COMSTOCK RESOURCES, INC. REPORTS FOURTH QUARTER 2020 FINANCIAL AND OPERATING RESULTS

February 16, 2021 4:15 PM EST

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FRISCO, TX, Feb. 16, 2021 (GLOBE NEWSWIRE) -- Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter and year ended December 31, 2020.

Financial Results for the Three Months Ended December 31, 2020

For the fourth quarter of 2020, Comstock reported net income available to common stockholders of $77.5 million or $0.30 per diluted share. The quarter results included a $80.2 million unrealized gain on the mark-to-market value of the Company's derivative financial instruments that are held to hedge oil and natural gas prices. The adjusted net income available to common stockholders excluding the unrealized gain on the hedge contracts and other non-recurring items for the fourth quarter of 2020 was $34.6 million or $0.14 per diluted share.

Comstock produced 109.0 billion cubic feet ("Bcf") of natural gas and 0.3 million barrels ("Bbls") of oil or 111.1 billion cubic feet of natural gas equivalent ("Bcfe") in the fourth quarter of 2020. Natural gas production averaged 1.2 million cubic feet ("MMcf") per day, an increase of 6% over natural gas production in the third quarter of 2020. Oil production in the fourth quarter of 2020 averaged 3,694 Bbls of oil per day as compared to 3,851 Bbls per day produced in the third quarter of 2020.

Comstock's average realized natural gas price in the fourth quarter of 2020, including realized hedging gains, was $2.40 per Mcf as compared to $2.30 per Mcf realized in the fourth quarter of 2019 and $1.95 per Mcf realized in the third quarter of 2020. The Company's average realized oil price in the fourth quarter of 2020, including realized hedging gains, was $44.47 per Bbl as compared to $50.36 per Bbl in the fourth quarter of 2019 and $33.52 per Bbl in the third quarter of 2020. Oil and gas sales were $276.8 million (including realized hedging gains) in the fourth quarter of 2020 as compared to $308.6 million in the fourth quarter of 2019. Adjusted EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses was $210.8 million in the fourth quarter of 2020 as compared to adjusted EBITDAX of $234.8 million for the fourth quarter of 2019. The Company's operating cash flow generated in the fourth quarter of 2020 was $154.6 million as compared to $187.9 million in the fourth quarter of 2019.

Financial Results for the Year Ended December 31, 2020

For the year ended December 31, 2020, Comstock reported a net loss available to common stockholders of $83.4 million or $0.39 per diluted share. The loss was primarily due to a $124.5 million unrealized loss related to the mark-to-market valuation of derivative financial instruments.  Adjusted net income available to common stockholders excluding the unrealized loss on hedges and other non-recurring items for the year ended December 31, 2020 was $49.6 million or $0.23 per diluted share.

Comstock produced 450.8 Bcf of natural gas and 1.5 million Bbls of oil or 459.9 Bcfe for the year ended December 31, 2020 as compared to 292.8 Bcf of natural gas, 2.7 million Bbls of oil or 308.9 Bcfe for the year ended December 31, 2019. Natural gas production averaged 1.2 MMcf per day in 2020, an increase of 54% over natural gas production in 2019.  Oil production averaged 4,120 Bbls of oil per day in 2020 compared to 7,356 Bbls of oil per day in 2019. Comstock's average realized natural gas price, including realized hedging gains, was $2.07 per Mcf for the year ended December 31, 2020, as compared to $2.35 per Mcf realized for the year ended December 31, 2019. The Company's average realized oil price in 2020, including realized hedging gains, was $40.88 per barrel as compared to $49.64 per barrel in 2019. Oil and gas sales were $993.1 million, including realized hedging gains, for the year ended December 31, 2020 as compared to oil and gas sales of $821.4 million in 2019. Adjusted EBITDAX of $722.2 million in  2020 was 18% higher than adjusted EBITDAX of $613.6 million in 2019. The Company's operating cash flow generated for the year ended December 31, 2020 of $521.2 million increased 11% over operating cash flow of $468.3 million for the year ended December 31, 2019.

Drilling Results

Comstock spent $483.6 million during 2020 for drilling and development activities in 2020. Comstock also spent $7.9 million on leasing activity. $476.9 million was spent to develop its Haynesville and Bossier shale properties, comprised of $436.1 million on drilling and completing wells and an additional $40.8 million on other development activity. Comstock drilled 55 (46.1 net) operated horizontal Haynesville shale wells during the year ended December 31, 2020, which had an average lateral length of  9,247 feet. Comstock also participated in 16 (1.3 net) non-operated Haynesville shale wells in 2020. During the year ended December 31, 2020, Comstock turned 76 (43.7 net) Haynesville shale wells to sales and currently expects to turn 14 (13.0 net) operated wells to sales in the first quarter of 2021.

Since its last operational update, Comstock completed an additional 20 (17.7 net) Haynesville shale wells.  The average initial production rate of these wells was 24 MMcf per day and had an average completed lateral length of 9,288 feet.

2020 Proved Oil & Gas Reserves

Comstock also announced that proved natural gas and oil reserves as of December 31, 2020 were estimated at 5.6 trillion cubic feet ("Tcf") of natural gas and 11.0 million Bbls of oil, or 5.6 Tcfe as compared to total proved reserves of 5.4 Tcfe as of December 31, 2019. The reserve estimates were determined under the SEC guidelines and were audited by the Company's independent reserve engineering firms. The 5.6 Tcfe of proved reserves at December 31, 2020 were 36% developed and 97% were operated by Comstock. The present value, using a 10% discount rate, or the future net cash flows before income taxes of the proved reserves (the "PV-10 Value") was approximately $2.0 billion, using average first of month 2020 prices of $1.99 per Mcf of natural gas and $39.57 per Bbl of oil. The PV-10 Value was impacted by the much lower oil and gas prices required under the SEC methodology. The natural gas and oil prices used in determining the December 31, 2020 proved reserves estimates were 23% lower for natural gas and 29% lower for oil as compared to prices used at December 31, 2019. The PV-10 Value using NYMEX reference prices of $2.75 per Mcf for natural gas and $50.00 per barrel for oil less the Company’s differentials would have been $4.4 billion.


The following table reflects the changes in the proved reserve estimates since the end of 2019:

  Oil
(MMBbls)
 Natural Gas
(Bcf)
 Total
(Bcfe)
Proved Reserves:      
Proved Reserves at December 31, 2019 16.7    5,341.5    5,442.0   
Production (1.5)  (450.8)  (459.9) 
Extensions and discoveries —    365.7    365.7   
Revisions:      
Price (2.9)  (68.2)  (85.3) 
Performance and Other (1.3)  374.7    366.4   
Proved Reserves at December 31, 2020 11.0    5,562.9    5,628.9   

Despite the low prices used to determine proved reserves, Comstock replaced 159% of its 2020 production excluding price revisions and 141% including them. Based on the 2020 proved reserve additions, Comstock’s "all-in" finding costs were approximately $0.66 per Mcfe excluding price-related revisions ($0.75 per Mcfe including price-related revisions).

2021 Drilling Budget

The Company currently plans to spend approximately $510 million to $550 million in 2021 on drilling and completion activities primarily focused on development of its Haynesville/Bossier shale properties and $7 million to $10 million on its leasing program. Under its current operating plan, Comstock expects to drill 62 (51.0 net) and complete 58 (50.5 net) operated horizontal wells utilizing five to six rigs during 2021. 

Other Matters

Comstock has planned a conference call for 10:00 a.m. Central Time on February 17, 2021, to discuss the fourth quarter of 2020 operational and financial results. Investors wishing to participate should visit the Company's website at www.comstockresources.com for a live webcast or dial 844-776-7840 (international dial-in use 661-378-9538) and provide access code 8399473 when prompted. If you are unable to participate in the original conference call, a web replay will be available approximately 24 hours following the completion of the call on Comstock's website at www.comstockresources.com. The web replay will be available for approximately one week. A replay of the conference call will be available beginning at 1:00 p.m. CT February 17, 2021 and will continue until 1:00 p.m. February 24, 2021. To hear the replay, call 855-859-2056 (404-537-3406) if calling from outside the US). The conference call access code is 8399473.

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.

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 December 31, Twelve Months Ended December 31,
 2020 2019 2020 2019
Revenues:       
Natural gas sales$261,424    $260,206    $809,399    $635,795   
Oil sales13,347    29,042    48,796    132,894   
Total oil and gas sales274,771    289,248    858,195    768,689   
Operating expenses:       
Production and ad valorem taxes9,199    12,999    36,967    35,702   
Gathering and transportation29,159    29,957    106,582    71,303   
Lease operating23,342    26,285    102,452    80,762   
Depreciation, depletion and amortization104,284    111,842    417,112    276,526   
General and administrative6,049    6,484    32,040    29,244   
Exploration—    —    27    241   
(Gain) loss on sale of assets(1)  —    (17)  25   
Total operating expenses172,032    187,567    695,163    493,803   
        
Operating income102,739    101,681    163,032    274,886   
Other income (expenses):       
Gain from derivative financial instruments81,929    19,790    9,951    51,735   
Other income287    282    1,080    622   
Transaction costs—    90    —    (41,010) 
Interest expense(66,065)  (54,107)  (234,829)  (161,541) 
Loss on early extinguishment of debt—    —    (861)  —   
Total other income (expenses)16,151    (33,945)  (224,659)  (150,194) 
Income (loss) before income taxes118,890    67,736    (61,627)  124,692   
Benefit from (provision for) income taxes(36,967)  (12,620)  9,210    (27,803) 
Net income (loss)81,923    55,116    (52,417)  96,889   
Preferred stock dividends and accretion(4,400)  (14,287)  (30,996)  (22,415) 
Net income (loss) available to common stockholders$77,523    $40,829    $(83,413)  $74,474   
        
Net income (loss) per share:       
Basic$0.34    $0.22    $(0.39)  $0.52   
Diluted$0.30    $0.19    $(0.39)  $0.52   
Weighted average shares outstanding:       
Basic231,377    187,280    215,194    142,750   
Diluted275,127    284,100    215,194    187,378   
        

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

 As of
 December 31, 2020 December 31, 2019
ASSETS   
Cash and cash equivalents$30,272 $18,532
Accounts receivable145,786 180,341
Derivative financial instruments8,913 75,304
Income taxes receivable 5,109
Other current assets14,839 10,399
Total current assets199,810 289,685
Property and equipment, net4,084,550 4,008,803
Goodwill335,897 335,897
Income taxes receivable 5,109
Derivative financial instruments661 13,888
Operating lease right-of-use assets3,025 3,509
Other assets40 231
 $4,623,983 $4,657,122
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
Accounts payable$259,284 $252,994
Accrued costs133,019 137,166
Operating leases2,284 1,994
Derivative financial instruments47,005 222
Total current liabilities441,592 392,376
Long-term debt2,517,149 2,500,132
Deferred income taxes200,583 211,772
Derivative financial instruments2,364 4,220
Long-term operating leases740 1,515
Asset retirement obligation19,290 18,151
Other non-current liabilities492 6,351
Total liabilities3,182,210 3,134,517
Mezzanine Equity:   
Preferred stock175,000 379,583
Stockholders' Equity:   
Common stock116,206 95,003
Additional paid-in capital1,095,384 909,423
Accumulated earnings55,183 138,596
Total stockholders' equity1,266,773 1,143,022
 $4,623,983 $4,657,122

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

 Three Months Ended December 31, Twelve Months Ended December 31,
 2020 2019 2020 2019
Gas production (MMcf)109,013   121,521   450,836   292,834  
Oil production (Mbbls)340   577   1,508   2,685  
Total production (MMcfe)111,052   124,980   459,883   308,944  
        
Natural gas sales$261,424   $260,206   $809,399   $635,795  
Natural gas hedging settlements (1)240   19,302   122,036   52,297  
Total natural gas including hedging261,664   279,508   931,435   688,092  
Oil sales13,347   29,042   48,796   132,894  
Oil hedging settlements (1)1,767   —   12,849   387  
Total oil including hedging15,114   29,042   61,645   133,281  
Total oil and gas sales including hedging$276,778   $308,550   $993,080   $821,373  
        
Average gas price (per Mcf)$2.40   $2.14   $1.80   $2.17  
Average gas price including hedging (per Mcf)$2.40   $2.30   $2.07   $2.35  
Average oil price (per barrel)$39.27   $50.36   $32.36   $49.49  
Average oil price including hedging (per barrel)$44.47   $50.36   $40.88   $49.64  
Average price (per Mcfe)$2.47   $2.31   $1.87   $2.49  
Average price including hedging (per Mcfe)$2.49   $2.47   $2.16   $2.66  
        
Production and ad valorem taxes$9,199   $12,999   $36,967   $35,702  
Gathering and transportation$29,159   $29,957   $106,582   $71,303  
Lease operating$23,342   $26,285   $102,452   $80,762  
        
Production and ad valorem taxes (per Mcfe)$0.09   $0.10   $0.08   $0.11  
Gathering and transportation (per Mcfe)$0.26   $0.24   $0.23   $0.23  
Lease operating (per Mcfe)$0.21   $0.21   $0.22   $0.27  
        
Oil and Gas Capital Expenditures:       
Acquisitions$—   $41,828   $—   $2,097,451  
Exploratory leasehold6,492   —   7,949   —  
Development leasehold5,659   890   13,022   7,603  
Development drilling and completion155,691   150,960   436,074   493,625  
Other development8,062   3,121   34,525   9,339  
Total$175,904   $196,799   $491,570   $2,608,018  

(1)     Included in gain from derivative financial instruments in operating results.

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

 Three Months Ended
December 31,
 Twelve Months Ended
December 31,
 2020 2019 2020 2019
ADJUSTED NET INCOME (LOSS) TO COMMON STOCKHOLDERS:       
Net income (loss) available to common stockholders$77,523    $40,829    $(83,413)  $74,474   
(Gain) loss on sale of assets(1)  —    (17)  25   
Unrealized (gain) loss on derivative financial instruments(80,158)  (488)  124,545    949   
Loss on early extinguishment of debt—    —    861    —   
Non-cash interest amortization from adjusting debt assumed in
acquisition to fair value
5,811    5,065    22,112    9,143   
Non-cash accretion from adjusting preferred stock issued in
acquisition to fair value
—    4,583    5,417    4,583   
Impairment of unevaluated oil and gas properties—    —    27    —   
Transaction costs—    (90)  —    41,010   
Covey Park July 2019 hedging settlements—    —    —    4,574   
Adjusted benefit (provision) for income taxes31,408    (836)  (19,930)  (12,420) 
Adjusted net income available to common stockholders (1)$34,583    $49,063    $49,602    $122,338   
        
Adjusted net income available to common stockholders per diluted share$0.14    $0.22    $0.23    $0.77   


ADJUSTED EBITDAX:       
Net income (loss)$81,923    $55,116    $(52,417)  $96,889  
Interest expense66,065    54,107    234,829    161,541  
Income taxes36,967    12,620    (9,210)  27,803  
Depreciation, depletion, and amortization104,284    111,842    417,112    276,526  
Unrealized (gain) loss from derivative financial instruments(80,158)  (488)  124,545    949  
Exploration—    —    27    241  
Stock-based compensation1,730    1,661    6,464    4,020  
Loss on early extinguishment of debt—    —    861    —  
Transaction costs—    (90)  —    41,010  
Covey Park July 2019 hedging settlements—    —    —    4,574  
(Gain) loss on sale of assets(1)  —    (17)  25  
Total Adjusted EBITDAX (2)$210,810    $234,768    $722,194    $613,578  
  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 non-cash unrealized gains and losses on derivative financial instruments and other unusual items.
  2. 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 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 December 31, Twelve Months Ended December 31,
 2020 2019 2020 2019
OPERATING CASH FLOW:       
Net income (loss)$81,923    $55,116    $(52,417)  $96,889   
Reconciling items:       
Deferred income taxes37,034    12,821    (9,409)  28,026   
Depreciation, depletion and amortization104,284    111,842    417,112    276,526   
Unrealized (gain) loss from derivative financial instruments(80,158)  (488)  124,545    949   
Amortization of debt discount and issuance costs9,807    7,068    34,038    16,274   
Stock-based compensation1,730    1,661    6,464    4,020   
Loss on early extinguishment of debt—    —    861    —   
Transaction costs—    (90)  —    41,010   
Covey Park July 2019 hedging settlements—    —    —    4,574   
Exploration—    —    27    —   
(Gain) loss on sale of assets(1)  —    (17)  25   
Operating cash flow (1)$154,619    $187,930    $521,204    $468,293   
        
Net cash provided by operating activities$185,746    $168,431    $575,701    $451,237   
Transaction costs—    (90)  —    41,010   
Covey Park July 2019 hedging settlements—    —    —    4,574   
Increase (decrease) in accounts receivable44,827    45,184    (34,555)  (3,220) 
Increase (decrease) in other current assets1,272    (2,686)  (7,019)  (9,823) 
Increase in accounts payable and accrued expenses(77,226)  (22,909)  (12,923)  (15,485) 
Operating cash flow (1)$154,619    $187,930    $521,204    $468,293   

(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.




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