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COMSTOCK RESOURCES, INC. REPORTS FOURTH QUARTER 2021 FINANCIAL AND OPERATING RESULTS

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February 15, 2022 4:15 PM EST

FRISCO, TX, Feb. 15, 2022 (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, 2021.

Highlights of 2021's Fourth Quarter

  • Generated free cash flow from operations of $105 million in the quarter and $262 million for the year.
  • Generated free cash flow including acquisition and divestiture activity of $204 million in the quarter and $343 million for the year.
  • Paid down $190 million of debt in the quarter.
  • Adjusted EBITDAX increased 41% to $297 million.
  • Operating cash flow (excluding working capital changes) increased 62% to $250 million or $0.90 per diluted share.
  • Fourth quarter capital spending was $140 million for drilling and completion activities and $39 million for acquisition activities.
  • Production increased 12% to 1,348 MMcfe per day (99% natural gas).
  • Revenues, after realized hedging losses, were $380 million, 37% higher than 2020's fourth quarter.
  • Adjusted net income to common stockholders was $99 million for the quarter or $0.37 per diluted share.

Financial Results for the Three Months Ended December 31, 2021

Revenues in the fourth quarter of 2021 totaled $379.9 million (inclusive of realized hedging losses of $275.5 million). Net cash provided by operating activities (excluding changes in working capital) generated in the fourth quarter was $249.8 million, and net income available to common stockholders for the fourth quarter of 2021 was $356.0 million ($1.30 per diluted share). Net income in the quarter included a pre-tax $469.8 million unrealized gain on hedging contracts held for risk management and a $162.2 million loss on the sale of the Company's Bakken assets. Excluding these items and certain other unusual items, adjusted net income available to common stockholders for the fourth quarter of 2021 was $98.8 million, or $0.37 per diluted share.

Comstock's production cost per Mcfe in the fourth quarter was $0.67 per Mcfe, which was comprised of $0.28 for gathering and transportation costs, $0.21 for lease operating costs, $0.10 for production and other taxes and $0.08 for cash general and administrative expenses. Production cost was $0.65 per Mcfe in the third quarter of 2021 and $0.60 in the fourth quarter of 2020. Comstock's unhedged operating margin was 87% in the fourth quarter of 2021 and 78% after hedging.

Financial Results for the Year Ended December 31, 2021

Revenues for the year ended December 31, 2021 totaled $1.4 billion (inclusive of realized hedging losses of $419.9 million). Net cash provided by operating activities (excluding changes in working capital) was $908.2 million, and the Company reported a net loss available to common stockholders for the year ended December 31, 2021 of $259.2 million ($1.12 per share). The net loss during the year included a pre-tax $140.9 million unrealized loss on the change in fair market value of the Company's hedging contracts, a $352.6 million loss on the early retirement of the Company's 9.75% and 7.50% senior notes and a $162.2 million loss on the sale of the Company's Bakken assets. Excluding these items and certain other unusual items, adjusted net income available to common stockholders for 2021 was $303.0 million, or $1.16 per diluted share.

Fourth Quarter Drilling Results

Comstock drilled nine (7.0 net) operated horizontal Haynesville/Bossier shale wells in the fourth quarter of 2021 which had an average lateral length of 11,163 feet. The Company also participated in an additional nine (0.5 net) non-operated Haynesville shale wells in the fourth quarter of 2021. Comstock turned 27 (8.6 net) wells to sales in the fourth quarter of 2021 and currently expects to turn an additional 13 (8.1 net) wells to sales in the first quarter of 2022.

Since its last operational update in November 2021, Comstock has turned 16 (12.2 net) new 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 10,508 feet.

Included in the wells completed in the fourth quarter were the Company's first 15,000 foot lateral Haynesville shale wells. The Talley 32-29-20 #1 and Talley 32-29-20 #2 were drilled to a total measured depth of 26,848 feet and 27,357 feet, respectively, with completed lateral lengths of 14,685 feet and 15,155 feet, respectively. These wells had initial production rates of 41 and 48 MMcf per day.

2022 Drilling Budget

The Company currently plans to spend approximately $750 million to $800 million in 2022 on drilling and completion activities primarily focused on the continued development of its Haynesville/Bossier shale properties, which includes $60 million to $65 million on infrastructure, workovers and other development costs. Under its current operating plan, Comstock expects to drill 67 (52.1 net) and complete 69 (56.0 net) operated horizontal wells utilizing five to seven rigs during 2022. Comstock also expects to spend an additional $8 million to $12 million on leasing activities in 2022.

The program will be funded entirely through operating cash flow and the Company is expected to generate substantial free cash flow in 2022 which it will use to retire debt and initiate a return of capital program once the Company reaches its leverage target.

Other Matters

Comstock has planned a conference call for 10:00 a.m. Central Time on February 16, 2022, to discuss the fourth quarter of 2021 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 7758087 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 on February 16, 2022 and will continue until 1:00 p.m. CT on February 23, 2022. To hear the replay, call 855-859-2056 (404-537-3406 if calling from outside the US). The conference call access code is 7758087.

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 December 31, Year Ended
December 31,
  2021   2020   2021   2020 
Revenues:       
Natural gas sales$        641,985          $        261,424          $        1,775,768          $        809,399         
Oil sales         13,391                   13,347                   74,962                   48,796         
Total oil and gas sales         655,376                   274,771                   1,850,730                   858,195         
Operating expenses:       
Production and ad valorem taxes         12,673                   9,199                   49,141                   36,967         
Gathering and transportation         34,344                   29,159                   130,940                   106,582         
Lease operating         26,317                   23,342                   103,467                   102,452         
Depreciation, depletion and amortization         110,075                   104,284                   469,388                   417,112         
General and administrative         10,991                   6,049                   34,943                   32,040         
Exploration         —                   —                   —                   27         
Loss (gain) on sale of assets         162,170                   (1)          162,077                   (17)
Total operating expenses         356,570                   172,032                   949,956                   695,163         
Operating income         298,806                   102,739                   900,774                   163,032         
Other income (expenses):       
Gain (loss) from derivative financial instruments         195,378                   81,929                   (560,648)          9,951         
Other income (expense)         (372)          287                   636                   1,080         
Interest expense         (47,840)          (66,065)          (218,485)          (234,829)
Loss on early retirement of debt         —                   —                   (352,599)          (861)
Total other income (expenses)         147,166                   16,151                   (1,131,096)          (224,659)
Income (loss) before income taxes         445,972                   118,890                   (230,322)          (61,627)
Benefit from (provision for) income taxes         (85,571)          (36,967)          (11,403)          9,210         
Net income (loss)         360,401                   81,923                   (241,725)          (52,417)
Preferred stock dividends and accretion         (4,411)          (4,400)          (17,500)          (30,996)
Net income (loss) available to common stockholders$        355,990          $        77,523          $        (259,225) $        (83,413)
        
Net income (loss) per share:       
Basic$        1.53          $        0.34          $        (1.12) $        (0.39)
Diluted$        1.30          $        0.30          $        (1.12) $        (0.39)
Weighted average shares outstanding:       
Basic         231,972                   231,377                   231,633                   215,194         
Diluted         276,713                   275,127                   231,633                   215,194         
        

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

 As of December 31,
  2021   2020
ASSETS   
Cash and cash equivalents$        30,663          $        30,272        
Accounts receivable         267,738                   145,786        
Derivative financial instruments         5,258                   8,913        
Other current assets         15,077                   14,839        
Total current assets         318,736                   199,810        
Property and equipment, net         4,007,146                   4,084,550        
Goodwill         335,897                   335,897        
Derivative financial instruments         —                   661        
Operating lease right-of-use assets         6,450                   3,025        
Other assets         —                   40        
 $        4,668,229          $        4,623,983        
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
Accounts payable$        314,569          $        259,284        
Accrued costs         135,026                   133,019        
Operating leases         2,444                   2,284        
Derivative financial instruments         181,945                   47,005        
Total current liabilities         633,984                   441,592        
Long-term debt         2,615,235                   2,517,149        
Deferred income taxes         197,417                   200,583        
Derivative financial instruments         4,042                   2,364        
Long-term operating leases         4,075                   740        
Asset retirement obligation         25,673                   19,290        
Other non-current liabilities         24                   492        
Total liabilities         3,480,450                   3,182,210        
Mezzanine Equity:   
Preferred stock         175,000                   175,000        
Stockholders' Equity:   
Common stock         116,462                   116,206        
Additional paid-in capital         1,100,359                   1,095,384        
Accumulated earnings (deficit)         (204,042)          55,183        
Total stockholders' equity         1,012,779                   1,266,773        
 $        4,668,229          $        4,623,983        

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

 Three Months Ended December 31, Year Ended
December 31,
  2021   2020   2021   2020 
Gas production (MMcf)         123,002                   109,013                   489,274                   450,836         
Oil production (Mbbls)         176                   340                   1,210                   1,508         
Total production (MMcfe)         124,060                   111,052                   496,534                   459,883         
        
Natural gas sales$        641,985          $        261,424          $        1,775,768          $        809,399         
Natural gas hedging settlements (1)         (272,891        )          240                   (411,798        )          122,036         
Total natural gas including hedging         369,094                   261,664                   1,363,970                   931,435         
Oil sales         13,391                   13,347                   74,962                   48,796         
Oil hedging settlements (1)         (2,588        )          1,767                   (8,077        )          12,849         
Total oil including hedging         10,803                   15,114                   66,885                   61,645         
Total oil and gas sales including hedging$        379,897          $        276,778          $        1,430,855          $        993,080         
        
Average gas price (per Mcf)$        5.22          $        2.40          $        3.63          $        1.80         
Average gas price including hedging (per Mcf)$        3.00          $        2.40          $        2.79          $        2.07         
Average oil price (per barrel)$        76.09          $        39.27          $        61.95          $        32.36         
Average oil price including hedging (per barrel)$        61.38          $        44.47          $        55.28          $        40.88         
Average price (per Mcfe)$        5.28          $        2.47          $        3.73          $        1.87         
Average price including hedging (per Mcfe)$        3.06          $        2.49          $        2.88          $        2.16         
        
Production and ad valorem taxes$        12,673          $        9,199          $        49,141          $        36,967         
Gathering and transportation         34,344                   29,159                   130,940                   106,582         
Lease operating         26,317                   23,342                   103,467                   102,452         
Cash general and administrative (2)         9,484                   4,319                   28,145                   25,576         
Total production costs$        82,818          $        66,019          $        311,693          $        271,577         
        
Production and ad valorem taxes (per Mcfe)$        0.10          $        0.09          $        0.10          $        0.08         
Gathering and transportation (per Mcfe)         0.28                   0.26                   0.26                   0.23         
Lease operating (per Mcfe)         0.21                   0.21                   0.21                   0.22         
Cash general and administrative (per Mcfe)         0.08                   0.04                   0.06                   0.06         
Total production costs (per Mcfe)$        0.67          $        0.60          $        0.63          $        0.59         
        
Unhedged operating margin         87        %          76        %          83        %          68        %
Hedged operating margin         78        %          76        %          78        %          73        %
        
Oil and Gas Capital Expenditures:       
Proved property acquisitions$        21,781          $        —          $        21,781          $        —         
Unproved property acquisitions         17,222                   6,492                   35,871                   7,949         
Total oil and gas properties acquisitions$        39,003          $        6,492          $        57,652          $        7,949         
Exploration and Development:       
Development leasehold$        6,159          $        5,659          $        12,953          $        13,022         
Exploratory drilling and completion         6,966                   —                   6,966                   —         
Development drilling and completion         114,617                   155,691                   569,141                   436,074         
Other development costs         12,373                   8,480                   39,168                   34,572         
Total exploration and development capital expenditures$        140,115          $        169,830          $        628,228          $        483,668         


 

(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 December 31, Year Ended
December 31,		 
  2021   2020   2021   2020  
ADJUSTED NET INCOME AVAILABLE TO COMMON STOCKHOLDERS:        
Net income (loss) available to common stockholders$        355,990          $        77,523          $        (259,225) $        (83,413) 
Unrealized (gain) loss from derivative financial instruments         (469,830)          (80,158)          140,934                   124,545          
Non-cash interest amortization from adjusting debt assumed in
acquisition to fair value		         2,659                   5,811                   12,621                   22,112          
(Gain) loss on sale of assets         162,170                   (1)          162,077                   (17) 
Loss on early retirement of debt         —                   —                   352,599                   861          
Non-cash accretion from adjusting preferred stock issued in
acquisition to fair value		         —                   —                   —                   5,417          
Impairment of unevaluated oil and gas properties         —                   —                   —                   27          
Adjustment to (provision for) benefit from income taxes         47,777                   31,408                   (106,000)          (19,930) 
Adjusted net income available to common stockholders (1)$        98,766          $        34,583          $        303,006          $        49,602          
         
Adjusted net income available to common stockholders per share (2)$        0.37          $        0.14          $        1.16          $        0.23          
         
Diluted shares outstanding         276,713                   275,127                   275,663                   278,554          


ADJUSTED EBITDAX:        
Net income (loss)$        360,401          $        81,923          $        (241,725) $        (52,417) 
Interest expense (3)         46,811                   66,301                   218,322                   235,218          
Income taxes         85,571                   36,967                   11,403                   (9,210) 
Depreciation, depletion, and amortization         110,075                   104,284                   469,388                   417,112          
Exploration         —                   —                   —                   27          
Unrealized (gain) loss from derivative financial instruments         (469,830)          (80,158)          140,934                   124,545          
Stock-based compensation         1,508                   1,730                   6,799                   6,464          
Loss on early extinguishment of debt         —                   —                   352,599                   861          
(Gain) loss on sale of assets         162,170                   (1)          162,077                   (17) 
Total Adjusted EBITDAX (4)$        296,706          $        211,046          $        1,119,797          $        722,583          


 

(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)   Includes realized gains or losses from interest rate derivative financial instruments.

(4)   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 December 31, Year Ended
December 31,
  2021   2020   2021   2020 
OPERATING CASH FLOW (1):       
Net income (loss)$        360,401          $        81,923          $        (241,725) $        (52,417)
Reconciling items:       
Unrealized (gain) loss from derivative financial instruments         (469,830)          (80,158)          140,934                   124,545         
Deferred income taxes (benefit)         81,377                   37,034                   (3,565)          (9,409)
Depreciation, depletion and amortization         110,075                   104,284                   469,388                   417,112         
Loss on early retirement of debt         —                   —                   352,599                   861         
Amortization of debt discount and issuance costs         4,116                   9,807                   21,703                   34,038         
Stock-based compensation         1,508                   1,730                   6,799                   6,464         
Exploration         —                   —                   —                   27         
(Gain) loss on sale of assets         162,170                   (1)          162,077                   (17)
Operating cash flow$        249,817          $        154,619          $        908,210          $        521,204         
(Increase) decrease in accounts receivable         (24,573)          (44,827)          (121,952)          34,555         
(Increase) decrease in other current assets         (2,883)          (1,272)          (2,033)          7,019         
Increase in accounts payable and accrued expenses         18,091                   77,226                   74,780                   12,923         
Net cash provided by operating activities$        240,452          $        185,746          $        859,005          $        575,701         
        


 Three Months Ended December 31, Year Ended
December 31,
  2021   2020   2021   2020 
FREE CASH FLOW (2):        
Operating cash flow$        249,817          $        154,619          $        908,210          $        521,204         
Less:       
Exploration and development capital expenditures         (140,115)          (169,830)          (628,228)          (483,668)
Preferred dividends         (4,411)          (4,400)          (17,500)          (25,580)
Free cash flow from operations$        105,291          $        (19,611) $        262,482          $        11,956         
Acquisition of oil and gas properties         (39,003)          (6,492)          (57,652)          (7,949)
Proceeds from divestiture of oil and gas properties         138,099                   —                   138,099                   —         
Free cash flow after acquisition and divestiture activity$        204,387          $        (26,103) $        342,929          $        4,007         
        


 

(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.



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