Form 8-K - Current report

false0000023194COMSTOCK RESOURCES INC00000231942024-10-302024-10-30

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 30, 2024

 

 

COMSTOCK RESOURCES, INC.

(Exact name of Registrant as Specified in Its Charter)

 

 

Nevada			001-03262	94-1667468
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
5300 Town and Country Blvd. Suite 500
Frisco, Texas				75034
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: [phone]

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.50 (per share)		CRK		New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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Item 2.02 Results of Operations and Financial Condition.

On October 30, 2024, Comstock Resources, Inc. ("Comstock" or the "Company") announced financial results for the quarter ended September 30, 2024. A copy of the press release announcing Comstock's earnings and operating results for these periods and other matters is attached hereto as Exhibit 99.1.

The earnings press release contains financial measures that are not in accordance with generally accepted accounting principles in the United States ("GAAP"). Comstock has provided reconciliations within the earnings release of the non-GAAP financial measures to the most directly comparable GAAP financial measures. The non-GAAP financial measures should be considered in addition to, but not as a substitute for, measures of financial performance prepared in accordance with GAAP that are presented in the earnings release.

The information in this Form 8-K and the Exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to the liability of that section, and shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

Exhibit No.	Description
99.1	Press Release dated October 30, 2024
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			COMSTOCK RESOURCES, INC.
Date:	October 30, 2024	By:	/s/ ROLAND O. BURNS
			Roland O. Burns President and Chief Financial Officer

 

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Exhibit 99.1

	5300 Town and Country Blvd., Suite 500
	Frisco, Texas 75034
	Telephone: [phone]
	Contact: Ron Mills
	VP of Finance and Investor Relations
	Web Site: www.comstockresources.com
NEWS RELEASE

For Immediate Release

COMSTOCK RESOURCES, INC. REPORTS

THIRD QUARTER 2024 FINANCIAL AND OPERATING RESULTS

FRISCO, TEXAS, October 30, 2024 – Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter ended September 30, 2024.

Highlights of 2024's Third Quarter

•

Weak natural gas prices continued to weigh heavily on the third quarter financial results.

•

Natural gas and oil sales, including realized hedging gains, were $305 million.

•

Operating cash flow was $152 million or $0.52 per diluted share.

•

Adjusted EBITDAX for the quarter was $202 million.

•

Adjusted net loss was $48.5 million or $0.17 per share for the quarter.

•

Lower completion activity was planned for the quarter, resulting in eight (5.4 net) operated wells being turned to sales since the Company's last update with an average initial production of 21 MMcf per day.

•

First horseshoe Haynesville well was successful with a 31 MMcf per day initial production rate.

•

Western Haynesville exploratory play continues to progress with acreage position up to 453,881 net acres and most recent well costs down to an estimated $2,814 per completed lateral foot. Comstock's thirteenth Western Haynesville well is on flowback with another five wells in the play expected to be turned to sales in late 2024 through early 2025.

Financial Results for the Three Months Ended September 30, 2024

Comstock's realized natural gas price for the third quarter of 2024 averaged $1.90 per Mcf before hedging and $2.28 per Mcf after hedging. As a result, Comstock's natural gas and oil sales in the third quarter of 2024 decreased to $305.0 million (including realized hedging gains of $51.4 million) despite a 2% increase in production in the quarter. Operating cash flow (excluding changes in working capital) generated in the third quarter of 2024 was $152.3 million, and net loss for the third quarter was $25.7 million or $0.09 per share. Net loss in the quarter included a pre-tax $23.8 million unrealized gain on hedging contracts held for risk management and a gain on sale of assets of $0.9 million. Excluding these items, adjusted net loss for the third quarter of 2024 was $48.5 million, or $0.17 per share.

 

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Comstock's production cost per Mcfe in the third quarter averaged $0.77 per Mcfe, which was comprised of $0.41 for gathering and transportation costs, $0.22 for lease operating costs, $0.09 for production and other taxes and $0.05 for cash general and administrative expenses. Comstock's unhedged operating margin was 60% in the third quarter of 2024 and 67% after hedging.

Financial Results for the Nine Months Ended September 30, 2024

Natural gas and oil sales for the nine months ended September 30, 2024 totaled $919.1 million (including realized hedging gains of $160.0 million). Operating cash flow (excluding changes in working capital) generated during the first nine months of 2024 was $452.4 million, and net loss was $163.4 million or $0.57 per share. Net loss during the first nine months of 2024 included a pre-tax $70.7 million unrealized loss on hedging contracts held for risk management and a gain on sale of assets of $0.9 million. Excluding these items, adjusted net loss for the nine months ended September 30, 2024 was $121.3 million or $0.42 per share.

Comstock's production cost per Mcfe during the nine months ended September 30, 2024 averaged $0.78 per Mcfe, which was comprised of $0.37 for gathering and transportation costs, $0.25 for lease operating costs, $0.12 for production and other taxes and $0.04 for cash general and administrative expenses. Comstock's unhedged operating margin was 58% during the first nine months of 2024 and 65% after hedging.

Drilling Results

Comstock drilled eight (6.2 net) operated horizontal Haynesville/Bossier shale wells in the third quarter of 2024 which had an average lateral length of 12,034 feet. Comstock turned 11 (8.0 net) operated wells to sales in the third quarter of 2024.

Since its last operational update in July, Comstock has turned eight (5.4 net) operated Haynesville/Bossier shale wells to sales. These wells had initial daily production rates that averaged 21 MMcf per day. The completed lateral length of these wells averaged 12,391 feet. Included in the wells turned to sales was the Sebastian 11 #5H, the Company's first horseshoe Haynesville well, which had a 9,382 foot completed lateral and an initial production rate of 31 MMcf per day.

Other

On October 30, 2024, Comstock also announced that its bank group reaffirmed the $2.0 billion borrowing base and approved the amendment of certain financial covenants under its $1.5 billion revolving credit facility.

Earnings Call Information

Comstock has planned a conference call for 10:00 a.m. Central Time on October 31, 2024, to discuss the third quarter 2024 operational and financial results. Investors wishing to listen 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/BI25940ff3de024e45b06512519e9e6 a64. 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/27pqb8gi.

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. CT on October 31, 2024. The replay of the conference can be accessed using the webcast link: https://edge.media-server.com/mmc/p/27pqb8gi.

 

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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.

 

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COMSTOCK RESOURCES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

 

 

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Revenues:
Natural gas sales		$	252,650			$	304,141			$	756,260			$	911,065
Oil sales			975				1,309				2,925				4,111
Total natural gas and oil sales			253,625				305,450				759,185				915,176
Gas services			50,847				71,287				127,889				239,350
Total revenues			304,472				376,737				887,074				1,154,526
Operating expenses:
Production and ad valorem taxes			12,578				25,386				49,730				59,891
Gathering and transportation			53,996				47,012				150,456				137,981
Lease operating			29,248				31,664				99,125				100,525
Exploration			—				—				—				1,775
Depreciation, depletion and amortization			208,350				148,190				593,281				422,350
Gas services			52,622				67,632				132,796				224,317
General and administrative			9,923				9,586				29,271				31,992
Gain on sale of assets			(910	)			—				(910	)			(125	)
Total operating expenses			365,807				329,470				1,053,749				978,706
Operating income (loss)			(61,335	)			47,267				(166,675	)			175,820
Other income (expenses):
Gain from derivative financial instruments			75,163				14,276				89,218				76,190
Other income			274				409				927				1,467
Interest expense			(54,516	)			(43,624	)			(156,005	)			(121,082	)
Total other income (expenses)			20,921				(28,939	)			(65,860	)			(43,425	)
Income (loss) before income taxes			(40,414	)			18,328				(232,535	)			132,395
(Provision for) benefit from income taxes			14,696				(3,608	)			69,094				(28,878	)
Net income (loss)			(25,718	)			14,720				(163,441	)			103,517
Net income attributable to noncontrolling interest			(3,173	)			—				(8,081	)			—
Net income (loss) available to Comstock		$	(28,891	)		$	14,720			$	(171,522	)		$	103,517
Net income (loss) per share
Basic		$	(0.09	)		$	0.05			$	(0.57	)		$	0.37
Diluted		$	(0.09	)		$	0.05			$	(0.57	)		$	0.37
Weighted average shares outstanding:
Basic			290,170				276,999				285,949				276,741
Diluted			290,170				276,999				285,949				276,741
Dividends per share		$	—			$	0.125			$	—			$	0.375

 

 

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COMSTOCK RESOURCES, INC.

OPERATING RESULTS

(In thousands, except per unit amounts)

 

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Natural gas production (MMcf)			133,116				130,528				403,420				383,902
Oil production (Mbbls)			13				17				40				57
Total production (MMcfe)			133,198				130,629				403,662				384,241
Natural gas sales		$	252,650			$	304,141			$	756,260			$	911,065
Natural gas hedging settlements (1)			51,409				10,344				159,956				76,221
Total natural gas including hedging			304,059				314,485				916,216				987,286
Oil sales			975				1,309				2,925				4,111
Total natural gas and oil sales including hedging		$	305,034			$	315,794			$	919,141			$	991,397
Average natural gas price (per Mcf)		$	1.90			$	2.33			$	1.87			$	2.37
Average natural gas price including hedging (per Mcf)		$	2.28			$	2.41			$	2.27			$	2.57
Average oil price (per barrel)		$	75.00			$	77.00			$	73.13			$	72.12
Average price (per Mcfe)		$	1.90			$	2.34			$	1.88			$	2.38
Average price including hedging (per Mcfe)		$	2.29			$	2.42			$	2.28			$	2.58
Production and ad valorem taxes		$	12,578			$	25,386			$	49,730			$	59,891
Gathering and transportation			53,996				47,012				150,456				137,981
Lease operating			29,248				31,664				99,125				100,525
Cash general and administrative (2)			6,042				6,930				17,892				24,984
Total production costs		$	101,864			$	110,992			$	317,203			$	323,381
Production and ad valorem taxes (per Mcfe)		$	0.09			$	0.20			$	0.12			$	0.16
Gathering and transportation (per Mcfe)			0.41				0.36				0.37				0.36
Lease operating (per Mcfe)			0.22				0.24				0.25				0.26
Cash general and administrative (per Mcfe)			0.05				0.05				0.04				0.07
Total production costs (per Mcfe)		$	0.77			$	0.85			$	0.78			$	0.85
Unhedged operating margin			60	%			64	%			58	%			65	%
Hedged operating margin			67	%			65	%			65	%			67	%
Gas services revenue		$	50,847			$	71,287			$	127,889			$	239,350
Gas services expenses			52,622				67,632				132,796				224,317
Gas services margin		$	(1,775	)		$	3,655			$	(4,907	)		$	15,033
Natural Gas and Oil Capital Expenditures:
Unproved property acquisitions		$	8,800			$	19,998			$	87,938			$	76,646
Total natural gas and oil properties acquisitions		$	8,800			$	19,998			$	87,938			$	76,646
Exploration and Development:
Development leasehold		$	5,623			$	5,369			$	12,153			$	19,087
Exploratory drilling and completion			57,144				74,737				215,992				179,049
Development drilling and completion			114,172				229,594				411,315				740,808
Other development costs			7,453				1,418				22,175				18,868
Total exploration and development capital expenditures		$	184,392			$	311,118			$	661,635			$	957,812

 

(1)

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

(2)

Excludes stock-based compensation.

 

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COMSTOCK RESOURCES, INC.

NON-GAAP FINANCIAL MEASURES

(In thousands, except per share amounts)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
ADJUSTED NET INCOME (LOSS):
Net income (loss)		$	(25,718	)		$	14,720			$	(163,441	)		$	103,517
Unrealized (gain) loss from derivative financial instruments			(23,754	)			(3,932	)			70,738				31
Exploration expense			—				—				—				1,775
Gain on sale of assets			(910	)			—				(910	)			(125	)
Adjustment to income taxes			1,873				946				(27,663	)			(418	)
Adjusted net income (loss)		$	(48,509	)		$	11,734			$	(121,276	)		$	104,780
Adjusted net income (loss) per share (2)		$	(0.17	)		$	0.04			$	(0.42	)		$	0.38
Diluted shares outstanding			290,170				276,999				285,949				276,741
ADJUSTED EBITDAX:
Net income (loss)		$	(25,718	)		$	14,720			$	(163,441	)		$	103,517
Interest expense			54,516				43,624				156,005				121,082
Income taxes			(14,696	)			3,608				(69,094	)			28,878
Depreciation, depletion, and amortization			208,350				148,190				593,281				422,350
Exploration			—				—				—				1,775
Unrealized (gain) loss from derivative financial instruments			(23,754	)			(3,932	)			70,738				31
Stock-based compensation			3,883				2,655				11,380				7,006
Gain on sale of assets			(910	)			—				(910	)			(125	)
Total Adjusted EBITDAX (3)		$	201,671			$	208,865			$	597,959			$	684,514

 

(1)

Adjusted net income (loss) is presented because of its acceptance by investors and by Comstock management as an indicator of the Company's profitability excluding 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 (loss) per share is calculated to include the dilutive effects of unvested restricted stock pursuant to the two-class method and performance stock units pursuant to the treasury stock method.

(3)

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 depreciation, depletion and amortization, unrealized gains and losses on derivative financial instruments and exploration expense, is a common alternative measure of operating performance used by certain investors and financial analysts.

 

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COMSTOCK RESOURCES, INC.

NON-GAAP FINANCIAL MEASURES

(In thousands)

 

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
OPERATING CASH FLOW (1):
Net income (loss)		$	(25,718	)		$	14,720			$	(163,441	)		$	103,517
Reconciling items:
Unrealized (gain) loss from derivative financial instruments			(23,754	)			(3,932	)			70,738				31
Deferred income taxes			(12,734	)			3,608				(67,165	)			28,878
Depreciation, depletion and amortization			208,350				148,190				593,281				422,350
Amortization of debt discount and issuance costs			3,136				1,989				8,519				5,980
Stock-based compensation			3,883				2,655				11,380				7,006
Gain on sale of assets			(910	)			—				(910	)			(125	)
Operating cash flow		$	152,253			$	167,230			$	452,402			$	567,637
(Increase) decrease in accounts receivable			(658	)			(20,887	)			75,573				295,323
Increase in other current assets			(5,595	)			(1,825	)			(749	)			(624	)
Decrease in accounts payable and accrued expenses			(47,830	)			(73,753	)			(173,942	)			(73,697	)
Net cash provided by operating activities		$	98,170			$	70,765			$	353,284			$	788,639

 

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
FREE CASH FLOW (DEFICIT)(2):
Operating cash flow		$	152,253			$	167,230			$	452,402			$	567,637
Less:
Exploration and development capital expenditures			(184,392	)			(311,118	)			(661,635	)			(957,812	)
Midstream capital expenditures			(30,251	)			—				(46,739	)			—
Other capital expenditures			(735	)			(10,563	)			(1,706	)			(22,076	)
Contributions from midstream partner			19,000				—				36,000				—
Free cash deficit from operations		$	(44,125	)		$	(154,451	)		$	(221,678	)		$	(412,251	)
Acquisitions			(8,800	)			(19,998	)			(87,938	)			(76,646	)
Proceeds from divestitures			1,214				—				1,214				41,295
Free cash deficit after acquisition and divestiture activity		$	(51,711	)		$	(174,449	)		$	(308,402	)		$	(447,602	)

 

(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 (deficit) from operations and free cash flow (deficit) 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, midstream and other capital expenditures, contributions from its midstream partner, proved and unproved property acquisitions, and proceeds from divestiture of natural gas and oil properties.

 

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COMSTOCK RESOURCES, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

		September 30, 2024				December 31, 2023
ASSETS
Cash and cash equivalents		$	13,772			$	16,669
Accounts receivable			155,857				231,430
Derivative financial instruments			71,704				126,775
Other current assets			58,379				86,619
Total current assets			299,712				461,493
Property and equipment, net			5,590,448				5,384,771
Goodwill			335,897				335,897
Operating lease right-of-use assets			82,124				71,462
Derivative financial instruments			4,828				—
		$	6,313,009			$	6,253,623
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable		$	358,336			$	523,260
Accrued costs			106,057				134,466
Operating leases			35,372				23,765
Total current liabilities			499,765				681,491
Long-term debt			2,949,181				2,640,391
Deferred income taxes			402,870				470,035
Derivative financial instruments			20,495				—
Long-term operating leases			46,681				47,742
Asset retirement obligation			32,016				30,773
Total liabilities			3,951,008				3,870,432
Stockholders' Equity:
Common stock			146,130				139,214
Additional paid-in capital			1,362,393				1,260,930
Accumulated earnings			786,748				958,270
Total stockholders' equity attributable to Comstock			2,295,271				2,358,414
Noncontrolling interest			66,730				24,777
Total stockholders' equity			2,362,001				2,383,191
		$	6,313,009			$	6,253,623

 

 

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Document And Entity Information	Oct. 30, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 30, 2024
Entity Registrant Name	COMSTOCK RESOURCES INC
Entity Central Index Key	0000023194
Entity Emerging Growth Company	false
Entity File Number	001-03262
Entity Incorporation, State or Country Code	NV
Entity Tax Identification Number	94-1667468
Entity Address, Address Line One	5300 Town and Country Blvd.
Entity Address, Address Line Two	Suite 500
Entity Address, City or Town	Frisco
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75034
City Area Code	(972)
Local Phone Number	668-8800
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $0.50 (per share)
Trading Symbol	CRK
Security Exchange Name	NYSE

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