Comstock Resources Acquires Assets of Ovation Energy



Comstock Resources has agreed to purchase substantially all of the assets of Ovation Energy, L. P. for $62.5 million, effective October 1, 2004. With the acquisition, Comstock will acquire producing properties in the East Texas, Arkoma, Anadarko and San Juan basins. Comstock estimates that the properties being acquired have proved reserves of approximately 42.7 billion cubic feet of gas equivalent. These reserves are 99% natural gas and approximately 66% are in the proved developed category. Future development costs related to the properties are estimated to be 41 cents per thousand cubic feet of natural gas equivalent. The properties being acquired include 161 active wells. Comstock will operate 69 of these wells. The properties are currently producing approximately 7 million cubic feet of natural gas equivalent per day. The transaction is expected to close on October 1, 2004.

Comstock also announced that it has hedged a portion of its natural gas production in 2005 and 2006 related to this acquisition and to its recently announced expanded East Texas drilling program. The hedges related to the Ovation acquisition are comprised of costless collars covering a monthly volume of 256,000 MMBtus for 2005 and 2006. For 2005, the floor price (NYMEX basis) is $4.50 with a ceiling price (NYMEX basis) of $10.30. For 2006, the floor price (NYMEX basis) is $4.50 with a ceiling price (NYMEX basis) of $9.02. Comstock intends to incorporate the appropriate regional basis differentials once the acquisition has closed. The hedges related to the East Texas drilling program are comprised of costless collars for a monthly volume of 200,000 MMBtus for 2005 and 2006. The floor and ceiling prices for these hedges settle against the first of the month Houston Ship Channel ("HSC") Index price. For 2005, the floor price (HSC basis) is $4.50 with a ceiling price of $10.00 (HSC basis). For 2006, the floor price (HSC basis) is $4.50 with a ceiling price (HSC basis) of $8.25 (HSC basis).
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