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Wider-than-Expected Q4 Loss at Comstock Resources

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Domestic energy explorer, Comstock Resources Inc. (CRK - Free Report) reported fourth-quarter 2013 adjusted loss per share of 32 cents, wider than the Zacks Consensus Estimate of a loss of 24 cents. The disappointing results can be attributed to reduced natural gas drilling operations.

However, Comstock’s performance improved from the year-ago quarter’s adjusted loss of 55 cents per share. Significant reduction in operating expenses favored the results.

Total revenue increased 13.2% year over year to $105.9 million amid higher natural gas price realizations. However, it failed to beat the Zacks Consensus Estimate of $116.0 million, owing to considerable fall in total output.  

For the year ended Dec 31, 2013, Comstock reported adjusted loss of $1.52 per share, in line with the Zacks Consensus Estimate. Moreover, the figure narrowed from loss per share of $1.90 in 2012. Revenues of $420.3 million were 2.7% above the year-ago number.

Volume Analysis

Comstock’s quarterly volume contracted 22.8% year over year to 16.4 billion cubic feet equivalent (Bcfe), of which 74.5% was natural gas. The downtrend reflects output shrinkage from its East Texas/North Louisiana operations that comprised most of the total volume.

Production in the East Texas/North Louisiana operating region decreased 34.0% year over year to 10.2 Bcfe (99.1% gas). Output from South Texas and Other properties came in at approximately 5.9 Bcfe and 0.4 Bcfe, respectively.

Price Realizations

Average oil price realization (before hedging) was $92.64 per barrel (versus $92.46 per barrel in the fourth quarter of 2012) and average natural gas realization was $3.36 per thousand cubic feet/Mcf (compared with $3.05 per Mcf in the year-earlier quarter).

Costs & Expenses

Gathering and transportation costs came in at $4.2 million, representing a decline of 22.2% from the year-ago quarter. Lease operating cost of approximately $13.7 million was however up 8.6% year over year. Total operating expenses decreased a substantial 33.7% from the fourth quarter of 2012 to $130.3 million.

Cash Flow & EBITDAX

Comstock generated operating cash flow from continuing operations of $64.1 million in the reported quarter against $58.9 million in the year-earlier quarter. EBITDAX (earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other non-cash expenses) from continuing operations were $78.9 million, down 4.3% year over year.

Capital Expenditure & Balance Sheet

During the fourth quarter, Comstock spent $108.3 million on development drilling activities. As of Dec 31, 2013, Comstock had approximately $3.0 million in cash and cash equivalents and $798.7 million in long-term debt. The debt-to-capitalization ratio at the end of the quarter stood at approximately 45.6%.

Zacks Rating

Comstock currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can consider better-ranked players in the oil and gas exploration and production sector like Athlon Energy Inc. , Cabot Oil & Gas Corporation (COG - Free Report) and Warren Resources Inc. . All the stocks sport a Zacks Rank #1 (Strong Buy).

In-Depth Zacks Research for the Tickers Above

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Comstock Resources, Inc. (CRK) - free report >>

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