Comstock Resources Reports 2004 Results
Comstock Resources reports financial and operating results for the quarter and year ended December 31, 2004.
Financial Results for Quarter and Year Ended December 31, 2004
Comstock reported net income of $15.9 million, 43 cents per diluted share for the three months ended December 31, 2004 as compared to 2003's fourth quarter income of $5.7 million, 16 cents per diluted share. Fourth quarter 2004's oil and gas sales increased 36% to $71.2 million over 2003's fourth quarter sales of $52.5 million. Operating cash flow (before changes in working capital accounts) generated by Comstock in 2004's fourth quarter of $47.5 million was 56% higher than 2003's fourth quarter cash flow of $30.4 million. EBITDAX or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses was $54.9 million in 2004's fourth quarter, a 42% increase over 2003's fourth quarter EBITDAX of $38.6 million. The 2004 financial results include Comstock's 59.9% ownership in Bois d'Arc Energy which was formed in July of 2004 and is engaged in the exploration and production of oil and natural gas in the Gulf of Mexico.
In 2004, Comstock's oil and gas sales reached $261.6 million, a record high for the Company, as compared to oil and gas sales of $235.1 million in 2003. Net income for the year ended December 31, 2004 was $46.9 million, $1.29 per diluted share, as compared to net income of $53.3 million, $1.51 per diluted share, excluding the cumulative effect of an accounting principle change for future abandonment costs. The results for the year ended December 31, 2004 include a charge of $19.6 million ($12.5 million after income taxes or 35 cents per diluted share) relating to the early retirement of the Company's 11-1/4% senior notes. Operating cash flow (before changes in working capital accounts) generated by Comstock in 2004 was $176.2 million, a 16% increase from cash flow of $152.0 million in the same period in 2003. For the year ended December 31, 2004, EBITDAX increased 11% or $202.6 million as compared to EBITDAX of $183.0 million for the same period in 2003.
Comstock's production in the fourth quarter of 2004 totaled 10.4 billion cubic feet equivalent of natural gas ("Bcfe"), as compared to production of 11.0 Bcfe in the fourth quarter of 2003. For the year ended 2004, Comstock produced 42.7 Bcfe, as compared to production in 2003 of 44.0 Bcfe. Production was lower than 2003 mainly due to the effects of Hurricane Ivan which caused part of Bois d'Arc Energy's Gulf of Mexico production to be shut in the third and the fourth quarter of 2004 either during the storm or awaiting repairs to third party pipelines that were damaged by the hurricane. The higher sales were attributable to increased oil and natural gas prices. The Company's realized natural gas price averaged $6.66 per Mcf in 2004's fourth quarter as compared to $4.65 per Mcf in 2003's fourth quarter. Realized oil prices in the fourth quarter of 2004 averaged $47.06 per barrel as compared to $30.46 per barrel for 2003. For the year ended 2004, Comstock's realized natural gas price averaged $5.98 per Mcf as compared to 2003's average natural gas price of $5.41 per Mcf. For 2004, Comstock's realized oil price was $39.86 per barrel as compared to $30.70 per barrel in 2003.
2004 Drilling Results
Comstock also announced the results of its 2004 drilling program under which Comstock spent $115.6 million to drill 70 wells (46 development wells and 24 exploratory wells). Comstock spent an additional $62.7 million on acquisitions of producing properties, $6.2 million on acquiring acreage, $16.6 million on recompletions, workovers and abandonment and $8.3 million on offshore production facilities in 2004 for a total of $209.4 million. Fifty-eight of the 70 wells drilled in 2004 were completed as producing wells and twelve were dry holes or non commercial for an overall 83% drilling success rate in 2004. Of the 24 exploratory wells drilled last year, thirteen resulted in discoveries and eleven were dry holes. Overall, Comstock had a 54% drilling success rate in its exploration program in 2004.
Gulf of Mexico Region
Comstock drilled thirteen offshore wells (6.0 net) in its Gulf of Mexico region in the first half of 2004. These wells were drilled under its exploration program with Bois d'Arc Offshore Ltd. ("Bois d'Arc"), or as part of Comstock's redevelopment of its Ship Shoal 113 Unit. All but one of the offshore wells were successful. In July 2004, Comstock contributed its offshore Gulf of Mexico properties to Bois d'Arc Energy in exchange for 59.9% ownership of the new venture. Since its formation, Bois d'Arc Energy has drilled eleven offshore wells (5.1 net to Comstock's interest) in 2004. Seven were successful and four were dry holes. The successful wells include the OCS-G 00063 #3 well, the SL 10830 #6 well and the OCS-G 22621 #1 well which were drilled in the third quarter. During the fourth quarter, Bois d'Arc Energy drilled four successful wells and participated in drilling one dry hole at Ship Shoal 69. The four successful wells included the OCS-G 23920 #1 well at South Timbalier block 29 which was drilled to a total depth of 16,547 feet and logged approximately 76 net feet of pay in five sands. The second successful well was drilled in the Ship Shoal 113 unit with the OCS-G 00069 #24 well which was drilled to a total depth of 8,537 feet and logged approximately 173 net feet of pay in eight sands. Also the OCS-G 22701 #3 well drilled at Ship Shoal 134 to a total depth of 7,000 feet logged approximately 22 net feet of pay in three sands. In the second quarter, the well will be connected to an existing platform along with two other previously drilled wells in Ship Shoal blocks 134 and 135. The fourth well was drilled at Ship Shoal block 99 (the OCS-G 13912 #A1) which was drilled to a total depth of 12,400 feet and logged approximately eight net feet of pay in one sand.
To date in 2005, Bois d'Arc has drilled four more successful wells and has had no dry holes. Two are successful development wells at Ship Shoal blocks 92 and 98. The remaining two were exploratory wells including a well at Ship Shoal 111 drilled to test the "Laker" prospect and a successful well at South Pelto block 14.
South Texas Region
Comstock has drilled 26 wells (7.7 net) in its South Texas region in 2004. Nineteen of the 26 wells were successful and seven were dry holes. The successful South Texas wells were tested at an average per well rate of 4.6 million cubic feet of natural gas equivalent ("MMcfe") per day. Fifteen of the South Texas wells were successful development wells drilled primarily in the Ball Ranch or J.C. Martin fields. The remaining four successful wells were exploratory wells including the Javelina field discovery, the Dixie Mortgage Pawalek #1 which has been tested at 10.1 MMcfe per day. Comstock drilled another well in the Javelina field in 2005. The Dixie Mortgage Pawalek #2 logged approximately 86 net feet of pay of Vicksburg sands and is expected to have a similar production rate.
Southeast Texas Region
In the Southeast Texas Region, Comstock drilled two wells (1.0 net) in 2004. The Davis Blackstone #1 well was drilled in early 2004 and had an initial production rate of 8.2 MMcfe per day. The Collins #3 was drilled in late 2004 and has yet to be tested due to delays in resolving pipeline right of ways. These have now been resolved and the well is expected to be on production by the end of the first quarter. Comstock spudded the BSMC Unit B#1 well in late November to test its "Big Sandy" prospect to the South of the Double A Wells field. The well had been directionally drilled to approximately 15,000 feet before encountering mechanical difficulties that resulted in stuck drill pipe. Efforts to free the drill pipe were not successful and Comstock is currently sidetracking the well around the stuck drill pipe. Comstock plans to drill and log the prospective Upper Woodbine reservoir target late March 2005. Comstock continues to remain enthusiastic about this prospect's potential.
East Texas / North Louisiana and Other Regions
In 2004, Comstock drilled 16 wells (10.7 net) in the East Texas and North Louisiana region and another two successful wells (0.2 net) in its other regions. All of these wells were successful development wells. These wells have been tested at a per well average rate of 1.9 MMcfe per day. In 2005, Comstock has drilled four more successful wells in this region and has another four in the process of drilling. These wells are part of Comstock's 69 well drilling program planned in this region for 2005.
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