Comstock Resources(CRK) - 2024 Q2 - Quarterly Results

Highlights of 2024's Second Quarter Comstock reported an adjusted net loss of $58.2 million in Q2 2024 due to weak natural gas prices, despite generating $118 million in operating cash flow and bringing 15 new wells online - Financial results were heavily weighed down by very weak natural gas prices[7] - Natural gas and oil sales, including realized hedging gains, were $278 million[7] - Operating cash flow was $118 million, or $0.41 per diluted share[7] - Adjusted EBITDAX for the quarter was $167 million[7] - Adjusted net loss was $58.2 million, or $0.20 per share[7] - Liquidity was enhanced with a $400 million, 6.75% senior notes issuance[7] - The Haynesville shale drilling program turned 15 (14.4 net) operated wells to sales with an average initial production of 21 MMcf per day[7] Financial Performance Comstock reported a Q2 2024 net loss of $123.2 million, with an adjusted net loss of $58.2 million, primarily due to low natural gas prices, while hedging improved realized prices Second Quarter 2024 Financial Results Q2 2024 saw natural gas and oil sales of $278.2 million and a net loss of $123.2 million, with an adjusted net loss of $58.2 million, largely due to low gas prices and hedging losses Q2 2024 Key Financial Metrics | Metric | Value | | :--- | :--- | | Natural Gas & Oil Sales (incl. hedging) | $278.2 million | | Operating Cash Flow | $118.1 million | | Net Loss | ($123.2 million) | | Net Loss per Share | ($0.43) | | Adjusted Net Loss | ($58.2 million) | | Adjusted Net Loss per Share | ($0.20) | Q2 2024 Pricing and Costs | Metric | Value (per Mcf/Mcfe) | | :--- | :--- | | Realized Gas Price (unhedged) | $1.65 | | Realized Gas Price (hedged) | $2.12 | | Production Cost | $0.84 | | Unhedged Operating Margin | 50% | | Hedged Operating Margin | 61% | - The quarterly net loss was significantly impacted by a pre-tax $85.8 million unrealized loss on hedging contracts held for risk management[5] First Half 2024 Financial Results For the first half of 2024, Comstock reported $614.1 million in natural gas and oil sales and a net loss of $137.7 million, with an adjusted net loss of $66.8 million H1 2024 Key Financial Metrics | Metric | Value | | :--- | :--- | | Natural Gas & Oil Sales (incl. hedging) | $614.1 million | | Operating Cash Flow | $300.1 million | | Net Loss | ($137.7 million) | | Net Loss per Share | ($0.49) | | Adjusted Net Loss | ($66.8 million) | | Adjusted Net Loss per Share | ($0.24) | H1 2024 Production Costs and Margins | Metric | Value (per Mcfe) | | :--- | :--- | | Production Cost | $0.79 | | Unhedged Operating Margin | 57% | | Hedged Operating Margin | 65% | Drilling Results In Q2 2024, Comstock drilled 11 (9.2 net) Haynesville/Bossier shale wells with an average lateral length of 11,346 feet, turning 15 (14.4 net) wells to sales with average initial production of 21 MMcf per day - In Q2 2024, Comstock drilled 11 (9.2 net) operated horizontal Haynesville/Bossier shale wells[12] - The average lateral length for wells drilled in Q2 was 11,346 feet[12] - Since the last operational update, 15 (14.4 net) operated wells were turned to sales, with an average initial daily production rate of 21 MMcf per day and an average completed lateral length of 9,802 feet[13] Financial Statements The financial statements detail Comstock's Q2 and H1 2024 net losses, production volumes, prices, costs, and balance sheet changes, with non-GAAP reconciliations for key metrics Consolidated Statements of Operations Comstock reported total revenues of $246.8 million and a net loss of $123.2 million for Q2 2024, with a six-month net loss of $137.7 million, reversing prior year's net income Consolidated Statements of Operations (in thousands, except per share) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | :--- | :--- | | | 2024 | 2023 | 2024 | 2023 | | Total Revenues | $246,830 | $288,211 | $582,602 | $777,789 | | Operating Income (Loss) | $(92,493) | $(17,067) | $(105,340) | $128,553 | | Net Income (Loss) | $(123,249) | $(45,706) | $(137,723) | $88,797 | | Diluted Net Income (Loss) per Share | $(0.43) | $(0.17) | $(0.49) | $0.32 | Operating Results Q2 2024 saw increased total production to 130,949 MMcfe, but average realized gas prices fell to $2.12 per Mcf, while capital expenditures decreased to $221.0 million Production Volumes | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | :--- | :--- | | | 2024 | 2023 | 2024 | 2023 | | Natural gas production (MMcf) | 130,861 | 126,307 | 270,304 | 253,374 | | Total production (MMcfe) | 130,949 | 126,386 | 270,464 | 253,612 | Average Price and Cost per Mcfe | | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Average price including hedging | $2.12 | $2.26 | | Total production costs | $0.84 | $0.84 | Capital Expenditures (in thousands) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | :--- | :--- | | | 2024 | 2023 | 2024 | 2023 | | Total exploration and development | $221,019 | $321,988 | $477,243 | $646,694 | Non-GAAP Financial Measures Non-GAAP reconciliations show a Q2 2024 Adjusted Net Loss of $58.2 million, Adjusted EBITDAX of $166.7 million, and a free cash flow deficit of $104.0 million Adjusted Net Income (Loss) Reconciliation (in thousands) | | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net income (loss) | $(123,249) | $(45,706) | | Unrealized loss from derivative financial instruments | 85,804 | 59,989 | | Adjusted net income (loss) | $(58,214) | $1,039 | Adjusted EBITDAX (in thousands) | | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Total Adjusted EBITDAX | $166,705 | $182,155 | Free Cash Flow (Deficit) (in thousands) | | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Operating cash flow | $118,134 | $145,497 | | Less: Capital Expenditures & other | $(211,151) | $(328,958) | | Free cash deficit from operations | $(104,017) | $(183,461) | Consolidated Balance Sheets As of June 30, 2024, Comstock's total assets increased to $6.32 billion, total liabilities rose to $3.96 billion due to long-term debt, and stockholders' equity slightly decreased to $2.37 billion Balance Sheet Summary (in thousands) | | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $323,407 | $461,493 | | Property and equipment, net | $5,574,617 | $5,384,771 | | Total Assets | $6,324,525 | $6,253,623 | | Total Current Liabilities | $552,275 | $681,491 | | Long-term debt | $2,856,045 | $2,640,391 | | Total Liabilities | $3,958,620 | $3,870,432 | | Total Stockholders' Equity | $2,365,905 | $2,383,191 | Corporate Information Comstock Resources, a leading independent natural gas producer focused on the Haynesville shale, will host a conference call on July 31, 2024, to discuss its Q2 2024 results - A conference call to discuss Q2 2024 results is scheduled for 10:00 a.m. Central Time on July 31, 2024[15] - Comstock Resources, Inc. is a leading independent natural gas producer with operations focused on the development of the Haynesville shale in North Louisiana and East Texas[18]