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Comstock Resources Fourth Quarter, Full Year 2021 Results

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   |    Wednesday,February 16,2022

Comstock Resources, Inc. reported financial and operating results for the quarter and year ended December 31, 2021.

Highlights:

• 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.

4Q21 Results Summary

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.

Full Year 2021 Results

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.

4Q21 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.