Comstock Updates Financial, Operating Results

Comstock Resources today reported financial and operating results for the three months and year ended December 31, 2010.

Financial Results for the Three Months and Year Ended December 31, 2010

Comstock reported a net loss of $20.6 million or 45 cents per share for the three months ended December 31, 2010 as compared to a net loss of $6.8 million or 15 cents per share for the three months ended December 31, 2009. Included in the net loss for the fourth quarter of 2010 is a loss of $25.8 million before income taxes ($16.8 million after tax) resulting from the sale of the Company's Mississippi properties in the quarter. Excluding this loss on the divestiture, the net loss for the fourth quarter of 2010 would have been $3.8 million or 8 cents per share.

Production in the fourth quarter of 2010 was 17.3 billion cubic feet of natural gas equivalent ("Bcfe"). Production from the Company's Haynesville shale wells of 94.2 million cubic feet of natural gas equivalent ("MMcfe") per day accounted for 50% of the Company's total production of 187.6 MMcfe per day in the fourth quarter of 2010, as compared to 83.6 MMcfe per day (40%) during the fourth quarter of 2009. Comstock completed eleven Haynesville shale wells during the fourth quarter of 2010, overcoming the shortage of pressure pumping completion services which impacted completion activity in the second and third quarters of 2010. The increased Haynesville shale production was offset in part by the effect of 5 MMcfe per day of well shut-ins during the fourth quarter.

Natural gas prices declined in the fourth quarter of 2010 as compared to natural gas prices during the fourth quarter of 2009. Comstock's average realized natural gas price decreased 16% to $3.73 per Mcf for the fourth quarter of 2010 as compared to $4.43 per Mcf in the fourth quarter of 2009. The Company's average realized oil price increased by 15% to $74.75 per barrel for the fourth quarter of 2010 as compared to $64.76 per barrel in the fourth quarter of 2009. The lower natural gas prices resulted in a 21% decrease in oil and gas sales which were $72.7 million in the fourth quarter of 2010 as compared to 2009's fourth quarter sales of $91.9 million. Operating cash flow (before changes in working capital accounts) was $44.9 million in the fourth quarter of 2010 and EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses, was $51.3 million.

Comstock reported a net loss of $19.6 million or 43 cents per share for the year ended December 31, 2010 as compared to a net loss of $36.5 million or 81 cents per share for the year ended December 31, 2009. Excluding the loss resulting from the sale of the Mississippi properties, the net loss for the year ended December 31, 2010 would have been $2.8 million or 6 cents per share. Production in 2010 increased 12% to 73.3 Bcfe as compared to the 65.5 Bcfe produced during 2009. Comstock averaged $4.35 per Mcf for sales of its natural gas production in 2010, 5% higher than the $4.16 per Mcf realized during 2009. Realized oil prices in 2010 averaged $68.35 per barrel, 34% higher than the $50.94 per barrel in 2009. The higher production and improved oil and gas prices resulted in a 19% increase in oil and gas sales for 2010, which were $349.1 million as compared with $292.6 million in 2009. Operating cash flow (before changes in working capital accounts) generated by Comstock for 2010 was $219.7 million while EBITDAX was $249.1 million.

2010 Drilling Results

Comstock reported on the results of its 2010 drilling program. The Company spent $537 million during 2010 on its exploration and development activities, $396 million of which was spent on drilling activities, $138 million of which was spent to acquire leases and $3 million of which was spent to acquire seismic data. During 2010 Comstock drilled 78 wells (49.3 net wells). The drilling program added 431 Bcfe of proved reserves in 2010 and were the primary driver of the Company's 45% growth in proved oil and gas reserves achieved in 2010. As of December 31, 2010, the Company also had seven wells in the process of drilling, including six in the Haynesville or Bossier shale and one in the Eagle Ford shale.

In the East Texas/North Louisiana region, Comstock drilled 73 wells (45.5 net) during 2010. Seventy-two of the wells were Haynesville or Bossier shale wells. Thirty-seven of the 72 Haynesville or Bossier shale wells drilled in 2010 were completed and put on production at an average per well initial production rate of 10.4 MMcfe per day. Comstock had 35 (23.4 net) wells that were drilled in 2010 but were not completed due to unavailability of pressure pumping completion services. Comstock has secured sufficient completion services in 2011 to allow the Company to complete these wells. Comstock operates 26 (22.1 net) of the uncompleted wells.

In addition to its Haynesville shale horizontal drilling program, Comstock drilled two vertical wells during 2010. Comstock successfully completed a Cotton Valley well in its Blocker field in East Texas and also completed the Julian Pasture #4 in its Ball Ranch field in South Texas.

Comstock also reported early results from its drilling program on its Eagle Ford shale acreage in South Texas. Comstock has drilled three wells (3.0 net), one in each of Atascosa, Karnes and McMullen counties. These wells were all located in the oil window of the Eagle Ford shale play. The NWR #1H was drilled in Atascosa County to a vertical depth of 8,706 feet with a 5,209 foot lateral. After frac, this well produced an initial rate of 381 barrels of oil per day and is currently producing to sales on a restricted choke and is on a very shallow production decline. The Rancho Tres Hijos #1H well was drilled in McMullen County to a vertical depth of 8,715 feet with a 4,091 foot lateral. After frac, this well flowed at an initial rate approaching 432 barrels of oil per day and is currently producing to sales on a restricted choke and it is also on a very shallow production decline. The third well, the Coates #1, was drilled in Karnes County to a vertical depth of 9,706 feet with a 5,422 foot lateral. This well is currently flowing back frac fluids after its completion.

 

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