COMSTOCK RESOURCES, INC. REPORTS FOURTH QUARTER 2019 FINANCIAL AND OPERATING RESULTS

FRISCO, TX, Feb. 26, 2020 (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, 2019.  On July 16, 2019, Comstock completed the acquisition of Covey Park Energy LLC (“Covey Park”). The Company’s annual financial results include the results of operations of Covey Park beginning on July 16, 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”). The 2019 results and the period from August 14, 2018 through December 31, 2018 reflect the Jones Contribution, while results for the period from January 1, 2018 through August 13, 2018 reflect the historical results of Comstock for that period (the “Predecessor”).

Financial Results for the Three Months Ended December 31, 2019

For the fourth quarter of 2019, Comstock reported net income available to common stockholders of $40.8 million or $0.19 per diluted share. Net income available to common stockholders as adjusted to exclude certain items not related to normal operating activities for the fourth quarter of 2019 was $49.1 million or $0.22 per diluted share. These items included $4.1 million in non-cash interest amortization resulting from adjusting debt assumed in the Covey Park acquisition to fair value; $4.6 million of non-cash accretion resulting from adjusting the preferred stock issued in connection with the Covey Park acquisition to fair value; and $0.4 million in unrealized hedging gains.

Comstock produced 121.5 billion cubic feet (“Bcf”) of natural gas and 576,665 barrels of oil or 125.0 billion cubic feet of natural gas equivalent (“Bcfe”) in the fourth quarter of 2019. Natural gas production averaged 1,321 million cubic feet (“MMcf”) per day, an increase of 293% over natural gas production in the fourth quarter of 2018. The growth in natural gas production was primarily attributable to the acquisition of Covey Park and the successful results from Comstock’s Haynesville shale drilling activities in 2019. Oil production in the fourth quarter of 2019 decreased to 6,268 barrels of oil per day from 9,155 barrels per day produced in the fourth quarter of 2018 due primarily to expected production declines from the Bakken Shale properties acquired in the Jones Contribution.

Comstock’s average realized natural gas price in the fourth quarter of 2019, including hedging, decreased to $2.30 per Mcf as compared to $3.28 per Mcf realized in the fourth quarter of 2018.  The Company’s average realized oil price in the fourth quarter of 2019, including hedging, decreased to $50.36 per barrel as compared to $54.96 per barrel in the fourth quarter of 2018.  Oil and gas sales were $308.6 million (including realized hedging gains) in the fourth quarter of 2019 as compared to sales of $147.7 million in the fourth quarter of 2018. EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses, of $234.8 million in the fourth quarter of 2019 increased by 109% over EBITDAX of $112.5 million for the fourth quarter of 2018.  The Company’s operating cash flow generated in the fourth quarter of 2019 of $187.9 million increased 97% over operating cash flow of $95.6 million in the fourth quarter of 2018.

Financial Results for the Year Ended December 31, 2019

For the year ended December 31, 2019, Comstock reported a net income available to common stockholders of $74.5 million or $0.52 per diluted share.  Net income available to common stockholders as adjusted to exclude certain items not related to normal operating activities primarily due to the closing of the Covey Park acquisition for the year ended December 31, 2019 was $122.3 million or $0.77 per diluted share. These items included $31.9 million of advisory and legal fees, severance costs and other change of control payments; $7.1 million in non-cash interest amortization resulting from adjusting debt assumed in the Covey Park acquisition to fair value; $3.5 million of hedging settlements related to July production that were received prior to closing the Covey Park acquisition; $4.6 million of non-cash accretion resulting from adjusting the preferred stock issued in connection with the Covey Park acquisition to fair value; and $0.7 million in unrealized hedging gains.

Comstock produced 292.8 Bcf of natural gas and 2.7 million barrels of oil or 308.9 Bcfe for the year ended December 31, 2019.  Natural gas production averaged 802 MMcf per day and oil production averaged 7,356 barrels of oil per day.  On a proforma basis, assuming the Covey Park acquisition had been completed on January 1, 2019, oil and natural gas production would have been 7,416 barrels per day and 1,190 MMcf per day, respectively. Comstock’s average realized natural gas price after hedging was $2.35 per Mcf and realized oil price after hedging was $49.64 per barrel for the year.  Oil and gas sales for 2019 were $821.4 million (including realized hedging gains and losses), EBITDAX was $613.6 million and operating cash flow generated was $468.3 million.

Drilling Results

Total expenditures in 2019 for drilling and development activities was $510.5 million.  Comstock spent $485.4 million to develop its Haynesville and Bossier shale properties, including $468.5 million on drilling and completing wells and an additional $16.9 million on other development activity.  Comstock drilled 82 (51.1 net) horizontal Haynesville or Bossier shale wells in 2019, which had an average lateral length of approximately 8,100 feet.  Comstock also completed 19 (7.3 net) wells that were drilled in 2018.  Fifty (36.0 net) of the wells drilled in 2019 were also completed in 2019.  The Company currently expects the remaining 32 (15.1 net) wells drilled in 2019 will be completed in 2020, of which 18 (12.6 net) are operated wells. Comstock also spent $25.1 million of development costs on its other properties primarily on completing four (2.2 net) Eagle Ford shale wells during the year.

Since its last operational update, Comstock reported on an additional 20 Haynesville shale wells.  The average initial production rate of these wells was 24 MMcf per day. The wells had completed lateral lengths ranging from 4,337 feet to 10,191 feet, with an average completed lateral length of 6,926 feet.  Each well was tested at initial production rates of 15 to 45 MMcf per day.  Comstock currently has 15 (7.8 net) operated Haynesville shale wells that are in the process of being completed.

2019 Proved Oil & Gas Reserves

Comstock also announced that proved oil and natural gas reserves as of December 31, 2019 were estimated at 5.3 Tcfe of natural gas and 16.7 million barrels of oil, or 5.4 Tcfe as compared to total proved reserves of 2.4 Tcfe as of December 31, 2018. The reserve estimates were determined under the SEC guidelines and were audited by the Company’s independent reserve engineering firms. The 5.4 Tcfe of proved reserves at December 31, 2019 were 36% proved developed and 92% were operated by Comstock. The present value, using a 10% discount rate, or the future net cash flows before income taxes of the proved reserves (the “PV-10 Value”) was approximately $3.3 billion, using average first of month 2019 prices of $2.58 per Mcf of natural gas and $55.69 per barrel for oil. The PV-10 Value increased 85% from the PV-10 Value in 2018 of $1.8 billion. The natural gas and oil prices used in determining the December 31, 2019 proved reserves estimates were 11% lower for natural gas and 9% lower for oil as compared to prices used at December 31, 2018.

The following table reflects the changes in the proved reserve estimates since the end of 2018:

The significant growth in proved reserves was primarily attributable to acquisitions, including the Covey Park acquisition, which added 3.0 Tcfe to proved reserves. The Company also added 583 Bcfe related to its 2019 drilling activities and to performance and other revisions. Lower oil and natural gas prices reduced proved reserves by 232 Bcfe. Based on the 2019 proved reserve additions, Comstock’s “all-in” finding costs were approximately $0.72 per Mcfe excluding price-related revisions ($0.77 per Mcfe including price-related revisions).

2020 Drilling Budget

The Company also announced its current drilling plans for 2020.  Comstock’s planned capital expenditures for 2020 total $421.0 million and exclusively focused on the Haynesville/Bossier shale. Comstock is currently planning to operate five drilling rigs in 2020 and will drill 46 (34.3 net) operated horizontal wells and complete the 18 (12.6 net) wells drilled in 2019.

Other

Comstock has planned a conference call for 10:00 a.m. Central Time on February 27, 2020, to discuss the 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 4754719 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 February 27, 2020 and will continue until 1:00 p.m. March 5, 2020.  To hear the replay, call 855-859-2056 (404-537-3406 if calling from outside the US).  The conference call access code is 4754719.

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)

(a)    Included in gain from derivative financial instruments in operating results.

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

(a)    Included in gain from derivative financial instruments in operating results.

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

(a)    Included in gain from derivative financial instruments in operating results.

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

(a)    Included in gain from derivative financial instruments in operating results.

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

(a)    Included in gain from derivative financial instruments in operating results.

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

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

Ron Mills
VP of Finance and Investor Relations
972-668-8834 (Direct)
[email protected]