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COMSTOCK RESOURCES, INC. REPORTS SECOND QUARTER 2020 FINANCIAL AND OPERATING RESULTS

FRISCO,TX, Aug. 05, 2020 (GLOBE NEWSWIRE) -- Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter ended June 30, 2020.

Financial Results for the Three Months Ended June 30, 2020

For the second quarter of 2020, Comstock reported net loss available to common stockholders of $60.0 million or $0.29 per share. The loss was primarily related to an unrealized loss on the mark to market value of the Company's derivative financial instruments as future natural gas prices have improved substantially since March 31, 2020.  Net income available to common stockholders as adjusted to exclude the unrealized hedging losses and  certain items not related to normal operating activities for the second quarter of 2020 was $1.7 million or $0.01 per diluted share. The unrealized derivative loss was $65.6 million in the second quarter and the other items include $5.4 million in non-cash interest amortization resulting from adjusting debt assumed in the Covey Park acquisition to fair value; $2.9 million of non-cash accretion resulting from adjusting the preferred stock issued in connection with the Covey Park acquisition to fair value; and $0.9 million for a loss on early extinguishment of debt.

Comstock produced 116.5 billion cubic feet ("Bcf") of natural gas and 359,142 barrels of oil or 118.6 billion cubic feet of natural gas equivalent ("Bcfe") in the second quarter of 2020. Natural gas production averaged 1,280 million cubic feet ("MMcf") per day, an increase of 185% over natural gas production in the second quarter of 2019. The growth in natural gas production was primarily attributable to the Covey Park acquisition completed in July 2019 and the successful results from Comstock's Haynesville shale drilling activities in 2019 and 2020. Oil production in the second quarter of 2020 decreased to 3,947 barrels of oil per day from 7,628 barrels per day produced in the second quarter of 2019 due primarily to the expected production decline of the Bakken Shale properties acquired in 2018 as wells as oil production shut-in in the second quarter due to low oil prices. 23% of the Company's net oil production was shut in or curtailed during the second quarter.

Comstock's average realized natural gas price in the second quarter of 2020, including realized hedging gains, decreased to $1.88 per Mcf as compared to $2.29 per Mcf realized in the second quarter of 2019. The Company's average realized oil price in the second quarter of 2020, including realized hedging gains, decreased to $37.89 per barrel as compared to $52.12 per barrel in the second quarter of 2019. Oil and gas sales were $232.8 million (including realized hedging gains) in the second quarter of 2020 as compared to $130.1 million in the second quarter of 2019. EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses, of $162.1 million in the second quarter of 2020 increased by 74% over EBITDAX of $93.2 million for the second quarter of 2019. The Company's operating cash flow generated in the second quarter of 2020 of $117.5 million increased 77% over operating cash flow of $66.3 million in the second quarter of 2019.

Financial Results for the Six Months Ended June 30, 2020

For the first six months of 2020, Comstock reported net loss available to common stockholders of $30.0 million or $0.15 per share. Net income available to common stockholders as adjusted to exclude certain items not related to normal operating activities for the first six months of 2020 was $28.0 million or $0.14 per diluted share. These items included $49.1 million in unrealized hedging losses, $10.7 million in non-cash interest amortization resulting from adjusting debt assumed in the Covey Park acquisition to fair value; $5.4 million of non-cash accretion resulting from adjusting the preferred stock issued in connection with the Covey Park acquisition to fair value and $0.9 million for a loss on early extinguishment of debt.

Comstock produced 239.3 Bcf of natural gas and 813,637 barrels of oil or 244.1 Bcfe in the first six months of 2020. Natural gas production averaged 1,315 MMcf per day, an increase of 221% over natural gas production in the first six months of 2019. Oil production in the first six months of 2020 decreased to 4,471 barrels of oil per day from 8,313 barrels per day produced in first six months of 2019. 19% of the Company's net oil production was shut-in or curtailed in the first six months of 2020.

Comstock's average realized natural gas price in the first six months of 2020, including realized hedging gains, decreased to $1.96 per Mcf as compared to $2.55 per Mcf realized in the first six months of 2019. The Company's average realized oil price in the first six months of 2020, including realized hedging gains, decreased to $42.59 per barrel as compared to $48.71 per barrel in the first six months of 2019. Oil and gas sales were $504.1 million (including realized hedging gains) in the first six months of 2020 as compared to sales of $262.3 million in the first six months of 2019. EBITDAX of $363.7 million in the first six months of 2020 increased by 91% over EBITDAX of $190.2 million for the first six months of 2019. The Company's operating cash flow generated in the first six months of 2020 of $273.4 million increased 100% over operating cash flow of $137.0 million in the first six months of 2019.

Drilling Results

Total expenditures during the first six months of 2020 for drilling and development activities were $205.2 million, including $74.7 million spent in the second quarter. Comstock spent $201.3 million to develop its Haynesville and Bossier shale properties, comprised of $183.5 million on drilling and completing wells and an additional $17.8 million on other development activity. Comstock drilled 26 (20.1 net) horizontal operated Haynesville shale wells during the first six months of 2020, which had an average lateral length of approximately 8,996 feet. Comstock also participated in 12 (1.0 net) non-operated Haynesville shale wells in the first six months of 2020. During the first six months of 2020, Comstock turned 36 (17.3 net) Haynesville shale wells to sales.

Since its last operational update, Comstock has not put any new Haynesville Shale wells on production. In April, Comstock released its completion crews in order to delay new production coming on line during the summer months given the expectations for low natural gas prices. As a result of the low activity in the second quarter, Comstock currently has 35 (18.9 net) wells drilled but not completed.  Completion activity has been resumed in the third quarter and Comstock currently expects to turn approximately 25.0 net wells to sales in the last six months of 2020.


Other Matters

Comstock has planned a conference call for 10:00 a.m. Central Time on August 6, 2020, to discuss the second quarter of 2020 operational and financial results. Investors wishing to participate should visit the Company's website at www.comstockresources.com for a live webcast or dial 844-776-7840 (international dial-in use 661-378-9538) and provide access code 8184639 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 6, 2020 and will continue until 1:00 p.m. August 13, 2020. To hear the replay, call 855-859-2056 (404-537-3406) if calling from outside the US). The conference call access code is 8184639.

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)

  Three Months Ended June 30,  Six Months Ended June 30, 
  2020  2019  2020  2019 
Revenues:                
Natural gas sales $172,362  $91,951  $379,601  $182,083 
Oil sales  7,173   36,165   25,812   72,914 
Total oil and gas sales  179,535   128,116   405,413   254,997 
Operating expenses:                
Production taxes  6,445   5,827   12,012   11,766 
Gathering and transportation  26,590   10,502   55,001   17,932 
Lease operating  30,944   14,452   59,656   29,337 
Exploration        27    
Depreciation, depletion and amortization  103,347   46,847   213,772   84,437 
General and administrative  8,298   6,841   17,017   14,655 
Loss on sale of oil and gas properties     26      25 
Total operating expenses  175,624   84,495   357,485   158,152 
Operating income  3,911   43,621   47,928   96,845 
Other income (expenses):                
Gain (loss) from derivative financial instruments  (12,298)  14,744   49,601   7,087 
Other income (expense)  (9)  155   304   248 
Interest expense  (52,064)  (28,568)  (104,874)  (56,419)
Loss on early extinguishment of debt  (861)     (861)   
Transaction costs     (1,443)     (1,443)
Total other income (expenses)  (65,232)  (15,112)  (55,830)  (50,527)
Income (loss) before income taxes  (61,321)  28,509   (7,902)  46,318 
Benefit from (provision for) income taxes  11,445   (7,102)  54   (11,336)
Net income (loss)  (49,876)  21,407   (7,848)  34,982 
Preferred stock dividends and accretion  (10,126)     (22,198)   
Net income (loss) available to common stockholders $(60,002) $21,407  $(30,046) $34,982 
                 
Net income (loss) per share:                
Basic $(0.29) $0.20  $(0.15) $0.33 
Diluted $(0.29) $0.20  $(0.15) $0.33 
Weighted average shares outstanding:                
Basic  208,904   105,457   198,910   105,457 
Diluted  208,904   105,457   198,910   105,457 

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

  Three Months Ended June 30,  Six Months Ended June 30, 
  2020  2019  2020  2019 
Gas production (MMcf)  116,477   40,928   239,263   74,077 
Oil production (Mbbls)  360   695   814   1,505 
Total production (MMcfe)  118,631   45,093   244,144   83,105 
                 
Natural gas sales $172,362  $91,951  $379,601  $182,083 
Natural gas hedging settlements (1)  46,791   1,932   89,796   6,965 
Total natural gas including hedging  219,153   93,883   469,397   189,048 
Oil sales  7,173   36,165   25,812   72,914 
Oil hedging settlements (1)  6,434   15   8,844   370 
Total oil including hedging  13,607   36,180   34,656   73,284 
Total oil and gas sales including hedging $232,760  $130,063  $504,053  $262,332 
                 
Average gas price (per Mcf) $1.48  $2.25  $1.59  $2.46 
Average gas price including hedging (per Mcf) $1.88  $2.29  $1.96  $2.55 
Average oil price (per barrel) $19.97  $52.10  $31.72  $48.46 
Average oil price including hedging (per barrel) $37.89  $52.12  $42.59  $48.71 
Average price (per Mcfe) $1.51  $2.84  $1.66  $3.07 
Average price including hedging (per Mcfe) $1.96  $2.88  $2.06  $3.16 
                 
Production taxes $6,445  $5,827  $12,012  $11,766 
Gathering and transportation $26,590  $10,502  $55,001  $17,932 
Lease operating $30,944  $14,452  $59,656  $29,337 
                 
Production taxes (per Mcfe) $0.05  $0.13  $0.05  $0.14 
Gathering and transportation (per Mcfe) $0.22  $0.23  $0.23  $0.22 
Lease operating (per Mcfe) $0.27  $0.32  $0.24  $0.35 
                 
Oil and Gas Capital Expenditures:                
Development leasehold $2,455  $2,449  $6,336  $4,306 
Development drilling and completion  61,422   85,585   183,480   172,918 
Other development  10,857   1,437   15,418   4,716 
Total $74,734  $89,471  $205,234  $181,940 

                                                                 

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


COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands)

  Three Months Ended June 30,  Six Months Ended June 30, 
  2020  2019  2020  2019 
OPERATING CASH FLOW:      
Net income (loss) $(49,876) $21,407  $(7,848) $34,982 
Reconciling items:                
Deferred income taxes  (11,536)  7,078   (206)  11,430 
Depreciation, depletion and amortization  103,347   46,847   213,772   84,437 
Unrealized (gain) loss from derivative financial instruments  65,585   (12,797)  49,102   248 
Amortization of debt discount and issuance costs  7,527   1,623   14,726   3,197 
Stock-based compensation  1,552   623   2,982   1,271 
Loss on early extinguishment of debt  861      861    
Transaction costs     1,443      1,443 
Exploration        27    
Loss on sale of oil and gas properties     26      25 
Operating cash flow  117,460   66,250   273,416   137,033 
Transaction costs     (1,443)     (1,443)
Decrease in accounts receivable  28,875   9,951   83,172   20,734 
Decrease (increase) in other current assets  1,025   15   (2,803)  1,592 
Increase (decrease) in accounts payable and accrued expenses  (31,388)  23,538   (87,694)  15,110 
Net cash provided by operating activities $115,972  $98,311  $266,091  $173,026 
                 
EBITDAX:                
Net income (loss) $(49,876) $21,407  $(7,848) $34,982 
Interest expense  52,064   28,568   104,874   56,419 
Income taxes  (11,445)  7,102   (54)  11,336 
Depreciation, depletion, and amortization  103,347   46,847   213,772   84,437 
Unrealized (gain) loss from derivative financial instruments  65,585   (12,797)  49,102   248 
Exploration        27    
Stock-based compensation  1,552   623   2,982   1,271 
Loss on early extinguishment of debt  861      861    
Transaction costs     1,443      1,443 
Loss on sale of oil and gas properties     26      25 
Total EBITDAX $162,088  $93,219  $363,716  $190,161 
                 
  As of         
BALANCE SHEET: June 30, 2020  December 31, 2019         
Cash and cash equivalents $11,595  $18,532         
Derivative financial instruments  60,471   89,192         
Other current assets  120,589   195,849         
Property and equipment, net  4,000,643   4,008,803         
Other  340,120   344,746         
Total assets $4,533,418  $4,657,122         
                 
Current liabilities $290,966  $392,376         
Derivative financial instruments  13,058   4,220         
Long-term debt  2,501,803   2,500,132         
Deferred income taxes  211,566   211,772         
Asset retirement obligation  18,994   18,151         
Other non-current liabilities  4,530   7,866         
Preferred stock  175,000   379,583         
Stockholders' equity  1,317,501   1,143,022         
Total liabilities and stockholders' equity $4,533,418  $4,657,122         

      

Ron Mills
VP of Finance & Investor Relations
rmills@comstockresources.com
972-668-8834

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