COMSTOCK RESOURCES, INC. REPORTS THIRD QUARTER 2024 FINANCIAL AND OPERATING RESULTS

FRISCO, TX, Oct. 30, 2024 (GLOBE NEWSWIRE) — Comstock Resources, Inc. (“Comstock” or the “Company”) (NYSE: CRK) today reported financial and operating results for the quarter ended September 30, 2024.

Highlights of 2024‘s Third Quarter

Weak natural gas prices continued to weigh heavily on the third quarter financial results.Natural gas and oil sales, including realized hedging gains, were $305 million.Operating cash flow was $152 million or $0.52 per diluted share.Adjusted EBITDAX for the quarter was $202 million.Adjusted net loss was $48.5 million or $0.17 per share for the quarter.Lower completion activity was planned for the quarter, resulting in eight (5.4 net) operated wells being turned to sales since the Company’s last update with an average initial production of 21 MMcf per day.First horseshoe Haynesville well was successful with a 31 MMcf per day initial production rate.Western Haynesville exploratory play continues to progress with acreage position up to 453,881 net acres and most recent well costs down to an estimated $2,814 per completed lateral foot. Comstock’s thirteenth Western Haynesville well is on flowback with another five wells in the play expected to be turned to sales in late 2024 through early 2025.

Financial Results for the Three Months Ended September 30, 2024

Comstock’s realized natural gas price for the third quarter of 2024 averaged $1.90 per Mcf before hedging and $2.28 per Mcf after hedging. As a result, Comstock’s natural gas and oil sales in the third quarter of 2024 decreased to $305.0 million (including realized hedging gains of $51.4 million) despite a 2% increase in production in the quarter. Operating cash flow (excluding changes in working capital) generated in the third quarter of 2024 was $152.3 million, and net loss for the third quarter was $25.7 million or $0.09 per share. Net loss in the quarter included a pre-tax $23.8 million unrealized gain on hedging contracts held for risk management and a gain on sale of assets of $0.9 million. Excluding these items, adjusted net loss for the third quarter of 2024 was $48.5 million, or $0.17 per share.

Comstock’s production cost per Mcfe in the third quarter averaged $0.77 per Mcfe, which was comprised of $0.41 for gathering and transportation costs, $0.22 for lease operating costs, $0.09 for production and other taxes and $0.05 for cash general and administrative expenses. Comstock’s unhedged operating margin was 60% in the third quarter of 2024 and 67% after hedging.

Financial Results for the Nine Months Ended September 30, 2024

Natural gas and oil sales for the nine months ended September 30, 2024 totaled $919.1 million (including realized hedging gains of $160.0 million). Operating cash flow (excluding changes in working capital) generated during the first nine months of 2024 was $452.4 million, and net loss was $163.4 million or $0.57 per share. Net loss during the first nine months of 2024 included a pre-tax $70.7 million unrealized loss on hedging contracts held for risk management and a gain on sale of assets of $0.9 million. Excluding these items, adjusted net loss for the nine months ended September 30, 2024 was $121.3 million or $0.42 per share.

Comstock’s production cost per Mcfe during the nine months ended September 30, 2024 averaged $0.78 per Mcfe, which was comprised of $0.37 for gathering and transportation costs, $0.25 for lease operating costs, $0.12 for production and other taxes and $0.04 for cash general and administrative expenses. Comstock’s unhedged operating margin was 58% during the first nine months of 2024 and 65% after hedging.

Drilling Results

Comstock drilled eight (6.2 net) operated horizontal Haynesville/Bossier shale wells in the third quarter of 2024 which had an average lateral length of 12,034 feet. Comstock turned 11 (8.0 net) operated wells to sales in the third quarter of 2024.

Since its last operational update in July, Comstock has turned eight (5.4 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 12,391 feet. Included in the wells turned to sales was the Sebastian 11 #5H, the Company’s first horseshoe Haynesville well, which had a 9,382 foot completed lateral and an initial production rate of 31 MMcf per day.

Other

On October 30, 2024, Comstock also announced that its bank group reaffirmed the $2.0 billion borrowing base and approved the amendment of certain financial covenants under its $1.5 billion revolving credit facility.

Earnings Call Information

Comstock has planned a conference call for 10:00 a.m. Central Time on October 31, 2024, to discuss the third quarter 2024 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/BI25940ff3de024e45b06512519e9e6 a64. 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/27pqb8gi.

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, 2024. The replay of the conference can be accessed using the webcast link: https://edge.media-server.com/mmc/p/27pqb8gi.

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,   2024  2023  2024  2023 Revenues:            Natural gas sales $252,650  $304,141  $756,260  $911,065 Oil sales  975   1,309   2,925   4,111 Total natural gas and oil sales  253,625   305,450   759,185   915,176 Gas services  50,847   71,287   127,889   239,350 Total revenues  304,472   376,737   887,074   1,154,526 Operating expenses:            Production and ad valorem taxes  12,578   25,386   49,730   59,891 Gathering and transportation  53,996   47,012   150,456   137,981 Lease operating  29,248   31,664   99,125   100,525 Exploration  —   —   —   1,775 Depreciation, depletion and amortization  208,350   148,190   593,281   422,350 Gas services  52,622   67,632   132,796   224,317 General and administrative  9,923   9,586   29,271   31,992 Gain on sale of assets  (910)  —   (910)  (125)Total operating expenses  365,807   329,470   1,053,749   978,706 Operating income (loss)  (61,335)  47,267   (166,675)  175,820 Other income (expenses):            Gain from derivative financial instruments  75,163   14,276   89,218   76,190 Other income  274   409   927   1,467 Interest expense  (54,516)  (43,624)  (156,005)  (121,082)Total other income (expenses)  20,921   (28,939)  (65,860)  (43,425)Income (loss) before income taxes  (40,414)  18,328   (232,535)  132,395 (Provision for) benefit from income taxes  14,696   (3,608)  69,094   (28,878)Net income (loss)  (25,718)  14,720   (163,441)  103,517 Net income attributable to noncontrolling interest  (3,173)  —   (8,081)  — Net income (loss) available to Comstock $(28,891) $14,720  $(171,522) $103,517              Net income (loss) per share            Basic $(0.09) $0.05  $(0.57) $0.37 Diluted $(0.09) $0.05  $(0.57) $0.37 Weighted average shares outstanding:            Basic  290,170   276,999   285,949   276,741 Diluted  290,170   276,999   285,949   276,741 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,   2024  2023  2024  2023 Natural gas production (MMcf)  133,116   130,528   403,420   383,902 Oil production (Mbbls)  13   17   40   57 Total production (MMcfe)  133,198   130,629   403,662   384,241              Natural gas sales $252,650  $304,141  $756,260  $911,065 Natural gas hedging settlements (1)  51,409   10,344   159,956   76,221 Total natural gas including hedging  304,059   314,485   916,216   987,286 Oil sales  975   1,309   2,925   4,111 Total natural gas and oil sales including hedging $305,034  $315,794  $919,141  $991,397              Average natural gas price (per Mcf) $1.90  $2.33  $1.87  $2.37 Average natural gas price including hedging (per Mcf) $2.28  $2.41  $2.27  $2.57 Average oil price (per barrel) $75.00  $77.00  $73.13  $72.12 Average price (per Mcfe) $1.90  $2.34  $1.88  $2.38 Average price including hedging (per Mcfe) $2.29  $2.42  $2.28  $2.58              Production and ad valorem taxes $12,578  $25,386  $49,730  $59,891 Gathering and transportation  53,996   47,012   150,456   137,981 Lease operating  29,248   31,664   99,125   100,525 Cash general and administrative (2)  6,042   6,930   17,892   24,984 Total production costs $101,864  $110,992  $317,203  $323,381              Production and ad valorem taxes (per Mcfe) $0.09  $0.20  $0.12  $0.16 Gathering and transportation (per Mcfe)  0.41   0.36   0.37   0.36 Lease operating (per Mcfe)  0.22   0.24   0.25   0.26 Cash general and administrative (per Mcfe)  0.05   0.05   0.04   0.07 Total production costs (per Mcfe) $0.77  $0.85  $0.78  $0.85              Unhedged operating margin  60%  64%  58%  65%Hedged operating margin  67%  65%  65%  67%             Gas services revenue $50,847  $71,287  $127,889  $239,350 Gas services expenses  52,622   67,632   132,796   224,317 Gas services margin $(1,775) $3,655  $(4,907) $15,033              Natural Gas and Oil Capital Expenditures:            Unproved property acquisitions $8,800  $19,998  $87,938  $76,646 Total natural gas and oil properties acquisitions $8,800  $19,998  $87,938  $76,646 Exploration and Development:            Development leasehold $5,623  $5,369  $12,153  $19,087 Exploratory drilling and completion  57,144   74,737   215,992   179,049 Development drilling and completion  114,172   229,594   411,315   740,808 Other development costs  7,453   1,418   22,175   18,868 Total exploration and development capital expenditures $184,392  $311,118  $661,635  $957,812 

(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
September 30,  Nine Months Ended
September 30,   2024  2023  2024  2023 ADJUSTED NET INCOME (LOSS):            Net income (loss) $(25,718) $14,720  $(163,441) $103,517 Unrealized (gain) loss from derivative financial instruments  (23,754)  (3,932)  70,738   31 Exploration expense  —   —   —   1,775 Gain on sale of assets  (910)  —   (910)  (125)Adjustment to income taxes  1,873   946   (27,663)  (418)Adjusted net income (loss) $(48,509) $11,734  $(121,276) $104,780              Adjusted net income (loss) per share (2) $(0.17) $0.04  $(0.42) $0.38 Diluted shares outstanding  290,170   276,999   285,949   276,741                           ADJUSTED EBITDAX:            Net income (loss) $(25,718) $14,720  $(163,441) $103,517 Interest expense  54,516   43,624   156,005   121,082 Income taxes  (14,696)  3,608   (69,094)  28,878 Depreciation, depletion, and amortization  208,350   148,190   593,281   422,350 Exploration  —   —   —   1,775 Unrealized (gain) loss from derivative financial instruments  (23,754)  (3,932)  70,738   31 Stock-based compensation  3,883   2,655   11,380   7,006 Gain on sale of assets  (910)  —   (910)  (125)Total Adjusted EBITDAX (3) $201,671  $208,865  $597,959  $684,514 

(1)   Adjusted net income (loss) 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, gains and losses on sales of assets and other unusual items.

(2)   Adjusted net income (loss) per share is calculated to include the dilutive effects of unvested restricted stock pursuant to the two-class method and performance stock units 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 depreciation, depletion and amortization, unrealized gains and losses on derivative financial instruments 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,   2024  2023  2024  2023 OPERATING CASH FLOW (1):            Net income (loss) $(25,718) $14,720  $(163,441) $103,517 Reconciling items:            Unrealized (gain) loss from derivative financial instruments  (23,754)  (3,932)  70,738   31 Deferred income taxes  (12,734)  3,608   (67,165)  28,878 Depreciation, depletion and amortization  208,350   148,190   593,281   422,350 Amortization of debt discount and issuance costs  3,136   1,989   8,519   5,980 Stock-based compensation  3,883   2,655   11,380   7,006 Gain on sale of assets  (910)  —   (910)  (125)Operating cash flow $152,253  $167,230  $452,402  $567,637 (Increase) decrease in accounts receivable  (658)  (20,887)  75,573   295,323 Increase in other current assets  (5,595)  (1,825)  (749)  (624)Decrease in accounts payable and accrued expenses  (47,830)  (73,753)  (173,942)  (73,697)Net cash provided by operating activities $98,170  $70,765  $353,284  $788,639 

  Three Months Ended
September 30,  Nine Months Ended
September 30,   2024  2023  2024  2023 FREE CASH FLOW (DEFICIT)(2):            Operating cash flow $152,253  $167,230  $452,402  $567,637 Less:            Exploration and development capital expenditures  (184,392)  (311,118)  (661,635)  (957,812)Midstream capital expenditures  (30,251)  —   (46,739)  — Other capital expenditures  (735)  (10,563)  (1,706)  (22,076)Contributions from midstream partner  19,000   —   36,000   — Free cash deficit from operations $(44,125) $(154,451) $(221,678) $(412,251)Acquisitions  (8,800)  (19,998)  (87,938)  (76,646)Proceeds from divestitures  1,214   —   1,214   41,295 Free cash deficit after acquisition and divestiture activity $(51,711) $(174,449) $(308,402) $(447,602)

(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 (deficit) from operations and free cash flow (deficit) 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, midstream and other capital expenditures, contributions from its midstream partner, 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,
2024  December 31,
2023 ASSETS      Cash and cash equivalents $13,772  $16,669 Accounts receivable  155,857   231,430 Derivative financial instruments  71,704   126,775 Other current assets  58,379   86,619 Total current assets  299,712   461,493 Property and equipment, net  5,590,448   5,384,771 Goodwill  335,897   335,897 Operating lease right-of-use assets  82,124   71,462 Derivative financial instruments  4,828   —   $6,313,009  $6,253,623        LIABILITIES AND STOCKHOLDERS’ EQUITY      Accounts payable $358,336  $523,260 Accrued costs  106,057   134,466 Operating leases  35,372   23,765 Total current liabilities  499,765   681,491 Long-term debt  2,949,181   2,640,391 Deferred income taxes  402,870   470,035 Derivative financial instruments  20,495   — Long-term operating leases  46,681   47,742 Asset retirement obligation  32,016   30,773 Total liabilities  3,951,008   3,870,432 Stockholders’ Equity:      Common stock  146,130   139,214 Additional paid-in capital  1,362,393   1,260,930 Accumulated earnings  786,748   958,270 Total stockholders’ equity attributable to Comstock  2,295,271   2,358,414 Noncontrolling interest  66,730   24,777 Total stockholders’ equity  2,362,001   2,383,191   $6,313,009  $6,253,623 CONTACT: Ron Mills
VP – Finance and Investor Relations
Comstock Resources
972-668-8834
rmills@comstockresources.com