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Comstock's 2021 Budget Up Slightly YOY; Q4/Full Year 2020 Results

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   |    Tuesday,February 16,2021

Comstock Resources, Inc. reported financial and operating results for the quarter and year ended December 31, 2020.

2021 Drilling Budget

- Capex: $517-560 million - up 9% vs. 2020 levels of $492MM

  • D&C: $510-550 million - up 10% from 2020 levels of $484 million
  • Land, Facilities & Other: $7-10 million

- Production: did not disclose - 2020 output was 1,260 MMcfe/d

- Wells Drilled: 62 gross wells (51 net) - down 12% from 71 gross wells in 2020, but up 5% from 47.4 net wells drilled

- Wells Completed: 58 gross wells (50.5 net)

  • Plans to complete an additional 19 wells (17.4 net) were drilled in 2020.

- Rig Count: 5-6 rigs running

 

Q4 Financials

For the fourth quarter of 2020, Comstock reported net income available to common stockholders of $77.5 million or $0.30 per diluted share. The quarter results included a $80.2 million unrealized gain on the mark-to-market value of the Company's derivative financial instruments that are held to hedge oil and natural gas prices. The adjusted net income available to common stockholders excluding the unrealized gain on the hedge contracts and other non-recurring items for the fourth quarter of 2020 was $34.6 million or $0.14 per diluted share.

Comstock produced 109.0 billion cubic feet ("Bcf") of natural gas and 0.3 million barrels ("Bbls") of oil or 111.1 billion cubic feet of natural gas equivalent ("Bcfe") in the fourth quarter of 2020. Natural gas production averaged 1.2 million cubic feet ("MMcf") per day, an increase of 6% over natural gas production in the third quarter of 2020. Oil production in the fourth quarter of 2020 averaged 3,694 Bbls of oil per day as compared to 3,851 Bbls per day produced in the third quarter of 2020.

Comstock's average realized natural gas price in the fourth quarter of 2020, including realized hedging gains, was $2.40 per Mcf as compared to $2.30 per Mcf realized in the fourth quarter of 2019 and $1.95 per Mcf realized in the third quarter of 2020. The Company's average realized oil price in the fourth quarter of 2020, including realized hedging gains, was $44.47 per Bbl as compared to $50.36 per Bbl in the fourth quarter of 2019 and $33.52 per Bbl in the third quarter of 2020. Oil and gas sales were $276.8 million (including realized hedging gains) in the fourth quarter of 2020 as compared to $308.6 million in the fourth quarter of 2019. Adjusted EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses was $210.8 million in the fourth quarter of 2020 as compared to adjusted EBITDAX of $234.8 million for the fourth quarter of 2019. The Company's operating cash flow generated in the fourth quarter of 2020 was $154.6 million as compared to $187.9 million in the fourth quarter of 2019.

2020 Financials

For the year ended December 31, 2020, Comstock reported a net loss available to common stockholders of $83.4 million or $0.39 per diluted share. The loss was primarily due to a $124.5 million unrealized loss related to the mark-to-market valuation of derivative financial instruments.  Adjusted net income available to common stockholders excluding the unrealized loss on hedges and other non-recurring items for the year ended December 31, 2020 was $49.6 million or $0.23 per diluted share.

Comstock produced 450.8 Bcf of natural gas and 1.5 million Bbls of oil or 459.9 Bcfe for the year ended December 31, 2020 as compared to 292.8 Bcf of natural gas, 2.7 million Bbls of oil or 308.9 Bcfe for the year ended December 31, 2019. Natural gas production averaged 1.2 MMcf per day in 2020, an increase of 54% over natural gas production in 2019.  Oil production averaged 4,120 Bbls of oil per day in 2020 compared to 7,356 Bbls of oil per day in 2019. Comstock's average realized natural gas price, including realized hedging gains, was $2.07 per Mcf for the year ended December 31, 2020, as compared to $2.35 per Mcf realized for the year ended December 31, 2019. The Company's average realized oil price in 2020, including realized hedging gains, was $40.88 per barrel as compared to $49.64 per barrel in 2019. Oil and gas sales were $993.1 million, including realized hedging gains, for the year ended December 31, 2020 as compared to oil and gas sales of $821.4 million in 2019. Adjusted EBITDAX of $722.2 million in  2020 was 18% higher than adjusted EBITDAX of $613.6 million in 2019. The Company's operating cash flow generated for the year ended December 31, 2020 of $521.2 million increased 11% over operating cash flow of $468.3 million for the year ended December 31, 2019.

Drilling Results

Comstock spent $483.6 million during 2020 for drilling and development activities in 2020. Comstock also spent $7.9 million on leasing activity. $476.9 million was spent to develop its Haynesville and Bossier shale properties, comprised of $436.1 million on drilling and completing wells and an additional $40.8 million on other development activity. Comstock drilled 55 (46.1 net) operated horizontal Haynesville shale wells during the year ended December 31, 2020, which had an average lateral length of  9,247 feet. Comstock also participated in 16 (1.3 net) non-operated Haynesville shale wells in 2020. During the year ended December 31, 2020, Comstock turned 76 (43.7 net) Haynesville shale wells to sales and currently expects to turn 14 (13.0 net) operated wells to sales in the first quarter of 2021.

Since its last operational update, Comstock completed an additional 20 (17.7 net) Haynesville shale wells.  The average initial production rate of these wells was 24 MMcf per day and had an average completed lateral length of 9,288 feet.

2020 Proved Reserves

Comstock also announced that proved natural gas and oil reserves as of December 31, 2020 were estimated at 5.6 trillion cubic feet ("Tcf") of natural gas and 11.0 million Bbls of oil, or 5.6 Tcfe as compared to total proved reserves of 5.4 Tcfe as of December 31, 2019. The reserve estimates were determined under the SEC guidelines and were audited by the Company's independent reserve engineering firms. The 5.6 Tcfe of proved reserves at December 31, 2020 were 36% developed and 97% were operated by Comstock. The present value, using a 10% discount rate, or the future net cash flows before income taxes of the proved reserves (the "PV-10 Value") was approximately $2.0 billion, using average first of month 2020 prices of $1.99 per Mcf of natural gas and $39.57 per Bbl of oil. The PV-10 Value was impacted by the much lower oil and gas prices required under the SEC methodology. The natural gas and oil prices used in determining the December 31, 2020 proved reserves estimates were 23% lower for natural gas and 29% lower for oil as compared to prices used at December 31, 2019. The PV-10 Value using NYMEX reference prices of $2.75 per Mcf for natural gas and $50.00 per barrel for oil less the Company’s differentials would have been $4.4 billion.

Despite the low prices used to determine proved reserves, Comstock replaced 159% of its 2020 production excluding price revisions and 141% including them. Based on the 2020 proved reserve additions, Comstock’s "all-in" finding costs were approximately $0.66 per Mcfe excluding price-related revisions ($0.75 per Mcfe including price-related revisions).


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