Comstock Resources, Inc. Reports Fourth Quarter and Annual 2008 Financial and Operating Results






FRISCO, Texas, Feb. 9 /PRNewswire-FirstCall/ -- Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter and year ended December 31, 2008.


Financial Results for the Three Months and Year Ended December 31, 2008


Comstock reported a net loss of $96.4 million or $2.15 per share for the three months ended December 31, 2008 as compared to 2007's fourth quarter net income of $21.7 million or $0.48 per diluted share. Results for the fourth quarter of 2008 include impairment charges of $162.7 million ($105.8 million after income taxes or $2.33 per share) related to the Company's investment in Stone Energy Corporation ("Stone") and a $0.9 million ($0.6 million after tax or $.01 per diluted share) related to its oil and gas properties. Excluding these impairment charges, net income for the fourth quarter of 2008 would be $10.0 million or $0.22 per diluted share. Comstock's income from continuing operations in the fourth quarter of 2007 was $13.2 million or $0.30 per diluted share.


The fourth quarter operating results were impacted by continued production growth and declining market prices for crude oil and natural gas. Comstock's production from its continuing onshore operations in the fourth quarter of 2008 increased 23% to 15.1 billion cubic feet equivalent of natural gas ("Bcfe") as compared to production of 12.2 Bcfe in the fourth quarter of 2007. The fourth quarter average daily production rate of 164 million cubic feet of natural gas equivalent ("Mmcfe") was slightly higher than the third quarter 2008 production rate of 163 Mmcfe per day. Comstock's realized oil prices in the fourth quarter of 2008 declined to $52.16 per barrel, 31% lower than the $76.10 per barrel in 2007's fourth quarter. Oil prices in the fourth quarter of 2008 were substantially lower than the $105.15 per barrel realized during the third quarter of 2008. Natural gas prices realized in the fourth quarter of 2008 averaged $6.44 per Mcf, 10% lower than the $7.15 per Mcf realized in 2007. Natural gas prices in the fourth quarter of 2008 were also substantially less than the $10.16 per Mcf realized during the third quarter of 2008. Oil and gas sales in the fourth quarter of 2008 of $100.2 million increased 5% from 2007's fourth quarter sales of $95.5 million as the 23% production increase was largely offset by lower crude oil and natural gas prices. Operating cash flow (before changes in working capital accounts) generated by Comstock's continuing operations in 2008's fourth quarter of $79.5 million increased 26% over 2007's fourth quarter operating cash flow of $62.9 million. EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses from continuing operations, of $71.5 million in 2008's fourth quarter was comparable to 2007's fourth quarter EBITDAX from continuing operations of $72.3 million.


Comstock reported net income of $252.0 million or $5.53 per diluted share for the year ended December 31, 2008 as compared to 2007's net income of $68.9 million or $1.54 per diluted share. Income from continuing operations for 2008 was $58.2 million or $1.28 per diluted share as compared to income from continuing operations of $45.6 million or $1.03 per diluted share for 2007. Excluding the impairment charges related to the investment in Stone and its oil and gas properties, and the $26.6 million gain recognized on sale of certain onshore oil and gas properties ($17.3 million after income taxes or $0.38 per diluted share), Comstock's income from continuing operations for 2008 was $147.6 million or $3.25 per diluted share.


The full year 2008 financial results reflect overall higher oil and natural gas prices combined with the Company's strong production growth in 2008. Comstock's continuing onshore production in 2008 increased 32% to 59.9 Bcfe as compared to production of 45.3 Bcfe in 2007. Realized oil prices in 2008 averaged $87.15 per barrel, 43% higher than the $60.96 per barrel realized in 2007. Natural gas prices in 2008 averaged $8.83 per Mcf, 28% higher than the $6.89 per Mcf realized in 2007. Oil and gas sales of $563.7 million during 2008 increased 70% from 2007's sales of $331.6 million. Operating cash flow (before changes in working capital accounts) generated by Comstock's continuing operations in 2008 of $438.2 million increased 103% from 2007's cash flow from continuing operations of $215.5 million. EBITDAX from continuing operations of $458.7 million in 2008 increased 83% over 2007's EBITDAX from continuing operations of $250.8 million.


Comstock's offshore operations represented by its ownership in Bois d'Arc Energy, Inc. ("Bois d'Arc") are reflected as discontinued operations in the 2008 financial results due to the sale of Bois d'Arc to Stone in August 2008. For the year ended December 31, 2008, Bois d'Arc contributed $35.6 million or 77 cents per diluted share to net income as compared to $23.3 million or 51 cents per diluted share in 2007. Comstock recognized a gain of $158.1 million after tax ($3.48 per diluted share) in the third quarter in connection with the sale. Comstock received $439.9 million in cash and 5,317,069 shares of Stone common stock for its stake in Bois d'Arc.


2008 Drilling Results


Comstock also announced the results of its 2008 onshore drilling program. In 2008 Comstock drilled 136 wells (75.7 net). 132 (74.2 net) of the wells drilled were successful and four (1.5 net) were dry holes.


Comstock drilled 114 successful wells (61.5 net) in its East Texas / North Louisiana region which have been tested at an average per well initial production rate of 2.8 Mmcfe per day. One well (.3 net) was unsuccessful. Wells drilled in this region in 2008 include 37 wells (11.2 net) drilled in the Hico Knowles - Terryville area of North Louisiana. All of these wells have been completed and had initial production rates which averaged 3.5 Mmcfe per day. Comstock has also drilled 45 wells (34.2 net) in its Logansport field in North Louisiana. Forty-one of these wells have been completed with initial production rates which averaged 2.1 Mmcfe per day. Comstock's 2008 drilling program in this region includes seven successful horizontal Cotton Valley wells drilled in its Waskom and Blocker fields in Harrison County, Texas. Five of these wells have been completed with a per well average initial production rate of 7.1 Mmcfe per day. Comstock's average working interest in these wells is 83%.


Other activity in the East Texas / North Louisiana region relates to the Company's emerging Haynesville shale play. Comstock has 86,032 (70,504 net) acres that are prospective for Haynesville shale development in this region. The Company has completed two horizontal wells and has an additional eight wells in progress. The BSMC La 7 #1H well in the Toledo Bend North field was successfully completed in December 2008 with an initial production rate of approximately 9 Mmcfe per day. Comstock has an 88% working interest in this well. Comstock has a 22% interest in the successful R. F. Gamble 24 #1H, which was recently completed and with an initial production rate of approximately 14 Mmcfe per day. Comstock is currently completing three Haynesville horizontal wells. Comstock's second operated horizontal Haynesville well is the Collins La 15 #1H in the Logansport field. This well was drilled to a total vertical depth of 11,350 feet with a 4,200 foot lateral. This well's completion has been delayed due to mechanical problems. The Company is completing the Bogue A #6H well in the Waskom field. This well reached an 11,400 foot vertical depth with a 4,000 foot lateral extension. The Company is also completing the Hart #1H in the Logansport field which reached an 11,500 foot vertical depth with a 4,000 foot horizontal extension. The Company is currently drilling five Haynesville horizontal wells. The Green #13H in the Blocker field reached an 11,650 foot vertical depth and the Company is currently drilling this well's 3,700 foot lateral. The Headrick #1H in Bethany-Longstreet field has reached a vertical depth of 11,850 feet and its 4,000 foot lateral is currently being drilled. The Holmes A #1H in Logansport field is currently drilling at a vertical depth of approximately 11,000 feet. Comstock is also drilling the Moneyham #7H in Longwood field which is currently drilling at a vertical depth approaching 11,000 feet. Comstock has also finished drilling the 11,730 foot vertical section of the BSMC La 12 #1H well in the Toledo Bend North field.


During 2008, in South Texas Comstock drilled 18 wells (13.4 net), 15 (12.2 net) of which were successful. Fourteen of the successful wells had an average per well initial production rate of 4.3 Mmcfe per day. Four of the successful wells were in the Las Hermanitas field in Duval County, Texas, six were in the Javelina Field in Hidalgo County, three were in the Ball Ranch field, and one was in the Lorenz Ranch field. Comstock also had a successful well in the Fandango field in Zapata County, Texas. The Leyendecker #10 well was drilled to a total depth of 16,200 feet in the Fandango field. The Company has a 100% interest and is currently finishing this well's multiple stage completion. Subsequent to the success of the Leyendecker #10, Comstock has two additional wells underway in the Fandango field. Comstock has drilled the Muzza #13 to a 16,300 foot vertical depth and is currently drilling the Trevino #3 to a planned vertical depth of 14,900 feet. Both of these wells appear to have encountered the targeted Wilcox sands and will be completed.


Comstock also had two (0.3 net) successful wells drilled in the San Juan Basin and one (0.2 net) successful well drilled in the Anadarko Basin during the year.


2009 Drilling Budget


Comstock also announced that it is reducing its 2009 drilling budget from $450 million to $366 million in response to weak natural gas prices. The revised budget has Comstock drilling approximately 41 (34.8 net) wells in 2009. The 2009 drilling program will continue to be focused on the Company's higher return opportunities, including its extensive acreage position in the Haynesville Shale. Comstock's East Texas/North Louisiana operating region accounts for the largest portion of the revised 2009 budget with forecasted expenditures of $319 million. Comstock has budgeted to drill 36 (31.4 net) wells in this region in 2009, which includes thirty (25.8 net) Haynesville Shale horizontal wells and two (1.6 net) Cotton Valley horizontal wells. Comstock expects to spend $47 million in its South Texas region to drill five (3.4 net) wells in 2009.


Buck