FRISCO, TX, July 30, 2024 (GLOBE NEWSWIRE) — Comstock Resources, Inc. (“Comstock” or the “Company”) (NYSE: CRK) today reported financial and operating results for the quarter ended June 30, 2024.
Highlights of 2024‘s Second Quarter
Very weak natural gas prices weighed heavily on the second quarter financial results.Natural gas and oil sales, including realized hedging gains, were $278 million.Operating cash flow was $118 million or $0.41 per diluted share.Adjusted EBITDAX for the quarter was $167 million.Adjusted net loss was $58.2 million or $0.20 per share for the quarter.Enhanced liquidity with $400 million, 6.75% senior notes issuance.Steady results from the Haynesville shale drilling program with 15 (14.4 net) operated wells turned to sales since the Company’s last update with an average initial production of 21 MMcf per day.
Financial Results for the Three Months Ended June 30, 2024
Comstock’s realized gas price for the second quarter of 2024 averaged $1.65 per Mcf without hedging and $2.12 per Mcf after hedging. As a result, Comstock’s natural gas and oil sales in the second quarter of 2024 decreased to $278.2 million (including realized hedging gains of $60.6 million) despite a 4% increase in production as compared to the second quarter of 2023. Operating cash flow (excluding changes in working capital) generated in the second quarter of 2024 was $118.1 million, and net loss for the second quarter was $123.2 million or $0.43 per share. Net loss in the quarter included a pre-tax $85.8 million unrealized loss on hedging contracts held for risk management. Excluding this item, adjusted net loss for the second quarter of 2024 was $58.2 million, or $0.20 per share.
Comstock’s production cost per Mcfe in the second quarter averaged $0.84 per Mcfe, which was comprised of $0.38 for gathering and transportation costs, $0.27 for lease operating costs, $0.14 for production and other taxes and $0.05 for cash general and administrative expenses. Comstock’s unhedged operating margin was 50% in the second quarter of 2024 and 61% after hedging.
Financial Results for the Six Months Ended June 30, 2024
Natural gas and oil sales for the six months ended June 30, 2024 totaled $614.1 million (including realized hedging gains of $108.5 million). Operating cash flow (excluding changes in working capital) generated during the first six months of 2024 was $300.1 million, and net loss was $137.7 million or $0.49 per share. Net loss during the first six months of 2024 included a pre-tax $94.5 million unrealized loss on hedging contracts held for risk management. Excluding this item, adjusted net loss for the six months ended June 30, 2024 was $66.8 million or $0.24 per share.
Comstock’s production cost per Mcfe during the six months ended June 30, 2024 averaged $0.79 per Mcfe, which was comprised of $0.36 for gathering and transportation costs, $0.26 for lease operating costs, $0.13 for production and other taxes and $0.04 for cash general and administrative expenses. Comstock’s unhedged operating margin was 57% during the first six months of 2024 and 65% after hedging.
Drilling Results
Comstock drilled 11 (9.2 net) operated horizontal Haynesville/Bossier shale wells in the second quarter of 2024 which had an average lateral length of 11,346 feet. Comstock turned 12 (11.7 net) operated wells to sales in the second quarter of 2024.
Since its last operational update in May, Comstock has turned 15 (14.4 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 9,802 feet.
Earnings Call Information
Comstock has planned a conference call for 10:00 a.m. Central Time on July 31, 2024, to discuss the second 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/BI3dd152694a074bc28172df7314b38 fa6. 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/w3stws2d.
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 July 31, 2024. The replay of the conference can be accessed using the webcast link: https://edge.media-server.com/mmc/p/w3stws2d.
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
June 30, Six Months Ended
June 30, 2024 2023 2024 2023 Revenues: Natural gas sales $216,527 $228,892 $503,610 $606,924 Oil sales 1,074 860 1,950 2,802 Total natural gas and oil sales 217,601 229,752 505,560 609,726 Gas services 29,229 58,459 77,042 168,063 Total revenues 246,830 288,211 582,602 777,789 Operating expenses: Production and ad valorem taxes 19,244 19,599 37,152 34,505 Gathering and transportation 49,361 45,395 96,460 90,969 Lease operating 34,805 34,031 69,877 68,861 Exploration — — — 1,775 Depreciation, depletion and amortization 194,242 140,177 384,931 274,160 Gas services 31,494 55,390 80,174 156,685 General and administrative 10,177 10,038 19,348 22,406 (Gain) loss on sale of assets — 648 — (125)Total operating expenses 339,323 305,278 687,942 649,236 Operating income (loss) (92,493) (17,067) (105,340) 128,553 Other income (expenses): Gain (loss) from derivative financial instruments (25,252) (4,495) 14,055 61,914 Other income 322 598 653 1,058 Interest expense (51,932) (39,188) (101,489) (77,458)Total other expenses (76,862) (43,085) (86,781) (14,486)Income (loss) before income taxes (169,355) (60,152) (192,121) 114,067 (Provision for) benefit from income taxes 46,106 14,446 54,398 (25,270)Net income (loss) (123,249) (45,706) (137,723) 88,797 Net income attributable to noncontrolling interest (3,061) — (4,908) — Net income (loss) available to Comstock $(126,310) $(45,706) $(142,631) $88,797 Net income (loss) per share Basic $(0.43) $(0.17) $(0.49) $0.32 Diluted $(0.43) $(0.17) $(0.49) $0.32 Weighted average shares outstanding: Basic 289,670 276,669 283,816 276,610 Diluted 289,670 276,669 283,816 276,610 Dividends per share $— $0.125 $— $0.250
COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands, except per unit amounts)
Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Natural gas production (MMcf) 130,861 126,307 270,304 253,374 Oil production (Mbbls) 15 13 27 40 Total production (MMcfe) 130,949 126,386 270,464 253,612 Natural gas sales $216,527 $228,892 $503,610 $606,924 Natural gas hedging settlements (1) 60,552 55,494 108,547 65,877 Total natural gas including hedging 277,079 284,386 612,157 672,801 Oil sales 1,074 860 1,950 2,802 Total natural gas and oil sales including hedging $278,153 $285,246 $614,107 $675,603 Average natural gas price (per Mcf) $1.65 $1.81 $1.86 $2.40 Average natural gas price including hedging (per Mcf) $2.12 $2.25 $2.26 $2.66 Average oil price (per barrel) $71.60 $66.15 $72.22 $70.05 Average price (per Mcfe) $1.66 $1.82 $1.87 $2.40 Average price including hedging (per Mcfe) $2.12 $2.26 $2.27 $2.66 Production and ad valorem taxes $19,244 $19,599 $37,152 $34,505 Gathering and transportation 49,361 45,395 96,460 90,969 Lease operating 34,805 34,031 69,877 68,861 Cash general and administrative (2) 6,095 7,733 11,850 18,054 Total production costs $109,505 $106,758 $215,339 $212,389 Production and ad valorem taxes (per Mcfe) $0.14 $0.15 $0.13 $0.14 Gathering and transportation (per Mcfe) 0.38 0.36 0.36 0.36 Lease operating (per Mcfe) 0.27 0.27 0.26 0.27 Cash general and administrative (per Mcfe) 0.05 0.06 0.04 0.07 Total production costs (per Mcfe) $0.84 $0.84 $0.79 $0.84 Unhedged operating margin 50% 54% 57% 65%Hedged operating margin 61% 63% 65% 69% Gas services revenue $29,229 $58,459 $77,042 $168,063 Gas services expenses 31,494 55,390 80,174 156,685 Gas services margin $(2,265) $3,069 $(3,132) $11,378 Natural Gas and Oil Capital Expenditures: Unproved property acquisitions $9,694 $15,953 $79,138 $56,648 Total natural gas and oil properties acquisitions $9,694 $15,953 $79,138 $56,648 Exploration and Development: Development leasehold $2,592 $4,975 $6,530 $13,718 Exploratory drilling and completion 52,392 74,622 158,848 104,312 Development drilling and completion 151,350 231,038 297,143 511,214 Other development costs 14,685 11,353 14,722 17,450 Total exploration and development capital expenditures $221,019 $321,988 $477,243 $646,694
(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
June 30, Six Months Ended
June 30, 2024 2023 2024 2023 ADJUSTED NET INCOME (LOSS): Net income (loss) $(123,249) $(45,706) $(137,723) $88,797 Unrealized loss from derivative financial instruments 85,804 59,989 94,492 3,963 Exploration expense — — — 1,775 (Gain) loss on sale of assets — 648 — (125)Adjustment to income taxes (20,769) (13,892) (23,521) (1,364)Adjusted net income (loss) $(58,214) $1,039 $(66,752) $93,046 Adjusted net income (loss) per share (2) $(0.20) $0.00 $(0.24) $0.33 Diluted shares outstanding 289,670 276,669 283,816 276,610 ADJUSTED EBITDAX: Net income (loss) $(123,249) $(45,706) $(137,723) $88,797 Interest expense 51,932 39,188 101,489 77,458 Income taxes (46,106) (14,446) (54,398) 25,270 Depreciation, depletion, and amortization 194,242 140,177 384,931 274,160 Exploration — — — 1,775 Unrealized loss from derivative financial instruments 85,804 59,989 94,492 3,963 Stock-based compensation 4,082 2,305 7,497 4,351 (Gain) loss on sale of assets — 648 — (125)Total Adjusted EBITDAX (3) $166,705 $182,155 $396,288 $475,649
(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 and preferred stock 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
June 30, Six Months Ended
June 30, 2024 2023 2024 2023 OPERATING CASH FLOW (1): Net income (loss) $(123,249) $(45,706) $(137,723) $88,797 Reconciling items: Unrealized loss from derivative financial instruments 85,804 59,989 94,492 3,963 Deferred income taxes (46,144) (13,910) (54,431) 25,270 Depreciation, depletion and amortization 194,242 140,177 384,931 274,160 Amortization of debt discount and issuance costs 3,399 1,994 5,383 3,991 Stock-based compensation 4,082 2,305 7,497 4,351 (Gain) loss on sale of assets — 648 — (125)Operating cash flow $118,134 $145,497 $300,149 $400,407 (Increase) decrease in accounts receivable (23,187) 60,218 76,231 316,210 (Increase) decrease in other current assets (730) 2,715 4,846 1,201 Increase (decrease) in accounts payable and accrued expenses (10,642) 123,080 (126,112) 56 Net cash provided by operating activities $83,575 $331,510 $255,114 $717,874
Three Months Ended
June 30, Six Months Ended
June 30, 2024 2023 2024 2023 FREE CASH FLOW (DEFICIT)(2): Operating cash flow $118,134 $145,497 $300,149 $400,407 Less: Exploration and development capital expenditures (221,019) (321,988) (477,243) (646,694)Midstream capital expenditures (11,190) (6,870) (16,488) (11,057)Other capital expenditures (942) (100) (971) (456)Contributions from midstream partner 11,000 — 17,000 — Free cash deficit from operations $(104,017) $(183,461) $(177,553) $(257,800)Acquisitions (9,694) (15,953) (79,138) (56,648)Proceeds from divestitures — 41,165 — 41,295 Free cash deficit after acquisition and divestiture activity $(113,711) $(158,249) $(256,691) $(273,153)
(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)
June 30,
2024 December 31,
2023 ASSETS Cash and cash equivalents $19,270 $16,669 Accounts receivable 155,199 231,430 Derivative financial instruments 79,649 126,775 Other current assets 69,289 86,619 Total current assets 323,407 461,493 Property and equipment, net 5,574,617 5,384,771 Goodwill 335,897 335,897 Operating lease right-of-use assets 90,604 71,462 $6,324,525 $6,253,623 LIABILITIES AND STOCKHOLDERS’ EQUITY Accounts payable $377,909 $523,260 Accrued costs 139,414 134,466 Operating leases 34,952 23,765 Total current liabilities 552,275 681,491 Long-term debt 2,856,045 2,640,391 Deferred income taxes 415,604 470,035 Derivative financial instruments 47,366 — Long-term operating leases 55,621 47,742 Asset retirement obligation 31,709 30,773 Total liabilities 3,958,620 3,870,432 Stockholders’ Equity: Common stock 146,130 139,214 Additional paid-in capital 1,358,549 1,260,930 Accumulated earnings 815,639 958,270 Total stockholders’ equity attributable to Comstock 2,320,318 2,358,414 Noncontrolling interest 45,587 24,777 Total stockholders’ equity 2,365,905 2,383,191 $6,324,525 $6,253,623 CONTACT: Ron Mills
Vice President of Finance and Investor Relations
Comstock Resources
972-668-8834
rmills@comstockresources.com