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Comstock Resources (CRK) Q4 Earnings Top on Ramped-Up Output

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Comstock Resources, Inc. (CRK - Free Report) delivered fourth-quarter 2019 adjusted net income per share of 22 cents, ahead of the Zacks Consensus Estimate of 18 cents, attributable to strong production.  However, the figure declined 37.1% from the year-ago adjusted net income per share of 35 cents due to lower commodity price realizations.

Total revenues of $289.25 million came below the Zacks Consensus Estimate of $298 million. The top line, however, soared 88.43% year over year.

Production & Realized Prices

Production of oil and natural gas averaged 125 billion cubic feet equivalent (Bcfe), up 247.3% from the year-ago level as the company’s successful Haynesville shale drilling program continues to yield returns. Natural gas output accounted for approximately 97% of the company’s total production compared with almost 86% in the year-earlier quarter, primarily owing to the Covey Park acquisition.

On third-quarter earnings call, Comstock announced its acquisition of a privately-held company with Haynesville shale properties, which was made on Nov 1. Located in DeSoto Parish, LA, the acquired acreage consists of 3,000 net acres alongside 12.7 net future drilling locations. Per the deal, Comstock issued 4,500,000 shares of common stock in connection with the all-stock transaction. According to the company, the acquired oil and gas reserves are anticipated to have a capacity of 89 Bcfe.

The average realized crude oil price in the quarter under review was $50.36 per barrel, down 7.1% from the year-ago realization of $54.21. The average realized natural gas price was $2.14 per thousand cubic feet compared with $3.49 in the same period last year.

Comstock Resources, Inc. Price, Consensus and EPS Surprise

Comstock Resources, Inc. Price, Consensus and EPS Surprise

Comstock Resources, Inc. price-consensus-eps-surprise-chart | Comstock Resources, Inc. Quote

Expenses

Total operating expenses in the fourth quarter summed $187.56 million, higher than the year-ago figure of $72.04 million, primarily due to increased lease operating and gathering & transportation expenses. Notably, the company’s lease operating costs rose to $28.8 million from $13.7 million a year ago. Moreover, Comstock’s production taxes ascended to $10.4 million. Gathering and transportation expenses also climbed to $29.9 million.

Cash Flow, EBITDAX & Balance Sheet

Comstock’s operating cash flow was $187.9 million, surging 96.6% from the year-ago number of $95.5 million. Earnings before interest, taxes, depreciation, amortization and exploration (or EBITDAX) also soared handsomely. The metric skyrocketed 108.6% year over year to $234.8 million from $112.5 million a year ago.

As of Dec 31, the company had $18.53 million as cash and cash equivalents. Its long-term debt of $2500.13 million translated to a debt-to-capitalization ratio of 68.6%.

Guidance

For 2020, Comstock now forecasts capex of $421 million with its main focus on Haynesville shale.

Comstock aims to operate five drilling rigs and 46 operated horizontal wells all the year round and expects completion of 18 wells drilled in 2019.

Zacks Rank & Key Picks

Comstock has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Contango Oil & Gas Company ), Apache Corporation (APA - Free Report) and Chesapeake Energy Corporation (CHK - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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