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

February 13, 2024

FRISCO, TX, Feb. 13, 2024 (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, 2023.

Highlights of 2023‘s Fourth Quarter

Continued weak natural gas prices weighed heavily on the fourth quarter results.Natural gas and oil sales, including realized hedging gains, were $354 million.Adjusted EBITDAX for the quarter was $244 million.Operating cash flow was $207 million or $0.75 per share.Solid results from the Haynesville shale drilling program with 22 (16.5 net) operated wells turned to sales since the Company’s last update with an average initial production rate of 24 MMcf per day.Added 23,000 net acres in the Western Haynesville, increasing our acreage in the play to over 250,000 net acres.Latest Western Haynesville successful well is currently producing at a rate of 31 MMcf per day.

Financial Results for the Three Months Ended December 31, 2023

Comstock’s natural gas and oil sales in the fourth quarter of 2023 totaled $353.5 million (including realized hedging gains of $4.1 million). Operating cash flow (excluding changes in working capital) generated in the fourth quarter of 2023 was $206.9 million, and net income available to common stockholders for the fourth quarter was $108.4 million or $0.39 per share. Net income in the quarter included a pre-tax $107.3 million unrealized gain on hedging contracts held for natural gas price risk management. Excluding this item, adjusted net income for the fourth quarter of 2023 was $27.9 million, or $0.10 per share.

Comstock’s production cost per Mcfe in the fourth quarter averaged $0.81 per Mcfe, which was comprised of $0.33 for gathering and transportation costs, $0.23 for lease operating costs, $0.23 for production and other taxes and $0.02 for cash general and administrative expenses. Comstock’s unhedged operating margin was 67% in the fourth quarter of 2023 and 68% after hedging.

Financial Results for the Year Ended December 31, 2023

Natural gas and oil sales for the year ended December 31, 2023 totaled $1.3 billion (including realized hedging gains of $80.3 million). Operating cash flow (excluding changes in working capital) generated during the year was $774.5 million, and net income available to common stockholders was $211.9 million or $0.76 per share. Adjusted net income excluding unrealized gain on hedging contracts for the year ended December 31, 2023 was $132.7 million or $0.47 per share.

Comstock’s production cost per Mcfe during the year ended December 31, 2023 averaged $0.83 per Mcfe, which was comprised of $0.35 for gathering and transportation costs, $0.25 for lease operating costs, $0.18 for production and other taxes and $0.05 for cash general and administrative expenses. Comstock’s unhedged operating margin was 65% during 2023 and 68% after hedging.

2023 Drilling Results

Comstock drilled 67 (55.5 net) operated horizontal Haynesville/Bossier shale wells in 2023, which had an average lateral length of 10,796 feet. Comstock also turned 74 (55.7 net) operated wells to sales in 2023, which had an average initial production rate of 25 MMcf per day.

Since its last operational update in November, Comstock has turned an additional 22 (16.5 net) operated Haynesville/Bossier shale wells to sales. These wells had initial daily production rates that averaged 24 MMcf per day. The completed lateral length of these wells averaged 11,966 feet. Included in the wells turned to sales since the last operational update was the eighth successful Western Haynesville well – the Neyland MMM #1, which was drilled to a total vertical depth of 16,752 feet with a 10,438 foot completed lateral. The well is currently producing 31 MMcf per day and has not reached its maximum initial production rate.

2023 Proved Oil and Gas Reserves

Comstock also announced that proved natural gas and oil reserves as of December 31, 2023 were estimated at 4.9 trillion cubic feet equivalent (“Tcfe”) as compared to 6.7 Tcfe as of December 31, 2022. The reserve estimates were determined under SEC guidelines and were audited by the Company’s independent reserve engineering firm. The 4.9 Tcfe of proved reserves at December 31, 2023 were substantially all natural gas, 56% developed and 98% operated by Comstock. The decrease is the result of lower natural gas prices used in the determination. The present value, using a 10% discount rate, of the future net cash flows before income taxes of the proved reserves (the “PV-10 Value”), was approximately $2.5 billion using the Company’s average first of month 2023 prices of $2.39 per thousand cubic feet of natural gas and $72.63 per barrel of oil. The natural gas and oil prices used in determining the December 31, 2023 proved reserve estimates were 56% lower for natural gas and 14% lower for oil as compared to prices used at December 31, 2022. Comstock’s proved reserves would have been 6.6 Tcfe with a PV-10 Value of $5.2 billion using NYMEX reference prices of $3.50 per Mcf for natural gas and $75.00 per barrel of oil less the Company’s differentials.

The following table reflects the changes in the SEC proved reserve estimates since the end of 2022:

 Total
(Bcfe) Proved Reserves:  Proved Reserves at December 31, 2022 6,700.9 Production (524.9)Extensions and discoveries 571.4 Revisions (1,803.9)Proved Reserves at December 31, 2023 4,943.5 

Despite the lower prices used in determining proved reserves, Comstock replaced 109% of its 2023 production excluding revisions, which were related to the lower prices used in the determination.

2024 Budget

In response to weak natural gas prices, Comstock plans to suspend its quarterly dividend until natural gas prices improve. In addition, the Company plans to reduce the number of operating drilling rigs it is running from seven to five. Two of the five drilling rigs will continue to be deployed in the Company’s Western Haynesville play. As a result, Comstock plans to spend approximately $750 million to $850 million in 2024 on its development and exploration projects to drill 46 (35.9 net) operated horizontal wells and to turn 44 (38.2 net) operated wells to sales in 2024. Comstock expects to spend $125 million to $150 million on its Western Haynesville midstream system, which will be funded by its midstream partnership.

Earnings Call Information

Comstock has planned a conference call for 10:00 a.m. Central Time on February 14, 2024, to discuss the fourth 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/BI9aed23e8af74454f89bd226e82af31c9

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/jx7owzgq.

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 February 14, 2024. The replay of the conference can be accessed using the webcast link: https://edge.media-server.com/mmc/p/jx7owzgq.

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,   2023  2022  2023  2022 Revenues:            Natural gas sales $348,385  $740,320  $1,259,450  $3,117,094 Oil sales  1,050   1,273   5,161   7,597 Total natural gas and oil sales  349,435   741,593   1,264,611   3,124,691 Gas services  61,148   180,791   300,498   503,366 Total revenues  410,583   922,384   1,565,109   3,628,057 Operating expenses:            Production and ad valorem taxes  31,912   17,837   91,803   77,917 Gathering and transportation  46,925   41,882   184,906   155,679 Lease operating  31,678   31,261   132,203   111,134 Exploration  —   4,924   1,775   8,287 Depreciation, depletion and amortization  185,558   134,456   607,908   489,450 Gas services  57,733   159,773   282,050   465,044 General and administrative  6,000   11,954   37,992   39,405 Gain on sale of assets  —   (319)  (125)  (340)Total operating expenses  359,806   401,768   1,338,512   1,346,576 Operating income  50,777   520,616   226,597   2,281,481 Other income (expenses):            Gain (loss) from derivative financial instruments  111,449   119,132   187,639   (662,522)Other income  304   410   1,771   916 Interest expense  (47,936)  (38,888)  (169,018)  (171,092)Loss on early retirement of debt  —   —   —   (46,840)Total other income (expenses)  63,817   80,654   20,392   (879,538)Income before income taxes  114,594   601,270   246,989   1,401,943 Provision for income taxes  (6,217)  (81,451)  (35,095)  (261,061)Net income  108,377   519,819   211,894   1,140,882 Preferred stock dividends  —   (2,925)  —   (16,014)Net income available to common stockholders  108,377   516,894   211,894   1,124,868 Net income attributable to noncontrolling interest  (777)  —   (777)  — Net income attributable to Comstock $107,600  $516,894  $211,117  $1,124,868              Net income per share:            Basic $0.39  $2.08  $0.76  $4.75 Diluted $0.39  $1.87  $0.76  $4.11 Weighted average shares outstanding:            Basic  276,999   247,543   276,806   236,045 Diluted  276,999   277,032   276,806   277,465 Dividends per share $0.125  $0.125  $0.50  $0.125 

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

  Three Months Ended
December 31,  Year Ended
December 31,   2023  2022  2023  2022 Natural gas production (MMcf)  140,565   132,858   524,467   500,616 Oil production (Mbbls)  13   16   70   82 Total production (MMcfe)  140,649   132,955   524,890   501,107              Natural gas sales $348,385  $740,320  $1,259,450  $3,117,094 Natural gas hedging settlements (1)  4,107   (183,677)  80,328   (862,715)Total natural gas including hedging  352,492   556,643   1,339,778   2,254,379 Oil sales  1,050   1,273   5,161   7,597 Total natural gas and oil sales including hedging $353,542  $557,916  $1,344,939  $2,261,976              Average natural gas price (per Mcf) $2.48  $5.57  $2.40  $6.23 Average natural gas price including hedging (per Mcf) $2.51  $4.19  $2.55  $4.50 Average oil price (per barrel) $80.77  $79.56  $73.73  $92.65 Average price (per Mcfe) $2.48  $5.58  $2.41  $6.24 Average price including hedging (per Mcfe) $2.51  $4.20  $2.56  $4.51              Production and ad valorem taxes $31,912  $17,837  $91,803  $77,917 Gathering and transportation  46,925   41,882   184,906   155,679 Lease operating  31,678   31,261   132,203   111,134 Cash general and administrative (2)  3,141   10,262   28,125   32,795 Total production costs $113,656  $101,242  $437,037  $377,525              Production and ad valorem taxes (per Mcfe) $0.23  $0.12  $0.18  $0.16 Gathering and transportation (per Mcfe)  0.33   0.32   0.35   0.31 Lease operating (per Mcfe)  0.23   0.24   0.25   0.22 Cash general and administrative (per Mcfe)  0.02   0.08   0.05   0.07 Total production costs (per Mcfe) $0.81  $0.76  $0.83  $0.76              Unhedged operating margin  67%  86%  65%  88%Hedged operating margin  68%  82%  68%  83%             Gas services revenues $61,148  $180,791  $300,498  $503,366 Gas services expenses  57,733   159,773   282,050   465,044 Gas services margin $3,415  $21,018  $18,448  $38,322              Natural Gas and Oil Capital Expenditures:            Proved property acquisitions $—  $295  $—  $500 Unproved property acquisitions  21,907   16,724   98,553   54,120 Total natural gas and oil properties acquisitions $21,907  $17,019  $98,553  $54,620 Exploration and Development:            Development leasehold $8,818  $5,429  $27,905  $13,727 Exploratory drilling and completion  65,079   14,517   244,129   63,520 Development drilling and completion  233,856   281,653   974,664   901,026 Other development costs  6,262   1,193   25,130   53,693 Total exploration and development capital expenditures $314,015  $302,792  $1,271,828  $1,031,966  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
December 31,  Year Ended
December 31,   2023  2022  2023  2022 ADJUSTED NET INCOME:            Net income available to common stockholders $108,377  $516,894  $211,894  $1,124,868 Unrealized gain from derivative financial instruments  (107,342)  (302,809)  (107,311)  (200,193)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  —   4,924   1,775   8,287 Gain on sale of assets  —   (319)  (125)  (340)Adjustment to income taxes  26,868   68,970   26,450   39,011 Adjusted net income (1) $27,903  $287,660  $132,683  $1,022,647              Adjusted net income per share (2) $0.10  $1.05  $0.47  $3.73 Diluted shares outstanding  276,999   277,032   276,806   277,464                           ADJUSTED EBITDAX:            Net income $108,377  $519,819  $211,894  $1,140,882 Interest expense  47,936   38,888   169,018   171,092 Income taxes  6,217   81,451   35,095   261,061 Depreciation, depletion, and amortization  185,558   134,456   607,908   489,450 Exploration  —   4,924   1,775   8,287 Unrealized gain from derivative financial instruments  (107,342)  (302,809)  (107,311)  (200,193)Stock-based compensation  2,861   1,692   9,867   6,610 Loss on early extinguishment of debt  —   —   —   46,840 Gain on sale of assets  —   (319)  (125)  (340)Total Adjusted EBITDAX (3) $243,607  $478,102  $928,121  $1,923,689  Adjusted net income 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 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
December 31,  Year Ended
December 31,   2023  2022  2023  2022 OPERATING CASH FLOW (1):            Net income $108,377  $519,819  $211,894  $1,140,882 Reconciling items:            Unrealized gain from derivative financial instruments  (107,342)  (302,809)  (107,311)  (200,193)Deferred income taxes  15,423   79,928   44,301   228,317 Depreciation, depletion and amortization  185,558   134,456   607,908   489,450 Loss on early retirement of debt  —   —   —   46,840 Amortization of debt discount and issuance costs  1,984   1,713   7,964   10,255 Stock-based compensation  2,861   1,692   9,867   6,610 Gain on sale of assets  —   (319)  (125)  (340)Operating cash flow $206,861  $434,480  $774,498  $1,721,821 (Increase) decrease in accounts receivable  (16,626)  117,211   278,697   (242,389)(Increase) decrease in other current assets  1,369   (10,655)  745   (10,296)Increase (decrease) in accounts payable and other accrued expenses  36,603   (72,704)  (37,094)  229,252 Net cash provided by operating activities $228,207  $468,332  $1,016,846  $1,698,388 

  Three Months Ended
December 31,  Year Ended
December 31,   2023  2022  2023  2022 FREE CASH FLOW (2):            Operating cash flow $206,861  $434,480  $774,498  $1,721,821 Less:            Exploration and development capital expenditures  (314,015)  (302,792)  (1,271,828)  (1,031,966)Midstream capital expenditures  (14,098)  —   (35,694)  — Other capital expenditures  (11)  (147)  (491)  (803)Preferred stock dividends  —   (2,925)  —   (16,014)Contributions from midstream partnership  24,000   —   24,000   — Free cash flow (deficit) from operations $(97,263) $128,616  $(509,515) $673,038 Acquisitions  (21,907)  (18,044)  (98,553)  (72,593)Proceeds from divestitures  —   4,093   41,295   4,186 Free cash flow (deficit) after acquisition and divestiture activity $(119,170) $114,665  $(566,773) $604,631  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, midstream and other capital expenditures, preferred dividend payments, proved and unproved property acquisitions, and proceeds from divestitures of natural gas and oil properties.

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

  December 31,
2023  December 31,
2022 ASSETS      Cash and cash equivalents $16,669  $54,652 Accounts receivable  231,430   510,127 Derivative financial instruments  126,775   23,884 Other current assets  86,619   56,324 Total current assets  461,493   644,987 Property and equipment, net  5,384,771   4,622,655 Goodwill  335,897   335,897 Operating lease right-of-use assets  71,462   90,716   $6,253,623  $5,694,255        LIABILITIES AND STOCKHOLDERS’ EQUITY      Accounts payable $523,260  $530,195 Accrued costs  134,466   183,111 Operating leases  23,765   38,411 Derivative financial instruments  —   4,420 Total current liabilities  681,491   756,137 Long-term debt  2,640,391   2,152,571 Deferred income taxes  470,035   425,734 Derivative financial instruments  —   — Long-term operating leases  47,742   52,385 Asset retirement obligation  30,773   29,114 Total liabilities  3,870,432   3,415,941 Stockholders’ Equity:      Common stock  139,214   138,759 Additional paid-in capital  1,260,930   1,253,417 Accumulated earnings  958,270   886,138 Total stockholders’ equity attributable to Comstock  2,358,414   2,278,314 Noncontrolling interest  24,777   — Total stockholders’ equity  2,383,191   2,278,314   $6,253,623  $5,694,255 

CONTACT: Ron Mills
Comstock Resources
Vice President of Finance and Investor Relations
972-668-8834
rmills@comstockresources.com

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