Comstock Posts Loss, Falls Short

Oil and natural gas firm Comstock Resources Inc. (CRK) reported weaker-than-expected third quarter results as low commodity prices more than offset the rise in production volumes. Loss from continuing operations came in at 28 cents per share, 2 cents wider than the Zacks Consensus Estimate of 26 cents. In the year-ago period, the company earned $1.18 per share. Oil and gas sales were down 58.8% year-over-year to $67.4 million. 

Volume Growth 
The company’s operational performance during the quarter continued to reflect the success of its enhanced onshore drilling programs and property acquisitions, resulting in quarterly volume growth of 13.2% year-over-year to 17.0 billion cubic feet equivalent (Bcfe), of which 94% was natural gas. Production in the East Texas/North Louisiana operating region increased 33.7% to 10.7 Bcfe, while production from the South Texas properties came in at 5.0 Bcfe, an approximately 6.7% decrease from the year-earlier level. 

Price Realizations Down 
Average price realization per thousand cubic feet equivalent (Mcfe) was $3.98, down 63.6% from the year-ago quarter. Average oil price realization was $57.96 per barrel and average natural gas realization was $3.63 per Mcf, compared to $105.15 per barrel and $10.16 per Mcf, respectively, in the year-earlier quarter.
 
Costs & Expenses 
Oil and gas operating costs were down 25.7% from the third quarter of 2008 to $16.0 million. However, overall operating expenses increased 1.9% year-over-year to $79.0 million. 

Cash Flow & EBITDAX
Comstock generated operating cash flow from continuing operations of $70.0 million, a decrease of 47.4% from the year-earlier period. Quarterly EBITDAX (earnings before interest, taxes, depreciation, depletion, amortization, exploration expense, and other non-cash expenses) decreased 66.3% year-over-year to $46.8 million. 

Capital Expenditure 
During the third quarter of 2009, Comstock spent $79.0 million on its exploration and development activities. Management guided towards full-year 2009 drilling spending budget of $355 million. Of the 2009 spending budget, 90% is dedicated to the company’s East Texas/North Louisiana operating region. The 2009 drilling program consists of approximately 52 wells (38.4 net). Of these, 41 wells (30.6 net) are horizontal Haynesville shale wells. 

Balance Sheet 
At the end of the quarter, Comstock had approximately $3.1 million in cash and cash equivalents and $340 million in long-term debt. Debt-to-capitalization at the end of the quarter was 24.2%.

Read the full analyst report on CRK