Comstock Resources Inc. (CRK) News

FRISCO, Texas, May 4 /PRNewswire-FirstCall/ -- Comstock Resources, Inc. ('Comstock' or the 'Company') (NYSE: CRK) today reported financial and operating results for the three months ended March 31, 2009. Reported results for the three months ended March 31, 2008 reflect the Company's offshore operations which were sold during 2008 as discontinued operations.

Financial Results for the Three Months Ended March 31, 2009

Comstock reported a net loss of $5.7 million or $0.12 per share for the first quarter of 2009 as compared to 2008's first quarter net income from continuing operations of $29.4 million or $0.64 per diluted share. The loss in the first quarter is attributable to the decline in oil and natural gas prices. Comstock averaged $4.75 per Mcf for sales of its natural gas production in the first quarter of 2009, 42% lower than the $8.22 per Mcf realized in 2008's first quarter. Realized oil prices in the first quarter of 2009 averaged $35.03 per barrel, 57% lower than the $81.49 per barrel in 2008's first quarter.

Comstock's production in the first quarter of 2009 increased 3% to 14.1 billion cubic feet equivalent of natural gas ('Bcfe') as compared to pro forma production of 13.7 Bcfe in the first quarter of 2008, which excludes production from properties sold during 2008. The first quarter average daily production rate of 157 million cubic feet of natural gas equivalent ('MMcfe') decreased 4% from the 2008 fourth quarter production rate of 164 MMcfe per day mainly due to operational problems at third party operated gas processing facilities as well as delays experienced by the Company in completing some of its horizontal Haynesville wells during the first quarter of 2009.

Weaker oil and natural gas prices caused first quarter 2009's oil and gas sales to decrease 46% to $68.4 million from 2008's first quarter sales of $127.7 million. Operating cash flow (before changes in working capital accounts) generated by Comstock's continuing operations in 2009's first quarter of $44.8 million decreased 51% from 2008's first quarter operating cash flow of $91.5 million. EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses from continuing operations, decreased 56% to $45.3 million in 2009's first quarter from 2008's first quarter EBITDAX from continuing operations of $103.2 million.

2009 Drilling Results

Comstock also provided the results to date of its 2009 drilling program. Comstock spent $97.3 million during the first three months of 2009 on its exploration and development activities. Comstock expects to spend a total of $360.0 million in 2009 on its drilling program. In the first quarter of 2009, Comstock drilled 14 wells (11.6 net), all of which were successful. Nine of the 14 wells drilled in the first quarter were horizontal wells.

Comstock reported on its Haynesville Shale program in East Texas and North Louisiana. The Company is very encouraged with recent results from its horizontal wells after changing its completion techniques. Comstock's first Haynesville Shale horizontal wells utilized a formation stimulation process that utilized cross-linked heavier gel frac fluids and 20/40 ceramic proppants. Based on results that other operators had achieved, Comstock modified the formation stimulation process to primarily non-cross linked lighter frac fluids (slick water) and smaller 40/70 resin coated sand or ceramic proppants. Initial production results from wells using the new completion method were notably superior to wells using the old method.

The two wells drilled in the first quarter completed with the old method were the Bogue A #6H well drilled in the Waskom field in Harrison County, Texas and the Hart #1H drilled in the Logansport field in DeSoto Parish, Louisiana. The Bogue A #6H was drilled to a vertical depth of 10,858 feet with a 2,600 foot horizontal lateral. The well was completed with seven frac stages and was tested at an initial production rate of 7.4 MMcfe per day. Comstock has a 100% working interest in this well. The Hart #1H was drilled to a vertical depth of 11,553 feet with a 3,770 foot horizontal lateral. The well was completed with ten frac stages and was tested at an initial production rate of 7.2 MMcfe per day. Comstock has an 88% working interest in this well. The Moneyham #1H in the Longwood field in Caddo Parish, Louisiana used the cross-linked heavier gel frac fluids but used smaller 40/70 proppant. The Moneyham #1H was drilled to a vertical depth of 10,572 feet with a 3,840 foot horizontal lateral. The Moneyham was completed with ten frac stages, however during clean-out operations coiled tubing was lost in the well lateral. The well subsequently tested at an initial production rate of 6.6 MMcfe per day. Comstock has a 100% working interest in this well.

Comstock has completed three wells using the new completion method. The Headrick #1H and the Holmes A #1H were drilled in the Logansport field in the DeSoto Parish, Louisiana. The Headrick #1H was drilled to a vertical depth of 11,525 feet with a 4,060 foot horizontal lateral. The well was completed with ten frac stages and was tested at an initial production rate of 15.1 MMcfe per day. Comstock has a 100% working interest in this well. The Holmes A #1H was drilled to a vertical depth of 11,442 feet with a 4,010 foot horizontal lateral. The Holmes was completed with ten frac stages and was tested at an initial production rate of 16.2 MMcfe per day. Comstock has a 78% working interest in this well. Comstock's most recently completed Haynesville well is in its Toledo Bend North field in DeSoto Parish, Louisiana. The BSMC 12 #1H was drilled to a vertical depth of 11,535 feet with a 4,135 foot horizontal lateral. This well was completed with ten frac stages and was tested with an initial production rate of 11.6 MMcfe per day. Comstock has an 88% working interest in this well.

Comstock has scheduled the completion of four Haynesville horizontal wells, the Green #13H in Harrison County, Texas and the Broome #1H, Caraway #3H and the Colvin-Craner #2H in DeSoto Parish, Louisiana. Comstock currently has five operated horizontal Haynesville Shale wells drilling and is participating in four non-operated horizontal Haynesville Shale wells.

In addition to the Haynesville Shale wells drilled in the East Texas/North Louisiana region in the first quarter, Comstock drilled three (2.2 net) successful horizontal wells targeting the Cotton Valley Taylor Sands. These wells were drilled in the Blocker and Waskom fields in Harrison County, Texas and were tested at an average per well initial production rate of 4.2 MMcfe per day. Comstock also drilled two (1.4 net) successful vertical wells in its Logansport field in DeSoto Parish, Louisiana which were tested at an average per well initial production rate of 1.6 MMcfe per day.

In its South Texas region, Comstock drilled three successful wells (2.5 net) in the first quarter which had an average per well initial production rate of 8.5 MMcfe per day. Comstock drilled the Muzza #13 in the Fandango field to a 16,300 foot vertical depth and completed this well with an initial production rate of 7.3 MMcfe per day. The Trevino #3 also in the Fandango field was drilled to a vertical depth of 14,720 feet. This well was successfully completed with an initial production rate of 8.4 MMcfe per day. Comstock has a 100% working interest in these wells. The Santa Fe Julian Pasture #1 well in the Ball Ranch field was drilled to a total vertical depth of 13,388 feet and completed with an initial production rate of 9.9 MMcfe per day. Comstock has a 45% working interest in this well.

Comstock also announced that its bank group led by Bank of Montreal has redetermined the Company's borrowing base under its bank revolving credit facility to $550.0 million. At the end of the first quarter, Comstock had $90.0 million outstanding under its bank revolving credit facility.

Comstock has planned a conference call for 9:30 a.m. Central Time on Tuesday, May 5, 2009 to discuss the operational and financial results for the first quarter of 2009. Investors wishing to participate should visit our website at www.comstockresources.com for a live web cast or dial 1-866-788-0540 and provide access code 48691066 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.

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
                                                           March 31,
                                                    2009               2008

    Revenues:
        Oil and gas sales                        $68,351           $127,721

    Operating expenses:
        Oil and gas operating                     16,959             21,202
        Exploration                                   13              2,238
        Depreciation, depletion and amortization  47,272             41,505
        General and administrative                 9,819              6,164
        Loss on sales of assets                        -                240

           Total operating expenses               74,063             71,349

    Operating income (loss) from continuing
     operations                                   (5,712)            56,372

    Other income (expenses):
        Interest income                               22                161
        Other income                                  63                 22
        Interest expense                          (2,162)            (9,951)

           Total other income (expenses)          (2,077)            (9,768)

    Income (loss) from continuing operations
     before income taxes                          (7,789)            46,604
        Benefit from (provision for) income taxes  2,132            (17,202)

    Income (loss) from continuing operations      (5,657)            29,402

    Income from discontinued operations after
     income taxes and minority interest                -             11,693
    Net income (loss)                            $(5,657)           $41,095

    Basic net income (loss) per share:
        Continuing operations                     $(0.12)             $0.65
        Discontinued operations                        -               0.26
                                                  $(0.12)             $0.91
    Diluted net income (loss) per share:
        Continuing operations                     $(0.12)(1)          $0.64
        Discontinued operations                        -               0.26
                                                  $(0.12)(1)          $0.90
    Weighted average shares outstanding:
        Basic                                     44,941             44,179
        Diluted                                   44,941(1)          44,567

    (1)  Basic and diluted are the same due to the net loss.

                              COMSTOCK RESOURCES, INC.
                                  OPERATING RESULTS
                                    (In thousands)


                                                     Three Months Ended
                                                         March 31,
                                                   2009             2008


    OPERATING CASH FLOW:
    Net income (loss) from
    continuing operations                         $(5,657)       $29,402
    Reconciling items:
          Deferred income taxes                      (721)        15,232
          Dry hole costs and lease impairments          -          2,238
          Depreciation, depletion and
           amortization                            47,272         41,505
          Loss on sale of assets                        -            240
          Debt issuance cost amortization             203            202
          Stock-based compensation                  3,667          2,678
           Operating cash flow                     44,764         91,497
             Excess tax benefit from
              stock-based compensation               (679)          (670)
             Decrease (increase) in accounts
              receivable                           10,185        (15,665)
             Decrease (increase) in other
              current assets                          235           (158)
             Decrease in accounts payable
              and accrued expenses                (14,043)       (20,647)
                 Net cash provided by operating
                  activities from continuing
                  operations                      $40,462        $54,357

    EBITDAX:
        Income (loss) from continuing
         operations                               $(5,657)       $29,402
        Loss on sale of assets                          -            240
        Interest expense                            2,162          9,951
        Income tax expense (benefit)               (2,132)        17,202
        Depreciation, depletion and
         amortization                              47,272         41,505
        Stock-based compensation                    3,667          2,678
        Exploration                                    13          2,238
                 EBITDAX from continuing
                  operations                      $45,325       $103,216


                                                      As of March 31,
                                                    2009           2008

    Balance Sheet Data:
      Cash and cash equivalents                      $963         $1,555
      Derivative financial instruments             18,369              -
      Other current assets                         60,691         73,046
      Marketable securities                        15,351              -
      Property and equipment, net               1,494,923      1,329,340
      Assets of discontinued operations                 -      1,011,934
      Other                                         2,950          3,741
         Total assets                          $1,593,247     $2,419,616

      Accounts payable and accrued expenses       $96,035        $63,780
      Derivative financial instruments                  -         17,658
      Long-term debt                              265,000        680,000
      Deferred income taxes                       184,484        105,064
      Asset retirement obligation                   5,678          7,827
      Liabilities and minority interest of
       discontinued operations                          -        738,226
      Stockholders' equity                      1,042,050        807,061
         Total liabilities and stockholders'
          equity                               $1,593,247     $2,419,616

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

                           For the Three Months Ended March 31, 2009
                                 East
                                Texas/
                                North     South
                              Louisiana   Texas        Other       Total
    Oil production
     (thousand
     barrels)                    63         51          102         216
    Gas production
     (million cubic
     feet - Mmcf)             7,179      4,911          703      12,793
    Total production
     (Mmcfe)                  7,555      5,218        1,315      14,088

    Oil sales                $2,275     $2,079       $3,207      $7,561
    Gas sales                31,318     20,964        2,596      54,878
    Gas hedging gains             -      5,912            -       5,912
      Total gas sales        31,318     26,876        2,596      60,790
        Total oil and gas
         sales              $33,593    $28,955       $5,803     $68,351

    Average oil price
     (per barrel)            $36.11     $40.76       $31.44      $35.03
    Average gas price
     (per thousand
     cubic feet -Mcf)         $4.36      $4.27        $3.69       $4.29
    Average gas price
     including
     hedging (per Mcf)        $4.36      $5.27        $3.69       $4.75
    Average price
     (per Mcf equivalent)     $4.45      $4.42        $4.41       $4.43
    Average price including
     hedging (per Mcf
     equivalent)              $4.45      $5.55        $4.41       $4.85
    Lifting cost(1)          $7,503     $5,502       $3,954     $16,959(1)
    Lifting cost (per
     Mcf equivalent)          $0.99      $1.05        $3.01       $1.20

    Oil and Gas Capital
     Expenditures:
      Leasehold costs        $3,401       $271          $-      $3,672
      Exploratory
       drilling              36,467      1,812           -      38,279
      Development
       drilling              31,657     18,952           -      50,609
      Other development       1,398      2,966         332       4,696
        Total               $72,923    $24,001        $332     $97,256

    (1) Includes production taxes of $1,122.

                For the Three Months Ended March 31, 2008
                             As Reported
                           East
                           Texas/
                           North      South
                         Louisiana    Texas         Other   Total
    Oil production
     (thousand
     barrels)                 47        46          150        243
    Gas production
     (million cubic        6,727     5,630          773     13,130
     feet - Mmcf)
    Total production
     (Mmcfe)               7,008     5,907        1,671     14,586

    Oil sales             $4,424    $4,520      $10,828    $19,772
    Gas sales             55,731    46,135        6,327    108,193
    Gas hedging losses         -      (244)          -        (244)
      Total gas sales     55,731    45,891        6,327    107,949
        Total oil and
         gas sales       $60,155   $50,411      $17,155   $127,721

    Average oil price
     (per barrel)         $94.13    $98.26       $72.19     $81.49
    Average gas price
     (per thousand
     cubic feet -Mcf)      $8.28     $8.19        $8.18      $8.24
    Average gas price
     including hedging
     (per Mcf)             $8.28     $8.15        $8.18      $8.22
    Average price (per
     Mcf equivalent)       $8.58     $8.58       $10.27      $8.77
    Average price
     including hedging
     (per Mcf equivalent)  $8.58     $8.53       $10.27      $8.76
    Lifting cost(2)       $8,769    $7,056       $5,377    $21,202(2)
    Lifting cost (per
     Mcf equivalent)       $1.25     $1.19        $3.22      $1.45
    Oil and Gas Capital
     Expenditures:
      Leasehold costs     $2,861    $1,124          $49     $4,034
      Exploratory
       drilling                -     2,356          123      2,479
      Development
       drilling           39,373    11,403        1,389     52,165
      Other
       Development           930       717        1,716      3,363
        Total            $43,164   $15,600       $3,277    $62,041

    (2)  Includes production taxes of $6,233.

                For the Three Months Ended March 31, 2008
                  Adjusted to Exclude 2008 Asset Sales
                           East
                           Texas/
                           North      South
                         Louisiana    Texas         Other        Total
    Oil production
     (thousand
     barrels)                 42        33           150          225
    Gas production
     (million cubic        6,281     5,330           773       12,384
     feet - Mmcf)
    Total production
     (Mmcfe)               6,535     5,527         1,671       13,733

    Oil sales             $3,981    $3,235       $10,828      $18,044
    Gas sales             52,657    43,799         6,327      102,783
    Gas hedging losses         -      (244)           -          (244)
      Total gas sales     52,657    43,555         6,327      102,539
        Total oil and
         gas sales(4)    $56,638   $46,790       $17,155     $120,583(4)

    Average oil price
     (per barrel)         $94.79    $98.03        $72.19       $80.17
    Average gas price
     (per thousand cubic
     feet -Mcf)            $8.38     $8.22         $8.18        $8.30
    Average gas price
     including hedging
     (per Mcf)             $8.38     $8.17         $8.18        $8.28
    Average price (per
     Mcf equivalent)       $8.67     $8.51        $10.27        $8.80
    Average price
     including hedging
     (per Mcf equivalent)  $8.67     $8.47        $10.27        $8.78
    Lifting  cost(3)(4)   $7,833    $6,125        $5,377      $19,335(3)(4)
    Lifting cost (per
     Mcf equivalent)       $1.20     $1.11         $3.22        $1.41

    Oil and Gas Capital
     Expenditures:
      Leasehold costs     $2,861    $1,124           $49       $4,034
      Exploratory
       drilling                -     2,356           123        2,479
      Development
       drilling           39,373    11,403         1,389       52,165
      Other
       development(4)        782       545         1,716        3,043(4)
        Total(4)         $43,016   $15,428        $3,277      $61,721(4)

    (3)  Includes production taxes of $5,936.
    (4)  Excludes oil and gas revenues of $7,138, operating expenses of
         $1,867 and other development capital expenditures of $320 related
         to oil and gas properties sold during 2008.

SOURCE Comstock Resources, Inc.