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Comstock Resources (CRK) Loss Wider-than-Expected in Q3

MDR BAK CRK UPLMQ

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Domestic energy explorer Comstock Resources Inc. (CRK - Free Report) reported third-quarter 2016 loss of $3.27 per share (excluding one-time items), substantially wider than the Zacks Consensus Estimate of a loss of $2.14. The underperformance can be attributed to weak oil prices.

However, Comstock’s quarterly loss narrowed from the year-ago adjusted loss of $5.30 per share. Increasing natural gas volumes and a significant decline in operating expenses supported the improvement.

 

Quarterly revenues plunged 18% year over year to $50 million but came in above the Zacks Consensus Estimate of $46 million.

Volume Analysis

Comstock’s quarterly volume decreased 7.5% year over year to 16 billion cubic feet equivalent (Bcfe), of which 87.5% was natural gas. Lower production from South Texas properties more than offset the increase in output from its East Texas/North Louisiana operations. Natural gas output inched up 3.7% but oil production plunged 49.6%.

While volume in the East Texas/North Louisiana operating region – accounting for 78.8% of the total production– increased to 12.6 Bcfe, output from South Texas properties came in at approximately 3.2 Bcfe.

Price Realizations

Average oil price realization (before hedging) was $42.07 per barrel compared with $43.63 per barrel in the third quarter of 2015. Average natural gas realization was $2.62 per thousand cubic feet/Mcf as against $2.50 per Mcf in the year-earlier quarter.

Costs & Expenses

Gathering and transportation costs came in at $3.8 million, up 2.7% from the year-ago quarter. Lease operating cost of $12.3 million saw a 26.3% year-over-year decline.

Total operating expense fell 77.3% from the third quarter of 2015 to $149.1 million.

Cash Flow & EBITDAX

COMSTOCK RESOUR Price, Consensus and EPS Surprise

 

Comstock’s operating cash flow from continuing operations increased 8.5% from the third quarter of 2015 to $4.9 million.

Earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other non-cash expenses (EBITDAX) from continuing operations also deteriorated significantly. The metric deteriorated by 17.5% year over year to $29.7 million.

Capital Expenditure & Balance Sheet

In the reported quarter, Comstock spent $2.7 million on development drilling activities. This marks a massive 89.4% decline from $25.4 million incurred a year ago. As of Sep 30, 2016, the company had $26.6 million in cash and cash equivalents and $1,025.5 million in long-term debt.

Zacks Rank

Currently, Comstock Resources holds a Zacks Rank #2 (Buy).

Other well-ranked players from the broader energy sector include Braskem S.A. (BAK - Free Report) , Ultra Petroleum Corp. (UPLMQ - Free Report) and McDermott International Inc. (MDR - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the last four quarters, Braskem posted an average positive earnings surprise of 105.5%.

Ultra Petroleum, on the other hand, posted an average positive earnings surprise of 65.91% in the last four quarters.

In the last four quarters, McDermott posted an average positive earnings surprise of 250.00%.

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