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Comstock (CRK) Q1 Loss Narrows on Higher Gas Production

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Comstock Resources, Inc. (CRK - Free Report) reported first-quarter 2018 loss of 23 cents per share (excluding one-time items), significantly narrower than the Zacks Consensus Estimate of a loss of 68 cents. The better-than-expected results were driven by the growth in natural gas production. Higher-than-expected realized prices also benefited the company’s earnings and revenues.

The average realized price for oil stood at $68.71 a barrel, significantly above the estimated $61 per barrel. Comstock’s quarterly loss also significantly narrowed from the year-ago adjusted loss of $1.75 per share on natural gas output growth and higher crude prices.

Quarterly revenues increased to $72.6 million from $53.8 million a year ago. Revenues from natural gas sales jumped 45.4% to $59.5 million in the quarter under review. However, the top line lagged the Zacks Consensus Estimate of $76 million.

Comstock Resources, Inc. Price, Consensus and EPS Surprise

Comstock Resources, Inc. Price, Consensus and EPS Surprise | Comstock Resources, Inc. Quote

Volume Analysis

Comstock’s quarterly volume was 22.8 billion cubic feet equivalent (Bcfe), 46.2% higher compared with 15.6 Bcfe in the prior-year quarter. Natural gas output increased 54.6%, constituting 95% of the total production, whereas oil output plunged 39.4% in the reported quarter. The growth in natural gas production is attributable to the company's successful Haynesville shale drilling program. On the other hand, the lack of drilling activities in the Eagle Ford Shale led to the decline in the oil output.

Price Realizations

Average oil price realization (before hedging) was $68.71 per barrel compared with $48.60 in first-quarter 2017, reflecting an increase of 41.4%. Average natural gas realization was $2.75 per thousand cubic feet/Mcf compared with $2.92 per Mcf in the year-earlier quarter, reflecting a decline of 5.8%.

Costs & Expenses

Total operating expenses soared 51.1% from first-quarter 2017 figure to $77.7 million, primarily due to loss on the sale of oil and gas properties of $28.6 million in the quarter.

Production taxes came in at $1.8 million in the reported quarter, increasing from the year-ago quarter. Gathering/Transportation and depreciation costs also witnessed a year-over-year increase in the first quarter of 2018. These were partially offset by lease operating and general/administrative expenses that decreased in the reported quarter.

Cash Flow & EBITDAX

Comstock’s operating cash inflow from continuing operations was $35.7 million. This compared favorably with the operating cash inflow of about $15.9 million in the first quarter of 2017.  

EBITDAX from continuing operations increased significantly. The metric surged 56.9% year over year to $53.7 million.

Capital Expenditure & Balance Sheet

In the reported quarter, Comstock’s capital expenditure amounted to $46.5 million compared with $38.3 million in the year-ago quarter. The company spent $38.5 million on development drilling activities. As of Mar 31, 2018, the company had $50.9 million in cash and cash equivalents, and $1,131.4 million in long-term debt.

Zacks Rank and Other Key Picks

Comstock is an independent energy company engaged in the acquisition, development, production and exploration of oil and natural gas properties. The company carries a Zacks Rank #2 (Buy).

Other top-ranked players in the same industry include Bonanza Creek Energy, Inc. (BCEI - Free Report) , Eclipse Resources Corp. (ECR - Free Report) and Geopark Ltd. , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Bonanza Creek delivered an average positive earnings surprise of 215.36% in the last four quarters.

Eclipse Resources delivered an average positive earnings surprise of 133.33% in the trailing four quarters.

Geopark’s 2018 earnings are expected to witness year-over-year growth of 745.516%.

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