023 was $167.2 million, and net income available to common stockholders for the third quarter was $14.7 million or $0.05 per share. Net income in the quarter included a pre-tax $3.9 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 2023 was $11.7 million, or $0.04 per diluted share.

Comstock’s production cost per Mcfe in the third quarter averaged $0.85 per Mcfe, which was comprised of $0.36 for gathering and transportation costs, $0.24 for lease operating costs, $0.20 for production and other taxes and $0.05 for cash general and administrative expenses. Comstock’s unhedged operating margin was 64% in the third quarter of 2023 and 65% after hedging.

Financial Results for the Nine Months Ended September 30, 2023

Natural gas and oil sales for the nine months ended September 30, 2023 totaled $991.4 million (including realized hedging gains of $76.2 million). Operating cash flow (excluding changes in working capital) generated during the first nine months of 2023 was $567.6 million, and net income available to common stockholders was $103.5 million or $0.37 per share. Adjusted net income available to common stockholders for the nine months ended September 30, 2023 was $104.8 million or $0.38 per diluted share.

Comstock’s production cost per Mcfe during the nine months ended September 30, 2023 averaged $0.85 per Mcfe, which was comprised of $0.36 for gathering and transportation costs, $0.26 for lease operating costs, $0.16 for production and other taxes and $0.07 for cash general and administrative expenses. Comstock’s unhedged operating margin was 65% during the first nine months of 2023 and 67% after hedging.

Drilling Results

Comstock drilled thirteen (10.2 net) operated horizontal Haynesville/Bossier shale wells in the third quarter of 2023 which had an average lateral length of 11,644 feet. Comstock turned 21 (18.1 net) operated wells to sales in the third quarter of 2023.

Since its last operational update in August, Comstock has turned 21 (18.1 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 10,460 feet.

Included in the wells turned to sales were the sixth and seventh successful Western Haynesville wells – the Cazey MS #1 and the Lanier CW #1. The Cazey MS #1 well was drilled to a total vertical depth of 15,986 feet and has a 10,028 foot completed lateral. The well’s initial production rate was 34 MMcf per day. The Lanier CW #1 well was drilled to a total vertical depth of 17,309 feet and has a 9,577 foot completed lateral. The well’s initial production rate was 35 MMcf per day.

Declaration of Quarterly Dividend

On October 30, 2023, Comstock’s Board of Directors declared a quarterly dividend of $0.125 per common share. The dividend will be payable on December 15, 2023 to stockholders of record at the close of business on December 1, 2023.

Midstream Partnership

Comstock is forming a midstream partnership for its Western Haynesville acreage with Quantum Capital Solutions (“QCS”), an affiliate of Quantum Capital Group.  As part of this transaction, Comstock will contribute its Pinnacle gathering and treating system, which is comprised of 145-mile high pressure pipeline and the Bethel natural gas processing plant to the partnership in exchange for a total capital commitment by QCS of $300 million to fund the future build-out of the Western Haynesville midstream system over the next several years. Comstock will control and operate the midstream system. “The new partnership with QCS is expected to fund the needed expansion for our Western Haynesville midstream development program over the next five years,” stated M. Jay Allison, Chief Executive Officer of Comstock.

Earnings Call Information

Comstock has planned a conference call for 10:00 a.m. Central Time on October 31, 2023, to discuss the third 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/BIfc74a143ead8420db183d8bae 061d4c9. 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/5d543ov4.

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 October 31, 2023. The replay of the conference can be accessed using the webcast link:  https://edge.media-server.com/mmc/p/5d543ov4.

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,
   2023  2022  2023  2022 Revenues:            Natural gas sales $304,141  $994,979  $911,065  $2,376,774 Oil sales  1,309   1,936   4,111   6,324 Total natural gas and oil sales  305,450   996,915   915,176   2,383,098 Gas services  71,287   193,090   239,350   322,575 Total revenues  376,737   1,190,005   1,154,526   2,705,673 Operating expenses:            Production and ad valorem taxes  25,386   24,531   59,891   60,080 Gathering and transportation  47,012   44,740   137,981   113,797 Lease operating  31,664   28,608   100,525   79,873 Exploration  —   —   1,775   3,363 Depreciation, depletion and amortization  148,190   129,065   422,350   354,994 Gas services  67,632   181,818   224,317   305,271 General and administrative  9,586   10,165   31,992   27,451 Loss on sale of assets  —   —   (125)  (21)Total operating expenses  329,470   418,927   978,706   944,808 Operating income  47,267   771,078   175,820   1,760,865 Other income (expenses):            Gain (loss) from derivative financial instruments  14,276   (271,335)  76,190   (781,654)Other income  409   56   1,467   506 Interest expense  (43,624)  (41,393)  (121,082)  (132,204)Loss on early retirement of debt  —   —   —   (46,840)Total other expenses  (28,939)  (312,672)  (43,425)  (960,192)Income before income taxes  18,328   458,406   132,395   800,673 Provision for income taxes  (3,608)  (102,810)  (28,878)  (179,610)Net income  14,720   355,596   103,517   621,063 Preferred stock dividends  —   (4,411)  —   (13,089)Net income available to common stockholders $14,720  $351,185  $103,517  $607,974              Net income per share:            Basic $0.05  $1.50  $0.37  $2.61 Diluted $0.05  $1.28  $0.37  $2.24 Weighted average shares outstanding:            Basic  276,999   232,482   276,741   232,170 Diluted  276,999   277,715   276,741   277,605 Dividends per share $0.125  $—  $0.375  $— 

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

  Three Months Ended September 30,  Nine Months Ended September 30,   2023  2022  2023  2022 Natural gas production (MMcf)  130,528   128,902   383,902   367,758 Oil production (Mbbls)  17   21   57   66 Total production (MMcfe)  130,629   129,025   384,241   368,152              Natural gas sales $304,141  $994,979  $911,065  $2,376,774 Natural gas hedging settlements (1)  10,344   (304,489)  76,221   (679,038)Total natural gas including hedging  314,485   690,490   987,286   1,697,736 Oil sales  1,309   1,936   4,111   6,324 Total natural gas and oil sales including hedging $315,794  $692,426  $991,397  $1,704,060              Average natural gas price (per Mcf) $2.33  $7.72  $2.37  $6.46 Average natural gas price including hedging (per Mcf) $2.41  $5.36  $2.57  $4.62 Average oil price (per barrel) $77.00  $92.19  $72.12  $95.82 Average price (per Mcfe) $2.34  $7.73  $2.38  $6.47 Average price including hedging (per Mcfe) $2.42  $5.37  $2.58  $4.63              Production and ad valorem taxes $25,386  $24,531  $59,891  $60,080 Gathering and transportation  47,012   44,740   137,981   113,797 Lease operating  31,664   28,608   100,525   79,873 Cash general and administrative (2)  6,931   8,323   24,985   22,533 Total production costs $110,993  $106,202  $323,382  $276,283              Production and ad valorem taxes (per Mcfe) $0.20  $0.19  $0.16  $0.16 Gathering and transportation (per Mcfe)  0.36   0.35   0.36   0.31 Lease operating (per Mcfe)  0.24   0.22   0.26   0.22 Cash general and administrative (per Mcfe)  0.05   0.06   0.07   0.06 Total production costs (per Mcfe) $0.85  $0.82  $0.85  $0.75              Unhedged operating margin  64%  89%  65%  88%Hedged operating margin  65%  85%  67%  84%             Gas services revenue $71,287  $193,090  $239,350  $322,575 Gas services expenses  67,632   181,818   224,317   305,271 Gas services margin $3,655  $11,272  $15,033  $17,304              Natural Gas and Oil Capital Expenditures:            Proved property acquisitions $—  $—  $—  $205 Unproved property acquisitions  19,998   12,214   76,646   37,396 Total natural gas and oil properties acquisitions $19,998  $12,214  $76,646  $37,601 Exploration and Development:            Development leasehold $5,369  $3,011  $19,087  $8,298 Exploratory drilling and completion  74,737   18,606   179,049   49,003 Development drilling and completion  229,594   204,954   740,808   619,373 Other development costs  1,418   15,563   18,868   52,500 Total exploration and development capital expenditures $311,118  $242,134  $957,812  $729,174 

Included in gain (loss) from derivative financial instruments in operating results.Excludes stock-based compensation.

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

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
   2023  2022  2023  2022 ADJUSTED NET INCOME AVAILABLE TO COMMON STOCKHOLDERS:            Net income available to common stockholders $14,720  $351,185  $103,517  $607,974 Unrealized (gain) loss from derivative financial instruments  (3,932)  (33,154)  31   102,616 Loss on early retirement of debt  —   —   —   46,840 Non-cash interest amortization from adjusting debt assumed in acquisition to fair value  —   —   —   4,174 Exploration expense  —   —   1,775   3,363 Gain on sale of assets  —   —   (125)  (21)Adjustment to (provision for) benefit from income taxes  946   7,580   (418)  (29,959)Adjusted net income available to common stockholders (1) $11,734  $325,611  $104,780  $734,987              Adjusted net income available to common stockholders per share (2) $0.04  $1.18  $0.38  $2.68 Diluted shares outstanding  276,999   277,715   276,741   277,605                           ADJUSTED EBITDAX:            Net income $14,720  $355,596  $103,517  $621,063 Interest expense  43,624   41,393   121,082   132,204 Income taxes  3,608   102,810   28,878   179,610 Depreciation, depletion, and amortization  148,190   129,065   422,350   354,994 Exploration  —   —   1,775   3,363 Unrealized (gain) loss from derivative financial instruments  (3,932)  (33,154)  31   102,616 Stock-based compensation  2,655   1,842   7,006   4,918 Loss on early extinguishment of debt  —   —   —   46,840 Gain on sale of assets  —   —   (125)  (21)Total Adjusted EBITDAX (3) $208,865  $597,552  $684,514  $1,445,587 

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.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.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,
   2023  2022  2023  2022 OPERATING CASH FLOW (1):            Net income $14,720  $355,596  $103,517  $621,063 Reconciling items:            Unrealized (gain) loss from derivative financial instruments  (3,932)  (33,154)  31   102,616 Deferred income taxes  3,608   78,060   28,878   148,389 Depreciation, depletion and amortization  148,190   129,065   422,350   354,994 Loss on early retirement of debt  —   —   —   46,840 Amortization of debt discount and issuance costs  1,989   1,444   5,980   8,542 Stock-based compensation  2,655   1,842   7,006   4,918 Gain on sale of assets  —   —   (125)  (21)Operating cash flow $167,230  $532,853  $567,637  $1,287,341 (Increase) decrease in accounts receivable  (20,887)  (155,682)  295,323   (359,600)(Increase) decrease in other current assets  (1,825)  (522)  (624)  359 Increase (decrease) in accounts payable and accrued expenses  (73,753)  156,873   (73,697)  301,956 Net cash provided by operating activities $70,765  $533,522  $788,639  $1,230,056 

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
   2023  2022  2023  2022 FREE CASH FLOW (2):            Operating cash flow $167,230  $532,853  $567,637  $1,287,341 Less:            Exploration and development capital expenditures  (311,118)  (242,134)  (957,812)  (729,174)Other capital expenditures  (10,563)  (603)  (22,076)  (713)Preferred stock dividends  —   (4,411)  —   (13,089)Free cash flow (deficit) from operations $(154,451) $285,705  $(412,251) $544,365 Acquisitions of natural gas and oil properties  (19,998)  (12,347)  (76,646)  (54,492)Proceeds from divestitures  —   —   41,295   93 Free cash flow (deficit) after acquisition and divestiture activity $(174,449) $273,358  $(447,602) $489,966 

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.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)

  September 30,
2023
  December 31,
2022
 ASSETS      Cash and cash equivalents $19,835  $54,652 Accounts receivable  214,804   510,127 Derivative financial instruments  23,973   23,884 Other current assets  68,572   56,324 Total current assets  327,184   644,987 Property and equipment, net  5,219,961   4,622,655 Goodwill  335,897   335,897 Operating lease right-of-use assets  148,066   90,716   $6,031,108  $5,694,255        LIABILITIES AND STOCKHOLDERS’ EQUITY      Accounts payable $503,564  $530,195 Accrued costs  103,666   183,111 Operating leases  52,731   38,411 Derivative financial instruments  —   4,420 Total current liabilities  659,961   756,137 Long-term debt  2,503,407   2,152,571 Deferred income taxes  454,612   425,734 Derivative financial instruments  4,540   — Long-term operating leases  95,397   52,385 Asset retirement obligation  30,434   29,114 Total liabilities  3,748,351   3,415,941 Stockholders’ Equity:      Common stock  139,214   138,759 Additional paid-in capital  1,258,069   1,253,417 Accumulated earnings  885,474   886,138 Total stockholders’ equity  2,282,757   2,278,314   $6,031,108  $5,694,255 CONTACT: Ron Mills
Vice President of Finance & Investor Relations
Comstock Resources
972-668-8834
rmills@comstockresources.com

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