Comstock Resources(CRK)2024-10-31 17:28Financial Performance - Total revenues for the nine months ended September 30, 2024, were $887.07 million, a decrease from $1.15 billion in the same period in 2023[8] - Net loss for the nine months ended September 30, 2024, was $171.52 million, compared to a net income of $103.52 million in the same period in 2023[8] - Net income (loss) for the nine months ended September 30, 2024, was a loss of $163.44 million, compared to a profit of $103.52 million in the same period in 2023[8] - Net loss attributable to common stock was $25.7 million in Q3 2024, compared to net income of $14.7 million in Q3 2023[55] - Net loss of $25.7 million ($0.09 per share) reported for Q3 2024, compared to net income of $14.7 million ($0.05 per share) in Q3 2023, driven by lower natural gas prices[80] - Net income for Q1 2023 was $134.5 million, but the company experienced a net loss of $45.7 million in Q2 2023 and $16.3 million in Q1 2024[9] - Basic net loss per share for the nine months ended September 30, 2024, was $0.57, compared to a net income per share of $0.37 in the same period in 2023[8] - Total operating expenses for the nine months ended September 30, 2024, were $1.05 billion, up from $978.71 million in the same period in 2023[8] - Depreciation, depletion, and amortization expenses for the nine months ended September 30, 2024, were $593.28 million, up from $422.35 million in the same period in 2023[8] - Depreciation, depletion, and amortization (DD&A) increased by $60.2 million to $208.4 million in Q3 2024, with a DD&A rate of $1.56 per Mcfe, up from $1.13 per Mcfe in Q3 2023[74] - Interest expense increased to $54.5 million in Q3 2024 from $43.6 million in Q3 2023, due to additional senior notes issuance and higher interest rates[78] - Income tax benefit of $14.7 million in Q3 2024, compared to a provision of $3.6 million in Q3 2023, reflecting an effective tax rate of 36.4%[79] - The effective tax rate for the three months ended September 30, 2024 was 36.4%, compared to 19.7% in the same period in 2023[48] Revenue and Sales - Natural gas sales for the nine months ended September 30, 2024, were $756.26 million, down from $911.07 million in the same period in 2023[8] - Oil sales for the nine months ended September 30, 2024, were $2.93 million, compared to $4.11 million in the same period in 2023[8] - Gas services revenue for the nine months ended September 30, 2024, was $127.89 million, a decrease from $239.35 million in the same period in 2023[8] - Natural gas and oil sales decreased by $51.8 million (17%) to $253.6 million in Q3 2024 compared to $305.5 million in Q3 2023, primarily due to lower natural gas prices[67] - Gas service revenues decreased by $20.4 million (29%) to $50.8 million in Q3 2024 compared to $71.3 million in Q3 2023, driven by lower natural gas prices[69] - Natural gas production increased 2% to 133.1 Bcf in Q3 2024, with an average price of $1.90 per Mcf, down 18% from $2.33 per Mcf in Q3 2023[67] Assets and Liabilities - Total current assets as of September 30, 2024, were $299.71 million, down from $461.49 million as of December 31, 2023[5] - Long-term debt increased to $2.95 billion as of September 30, 2024, from $2.64 billion as of December 31, 2023[5] - Net property and equipment increased to $5.59 billion as of September 30, 2024, from $5.38 billion as of December 31, 2023[5] - Total stockholders' equity decreased to $2.36 billion as of September 30, 2024, from $2.38 billion as of December 31, 2023[6] - Total stockholders' equity attributable to Comstock decreased to $2.30 billion as of September 30, 2024, from $2.36 billion as of December 31, 2023[6] - Total stockholders' equity increased from $2,278.3 million at the beginning of 2023 to $2,362.0 million by September 30, 2024[9] - The company's cash and cash equivalents decreased by $2.9 million to $13.8 million as of September 30, 2024[10] - Other current assets decreased from $86.6 million at the end of 2023 to $58.4 million as of September 30, 2024[14] - Prepaid drilling costs decreased from $70.1 million at December 31, 2023, to $41.1 million at September 30, 2024[14] - The company's goodwill was $335.9 million as of September 30, 2024, with no impairment indicators identified[21] - Right-of-use lease assets totaled $82.1 million, with short-term and long-term liabilities, and no finance-type leases as of September 30, 2024[22] - The company had right-of-use lease assets of $82.1 million related to corporate office, office equipment, vehicles, and drilling rigs[22] - Accrued costs as of September 30, 2024 were $106.057 million, including $34.088 million in transportation costs and $22.086 million in interest payable[29] - The reserve for future abandonment costs increased to $32.016 million as of September 30, 2024, up from $30.773 million at the beginning of the period[30] - Accounts receivable from purchasers were $100.8 million as of September 30, 2024, compared to $166.6 million as of December 31, 2023[43] - The carrying value of commodity-based derivatives was $76.5 million as of September 30, 2024, with a fair value of $76.5 million[50] - The carrying value of the 6.75% senior notes due 2029 was $1.60 billion as of September 30, 2024, with a fair value of $1.58 billion[50] - The carrying value of the 5.875% senior notes due 2030 was $965.0 million as of September 30, 2024, with a fair value of $897.5 million[50] - The carrying value of the Company's bank credit facility was $415,000 as of September 30, 2024, compared to $480,000 as of December 31, 2023[50] - Long-term debt totaled $2.95 billion as of September 30, 2024, including $1.62 billion in 6.75% Senior Notes due 2029 and $965 million in 5.875% Senior Notes due 2030[60] - The company had approximately $3.0 billion principal amount of long-term debt outstanding as of September 30, 2024, with $965.0 million bearing interest at a fixed rate of 5.875% and $1.62 billion at a fixed rate of 6.75%[96] Cash Flow and Capital Expenditures - Cash flow from operating activities for the nine months ended September 30, 2024, was $353.3 million, compared to $788.6 million in the same period in 2023[10] - Net cash from operating activities decreased by $435.4 million (55%) to $353.3 million in the first nine months of 2024 compared to $788.6 million in the same period in 2023, primarily due to lower natural gas prices[81] - Capital expenditures and acquisitions for the nine months ended September 30, 2024, totaled $817.5 million, down from $1.09 billion in the same period in 2023[10] - Capital expenditures decreased by $315.0 million in the first nine months of 2024, primarily due to lower drilling and completion activity, with total cash capital expenditures of $788.5 million[84] - The company expects to spend an additional $225 million to $275 million in the remaining three months of 2024 on drilling, completion, infrastructure, and other activities[84] - The company acquired approximately 189,000 net undeveloped acres in its Western Haynesville area for $50.0 million in March 2024[59] - Capital expenditures and acquisitions totaled $817.5 million for the nine months ended September 30, 2024, down from $1,088.9 million in the same period of 2023[10] - Capitalized exploratory well costs increased significantly, from $37.1 million at the end of Q3 2023 to $129.9 million at the end of Q3 2024[16] - Additions to exploratory well costs pending determination of proved reserves for the nine months ended September 30, 2024, were $219.8 million, up from $179 million in the same period in 2023[16] Debt and Financing - Long-term debt increased to $2.95 billion as of September 30, 2024, from $2.64 billion as of December 31, 2023[5] - The company issued $400.0 million principal amount of 6.75% senior notes due 2029 in April 2024, receiving net proceeds of $365.2 million[61] - The company issued $400.0 million in 6.75% senior notes due 2029 in April 2024, receiving net proceeds of $365.2 million after deducting initial purchasers' discounts[82] - The company issued $400.0 million principal amount of 6.75% senior notes in April 2024, receiving net proceeds of $365.2 million after deducting discounts, used to pay down bank credit facility borrowings[82] - Comstock issued 12.5 million shares of common stock in a private placement in March 2024, raising $100.5 million and increasing majority stockholder ownership to 67%[62] - The company issued 12,500,000 shares of common stock in a private placement during the first nine months of 2024, receiving proceeds of $100.5 million[85] - The company issued 12,500 common shares in Q1 2024, raising $100.45 million[9] - As of September 30, 2024, the company had $1.1 billion of liquidity, including $1,085.0 million of unused borrowing capacity under its bank credit facility and $13.8 million of cash and cash equivalents[86] - As of September 30, 2024, the company had $415.0 million of borrowings outstanding under its bank credit facility, with aggregate commitments of $1.5 billion[89] - As of September 30, 2024, the company had $415.0 million of borrowings outstanding under its bank credit facility, with aggregate commitments of $1.5 billion maturing on November 15, 2027[89] - Cash payments for interest increased to $180.3 million in the nine months ended September 30, 2024, up from $150.2 million in the same period in 2023[56] Derivatives and Hedging - The company had natural gas price swap contracts for 310.775 million MMBtu at an average price of $3.51 per MMBtu as of September 30, 2024[32] - The company entered into additional natural gas swap contracts for 7.3 million MMBtu at an average price of $3.40 per MMBtu after September 30, 2024[33] - The company recognized a gain of $75.163 million on natural gas price derivatives for the three months ended September 30, 2024[34] - Gains on natural gas price derivatives recognized in earnings for the three months ended September 30, 2024 were $75.163 million, compared to $14.276 million in the same period in 2023[34] - Gain from derivative financial instruments for the nine months ended September 30, 2024, was $89.22 million, compared to $76.19 million in the same period in 2023[8] - The company had natural gas price swaps to hedge approximately 64.4 Bcf of its 2024 natural gas production at an average price of $3.54 per MMBtu[94] - The company had natural gas price swaps to hedge approximately 64.4 Bcf of 2024 production at an average price of $3.54 per MMBtu, and collars for 54.8 Bcf of 2025 production with an average ceiling price of $3.80 and floor price of $3.50[94] - An increase of 10% in the market price of natural gas on September 30, 2024, would decrease the fair value of the company's natural gas price swaps and collars by approximately $115.3 million[95] - A 10% increase in natural gas prices on September 30, 2024 would decrease the fair value of the company's natural gas price swaps and collars by approximately $115.3 million, while a 10% decrease would increase the fair value by $115.2 million[95] Stock and Compensation - Stock-based compensation expense for the three months ended September 30, 2024 was $3.9 million, compared to $2.7 million in the same period in 2023[35] - Total unrecognized compensation cost related to unvested restricted stock grants was $15.3 million as of September 30, 2024, expected to be recognized over 1.9 years[36] - Total unrecognized compensation cost related to PSUs was $9.7 million as of September 30, 2024, expected to be recognized over 2.2 years[37] - The Company had 2,091,087 shares of unvested restricted stock outstanding as of September 30, 2024, with a weighted average grant date fair value of $9.25 per share[36] - The Company had 1,290,755 PSUs outstanding as of September 30, 2024, with a weighted average grant date fair value of $13.21 per unit[37] - Weighted average unvested restricted stock outstanding increased to 2,091 thousand shares in Q3 2024, up from 1,469 thousand in Q3 2023[52] - Weighted average unearned PSUs outstanding rose to 1,291 thousand in Q3 2024, compared to 744 thousand in Q3 2023[53] - Unvested restricted stock included in common stock outstanding was 2,091,087 shares as of September 30, 2024, compared to 1,429,084 shares as of December 31, 2023[51] Leases and Commitments - Lease costs for the three months ended September 30, 2024 were $17.046 million, compared to $65.695 million for the same period in 2023[25] - Expected future payments for short-term leased drilling services as of September 30, 2024 were $53.7 million[26] - Total lease payments for operating leases as of September 30, 2024 were $89.501 million, with a total lease liability of $82.053 million[27] - The company entered into agreements for two new drilling rigs in August 2024, with an annual commitment of $12.8 million per rig[63] Taxes and Other Expenses - Production and ad valorem taxes decreased by $12.8 million (50%) to $12.6 million in Q3 2024 compared to $25.4 million in Q3 2023, due to lower statutory tax rates and reduced sales[70] - Gathering and transportation costs increased by $7.0 million (15%) to $54.0 million in Q3 2024 compared to $47.0 million in Q3 2023, driven by production growth in higher-cost areas[71] - Lease operating expenses decreased by $2.4 million (8%) to $29.2 million in Q3 2024 compared to $31.7 million in Q3 2023, due to lower water disposal and production costs[72] - Comstock received $0.3 million in fees for drilling, operating, and marketing services provided to partnerships owned by its majority stockholder in Q3 2024[64] - Comstock received $0.3 million in fees for drilling, operating, and marketing services provided to partnerships in Q3 2024, consistent with Q3 2023[64] Joint Ventures and Other Assets - Pinnacle Gas Services (PGS) assets that cannot be used by Comstock for general corporate purposes were $101.6 million as of September 30, 2024[13] - Pinnacle Gas Services, a joint venture, had $101.6 million in other property and equipment as of September 30, 2024[13] - The company had no exploratory wells with capitalized costs for more than one year as of September 30, 2024 and December 31, 2023[17] - The company had no exploratory wells with capitalized costs for more than one year as of September 30, 2024 and December 31, 2023[17]