FRISCO, TX, Feb. 14, 2023 (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, 2022.
Highlights
Generated free cash flow from operations of $673 million in 2022, including $129 million in the fourth quarter.
Production in the fourth quarter increased 7% from last year to 1,445 MMcfe per day.
Oil and gas sales, including realized hedging losses, were $2.3 billion in 2022 and $558 million in the fourth quarter and were 58% and 47% higher than 2021 and 2021’s fourth quarter.
Cash flow from operations in 2022 was $1.7 billion or $6.21 per diluted share, including $434 million in the fourth quarter or $1.57 per diluted share.
Adjusted EBITDAX in 2022 increased 72% to $1.9 billion and in the fourth quarter increased 61% to $478 million.
Adjusted net income to common stockholders in 2022 was $1.0 billion or $3.73 per diluted share and $288 million or $1.05 per diluted share in the fourth quarter.
Drilled 73 (57.0 net) successful Haynesville and Bossier shale operated horizontal wells in 2022 with an average lateral length of 10,044 feet and connected 66 (53.6 net) operated wells to sales with an average initial production rate of 26 MMcf per day.
Drilled two successful wells in Comstock’s Western Haynesville exploratory play.
2022 drilling program drove 9% reserve growth with 1.1 Tcfe of drilling related reserve additions achieving an overall finding cost of 95¢ per Mcfe.
Improved balance sheet with retirement of $506 million of debt and conversion of preferred stock.
Resumed quarterly dividend of $0.125 per share in December 2022.
Financial Results for the Three Months Ended December 31, 2022
Comstock’s natural gas and oil sales in the fourth quarter of 2022 totaled $557.9 million (after realized hedging losses of $183.7 million). Net cash provided by operating activities (excluding changes in working capital) generated in the fourth quarter was $434.5 million, and net income available to common stockholders for the fourth quarter of 2022 was $516.9 million or $1.87 per share. Reported net income in the quarter included a pre-tax $302.8 million unrealized gain on hedging contracts held for risk management. Excluding this item and certain other items, adjusted net income available to common stockholders for the fourth quarter of 2022 was $287.7 million, or $1.05 per diluted share.
Comstock’s production cost per Mcfe in the fourth quarter was $0.76 per Mcfe, which was comprised of $0.32 for gathering and transportation costs, $0.24 for lease operating costs, $0.12 for production and other taxes and $0.08 for cash general and administrative expenses. Production cost was $0.82 per Mcfe in the third quarter of 2022 and $0.67 in the fourth quarter of 2021. Comstock’s unhedged operating margin was 86% in the fourth quarter of 2022 and 82% after hedging.
Financial Results for the Year Ended December 31, 2022
Natural gas and oil sales for the year ended December 31, 2022 totaled $2.3 billion (after realized hedging losses of $862.7 million). Net cash provided by operating activities (excluding changes in working capital) was $1.7 billion, and the Company reported net income available to common stockholders for the year ended December 31, 2022 of $1.1 billion, or $4.11 per share. Net income during the year included a pre-tax $200.2 million unrealized gain on hedging contracts held for risk management and a $46.8 million loss on the early retirement of debt. Excluding these items and certain other items, adjusted net income available to common stockholders for 2022 was $1.0 billion, or $3.73 per diluted share.
Drilling Results
Comstock drilled 73 (57.0 net) operated horizontal Haynesville/Bossier shale wells in 2022 which had an average lateral length of 10,044 feet. The Company also participated in an additional 42 (3.4 net) non-operated Haynesville shale wells in 2022. Comstock turned 66 (53.6 net) operated wells and 38 (1.8 net) non-operated wells to sales in 2022 and currently expects to turn an additional 17 (10.5 net) operated wells to sales in the first quarter of 2023.
Since its last operational update in November, Comstock has turned 19 (13.1 net) operated Haynesville/Bossier shale wells to sales. These wells had initial daily production rates that averaged 25 MMcf per day. The completed lateral length of these wells averaged 10,186 feet. Included in these results was the second successful exploratory well drilled in the Western Haynesville area, the Cazey Black A #1, which had an initial production rate of 42 MMcf per day.
2023 Drilling Budget
In response to the current lower natural gas prices, Comstock is releasing two of its nine operated drilling rigs and currently plans to spend approximately $950 million to $1.15 billion in 2023 on drilling and completion activities primarily focused on the continued development of its Haynesville/Bossier shale properties and delineation of its Western Haynesville play. Comstock also expects to spend $75 million to $125 million on infrastructure, including upgrades to its Western Haynesville pipeline and processing facilities, and for other development costs. Under its current operating plan, Comstock expects to drill 67 (50.5 net) and complete 69 (49.2 net) operated horizontal wells in 2023, including eight (8.0 net) wells in the Western Haynesville area. Comstock also expects to spend an additional $25 million to $35 million on lease acquisitions in 2023.
Declaration of Quarterly Dividend
On February 13, 2023, Comstock’s Board of Directors declared a quarterly dividend of $0.125 per common share. The dividend will be payable on March 15, 2023 to stockholders of record at the close of business on March 1, 2023.
Other Matters
Comstock has planned a conference call for 10:00 a.m. Central Time on February 15, 2023, to discuss the fourth quarter of 2022 operational and financial results. Investors wishing to participate should visit the Company’s website at www.comstockresources.com for a live webcast. Investors wishing to participate in the conference call telephonically will need to register at https://register.vevent.com/register/BId7bb63a06a2246038d691f84bbfe8331. Upon registering to participate in the conference call, participants will receive the dial-in number and a personal PIN number to access the conference call. On the day of the call, please dial in at least 15 minutes in advance to ensure a timely connection to the call. The conference call will also be broadcast live in listen-only mode and can be accessed via the website URL: https://edge.media-server.com/mmc/p/trvtnedj.
If you are unable to participate in the original conference call, a web replay will be available for twelve months beginning at 1:00 p.m. Central Time on February 15, 2023. The replay of the conference call can be accessed using the webcast link: https://edge.media-server.com/mmc/p/trvtnedj.
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. Information concerning the assumptions, uncertainties and risks that may affect the actual results can be found in the Company’s filings with the Securities and Exchange Commission (“SEC”) available on the Company’s website or the SEC’s website at sec.gov.
Comstock Resources, Inc. is a leading independent natural gas producer with operations focused on the development of the Haynesville shale in North Louisiana and East Texas. The Company’s stock is traded on the New York Stock Exchange under the symbol CRK.
COMSTOCK RESOURCES, INC.CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share amounts)
Three Months Ended December 31,
Year EndedDecember 31,
2022
2021
2022
2021
Revenues:
Natural gas sales
$
740,320
$
641,985
$
3,117,094
$
1,775,768
Oil sales
1,273
13,391
7,597
74,962
Total oil and gas sales
741,593
655,376
3,124,691
1,850,730
Gas services
180,791
—
503,366
—
Total revenues
922,384
655,376
3,628,057
1,850,730
Operating expenses:
Production and ad valorem taxes
17,837
12,673
77,917
49,141
Gathering and transportation
41,882
34,344
155,679
130,940
Lease operating
31,261
26,317
111,134
103,467
Depreciation, depletion and amortization
134,456
110,075
489,450
469,388
Gas services
159,773
—
465,044
—
General and administrative
11,954
10,991
39,405
34,943
Exploration
4,924
—
8,287
—
(Gain) loss on sale of assets
(319
)
162,170
(340
)
162,077
Total operating expenses
401,768
356,570
1,346,576
949,956
Operating income
520,616
298,806
2,281,481
900,774
Other income (expenses):
Gain (loss) from derivative financial instruments
119,132
195,378
(662,522
)
(560,648
)
Other income (expense)
410
(372
)
916
636
Interest expense
(38,888
)
(47,840
)
(171,092
)
(218,485
)
Loss on early retirement of debt
—
—
(46,840
)
(352,599
)
Total other income (expenses)
80,654
147,166
(879,538
)
(1,131,096
)
Income (loss) before income taxes
601,270
445,972
1,401,943
(230,322
)
Provision for income taxes
(81,451
)
(85,571
)
(261,061
)
(11,403
)
Net income (loss)
519,819
360,401
1,140,882
(241,725
)
Preferred stock dividends and accretion
(2,925
)
(4,411
)
(16,014
)
(17,500
)
Net income (loss) available to common stockholders
$
516,894
$
355,990
$
1,124,868
$
(259,225
)
Net income (loss) per share:
Basic
$
2.08
$
1.53
$
4.75
$
(1.12
)
Diluted
$
1.87
$
1.30
$
4.11
$
(1.12
)
Weighted average shares outstanding:
Basic
247,543
231,972
236,045
231,633
Diluted
277,032
276,713
277,465
231,633
Dividends per share
$
0.125
$
—
$
0.125
$
—
COMSTOCK RESOURCES, INC.CONSOLIDATED BALANCE SHEETS(In thousands)
As of December 31,
2022
2021
ASSETS
Cash and cash equivalents
$
54,652
$
30,663
Accounts receivable
510,127
267,738
Derivative financial instruments
23,884
5,258
Other current assets
56,324
15,077
Total current assets
644,987
318,736
Property and equipment, net
4,622,655
4,007,146
Goodwill
335,897
335,897
Operating lease right-of-use assets
90,716
6,450
$
5,694,255
$
4,668,229
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable
$
530,195
$
314,569
Accrued costs
183,111
135,026
Operating leases
38,411
2,444
Derivative financial instruments
4,420
181,945
Total current liabilities
756,137
633,984
Long-term debt
2,152,571
2,615,235
Deferred income taxes
425,734
197,417
Derivative financial instruments
—
4,042
Long-term operating leases
52,385
4,075
Asset retirement obligation
29,114
25,673
Other non-current liabilities
—
24
Total liabilities
3,415,941
3,480,450
Mezzanine Equity:
Preferred stock
—
175,000
Stockholders’ Equity:
Common stock
138,759
116,462
Additional paid-in capital
1,253,417
1,100,359
Accumulated earnings (deficit)
886,138
(204,042
)
Total stockholders’ equity
2,278,314
1,012,779
$
5,694,255
$
4,668,229
COMSTOCK RESOURCES, INC.OPERATING RESULTS(In thousands, except per unit amounts)
Three Months Ended December 31,
Year EndedDecember 31,
2022
2021
2022
2021
Gas production (MMcf)
132,858
123,002
500,616
489,274
Oil production (Mbbls)
16
176
82
1,210
Total production (MMcfe)
132,955
124,060
501,107
496,534
Natural gas sales
$
740,320
$
641,985
$
3,117,094
$
1,775,768
Natural gas hedging settlements (1)
(183,677
)
(272,891
)
(862,715
)
(411,798
)
Total natural gas including hedging
556,643
369,094
2,254,379
1,363,970
Oil sales
1,273
13,391
7,597
74,962
Oil hedging settlements (1)
—
(2,588
)
—
(8,077
)
Total oil including hedging
1,273
10,803
7,597
66,885
Total oil and gas sales including hedging
$
557,916
$
379,897
$
2,261,976
$
1,430,855
Average gas price (per Mcf)
$
5.57
$
5.22
$
6.23
$
3.63
Average gas price including hedging (per Mcf)
$
4.19
$
3.00
$
4.50
$
2.79
Average oil price (per barrel)
$
79.56
$
76.09
$
92.65
$
61.95
Average oil price including hedging (per barrel)
$
79.56
$
61.38
$
92.65
$
55.28
Average price (per Mcfe)
$
5.58
$
5.28
$
6.24
$
3.73
Average price including hedging (per Mcfe)
$
4.20
$
3.06
$
4.51
$
2.88
Production and ad valorem taxes
$
17,837
$
12,673
$
77,917
$
49,141
Gathering and transportation
41,882
34,344
155,679
130,940
Lease operating
31,261
26,317
111,134
103,467
Cash general and administrative (2)
10,262
9,484
32,795
28,145
Total production costs
$
101,242
$
82,818
$
377,525
$
311,693
Production and ad valorem taxes (per Mcfe)
$
0.12
$
0.10
$
0.16
$
0.10
Gathering and transportation (per Mcfe)
0.32
0.28
0.31
0.26
Lease operating (per Mcfe)
0.24
0.21
0.22
0.21
Cash general and administrative (per Mcfe)
0.08
0.08
0.07
0.06
Total production costs (per Mcfe)
$
0.76
$
0.67
$
0.76
$
0.63
Unhedged operating margin
86
%
87
%
88
%
83
%
Hedged operating margin
82
%
78
%
83
%
78
%
Oil and Gas Capital Expenditures:
Proved property acquisitions
$
295
$
21,781
$
500
$
21,781
Unproved property acquisitions
16,724
17,222
54,120
35,871
Total oil and gas properties acquisitions
$
17,019
$
39,003
$
54,620
$
57,652
Exploration and Development:
Development leasehold
$
5,429
$
6,159
$
13,727
$
12,953
Exploratory drilling and completion
14,517
6,966
63,520
6,966
Development drilling and completion
281,653
114,617
901,026
569,141
Other development costs
1,193
12,373
53,693
39,168
Total exploration and development capital expenditures
$
302,792
$
140,115
$
1,031,966
$
628,228
(1) Included in gain (loss) from derivative financial instruments in operating results.
(2) Excludes stock-based compensation.
COMSTOCK RESOURCES, INC.NON-GAAP FINANCIAL MEASURES(In thousands, except per share amounts)
Three Months Ended December 31,
Year EndedDecember 31,
2022
2021
2022
2021
ADJUSTED NET INCOME AVAILABLE TO COMMON STOCKHOLDERS:
Net income (loss) available to common stockholders
$
516,894
$
355,990
$
1,124,868
$
(259,225
)
Unrealized (gain) loss from derivative financial instruments
(302,809
)
(469,830
)
(200,193
)
140,934
Non-cash interest amortization from adjusting debt assumed inacquisition to fair value
—
2,659
4,174
12,621
(Gain) loss on sale of assets
(319
)
162,170
(340
)
162,077
Loss on early retirement of debt
—
—
46,840
352,599
Exploration expense
4,924
—
8,287
—
Adjustment to (provision for) benefit from income taxes
68,970
47,777
39,011
(106,000
)
Adjusted net income available to common stockholders (1)
$
287,660
$
98,766
$
1,022,647
$
303,006
Adjusted net income available to common stockholders per share (2)
$
1.05
$
0.37
$
3.73
$
1.16
Diluted shares outstanding
277,032
276,713
277,464
275,663
ADJUSTED EBITDAX:
Net income (loss)
$
519,819
$
360,401
$
1,140,882
$
(241,725
)
Interest expense (3)
38,888
46,811
171,092
218,322
Income taxes
81,451
85,571
261,061
11,403
Depreciation, depletion, and amortization
134,456
110,075
489,450
469,388
Exploration
4,924
—
8,287
—
Unrealized (gain) loss from derivative financial instruments
(302,809
)
(469,830
)
(200,193
)
140,934
Stock-based compensation
1,692
1,508
6,610
6,799
Loss on early extinguishment of debt
—
—
46,840
352,599
(Gain) loss on sale of assets
(319
)
162,170
(340
)
162,077
Total Adjusted EBITDAX (4)
$
478,102
$
296,706
$
1,923,689
$
1,119,797
(1) Adjusted net income available to common stockholders is presented because of its acceptance by investors and by Comstock management as an indicator of the Company’s profitability excluding loss on early retirement of debt, non-cash unrealized gains and losses on derivative financial instruments, gains and losses on sales of assets and other unusual items.
(2) Adjusted net income available to common stockholders per share is calculated to include the dilutive effects of unvested restricted stock pursuant to the two-class method and performance stock units and preferred stock pursuant to the treasury stock method.
(3) Includes realized gains or losses from interest rate derivative financial instruments.
(4) Adjusted EBITDAX is presented in the earnings release because management believes that adjusted EBITDAX, which represents Comstock’s results from operations before interest, income taxes, and certain non-cash items, including loss on early retirement of debt, depreciation, depletion and amortization and exploration expense, is a common alternative measure of operating performance used by certain investors and financial analysts.
COMSTOCK RESOURCES, INC.NON-GAAP FINANCIAL MEASURES(In thousands)
Three Months Ended December 31,
Year EndedDecember 31,
2022
2021
2022
2021
OPERATING CASH FLOW(1):
Net income (loss)
$
519,819
$
360,401
$
1,140,882
$
(241,725
)
Reconciling items:
Unrealized (gain) loss from derivative financial instruments
(302,809
)
(469,830
)
(200,193
)
140,934
Deferred income taxes (benefit)
79,928
81,377
228,317
(3,565
)
Depreciation, depletion and amortization
134,456
110,075
489,450
469,388
Loss on early retirement of debt
—
—
46,840
352,599
Amortization of debt discount and issuance costs
1,713
4,116
10,255
21,703
Stock-based compensation
1,692
1,508
6,610
6,799
(Gain) loss on sale of assets
(319
)
162,170
(340
)
162,077
Operating cash flow
$
434,480
$
249,817
$
1,721,821
$
908,210
(Increase) decrease in accounts receivable
117,211
(24,573
)
(242,389
)
(121,952
)
Increase in other current assets
(10,655
)
(2,883
)
(10,296
)
(2,033
)
Increase (decrease) in accounts payable and accrued expenses
(72,704
)
18,091
229,252
74,780
Net cash provided by operating activities
$
468,332
$
240,452
$
1,698,388
$
859,005
Three Months Ended December 31,
Year EndedDecember 31,
2022
2021
2022
2021
FREE CASH FLOW(2):
Operating cash flow
$
434,480
$
249,817
$
1,721,821
$
908,210
Less:
Preferred stock dividends
(2,925
)
(4,411
)
(16,014
)
(17,500
)
Exploration and development capital expenditures
(302,792
)
(140,115
)
(1,031,966
)
(628,228
)
Other capital expenditures
(147
)
(123
)
(803
)
(192
)
Free cash flow from operations
$
128,616
$
105,168
$
673,038
$
262,290
Acquisitions of proved and unproved properties
(17,019
)
(39,003
)
(54,620
)
(57,652
)
Other assets acquisitions
(1,025
)
—
(17,973
)
—
Proceeds from divestitures
4,093
138,133
4,186
138,394
Free cash flow after acquisition and divestiture activity
$
114,665
$
204,298
$
604,631
$
343,032
(1) Operating cash flow is presented in the earnings release because management believes it to be useful to investors as a common alternative measure of cash flows which excludes changes to other working capital accounts.
(2) Free cash flow from operations and free cash flow after acquisition and divestiture activity are presented in the earnings release because management believes them to be useful indicators of the Company’s ability to internally fund acquisitions, debt maturities and dividends after exploration and development capital expenditures, preferred dividend payments, proved and unproved property acquisitions and proceeds from divestiture of oil and gas properties.
Ron Mills
VP of Finance and Investor Relations
Comstock Resources
972-668-8834
[email protected]
Source: Comstock Resources, Inc.
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