Comstock Resources, Inc. Reports Second Quarter 2019 Financials and Operating Results

Frisco, TX, Aug. 07, 2019 (GLOBE NEWSWIRE) — COMSTOCK RESOURCES, INC. REPORTS
SECOND QUARTER 2019 FINANCIAL AND OPERATING RESULTS

FRISCO, TEXAS, August 7, 2019 – Comstock Resources, Inc. (“Comstock” or the “Company”) (NYSE: CRK) today reported financial and operating results for the second quarter of 2019.  On August 14, 2018, the Company completed transactions in which entities controlled by Dallas businessman Jerry Jones contributed Bakken Shale properties to the Company in exchange for a controlling interest in the Company (the “Jones Contribution”) and the Company refinanced its long-term debt.  Results for the three months and six months ended June 30, 2019 reflect the Jones Contribution, while results for the three months and six months ended June 30, 2018 (the “Predecessor”) reflect the historical results of Comstock for that period.  The Company’s consolidated financial results are being presented with a blackline division which delineates the lack of comparability between amounts presented for these periods.

Financial Results for the Three Months Ended June 30, 2019

For the second quarter of 2019, Comstock reported net income of $21.4 million or $0.20 per diluted share as compared to a net loss of $34.0 million or $2.22 per share for the Predecessor second quarter of 2018.  The second quarter 2019 results included an unrealized gain from derivative financial instruments held to manage oil and gas price risks of $12.8 million and Covey Park merger related transaction costs of $1.4 million.  Excluding these items, the net income for the second quarter of 2019 would have been $12.7 million or $0.12 per diluted share.

Comstock produced 40.9 billion cubic feet (“Bcf”) of natural gas and 695,000 barrels of oil or 45.1 billion cubic feet of natural gas equivalent (“Bcfe”) in the second quarter of 2019.  The Company’s natural gas production averaged 450 million cubic feet (“MMcf”) per day, an increase of 88% over natural gas production in the Predecessor second quarter of 2018 and 22% higher than the first quarter of 2019.  The growth in natural gas production was primarily attributable to Comstock’s Haynesville shale drilling program.  Oil production in the second quarter of 2019, which averaged 7,628 barrels of oil per day, increased from the 990 barrels per day produced in the Predecessor second quarter of 2018 due to production from the Bakken Shale properties.  Oil production in the second quarter of 2018 was primarily attributable to the Company’s Eagle Ford shale properties which were sold on April 30, 2018.

Comstock’s average realized natural gas price, including hedging gains, decreased 13% to $2.29 per Mcf in the second quarter of 2019 as compared to $2.64 per Mcf realized in the Predecessor second quarter of 2018.  The Company’s average realized oil price, including hedging gains, decreased by 9% to $52.12 per barrel in the second quarter of 2019 as compared to $57.56 per barrel in the Predecessor second quarter of 2018.  Oil and gas sales were $130.1 million (including realized hedging gains and losses) in the second quarter of 2019 as compared to the Predecessor 2018 second quarter sales of $62.6 million.  EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses, of $93.2 million in the second quarter of 2019 increased by 110% over EBITDAX of $44.3 million for the Predecessor second quarter of 2018.  The Company’s operating cash flow generated in the second quarter of 2019 (before working capital changes and the merger related costs) of $66.3 million increased 151% over operating cash flow of $26.4 million in the Predecessor second quarter of 2018.

Financial Results for the Six Months Ended June 30, 2019

For the first six months of 2019, Comstock reported net income of $35.0 million or $0.33 per diluted share as compared to a net loss of $75.9 million or $4.99 per share for the Predecessor first six months of 2018.  The first six months of 2019 results included an unrealized loss from derivative financial instruments held to manage oil and gas price risks of $0.2 million and the merger related transaction costs of $1.4 million.  Excluding these items, the net income for the first six months of 2019 would have been $36.3 million or $0.34 per share.

Comstock produced 74.1 billion cubic feet of natural gas and 1.5 million barrels of oil or 83.1 Bcfe in the first six months of 2019.  The Company’s natural gas production averaged 409 MMcf per day, an increase of 71% over natural gas production in the Predecessor first six months of 2018.  Oil production in the first six months of 2019, which averaged 8,313 barrels of oil per day, increased from the 1,547 barrels per day produced in the Predecessor first six months of 2018 due to production from the contributed Bakken Shale properties.

Comstock’s average realized natural gas price, including hedging gains, decreased 7% to $2.55 per Mcf in the first six months of 2019 as compared to $2.73 per Mcf realized in the Predecessor first six months of 2018.  The Company’s average realized oil price, including hedging gains, decreased by 25% to $48.71 per barrel in the first six months of 2019 as compared to $65.12 per barrel in the Predecessor first six months of 2018.  Oil and gas sales were $262.3 million (including realized hedging gains and losses) in the first six months of 2019 as compared to the Predecessor first six months of 2018 sales of $136.6 million.  EBITDAX of $190.2 million in the first six months of 2019 increased by 94% over EBITDAX of $98.0 million for the Predecessor first six months of 2018.  The Company’s operating cash flow generated in the first six months of 2019 (before working capital changes and the merger related costs) of $137.0 million increased 120% over operating cash flow of $62.2 million in the Predecessor first six months of 2018.

Drilling Results

Comstock reported the results to date of its 2019 Haynesville/Bossier shale drilling program which is driving the strong production growth in 2019.  During the first six months of 2019, Comstock spent $181.9 million on its development activities.  Comstock spent $155.9 million on drilling and completing Haynesville shale wells.  Comstock drilled 21 (14.2 net) horizontal Haynesville/Bossier shale wells during the first six months of 2019, which had an average lateral length of approximately 8,016 feet.  Comstock also completed 19 (5.2 net) wells that were drilled in 2018.  Twelve (9.4 net) of the wells drilled in the first six months of 2019 were also completed.  Comstock also spent $15.9 million drilling four (2.2 net) Eagle Ford shale oil wells and an additional $10.1 million primarily on leasehold and other development activity.

Since the last operational update, Comstock reported on ten new Haynesville shale wells.  The average initial production rate of these wells was 24 MMcf per day. The wells had completed lateral lengths ranging from 4,426 feet to 11,319 feet, with an average completed lateral length of 6,970 feet.  Each well was tested at initial production rates of 22 to 28 MMcf per day. The four Eagle Ford shale wells in South Texas drilled in 2019 have been completed and had an average initial production rate of 1,034 barrels of oil equivalent (85% oil) per well.

Covey Park 2019 Results

On July 16, 2019 Comstock completed the previously announced acquisition of Covey Park Energy, LLC (“Covey Park”) pursuant to a merger in which the Company was the surviving entity.  The Company’s financial results will include the results of operations of Covey Park in the third quarter of 2019 beginning on July 16, 2019.

For the three months ended June 30, 2019, Covey Park produced 67.6 Bcf of natural gas and 11,000 barrels of oil or 68 Bcfe.  Covey Park’s average realized sales price (including hedging gains) was $2.68 per Mcf for natural gas and $59.94 per barrel for oil.  Total oil and gas sales for the second quarter of 2019 (including hedging gains) were $182.1 million.

For the six months ended June 30, 2019, Covey Park produced 131.0 Bcf of natural gas and 20,000 barrels of oil or 131 Bcfe.  The average realized sales price (including hedging gains) was $2.74 per Mcf for natural gas and $58.25 per barrel for oil.  Total oil and gas sales for the six months ended June 30, 2019 (including realized hedging gains) were $359.7 million.

During the first six months of 2019, Covey Park drilled 17 Haynesville shale wells (15.5 net) and completed 19 wells (17.7 net).  The average per well initial production rate of these wells was 20 MMcf per day. The wells had completed lateral lengths ranging from 4,200 feet to 9,492 feet, with an average completed lateral length of 7,403 feet.  Each well was tested at initial production rates of 12 to 30 MMcf per day.

With completion of the Covey Park acquisition, Comstock’s 2019 annual drilling and completion budget will be $538 million which includes drilling activity on Covey Park properties subsequent to the closing of the merger.  Activity planned for 2019 includes completing 19 (5.2 net) wells drilled by Comstock in 2018 and drilling 78 (57.4 net) Haynesville/Bossier shale wells in 2019.  Comstock is also spending $21.2 million in 2019 on its Eagle Ford shale and Bakken shale oil properties.

Other

Comstock has planned a conference call for 10:00 a.m. Central Time on August 7, 2019, to discuss the second quarter of 2019 operational and financial results.  Investors wishing to participate should visit the Company’s website at www.comstockresources.com for a live web cast or dial 844-776-7840 (international dial-in use 661-378-9538) and provide access code 6057864 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 August 7, 2019 and will continue until 1:00 p.m. August 14, 2019.  To hear the replay, call 855-859-2056 (404-537-3406 if calling from outside the US).  The conference call access code is 6057864.

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 engaged in oil and gas acquisitions, exploration and development, and its assets are primarily located in Texas, Louisiana and North Dakota.  The Company‘s stock is traded on the New York Stock Exchange under the symbol CRK.

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

COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands)

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

                                                            
(1)    Included in gain (loss) from derivative financial instruments in operating results

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

                                                
(1)       Included in gain (loss) from derivative financial instruments in operating results

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

                                                            
(1)    Included in gain (loss) from derivative financial instruments in operating results

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

                                                
(1)       Included in gain (loss) from derivative financial instruments in operating results

PRO FORMA COMBINED OPERATING RESULTS

 (In thousands, except per unit amounts)

                                                            
(1)    Included in gain (loss) from derivative financial instruments in operating results
(2)    Pro forma for an acquisition which completed on March 5, 2019

Comstock Resources
Gary H. Guyton
Director of Planning and Investor Relations
972-668-8834