Comstock Resources Inc. (CRK) News

FRISCO, Texas, Feb. 9 /PRNewswire-FirstCall/ -- Comstock Resources, Inc. ('Comstock' or the 'Company') (NYSE: CRK) today reported financial and operating results for the quarter and year ended December 31, 2008.

Financial Results for the Three Months and Year Ended December 31, 2008

Comstock reported a net loss of $96.4 million or $2.15 per share for the three months ended December 31, 2008 as compared to 2007's fourth quarter net income of $21.7 million or $0.48 per diluted share. Results for the fourth quarter of 2008 include impairment charges of $162.7 million ($105.8 million after income taxes or $2.33 per share) related to the Company's investment in Stone Energy Corporation ('Stone') and a $0.9 million ($0.6 million after tax or $.01 per diluted share) related to its oil and gas properties. Excluding these impairment charges, net income for the fourth quarter of 2008 would be $10.0 million or $0.22 per diluted share. Comstock's income from continuing operations in the fourth quarter of 2007 was $13.2 million or $0.30 per diluted share.

The fourth quarter operating results were impacted by continued production growth and declining market prices for crude oil and natural gas. Comstock's production from its continuing onshore operations in the fourth quarter of 2008 increased 23% to 15.1 billion cubic feet equivalent of natural gas ('Bcfe') as compared to production of 12.2 Bcfe in the fourth quarter of 2007. The fourth quarter average daily production rate of 164 million cubic feet of natural gas equivalent ('Mmcfe') was slightly higher than the third quarter 2008 production rate of 163 Mmcfe per day. Comstock's realized oil prices in the fourth quarter of 2008 declined to $52.16 per barrel, 31% lower than the $76.10 per barrel in 2007's fourth quarter. Oil prices in the fourth quarter of 2008 were substantially lower than the $105.15 per barrel realized during the third quarter of 2008. Natural gas prices realized in the fourth quarter of 2008 averaged $6.44 per Mcf, 10% lower than the $7.15 per Mcf realized in 2007. Natural gas prices in the fourth quarter of 2008 were also substantially less than the $10.16 per Mcf realized during the third quarter of 2008. Oil and gas sales in the fourth quarter of 2008 of $100.2 million increased 5% from 2007's fourth quarter sales of $95.5 million as the 23% production increase was largely offset by lower crude oil and natural gas prices. Operating cash flow (before changes in working capital accounts) generated by Comstock's continuing operations in 2008's fourth quarter of $79.5 million increased 26% over 2007's fourth quarter operating cash flow of $62.9 million. EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses from continuing operations, of $71.5 million in 2008's fourth quarter was comparable to 2007's fourth quarter EBITDAX from continuing operations of $72.3 million.

Comstock reported net income of $252.0 million or $5.53 per diluted share for the year ended December 31, 2008 as compared to 2007's net income of $68.9 million or $1.54 per diluted share. Income from continuing operations for 2008 was $58.2 million or $1.28 per diluted share as compared to income from continuing operations of $45.6 million or $1.03 per diluted share for 2007. Excluding the impairment charges related to the investment in Stone and its oil and gas properties, and the $26.6 million gain recognized on sale of certain onshore oil and gas properties ($17.3 million after income taxes or $0.38 per diluted share), Comstock's income from continuing operations for 2008 was $147.6 million or $3.25 per diluted share.

The full year 2008 financial results reflect overall higher oil and natural gas prices combined with the Company's strong production growth in 2008. Comstock's continuing onshore production in 2008 increased 32% to 59.9 Bcfe as compared to production of 45.3 Bcfe in 2007. Realized oil prices in 2008 averaged $87.15 per barrel, 43% higher than the $60.96 per barrel realized in 2007. Natural gas prices in 2008 averaged $8.83 per Mcf, 28% higher than the $6.89 per Mcf realized in 2007. Oil and gas sales of $563.7 million during 2008 increased 70% from 2007's sales of $331.6 million. Operating cash flow (before changes in working capital accounts) generated by Comstock's continuing operations in 2008 of $438.2 million increased 103% from 2007's cash flow from continuing operations of $215.5 million. EBITDAX from continuing operations of $458.7 million in 2008 increased 83% over 2007's EBITDAX from continuing operations of $250.8 million.

Comstock's offshore operations represented by its ownership in Bois d'Arc Energy, Inc. ('Bois d'Arc') are reflected as discontinued operations in the 2008 financial results due to the sale of Bois d'Arc to Stone in August 2008. For the year ended December 31, 2008, Bois d'Arc contributed $35.6 million or 77 cents per diluted share to net income as compared to $23.3 million or 51 cents per diluted share in 2007. Comstock recognized a gain of $158.1 million after tax ($3.48 per diluted share) in the third quarter in connection with the sale. Comstock received $439.9 million in cash and 5,317,069 shares of Stone common stock for its stake in Bois d'Arc.

2008 Drilling Results

Comstock also announced the results of its 2008 onshore drilling program. In 2008 Comstock drilled 136 wells (75.7 net). 132 (74.2 net) of the wells drilled were successful and four (1.5 net) were dry holes.

Comstock drilled 114 successful wells (61.5 net) in its East Texas / North Louisiana region which have been tested at an average per well initial production rate of 2.8 Mmcfe per day. One well (.3 net) was unsuccessful. Wells drilled in this region in 2008 include 37 wells (11.2 net) drilled in the Hico Knowles - Terryville area of North Louisiana. All of these wells have been completed and had initial production rates which averaged 3.5 Mmcfe per day. Comstock has also drilled 45 wells (34.2 net) in its Logansport field in North Louisiana. Forty-one of these wells have been completed with initial production rates which averaged 2.1 Mmcfe per day. Comstock's 2008 drilling program in this region includes seven successful horizontal Cotton Valley wells drilled in its Waskom and Blocker fields in Harrison County, Texas. Five of these wells have been completed with a per well average initial production rate of 7.1 Mmcfe per day. Comstock's average working interest in these wells is 83%.

Other activity in the East Texas / North Louisiana region relates to the Company's emerging Haynesville shale play. Comstock has 86,032 (70,504 net) acres that are prospective for Haynesville shale development in this region. The Company has completed two horizontal wells and has an additional eight wells in progress. The BSMC La 7 #1H well in the Toledo Bend North field was successfully completed in December 2008 with an initial production rate of approximately 9 Mmcfe per day. Comstock has an 88% working interest in this well. Comstock has a 22% interest in the successful R. F. Gamble 24 #1H, which was recently completed and with an initial production rate of approximately 14 Mmcfe per day. Comstock is currently completing three Haynesville horizontal wells. Comstock's second operated horizontal Haynesville well is the Collins La 15 #1H in the Logansport field. This well was drilled to a total vertical depth of 11,350 feet with a 4,200 foot lateral. This well's completion has been delayed due to mechanical problems. The Company is completing the Bogue A #6H well in the Waskom field. This well reached an 11,400 foot vertical depth with a 4,000 foot lateral extension. The Company is also completing the Hart #1H in the Logansport field which reached an 11,500 foot vertical depth with a 4,000 foot horizontal extension. The Company is currently drilling five Haynesville horizontal wells. The Green #13H in the Blocker field reached an 11,650 foot vertical depth and the Company is currently drilling this well's 3,700 foot lateral. The Headrick #1H in Bethany-Longstreet field has reached a vertical depth of 11,850 feet and its 4,000 foot lateral is currently being drilled. The Holmes A #1H in Logansport field is currently drilling at a vertical depth of approximately 11,000 feet. Comstock is also drilling the Moneyham #7H in Longwood field which is currently drilling at a vertical depth approaching 11,000 feet. Comstock has also finished drilling the 11,730 foot vertical section of the BSMC La 12 #1H well in the Toledo Bend North field.

During 2008, in South Texas Comstock drilled 18 wells (13.4 net), 15 (12.2 net) of which were successful. Fourteen of the successful wells had an average per well initial production rate of 4.3 Mmcfe per day. Four of the successful wells were in the Las Hermanitas field in Duval County, Texas, six were in the Javelina Field in Hidalgo County, three were in the Ball Ranch field, and one was in the Lorenz Ranch field. Comstock also had a successful well in the Fandango field in Zapata County, Texas. The Leyendecker #10 well was drilled to a total depth of 16,200 feet in the Fandango field. The Company has a 100% interest and is currently finishing this well's multiple stage completion. Subsequent to the success of the Leyendecker #10, Comstock has two additional wells underway in the Fandango field. Comstock has drilled the Muzza #13 to a 16,300 foot vertical depth and is currently drilling the Trevino #3 to a planned vertical depth of 14,900 feet. Both of these wells appear to have encountered the targeted Wilcox sands and will be completed.

Comstock also had two (0.3 net) successful wells drilled in the San Juan Basin and one (0.2 net) successful well drilled in the Anadarko Basin during the year.

2009 Drilling Budget

Comstock also announced that it is reducing its 2009 drilling budget from $450 million to $366 million in response to weak natural gas prices. The revised budget has Comstock drilling approximately 41 (34.8 net) wells in 2009. The 2009 drilling program will continue to be focused on the Company's higher return opportunities, including its extensive acreage position in the Haynesville Shale. Comstock's East Texas/North Louisiana operating region accounts for the largest portion of the revised 2009 budget with forecasted expenditures of $319 million. Comstock has budgeted to drill 36 (31.4 net) wells in this region in 2009, which includes thirty (25.8 net) Haynesville Shale horizontal wells and two (1.6 net) Cotton Valley horizontal wells. Comstock expects to spend $47 million in its South Texas region to drill five (3.4 net) wells in 2009.

Comstock Fourth Quarter and Annual 2008 Earnings Conference Call

Comstock has scheduled a conference call for Tuesday, February 10, 2009 at 9:30 a.m. CST (10:30 a.m. EST) to discuss fourth quarter and annual 2008 financial and operating results. To access, dial (800) 599-9795 before the call begins. Please reference Passcode 13456712. International callers may also participate by dialing (617) 786-2905. A replay of the call will be available approximately two hours after the live broadcast ends and will be accessible until Tuesday, February 17, 2009. To access the replay, please dial (888) 286-8010 and reference Passcode 42281507. International callers may listen to a playback by dialing (617) 801-6888. In addition, the call will be webcast live on Comstock's website at http://www.comstockresources.com. A replay of the call will also be available on that site.

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 a growing 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.

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

                                      Three Months Ended        Year Ended
                                         December 31,          December 31,
                                       2008       2007       2008       2007
    Revenues:
        Oil and gas sales           $100,154    $95,519   $563,749   $331,613
        Gain on sales of assets           --         --     26,560         --

    Operating expenses:
        Oil and gas operating         20,610     16,082     86,730     64,791
        Exploration                       --      3,388      5,032      7,039
        Depreciation, depletion and
         amortization                 50,309     34,328    182,179    125,349
        Oil and gas property
         impairment                      922         --        922        482
        General and administrative,
         net                          11,938     10,312     32,266     27,813

          Total operating expenses    83,779     64,110    307,129    225,474

    Operating income from
     continuing operations            16,375     31,409    283,180    106,139

    Other income (expenses):
        Interest income                  584        233      1,537        877
        Other income                      32         28        119        144
        Interest expense              (2,088)    (9,461)   (25,336)   (32,293)
        Marketable securities
         impairment                 (162,672)        --   (162,672)        --

          Total other income
           (expenses)               (164,144)    (9,200)  (186,352)   (31,272)

    Income (loss) from continuing
     operations before income taxes (147,769)    22,209     96,828     74,867
        Benefit from (provision for)
         income taxes                 51,392     (9,043)   (38,611)   (29,223)

    Income (loss) from continuing
     operations                      (96,377)    13,166     58,217     45,644

    Income from discontinued
     operations after income taxes
     and minority interest                --      8,532    193,745     23,257
    Net income (loss)               $(96,377)   $21,698   $251,962    $68,901

    Basic net income (loss) per share:
        Continuing operations         $(2.15)     $0.30      $1.31      $1.05
        Discontinued operations           --       0.20       4.35       0.54
                                      $(2.15)     $0.50      $5.66      $1.59

    Diluted net income (loss) per share:
        Continuing operations         $(2.15)     $0.30      $1.28      $1.03
        Discontinued operations           --       0.18       4.25       0.51
                                      $(2.15)     $0.48      $5.53      $1.54

    Weighted average shares outstanding:
        Basic                         44,751     43,544     44,524     43,415
        Diluted                       44,751(1)  44,583     45,440     44,405

    (1) Diluted shares outstanding are the same as basic due to the net loss.



                               COMSTOCK RESOURCES, INC.
                                  OPERATING RESULTS
                                   (In thousands)

                                      Three Months Ended       Year Ended
                                         December 31,         December 31,
                                       2008      2007        2008       2007
    OPERATING CASH FLOW:
      Income (loss) from continuing
       operations                   $(96,377)   $13,166    $58,217    $45,644
      Reconciling items:
        Deferred income taxes        (41,551)     8,903     43,620     25,543
        Dry hole costs and lease
         impairments                      --      3,388      4,113      6,846
        Depreciation, depletion and
         amortization                 50,309     34,328    182,179    125,349
        Gain on sale of assets            --         --    (26,560)        --
        Marketable securities
         impairment                  162,672         --    162,672         --
        Oil and gas properties
         impairment                      922         --        922        482
        Debt issuance cost
         amortization                    202        202        810        810
        Stock-based compensation       3,295      2,884     12,263     10,789
          Operating cash flow         79,472     62,871    438,236    215,463
            Excess tax benefit from
             stock-based compensation     --     (5,920)    (8,805)    (6,522)
            Decrease (increase) in
             accounts receivable      21,156     (5,856)     6,418    (11,605)
            Decrease (increase) in
             other current assets       (888)     2,527     (9,646)      (230)
            Increase (decrease) in
             accounts payable and
             accrued expenses         19,757       (942)    24,330      4,433
              Net cash provided by
               operating activities
               from continuing
               operations           $119,497    $52,680   $450,533   $201,539

    EBITDAX:
        Income (loss) from
         continuing operations      $(96,377)   $13,166    $58,217    $45,644
        Gain on sales of assets           --         --    (26,560)        --
        Interest expense               2,088      9,461     25,336     32,293
        Income tax expense           (51,392)     9,043     38,611     29,223
        Depreciation, depletion
         and amortization             50,309     34,328    182,179    125,349
        Marketable securities
         impairment                  162,672         --    162,672         --
        Oil and gas properties
         impairment                      922         --        922        482
        Stock-based compensation       3,295      2,884     12,263     10,789
        Exploration                       --      3,388      5,032      7,039
              EBITDAX from
               continuing operations $71,517    $72,270   $458,672   $250,819



                                                           As of December 31,
                                                             2008       2007

    Balance Sheet Data:
      Cash and cash equivalents                             $6,281     $5,565
      Other current assets                                  74,879     52,638
      Marketable securities                                 48,868         --
      Property and equipment, net                        1,444,715  1,310,559
      Assets of discontinued operations                         --    981,682
      Other                                                  3,147      3,943
          Total assets                                  $1,577,890 $2,354,387

      Accounts payable and accrued expenses               $114,455    $83,467
      Long-term debt                                       210,000    680,000
      Deferred income taxes                                185,870     92,088
      Asset retirement obligation                            5,480      7,512
      Liabilities and minority interest of
       discontinued operations                                  --    719,676
      Stockholders' equity                               1,062,085    771,644
          Total liabilities and stockholders' equity    $1,577,890 $2,354,387



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

                                 For the Three Months Ended December 31, 2008
                                  East Texas/
                                    North       South
                                  Louisiana     Texas      Other      Total
    Oil production (thousand
     barrels)                           73         37        124        234
    Gas production
     (million cubic feet - Mmcf)     7,927      4,903        830     13,660
    Total production (Mmcfe)         8,365      5,126      1,577     15,068

    Oil sales                      $ 4,477    $ 2,252     $5,509   $ 12,238
    Gas sales                       51,285     29,668      4,415     85,368
    Gas hedging gains                   --      2,548         --      2,548
        Total gas sales             51,285     32,216      4,415     87,916
          Total oil and gas sales  $55,762    $34,468     $9,924   $100,154

    Average oil price (per barrel)  $61.30     $60.68     $44.26     $52.16
    Average gas price
     (per thousand cubic feet - Mcf) $6.47      $6.05      $5.32      $6.25
    Average gas price including
     hedging (per Mcf)               $6.47      $6.57      $5.32      $6.44
    Average price
     (per Mcf equivalent)            $6.67      $6.23      $6.29      $6.48
    Average price including hedging
     (per Mcf equivalent)            $6.67      $6.72      $6.29      $6.65

    Lifting cost(1)                $10,888     $5,366     $4,356    $20,610(1)
    Lifting cost
     (per Mcf equivalent)            $1.30      $1.05      $2.76      $1.37

    Oil and Gas Capital Expenditures:
        Acquisitions               $    --    $    --     $   --   $     --
        Leasehold costs              7,711        547         67      8,325
        Exploratory drilling        43,544     12,170      2,221     57,935
        Development drilling        33,269     14,922         31     48,222
        Other development                3      1,320         97      1,420
          Total                    $84,527    $28,959     $2,416   $115,902



                                 For the Three Months Ended December 31, 2007
                                  East Texas/
                                    North       South
                                  Louisiana     Texas      Other      Total
    Oil production (thousand
     barrels)                           40         56        146        242
    Gas production
     (million cubic feet - Mmcf)     6,559      3,364        846     10,769
    Total production (Mmcfe)         6,800      3,702      1,724     12,226

    Oil sales                      $ 3,552    $ 5,068    $ 9,861    $18,481
    Gas sales                       46,133     25,117      5,788     77,038
    Gas hedging gains                   --         --         --         --
        Total gas sales             46,133     25,117      5,788     77,038
          Total oil and gas sales  $49,685    $30,185    $15,649    $95,519

    Average oil price (per barrel)  $88.80     $90.50     $67.54     $76.10
    Average gas price
     (per thousand cubic feet - Mcf) $7.03      $7.47      $6.84      $7.15
    Average gas price including
     hedging (per Mcf)               $7.03      $7.47      $6.84      $7.15
    Average price
     (per Mcf equivalent)            $7.31      $8.15      $9.08      $7.81
    Average price including hedging
     (per Mcf equivalent)            $7.31      $8.15      $9.08      $7.81

    Lifting cost(1)                 $6,710     $4,772     $4,600    $16,082(1)
    Lifting cost
     (per Mcf equivalent)            $0.99      $1.29      $2.67      $1.32

    Oil and Gas Capital Expenditures:
        Acquisitions               $    --   $160,101     $   --   $160,101
        Leasehold costs                576        789         71      1,436
        Exploratory drilling            --      3,916        (51)     3,865
        Development drilling        56,454     11,922      2,111     70,487
        Other development              798      1,710        515      3,023
          Total                    $57,828   $178,438     $2,646   $238,912



                                       For the Year Ended December 31, 2008
                                  East Texas/
                                    North       South
                                  Louisiana     Texas      Other      Total
    Oil production (thousand
     barrels)                          299        179        531      1,009
    Gas production
     (million cubic feet - Mmcf)    29,322     21,536      3,009     53,867
    Total production (Mmcfe)        31,117     22,611      6,195     59,923

    Oil sales                     $ 29,690   $ 18,264    $40,003   $ 87,957
    Gas sales                      263,740    192,661     24,201    480,602
    Gas hedging losses                  --     (4,810)        --     (4,810)
        Total gas sales            263,740    187,851     24,201    475,792
          Total oil and gas sales $293,430   $206,115    $64,204   $563,749

    Average oil price (per barrel)  $99.23    $101.96     $75.34     $87.15
    Average gas price
     (per thousand cubic feet - Mcf) $8.99      $8.95      $8.04      $8.92
    Average gas price including
     hedging (per Mcf)               $8.99      $8.72      $8.04      $8.83
    Average price
     (per Mcf equivalent)            $9.43      $9.33     $10.36      $9.49
    Average price including hedging
     (per Mcf equivalent)            $9.43      $9.12     $10.36      $9.41
    Lifting cost(2)                $39,021    $27,678    $20,031    $86,730(2)
    Lifting cost
     (per Mcf equivalent)            $1.25      $1.22      $3.23      $1.45

    Oil and Gas Capital Expenditures:
        Acquisitions              $     --    $    --     $   --   $     --
        Leasehold costs            116,931      2,159        175    119,265
        Exploratory drilling        43,544     14,953      2,616     61,113
        Development drilling       170,612     57,955      2,037    230,604
        Other development            1,454      9,388      3,406     14,248
          Total                   $332,541    $84,455     $8,234   $425,230



                                       For the Year Ended December 31, 2007
                                  East Texas/
                                    North       South
                                  Louisiana     Texas      Other      Total
    Oil production (thousand
     barrels)                          162        214        632      1,008
    Gas production
    (million cubic feet - Mmcf)     24,407     11,790      3,034     39,231
    Total production (Mmcfe)        25,378     13,077      6,827     45,282

    Oil sales                     $ 11,052   $ 15,189    $35,233   $ 61,474
    Gas sales                      164,926     85,427     19,786    270,139
    Gas hedging losses                  --         --         --         --
        Total gas sales            164,926     85,427     19,786    270,139
          Total oil and gas sales $175,978   $100,616    $55,019   $331,613

    Average oil price (per barrel)  $68.22     $70.98     $55.75     $60.96
    Average gas price
     (per thousand cubic feet - Mcf) $6.76      $7.25      $6.52      $6.89
    Average gas price including
     hedging (per Mcf)               $6.76      $7.25      $6.52      $6.89
    Average price
     (per Mcf equivalent)            $6.93      $7.69      $8.06      $7.32
    Average price including hedging
     (per Mcf equivalent)            $6.93      $7.69      $8.06      $7.32
    Lifting cost(2)                $29,527    $16,832    $18,432    $64,791(2)
    Lifting cost
     (per Mcf equivalent)            $1.16      $1.29      $2.70      $1.43

    Oil and Gas Capital Expenditures:
        Acquisitions              $     --   $191,290    $    --   $191,290
        Leasehold costs              3,377      2,755      2,850      8,982
        Exploratory drilling            --     11,910      2,379     14,289
        Development drilling       215,593     61,738     25,024    302,355
        Other development            2,620      3,337      2,841      8,798
          Total                   $221,590   $271,030    $33,094   $525,714

    (1)  Includes production taxes of $1,755 and $3,319 for the three months
    ended December 31, 2008 and 2007, respectively.
    (2)  Includes production taxes of $20,648 and $13,830 for the year ended
     December 31, 2008 and 2007, respectively.

SOURCE Comstock Resources, Inc.