Comstock Resources, Inc. Reports Second Quarter 2013 Financial And Operating Results

FRISCO, Texas, July 29, 2013 /PRNewswire/ -- Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter and six months ended June 30, 2013.  As previously reported, Comstock completed the divestiture of its West Texas operations on May 14, 2013, receiving proceeds of $823.7 million.  A gain on the sale of $230.6 million ($149.9 million after tax or $3.21 per share) was recognized in the quarter.  This gain and the operating results of the West Texas properties are reflected as discontinued operations in the Company's financial statements.

Financial Results for the Three Months and Six Months Ended June 30, 2013

Comstock reported net income of $129.7 million or $2.68 per share.  Included in net income was a net gain on sale of the Company's West Texas properties of $230.6 million ($149.9 million after tax or $3.21 per share).  Comstock reported a loss related to its continuing operations of $21.5 million or 45¢ per share for the three months ended June 30, 2013 as compared to income from continuing operations of $16.7 million or 35¢ per share for the three months ended June 30, 2012. 

The second quarter of 2013 results from continuing operations include an impairment of oil and gas properties and unevaluated leases of $10.1 million ($6.6 million after tax or 14¢ per share) and an unrealized gain from derivative financial instruments of $0.6 million ($0.4 million after tax or 1¢ per share).  Results for the three months ended June 30, 2012 also include an unrealized gain from derivative financial instruments of $34.8 million ($22.6 million after tax or 49¢ per share), a gain of $20.3 million ($13.2 million after tax or 28¢ per share) from the sale of oil and gas properties and impairments of $5.3 million ($3.4 million after tax or 7¢ per share).

Comstock's production from continuing operations in the second quarter of 2013 was 551,000 barrels of oil and 14.2 billion cubic feet of natural gas or 17.5 billion cubic feet of natural gas equivalent ("Bcfe") as compared to the 24.5 Bcfe produced in the second quarter of 2012.  Oil production in the second quarter, which averaged 6,048 barrels of oil per day, grew 26% from the 4,803 barrels per day produced in the first quarter of 2013 and increased 20% from oil production in the second quarter of 2012.  Gas production declined 35% from 2012 due to the lack of drilling activity in the Company's Haynesville shale natural gas properties.

Comstock's average realized natural gas price improved by 86% to $3.71 per Mcf for the second quarter of 2013 as compared to $2.00 per Mcf realized in the second quarter of 2012.  The Company's average realized oil price, including hedging gains, decreased by 2% to $105.30 per barrel for the second quarter of 2013 as compared to $107.71 per barrel for the second quarter of 2012.  Oil and gas sales from continuing operations (including realized gains or losses from hedging) of $110.7 million for the second quarter increased by 19% as compared to 2012's second quarter sales of $93.0 million.  Operating cash flow from continuing operations (before changes in working capital accounts) was $66.0 million in the second quarter of 2013, which represented a 24% increase as compared to $53.4 million in the second quarter of 2012.  EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses, from continuing operations of $83.9 million in the second quarter of 2013, increased 28% over EBITDAX from continuing operations of $65.5 million in the second quarter of 2012.

Comstock reported net income of $102.6 million, or $2.12 per diluted share, for the six months ended June 30, 2013 as compared to net income of $8.5 million or 18¢ per diluted share for the six months ended June 30, 2012.  The loss from continuing operations for the first six months of 2013 was $46.0 million, or 95¢ per diluted share, as compared to income from continuing operations of $18.1 million or 38¢ per diluted share for the same period in 2012.

The 2013 results include an unrealized loss from derivative financial instruments of $8.1 million ($5.3 million after tax or 11¢ per diluted share), a gain of $7.9 million ($5.1 million or 11¢ per diluted share) on the sale of marketable securities and impairments of oil and gas properties and unevaluated leases of $12.6 million ($8.2 million after tax, or 17¢ per diluted share).  Results for the six months ended June 30, 2012 included an unrealized gain on derivatives of $24.6 million ($16.0 million after tax or 34¢ per diluted share), a gain of $27.1 million ($17.6 million after tax or 38¢ per diluted share) from the sale of oil and gas properties, a gain on sale of marketable securities of $26.6 million ($17.3 million after tax or 37¢ per diluted share), and impairments of oil and gas properties and unevaluated leases of $6.7 million ($4.4 million or 9¢ per diluted share). 

Oil production related to continuing operations for the six months ended June 30, 2013 increased 10% to 983,000 barrels as compared to 892,000 barrels for the same period in 2012.  Gas production decreased 32% to 29.8 Bcf for the first half of 2013 as compared to 44.0 Bcf for the same period 2012.  Comstock's average realized natural gas price increased 48% to $3.42 per Mcf for the first six months of 2013 as compared to $2.31 per Mcf for the first six months of 2012.  The Company's average realized oil price for the first six months of 2013 of $107.89 per barrel, including hedging gains, was 3% above 2012's average realized price of $104.97 per barrel.  Oil and gas sales increased by 6% to $208.0 million in the first six months of 2013 as compared to the sales in the first six months of 2012 of $195.5 million.  Operating cash flow (before changes in working capital accounts) of $122.3 million in the first six months of 2013 increased 6% from 2012's first six months operating cash flow of $115.0 million.  EBITDAX increased 13% to $156.4 million for the first six months of 2013 from the first six months of 2012 of $138.4 million.

The operations of the Company's West Texas operations are reflected as discontinued operations due to the sale of such properties, which was completed on May 14, 2013.  The Company's income attributable to the discontinued operations including the gain recognized on the sale was $151.2 million or $3.13 per diluted share in the second quarter of 2013 as compared to a loss of $9.5 million (20¢ per share) in the second quarter of 2012.  For the six months ended June 30, 2013, the income from discontinued operations including the gain on the sale was $148.6 million or $3.07 per share as compared to a net loss of $9.6 million or 20¢ per share for the same period in 2012.  Comstock received $823.7 million in cash proceeds for its West Texas properties and had a gain on the sale of $230.6 million ($149.9 million after tax or $3.21 per share).

2013 Drilling Results

Comstock reported on the results to date of its 2013 drilling program related to its continuing operations which is focused on developing its Eagle Ford oil shale properties in South Texas.  During the first six months of 2013, Comstock spent $128.7 million on its continuing development and exploration activities and $4.8 million on acreage and other acquisition costs.  Comstock drilled 25 horizontal oil wells (15.2 net) and two horizontal natural gas wells (2.0 net) and had six oil wells (3.7 net) drilling at June 30, 2013.

Since the beginning of 2013, the Company has completed 25 (15.4 net) horizontal Eagle Ford shale wells including six (3.8 net) wells drilled in 2012.  The 25 Eagle Ford shale wells that were completed had an average per well initial production rate of 796 barrels of oil equivalent ("BOE") per day.  The four wells with the highest initial production rates were Forrest Wheeler C #1H, Swenson B #1H, Swenson A #1H and Swenson B #2H.  These wells are located in McMullen County and had initial production rates of 1,337, 1,322, 1,222 and 1,143 BOE per day, respectively.  Beginning in June, the Company had six operated rigs drilling in the Eagle Ford shale program, an increase from the three rigs that were drilling in the first quarter.

The two natural gas wells were completed in the Bossier shale formation in DeSoto Parish, Louisiana in July and had an average per well initial production rate of 9 million cubic feet of natural gas per day under a restricted 16/64 inch choke.

Comstock has planned a conference call for 9:30 a.m. Central Time on July 30, 2013, to discuss the operational and financial results for the second quarter of 2013.  Investors wishing to participate should visit the Company's website at www.comstockresources.com for a live web cast or dial 1-866-318-8614 (international dial-in use 617-399-5133) and provide access code 42675964 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 12:30 p.m. ET July 30, 2013 and will continue until 11:59 p.m. August 6, 2013.  To hear the replay, call 888-286-8010 (617-801-6888 if calling from outside the US).  The conference call ID number is 58926292.

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 an independent energy company based in Frisco, Texas and is engaged in oil and gas acquisitions, exploration and development primarily in Texas and Louisiana.  The Company's stock is traded on the New York Stock Exchange under the symbol CRK.

SOURCE Comstock Resources, Inc.