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Comstock Resources (CRK) Loss Wider in Q2, Revenues Fall
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Domestic energy explorer Comstock Resources Inc. (CRK - Free Report) reported second-quarter 2016 loss of $4.05 per share (excluding one-time items), significantly wider than the Zacks Consensus Estimate of a loss of 61 cents and the year-ago adjusted loss of $1.11. The underperformance could be attributed to sliding oil and gas prices along with lower equivalent volumes.
Quarterly revenues plunged 47.3% year over year to $40.7 million but were slightly above the Zacks Consensus Estimate of $40 million.
Volume Analysis
Comstock’s quarterly volume decreased 6% year over year to 15.7 billion cubic feet equivalent (Bcfe), of which 86.5% was natural gas. Lower production from South Texas operations more than offset the output from its East Texas/North Louisiana properties. Natural gas output was up 22.7% but oil production fell almost 62%.
While volume in the East Texas/North Louisiana operating region – accounting for 76.3% of the total – improved 35.2% year over year to almost 12 Bcfe, output from South Texas properties came in at approximately 3.3 Bcfe (down 55.4%).
Price Realizations
Average oil price realization (before hedging) was $42.21 per barrel (compared with $55.34 per barrel in the second quarter of 2015) and average natural gas realization was $1.90 per thousand cubic feet/Mcf (compared with $2.37 per Mcf in the year-earlier quarter).
Costs & Expenses
Gathering and transportation costs came in at $4 million, representing an increase of 21.2% from the year-ago quarter. Meanwhile, lease operating cost of $13 million saw a 27.4% year-over-year decline.
Total operating expenses fell 76% from the second quarter of 2015 to $63.4 million.
Cash Flow & EBITDAX
Comstock’s operating cash flow from continuing operations turned negative in the reported quarter, as it spend $8.3 million more cash than it generated by producing and selling oil and gas. On the contrary, the company reported operating cash flow of $15 million last year.
Earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other non-cash expenses (EBITDAX) from continuing operations also deteriorated significantly by 60% year over year to $19.3 million.
Capital Expenditure & Balance Sheet
In the reported quarter, Comstock spent $19.7 million on development drilling activities, a massive 50% decline from $39.4 million incurred a year ago. As of Jun 30, 2016, the company had $67.4 million in cash and cash equivalents and $1,145.2 million in long-term debt.
Outlook
The company projects 2016 oil production and natural gas output in the range of 3,800–4,100 barrels per day and 130–145 MMcf per day, respectively. For 2017, the company anticipates a decline in daily oil and gas and natural gas production to respectively 2,800–3,100 barrels and 90–100 MMcf.
Currently, Comstock Resources holds a Zacks Rank #2 (Buy). Other players in the energy sector that warrants a look include Midcoast Energy Partners LP , WPX Energy Inc and North Atlantic Drilling Limited . Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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Comstock Resources (CRK) Loss Wider in Q2, Revenues Fall
Domestic energy explorer Comstock Resources Inc. (CRK - Free Report) reported second-quarter 2016 loss of $4.05 per share (excluding one-time items), significantly wider than the Zacks Consensus Estimate of a loss of 61 cents and the year-ago adjusted loss of $1.11. The underperformance could be attributed to sliding oil and gas prices along with lower equivalent volumes.
Quarterly revenues plunged 47.3% year over year to $40.7 million but were slightly above the Zacks Consensus Estimate of $40 million.
Volume Analysis
Comstock’s quarterly volume decreased 6% year over year to 15.7 billion cubic feet equivalent (Bcfe), of which 86.5% was natural gas. Lower production from South Texas operations more than offset the output from its East Texas/North Louisiana properties. Natural gas output was up 22.7% but oil production fell almost 62%.
While volume in the East Texas/North Louisiana operating region – accounting for 76.3% of the total – improved 35.2% year over year to almost 12 Bcfe, output from South Texas properties came in at approximately 3.3 Bcfe (down 55.4%).
Price Realizations
Average oil price realization (before hedging) was $42.21 per barrel (compared with $55.34 per barrel in the second quarter of 2015) and average natural gas realization was $1.90 per thousand cubic feet/Mcf (compared with $2.37 per Mcf in the year-earlier quarter).
Costs & Expenses
Gathering and transportation costs came in at $4 million, representing an increase of 21.2% from the year-ago quarter. Meanwhile, lease operating cost of $13 million saw a 27.4% year-over-year decline.
Total operating expenses fell 76% from the second quarter of 2015 to $63.4 million.
Cash Flow & EBITDAX
Comstock’s operating cash flow from continuing operations turned negative in the reported quarter, as it spend $8.3 million more cash than it generated by producing and selling oil and gas. On the contrary, the company reported operating cash flow of $15 million last year.
Earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other non-cash expenses (EBITDAX) from continuing operations also deteriorated significantly by 60% year over year to $19.3 million.
Capital Expenditure & Balance Sheet
In the reported quarter, Comstock spent $19.7 million on development drilling activities, a massive 50% decline from $39.4 million incurred a year ago. As of Jun 30, 2016, the company had $67.4 million in cash and cash equivalents and $1,145.2 million in long-term debt.
Outlook
The company projects 2016 oil production and natural gas output in the range of 3,800–4,100 barrels per day and 130–145 MMcf per day, respectively. For 2017, the company anticipates a decline in daily oil and gas and natural gas production to respectively 2,800–3,100 barrels and 90–100 MMcf.
COMSTOCK RESOUR Price, Consensus and EPS Surprise
COMSTOCK RESOUR Price, Consensus and EPS Surprise | COMSTOCK RESOUR Quote
Zacks Rank
Currently, Comstock Resources holds a Zacks Rank #2 (Buy). Other players in the energy sector that warrants a look include Midcoast Energy Partners LP , WPX Energy Inc and North Atlantic Drilling Limited . Each of these stocks sports a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>