Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter and year ended December 31, 2021.

Highlights of 2021's Fourth Quarter

  • Generated free cash flow from operations of $105 million in the quarter and $262 million for the year.
  • Generated free cash flow including acquisition and divestiture activity of $204 million in the quarter and $343 million for the year.
  • Paid down $190 million of debt in the quarter.
  • Adjusted EBITDAX increased 41% to $297 million.
  • Operating cash flow (excluding working capital changes) increased 62% to $250 million or $0.90 per diluted share.
  • Fourth quarter capital spending was $140 million for drilling and completion activities and $39 million for acquisition activities.
  • Production increased 12% to 1,348 MMcfe per day (99% natural gas).
  • Revenues, after realized hedging losses, were $380 million, 37% higher than 2020's fourth quarter.
  • Adjusted net income to common stockholders was $99 million for the quarter or $0.37 per diluted share.

Financial Results for the Three Months Ended December 31, 2021

Revenues in the fourth quarter of 2021 totaled $379.9 million (inclusive of realized hedging losses of $275.5 million). Net cash provided by operating activities (excluding changes in working capital) generated in the fourth quarter was $249.8 million, and net income available to common stockholders for the fourth quarter of 2021 was $356.0 million ($1.30 per diluted share). Net income in the quarter included a pre-tax $469.8 million unrealized gain on hedging contracts held for risk management and a $162.2 million loss on the sale of the Company's Bakken assets. Excluding these items and certain other unusual items, adjusted net income available to common stockholders for the fourth quarter of 2021 was $98.8 million, or $0.37 per diluted share.

Comstock's production cost per Mcfe in the fourth quarter was $0.67 per Mcfe, which was comprised of $0.28 for gathering and transportation costs, $0.21 for lease operating costs, $0.10 for production and other taxes and $0.08 for cash general and administrative expenses. Production cost was $0.65 per Mcfe in the third quarter of 2021 and $0.60 in the fourth quarter of 2020. Comstock's unhedged operating margin was 87% in the fourth quarter of 2021 and 78% after hedging.

Financial Results for the Year Ended December 31, 2021

Revenues for the year ended December 31, 2021 totaled $1.4 billion (inclusive of realized hedging losses of $419.9 million). Net cash provided by operating activities (excluding changes in working capital) was $908.2 million, and the Company reported a net loss available to common stockholders for the year ended December 31, 2021 of $259.2 million ($1.12 per share). The net loss during the year included a pre-tax $140.9 million unrealized loss on the change in fair market value of the Company's hedging contracts, a $352.6 million loss on the early retirement of the Company's 9.75% and 7.50% senior notes and a $162.2 million loss on the sale of the Company's Bakken assets. Excluding these items and certain other unusual items, adjusted net income available to common stockholders for 2021 was $303.0 million, or $1.16 per diluted share.

Fourth Quarter Drilling Results

Comstock drilled nine (7.0 net) operated horizontal Haynesville/Bossier shale wells in the fourth quarter of 2021 which had an average lateral length of 11,163 feet. The Company also participated in an additional nine (0.5 net) non-operated Haynesville shale wells in the fourth quarter of 2021. Comstock turned 27 (8.6 net) wells to sales in the fourth quarter of 2021 and currently expects to turn an additional 13 (8.1 net) wells to sales in the first quarter of 2022.

Since its last operational update in November 2021, Comstock has turned 16 (12.2 net) new operated Haynesville/Bossier shale wells to sales. These wells had initial daily production rates that averaged 23 MMcf per day. The completed lateral length of these wells averaged 10,508 feet.

Included in the wells completed in the fourth quarter were the Company's first 15,000 foot lateral Haynesville shale wells. The Talley 32-29-20 #1 and Talley 32-29-20 #2 were drilled to a total measured depth of 26,848 feet and 27,357 feet, respectively, with completed lateral lengths of 14,685 feet and 15,155 feet, respectively. These wells had initial production rates of 41 and 48 MMcf per day.

2022 Drilling Budget

The Company currently plans to spend approximately $750 million to $800 million in 2022 on drilling and completion activities primarily focused on the continued development of its Haynesville/Bossier shale properties, which includes $60 million to $65 million on infrastructure, workovers and other development costs. Under its current operating plan, Comstock expects to drill 67 (52.1 net) and complete 69 (56.0 net) operated horizontal wells utilizing five to seven rigs during 2022. Comstock also expects to spend an additional $8 million to $12 million on leasing activities in 2022.

The program will be funded entirely through operating cash flow and the Company is expected to generate substantial free cash flow in 2022 which it will use to retire debt and initiate a return of capital program once the Company reaches its leverage target.

Other Matters

Comstock has planned a conference call for 10:00 a.m. Central Time on February 16, 2022, to discuss the fourth quarter of 2021 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 7758087 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 on February 16, 2022 and will continue until 1:00 p.m. CT on February 23, 2022. To hear the replay, call 855-859-2056 (404-537-3406 if calling from outside the US). The conference call access code is 7758087.

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,
    2021       2020       2021       2020  
Revenues:              
Natural gas sales $         641,985             $         261,424             $         1,775,768             $         809,399          
Oil sales           13,391                       13,347                       74,962                       48,796          
Total oil and gas sales           655,376                       274,771                       1,850,730                       858,195          
Operating expenses:              
Production and ad valorem taxes           12,673                       9,199                       49,141                       36,967          
Gathering and transportation           34,344                       29,159                       130,940                       106,582          
Lease operating           26,317                       23,342                       103,467                       102,452          
Depreciation, depletion and amortization           110,075                       104,284                       469,388                       417,112          
General and administrative           10,991                       6,049                       34,943                       32,040          
Exploration           —                       —                       —                       27          
Loss (gain) on sale of assets           162,170                       (1 )             162,077                       (17 )
Total operating expenses           356,570                       172,032                       949,956                       695,163          
Operating income           298,806                       102,739                       900,774                       163,032          
Other income (expenses):              
Gain (loss) from derivative financial instruments           195,378                       81,929                       (560,648 )             9,951          
Other income (expense)           (372 )             287                       636                       1,080          
Interest expense           (47,840 )             (66,065 )             (218,485 )             (234,829 )
Loss on early retirement of debt           —                       —                       (352,599 )             (861 )
Total other income (expenses)           147,166                       16,151                       (1,131,096 )             (224,659 )
Income (loss) before income taxes           445,972                       118,890                       (230,322 )             (61,627 )
Benefit from (provision for) income taxes           (85,571 )             (36,967 )             (11,403 )             9,210          
Net income (loss)           360,401                       81,923                       (241,725 )             (52,417 )
Preferred stock dividends and accretion           (4,411 )             (4,400 )             (17,500 )             (30,996 )
Net income (loss) available to common stockholders $         355,990             $         77,523             $         (259,225 )   $         (83,413 )
               
Net income (loss) per share:              
Basic $         1.53             $         0.34             $         (1.12 )   $         (0.39 )
Diluted $         1.30             $         0.30             $         (1.12 )   $         (0.39 )
Weighted average shares outstanding:              
Basic           231,972                       231,377                       231,633                       215,194          
Diluted           276,713                       275,127                       231,633                       215,194          
               

COMSTOCK RESOURCES, INC.CONSOLIDATED BALANCE SHEETS(In thousands)

  As of December 31,
    2021       2020
ASSETS      
Cash and cash equivalents $         30,663             $         30,272        
Accounts receivable           267,738                       145,786        
Derivative financial instruments           5,258                       8,913        
Other current assets           15,077                       14,839        
Total current assets           318,736                       199,810        
Property and equipment, net           4,007,146                       4,084,550        
Goodwill           335,897                       335,897        
Derivative financial instruments           —                       661        
Operating lease right-of-use assets           6,450                       3,025        
Other assets           —                       40        
  $         4,668,229             $         4,623,983        
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Accounts payable $         314,569             $         259,284        
Accrued costs           135,026                       133,019        
Operating leases           2,444                       2,284        
Derivative financial instruments           181,945                       47,005        
Total current liabilities           633,984                       441,592        
Long-term debt           2,615,235                       2,517,149        
Deferred income taxes           197,417                       200,583        
Derivative financial instruments           4,042                       2,364        
Long-term operating leases           4,075                       740        
Asset retirement obligation           25,673                       19,290        
Other non-current liabilities           24                       492        
Total liabilities           3,480,450                       3,182,210        
Mezzanine Equity:      
Preferred stock           175,000                       175,000        
Stockholders' Equity:      
Common stock           116,462                       116,206        
Additional paid-in capital           1,100,359                       1,095,384        
Accumulated earnings (deficit)           (204,042 )             55,183        
Total stockholders' equity           1,012,779                       1,266,773        
  $         4,668,229             $         4,623,983        

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

  Three Months Ended December 31,   Year EndedDecember 31,
    2021       2020       2021       2020  
Gas production (MMcf)           123,002                       109,013                       489,274                       450,836          
Oil production (Mbbls)           176                       340                       1,210                       1,508          
Total production (MMcfe)           124,060                       111,052                       496,534                       459,883          
               
Natural gas sales $         641,985             $         261,424             $         1,775,768             $         809,399          
Natural gas hedging settlements (1)           (272,891         )             240                       (411,798         )             122,036          
Total natural gas including hedging           369,094                       261,664                       1,363,970                       931,435          
Oil sales           13,391                       13,347                       74,962                       48,796          
Oil hedging settlements (1)           (2,588         )             1,767                       (8,077         )             12,849          
Total oil including hedging           10,803                       15,114                       66,885                       61,645          
Total oil and gas sales including hedging $         379,897             $         276,778             $         1,430,855             $         993,080          
               
Average gas price (per Mcf) $         5.22             $         2.40             $         3.63             $         1.80          
Average gas price including hedging (per Mcf) $         3.00             $         2.40             $         2.79             $         2.07          
Average oil price (per barrel) $         76.09             $         39.27             $         61.95             $         32.36          
Average oil price including hedging (per barrel) $         61.38             $         44.47             $         55.28             $         40.88          
Average price (per Mcfe) $         5.28             $         2.47             $         3.73             $         1.87          
Average price including hedging (per Mcfe) $         3.06             $         2.49             $         2.88             $         2.16          
               
Production and ad valorem taxes $         12,673             $         9,199             $         49,141             $         36,967          
Gathering and transportation           34,344                       29,159                       130,940                       106,582          
Lease operating           26,317                       23,342                       103,467                       102,452          
Cash general and administrative (2)           9,484                       4,319                       28,145                       25,576          
Total production costs $         82,818             $         66,019             $         311,693             $         271,577          
               
Production and ad valorem taxes (per Mcfe) $         0.10             $         0.09             $         0.10             $         0.08          
Gathering and transportation (per Mcfe)           0.28                       0.26                       0.26                       0.23          
Lease operating (per Mcfe)           0.21                       0.21                       0.21                       0.22          
Cash general and administrative (per Mcfe)           0.08                       0.04                       0.06                       0.06          
Total production costs (per Mcfe) $         0.67             $         0.60             $         0.63             $         0.59          
               
Unhedged operating margin           87         %             76         %             83         %             68         %
Hedged operating margin           78         %             76         %             78         %             73         %
               
Oil and Gas Capital Expenditures:              
Proved property acquisitions $         21,781             $         —             $         21,781             $         —          
Unproved property acquisitions           17,222                       6,492                       35,871                       7,949          
Total oil and gas properties acquisitions $         39,003             $         6,492             $         57,652             $         7,949          
Exploration and Development:              
Development leasehold $         6,159             $         5,659             $         12,953             $         13,022          
Exploratory drilling and completion           6,966                       —                       6,966                       —          
Development drilling and completion           114,617                       155,691                       569,141                       436,074          
Other development costs           12,373                       8,480                       39,168                       34,572          
Total exploration and development capital expenditures $         140,115             $         169,830             $         628,228             $         483,668          
 

(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,  
    2021       2020       2021       2020    
ADJUSTED NET INCOME AVAILABLE TO COMMON STOCKHOLDERS:                
Net income (loss) available to common stockholders $         355,990             $         77,523             $         (259,225 )   $         (83,413 )  
Unrealized (gain) loss from derivative financial instruments           (469,830 )             (80,158 )             140,934                       124,545            
Non-cash interest amortization from adjusting debt assumed in acquisition to fair value           2,659                       5,811                       12,621                       22,112            
(Gain) loss on sale of assets           162,170                       (1 )             162,077                       (17 )  
Loss on early retirement of debt           —                       —                       352,599                       861            
Non-cash accretion from adjusting preferred stock issued in acquisition to fair value           —                       —                       —                       5,417            
Impairment of unevaluated oil and gas properties           —                       —                       —                       27            
Adjustment to (provision for) benefit from income taxes           47,777                       31,408                       (106,000 )             (19,930 )  
Adjusted net income available to common stockholders (1) $         98,766             $         34,583             $         303,006             $         49,602            
                 
Adjusted net income available to common stockholders per share (2) $         0.37             $         0.14             $         1.16             $         0.23            
                 
Diluted shares outstanding           276,713                       275,127                       275,663                       278,554            
ADJUSTED EBITDAX:                
Net income (loss) $         360,401             $         81,923             $         (241,725 )   $         (52,417 )  
Interest expense (3)           46,811                       66,301                       218,322                       235,218            
Income taxes           85,571                       36,967                       11,403                       (9,210 )  
Depreciation, depletion, and amortization           110,075                       104,284                       469,388                       417,112            
Exploration           —                       —                       —                       27            
Unrealized (gain) loss from derivative financial instruments           (469,830 )             (80,158 )             140,934                       124,545            
Stock-based compensation           1,508                       1,730                       6,799                       6,464            
Loss on early extinguishment of debt           —                       —                       352,599                       861            
(Gain) loss on sale of assets           162,170                       (1 )             162,077                       (17 )  
Total Adjusted EBITDAX (4) $         296,706             $         211,046             $         1,119,797             $         722,583            
 

(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,
    2021       2020       2021       2020  
OPERATING CASH FLOW (1):              
Net income (loss) $         360,401             $         81,923             $         (241,725 )   $         (52,417 )
Reconciling items:              
Unrealized (gain) loss from derivative financial instruments           (469,830 )             (80,158 )             140,934                       124,545          
Deferred income taxes (benefit)           81,377                       37,034                       (3,565 )             (9,409 )
Depreciation, depletion and amortization           110,075                       104,284                       469,388                       417,112          
Loss on early retirement of debt           —                       —                       352,599                       861          
Amortization of debt discount and issuance costs           4,116                       9,807                       21,703                       34,038          
Stock-based compensation           1,508                       1,730                       6,799                       6,464          
Exploration           —                       —                       —                       27          
(Gain) loss on sale of assets           162,170                       (1 )             162,077                       (17 )
Operating cash flow $         249,817             $         154,619             $         908,210             $         521,204          
(Increase) decrease in accounts receivable           (24,573 )             (44,827 )             (121,952 )             34,555          
(Increase) decrease in other current assets           (2,883 )             (1,272 )             (2,033 )             7,019          
Increase in accounts payable and accrued expenses           18,091                       77,226                       74,780                       12,923          
Net cash provided by operating activities $         240,452             $         185,746             $         859,005             $         575,701          
               
  Three Months Ended December 31,   Year EndedDecember 31,
    2021       2020       2021       2020  
FREE CASH FLOW (2):              
Operating cash flow $         249,817             $         154,619             $         908,210             $         521,204          
Less:              
Exploration and development capital expenditures           (140,115 )             (169,830 )             (628,228 )             (483,668 )
Preferred dividends           (4,411 )             (4,400 )             (17,500 )             (25,580 )
Free cash flow from operations $         105,291             $         (19,611 )   $         262,482             $         11,956          
Acquisition of oil and gas properties           (39,003 )             (6,492 )             (57,652 )             (7,949 )
Proceeds from divestiture of oil and gas properties           138,099                       —                       138,099                       —          
Free cash flow after acquisition and divestiture activity $         204,387             $         (26,103 )   $         342,929             $         4,007          
               
 

(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 and debt maturities 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 - Finance & Investor Relations
Comstock Resources
972-668-8834
rmills@comstockresources.com
Comstock Resources (NYSE:CRK)
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