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
