Energy Prospectus

FRISCO, TX, May 03, 2022 (GLOBE NEWSWIRE) -- Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter ended March 31, 2022.

Highlights of 2022's First Quarter

Generated free cash flow from operations of $68 million in the quarter.

Paid down $85 million of debt in the quarter.

Adjusted EBITDAX increased 27% to $333 million.

Operating cash flow (excluding working capital changes) increased 44% to $297 million or $1.07 per diluted share. < This is the KEY STAT. It compares to my operating cash flow forecast of $285.9 million.

Revenues, after realized hedging losses, were $408 million, 23% higher than 2021's first quarter. < Compares to my Revenues forecast of $421 million, which always include my estimate of cash settlements on their hedges and regional differentals.

Adjusted net income to common stockholders was $136 million for the quarter or $0.51 per diluted share. < Compares to my forecast of $138.8 million net income. You all need to ignore "Reported Net Income". GAAP accounting rules for hedges makes it a worthless number.

Strong results from Haynesville drilling program with 15 (12.0 net) operated wells turned to sales with an average initial production of 29 MMcf per day. < At $6.00 gas price these wells payout in less than 6 months.

Financial Results for the Three Months Ended March 31, 2022

Revenues in the first quarter of 2022 totaled $407.7 million (inclusive of realized hedging losses of $117.2 million). Net cash provided by operating activities (excluding changes in working capital) generated in the first quarter was $296.5 million, and net loss available to common stockholders for the first quarter of 2022 was $115.7 million or $(0.50) per share. Net loss in the quarter included a pre-tax $320.3 million unrealized loss on hedging contracts held for risk management. Excluding this item and certain other items, adjusted net income available to common stockholders for the first quarter of 2022 was $135.8 million, or $0.51 per diluted share.

Comstock's production cost per Mcfe in the first quarter was $0.69 per Mcfe, which was comprised of $0.28 for gathering and transportation costs, $0.23 for lease operating costs, $0.12 for production and other taxes and $0.06 for cash general and administrative expenses. Production cost was $0.67 per Mcfe in the fourth quarter of 2021 and $0.60 in the first quarter of 2021. Comstock's unhedged operating margin was 85% in the first quarter of 2022 and 81% after hedging. < This is VERY GOOD.

First Quarter 2022 Drilling Results

Comstock drilled 15 (13.1 net) operated horizontal Haynesville/Bossier shale wells in the first quarter of 2022 which had an average lateral length of 10,186 feet. The Company also participated in an additional 14 (0.7 net) non-operated Haynesville shale wells in the first quarter of 2022. Comstock turned 33 (15.2 net) wells to sales in the first quarter of 2022 and currently expects to turn an additional 14 (12.7 net) wells to sales in the second quarter of 2022.

Since its last operational update in February, Comstock has turned 15 (12.0 net) new operated Haynesville/Bossier shale wells to sales. These wells had initial daily production rates that averaged 29 MMcf per day. The completed lateral length of these wells averaged 10,115 feet.

Other Matters

Comstock has planned a conference call for 10:00 a.m. Central Time on May 4, 2022, to discuss the first quarter of 2022 operational and financial results. Investors wishing to participate should visit the Company's website at www.comstockresources.com for a live webcast or dial 844-776-7840 (international dial-in use 661-378-9538) and provide access code 2547726 when prompted. If you are unable to participate in the original conference call, a web replay will be available approximately 24 hours following the completion of the call on Comstock's website at www.comstockresources.com. The web replay will be available for approximately one week. A replay of the conference call will be available beginning at 1:00 p.m. CT on May 4, 2022 and will continue until 1:00 p.m. CT on May 11, 2022. To hear the replay, call 855-859-2056 (404-537-3406 if calling from outside the US). The conference call access code is 2547726.

My valuation before their guidance update goes to $26.80 just because Comstock's Q1 operating cash flow came in slightly higher than my forecast. Keep in mind that I am still basing my forecasts on HH gas averaging $6.00 in Q2 & Q3, $6.50 in Q4 and $5.00 in 2023. A $1.00 increase in the HH gas price for each period would increase my valuation of CRK to $30.50. For each $1.00 increase at HH, CRK's realized gas price goes up about $0.50/mcf.

During the CC they should give detailed guidance for the rest of 2022. Previously, their guidance was 4% to 5% production growth this year.

On the conference call listen carefully to their comments about getting premium gas prices from the LNG exporters along the Gulf Coast. That is going to have the potential for a significant revenue boost for AR, CRK and RRC. During Winter Storm Uri, CRK was able to sell some undedicated gas for over $50/mcf.

I will be updating my forecast/valuation model after the conference call tomorrow morning.

PS: Learn to ignore stock price moves after the markets close. They are often caused by very small volume trades. When the market closed CRK was at $18.68, up 130% YTD. A short-term trader was probably just harvesting a nice gain.

Hi Dan,

Regarding your comment from the conference calls:

"The potential for a significant revenue boost for AR, CRK and RRC"

I'm gathering from this that Antero, Comstock and Range Resources all have ongoing good pipeline access to the Gulf LNG terminals.
Is this correct?


Saw this article yesterday, that suggests DVN and CTRA are also looking at ways to get better pipeline access for LNG delivery.

https://finance.yahoo.com/news/1-coterr ... 29749.html

Thanks
Kevin Gardiner

Crap hedges do matter

CRK down 8 % to 17.18 whilst NG is soaring.

They are learning though.

They wrote new hedges for 2023 costless collars with upside to 9 +.. well done!

This might be a buying opportunity

Yes, AR, CRK and RRC all have pipeline access to the Gulf Coast. Comstock is a Haynesville company, so it has lots of pipeline access and plenty of capacity to increase production. AR and RRC are Appalachian (Marcellus/Utica) companies, so their ability to raise production is limited by the fact that pipeline takeaway capacity is close to being maxed out from the region. However, AR and RRC do have outstanding marketing teams that can get their production to markets that have premium prices.

Ceo says " What a great day" stock down 11 %.

Slide 11 is interesting, shows well performance

# 1 & 2 are 15000 ft length and they have the lowest performance. They had some shorter lateral wells that produced 40-50% more

https://investors.comstockresources.com ... d0d4995344

My plan is to pivot to the name when the crap hedges roll off. In the mean time, there are other companies that will have a better "realized price on ng sales" Also, the stock has moved up strongly , and who knows if the wildly strong market for NG holds up in 2023/2024.

Their FCF yield is about 5 % when some others are 4 x that. Let's see what PXD & CLR do, they release tonight.

Debt 2.6+ .2 Pref + Mcap 3.9 + 6.7 b total EV... FCF of 335 m gives you only 5 % yield! they show equity @ 900 m but thats the Balance sheet number.