Exhibit 99.1
 | 5300 Town and Country Blvd., Suite 500 | ||||
| Frisco, Texas 75034 | |||||
| Telephone: (972) 668-8834 | |||||
| Contact: Ron Mills | |||||
| VP of Finance and Investor Relations | |||||
| Web Site: www.comstockresources.com | |||||
| NEWS RELEASE | |||||
For Immediate Release
COMSTOCK RESOURCES, INC. REPORTS
FOURTH QUARTER 2021 FINANCIAL AND OPERATING RESULTS
FRISCO, TEXAS, February 15, 2022 – Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter and year ended December 31, 2021.
Highlights of 2021's Fourth Quarter
•Generated free cash flow from operations of $105 million in the quarter and $262 million for the year.
•Generated free cash flow including acquisition and divestiture activity of $204 million in the quarter and $343 million for the year.
•Paid down $190 million of debt in the quarter.
•Adjusted EBITDAX increased 41% to $297 million.
•Operating cash flow (excluding working capital changes) increased 62% to $250 million or $0.90 per diluted share.
•Fourth quarter capital spending was $140 million for drilling and completion activities and $39 million for acquisition activities.
•Production increased 12% to 1,348 MMcfe per day (99% natural gas).
•Revenues, after realized hedging losses, were $380 million, 37% higher than 2020's fourth quarter.
•Adjusted net income to common stockholders was $99 million for the quarter or $0.37 per diluted share.
Financial Results for the Three Months Ended December 31, 2021
Revenues in the fourth quarter of 2021 totaled $379.9 million (inclusive of realized hedging losses of $275.5 million). Net cash provided by operating activities (excluding changes in working capital) generated in the fourth quarter was $249.8 million, and net income available to common stockholders for the fourth quarter of 2021 was $356.0 million ($1.30 per diluted share). Net income in the quarter included a pre-tax $469.8 million unrealized gain on hedging contracts held for risk management and a $162.2
million loss on the sale of the Company's Bakken assets. Excluding these items and certain other unusual items, adjusted net income available to common stockholders for the fourth quarter of 2021 was $98.8 million, or $0.37 per diluted share.
Comstock's production cost per Mcfe in the fourth quarter was $0.67 per Mcfe, which was comprised of $0.28 for gathering and transportation costs, $0.21 for lease operating costs, $0.10 for production and other taxes and $0.08 for cash general and administrative expenses. Production cost was $0.65 per Mcfe in the third quarter of 2021 and $0.60 in the fourth quarter of 2020. Comstock's unhedged operating margin was 87% in the fourth quarter of 2021 and 78% after hedging.
Financial Results for the Year Ended December 31, 2021
Revenues for the year ended December 31, 2021 totaled $1.4 billion (inclusive of realized hedging losses of $419.9 million). Net cash provided by operating activities (excluding changes in working capital) was $908.2 million, and the Company reported a net loss available to common stockholders for the year ended December 31, 2021 of $259.2 million ($1.12 per share). The net loss during the year included a pre-tax $140.9 million unrealized loss on the change in fair market value of the Company's hedging contracts, a $352.6 million loss on the early retirement of the Company's 9.75% and 7.50% senior notes and a $162.2 million loss on the sale of the Company's Bakken assets. Excluding these items and certain other unusual items, adjusted net income available to common stockholders for 2021 was $303.0 million, or $1.16 per diluted share.
Fourth Quarter Drilling Results
Comstock drilled nine (7.0 net) operated horizontal Haynesville/Bossier shale wells in the fourth quarter of 2021 which had an average lateral length of 11,163 feet. The Company also participated in an additional nine (0.5 net) non-operated Haynesville shale wells in the fourth quarter of 2021. Comstock turned 27 (8.6 net) wells to sales in the fourth quarter of 2021 and currently expects to turn an additional 13 (8.1 net) wells to sales in the first quarter of 2022.
Since its last operational update in November 2021, Comstock has turned 16 (12.2 net) new operated Haynesville/Bossier shale wells to sales. These wells had initial daily production rates that averaged 23 MMcf per day. The completed lateral length of these wells averaged 10,508 feet.
Included in the wells completed in the fourth quarter were the Company's first 15,000 foot lateral Haynesville shale wells. The Talley 32-29-20 #1 and Talley 32-29-20 #2 were drilled to a total measured depth of 26,848 feet and 27,357 feet, respectively, with completed lateral lengths of 14,685 feet and 15,155 feet, respectively. These wells had initial production rates of 41 and 48 MMcf per day.
2022 Drilling Budget
The Company currently plans to spend approximately $750 million to $800 million in 2022 on drilling and completion activities primarily focused on the continued development of its Haynesville/Bossier shale properties, which includes $60 million to $65 million on infrastructure, workovers and other development costs. Under its current operating plan, Comstock expects to drill 67 (52.1 net) and complete 69 (56.0 net) operated horizontal wells utilizing five to seven rigs during 2022. Comstock also expects to spend an additional $8 million to $12 million on leasing activities in 2022.
The program will be funded entirely through operating cash flow and the Company is expected to generate substantial free cash flow in 2022 which it will use to retire debt and initiate a return of capital program once the Company reaches its leverage target.
Other Matters
Comstock has planned a conference call for 10:00 a.m. Central Time on February 16, 2022, to discuss the fourth quarter of 2021 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 7758087 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 February 16, 2022 and will continue until 1:00 p.m. CT on February 23, 2022. To hear the replay, call 855-859-2056 (404-537-3406 if calling from outside the US). The conference call access code is 7758087.
This press release may contain "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties which could cause actual results to differ materially from those described herein. Although the Company believes the expectations in such statements to be reasonable, there can be no assurance that such expectations will prove to be correct. Information concerning the assumptions, uncertainties and risks that may affect the actual results can be found in the Company’s filings with the Securities and Exchange Commission (“SEC”) available on the Company’s website or the SEC’s website at sec.gov.
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. The Company's stock is traded on the New York Stock Exchange under the symbol CRK.
COMSTOCK RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Natural gas sales | $ | 641,985 | $ | 261,424 | $ | 1,775,768 | $ | 809,399 | |||||||||||||||
| Oil sales | 13,391 | 13,347 | 74,962 | 48,796 | |||||||||||||||||||
| Total oil and gas sales | 655,376 | 274,771 | 1,850,730 | 858,195 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Production and ad valorem taxes | 12,673 | 9,199 | 49,141 | 36,967 | |||||||||||||||||||
| Gathering and transportation | 34,344 | 29,159 | 130,940 | 106,582 | |||||||||||||||||||
| Lease operating | 26,317 | 23,342 | 103,467 | 102,452 | |||||||||||||||||||
| Depreciation, depletion and amortization | 110,075 | 104,284 | 469,388 | 417,112 | |||||||||||||||||||
| General and administrative | 10,991 | 6,049 | 34,943 | 32,040 | |||||||||||||||||||
| Exploration | — | — | — | 27 | |||||||||||||||||||
| Loss (gain) on sale of assets | 162,170 | (1) | 162,077 | (17) | |||||||||||||||||||
| Total operating expenses | 356,570 | 172,032 | 949,956 | 695,163 | |||||||||||||||||||
| Operating income | 298,806 | 102,739 | 900,774 | 163,032 | |||||||||||||||||||
| Other income (expenses): | |||||||||||||||||||||||
| Gain (loss) from derivative financial instruments | 195,378 | 81,929 | (560,648) | 9,951 | |||||||||||||||||||
| Other income (expense) | (372) | 287 | 636 | 1,080 | |||||||||||||||||||
| Interest expense | (47,840) | (66,065) | (218,485) | (234,829) | |||||||||||||||||||
| Loss on early retirement of debt | — | — | (352,599) | (861) | |||||||||||||||||||
| Total other income (expenses) | 147,166 | 16,151 | (1,131,096) | (224,659) | |||||||||||||||||||
| Income (loss) before income taxes | 445,972 | 118,890 | (230,322) | (61,627) | |||||||||||||||||||
| Benefit from (provision for) income taxes | (85,571) | (36,967) | (11,403) | 9,210 | |||||||||||||||||||
| Net income (loss) | 360,401 | 81,923 | (241,725) | (52,417) | |||||||||||||||||||
| Preferred stock dividends and accretion | (4,411) | (4,400) | (17,500) | (30,996) | |||||||||||||||||||
| Net income (loss) available to common stockholders | $ | 355,990 | $ | 77,523 | $ | (259,225) | $ | (83,413) | |||||||||||||||
| Net income (loss) per share: | |||||||||||||||||||||||
| Basic | $ | 1.53 | $ | 0.34 | $ | (1.12) | $ | (0.39) | |||||||||||||||
| Diluted | $ | 1.30 | $ | 0.30 | $ | (1.12) | $ | (0.39) | |||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||
| Basic | 231,972 | 231,377 | 231,633 | 215,194 | |||||||||||||||||||
| Diluted | 276,713 | 275,127 | 231,633 | 215,194 | |||||||||||||||||||
COMSTOCK RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
| As of December 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | 30,663 | $ | 30,272 | |||||||
| Accounts receivable | 267,738 | 145,786 | |||||||||
| Derivative financial instruments | 5,258 | 8,913 | |||||||||
| Other current assets | 15,077 | 14,839 | |||||||||
| Total current assets | 318,736 | 199,810 | |||||||||
| Property and equipment, net | 4,007,146 | 4,084,550 | |||||||||
| Goodwill | 335,897 | 335,897 | |||||||||
| Derivative financial instruments | — | 661 | |||||||||
| Operating lease right-of-use assets | 6,450 | 3,025 | |||||||||
| Other assets | — | 40 | |||||||||
| $ | 4,668,229 | $ | 4,623,983 | ||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Accounts payable | $ | 314,569 | $ | 259,284 | |||||||
| Accrued costs | 135,026 | 133,019 | |||||||||
| Operating leases | 2,444 | 2,284 | |||||||||
| Derivative financial instruments | 181,945 | 47,005 | |||||||||
| Total current liabilities | 633,984 | 441,592 | |||||||||
| Long-term debt | 2,615,235 | 2,517,149 | |||||||||
| Deferred income taxes | 197,417 | 200,583 | |||||||||
| Derivative financial instruments | 4,042 | 2,364 | |||||||||
| Long-term operating leases | 4,075 | 740 | |||||||||
| Asset retirement obligation | 25,673 | 19,290 | |||||||||
| Other non-current liabilities | 24 | 492 | |||||||||
| Total liabilities | 3,480,450 | 3,182,210 | |||||||||
| Mezzanine Equity: | |||||||||||
| Preferred stock | 175,000 | 175,000 | |||||||||
| Stockholders' Equity: | |||||||||||
| Common stock | 116,462 | 116,206 | |||||||||
| Additional paid-in capital | 1,100,359 | 1,095,384 | |||||||||
| Accumulated earnings (deficit) | (204,042) | 55,183 | |||||||||
| Total stockholders' equity | 1,012,779 | 1,266,773 | |||||||||
| $ | 4,668,229 | $ | 4,623,983 | ||||||||
COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands, except per unit amounts)
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Gas production (MMcf) | 123,002 | 109,013 | 489,274 | 450,836 | |||||||||||||||||||
| Oil production (Mbbls) | 176 | 340 | 1,210 | 1,508 | |||||||||||||||||||
| Total production (MMcfe) | 124,060 | 111,052 | 496,534 | 459,883 | |||||||||||||||||||
| Natural gas sales | $ | 641,985 | $ | 261,424 | $ | 1,775,768 | $ | 809,399 | |||||||||||||||
Natural gas hedging settlements (1) | (272,891) | 240 | (411,798) | 122,036 | |||||||||||||||||||
| Total natural gas including hedging | 369,094 | 261,664 | 1,363,970 | 931,435 | |||||||||||||||||||
| Oil sales | 13,391 | 13,347 | 74,962 | 48,796 | |||||||||||||||||||
Oil hedging settlements (1) | (2,588) | 1,767 | (8,077) | 12,849 | |||||||||||||||||||
| Total oil including hedging | 10,803 | 15,114 | 66,885 | 61,645 | |||||||||||||||||||
| Total oil and gas sales including hedging | $ | 379,897 | $ | 276,778 | $ | 1,430,855 | $ | 993,080 | |||||||||||||||
| Average gas price (per Mcf) | $ | 5.22 | $ | 2.40 | $ | 3.63 | $ | 1.80 | |||||||||||||||
| Average gas price including hedging (per Mcf) | $ | 3.00 | $ | 2.40 | $ | 2.79 | $ | 2.07 | |||||||||||||||
| Average oil price (per barrel) | $ | 76.09 | $ | 39.27 | $ | 61.95 | $ | 32.36 | |||||||||||||||
| Average oil price including hedging (per barrel) | $ | 61.38 | $ | 44.47 | $ | 55.28 | $ | 40.88 | |||||||||||||||
| Average price (per Mcfe) | $ | 5.28 | $ | 2.47 | $ | 3.73 | $ | 1.87 | |||||||||||||||
| Average price including hedging (per Mcfe) | $ | 3.06 | $ | 2.49 | $ | 2.88 | $ | 2.16 | |||||||||||||||
| Production and ad valorem taxes | $ | 12,673 | $ | 9,199 | $ | 49,141 | $ | 36,967 | |||||||||||||||
| Gathering and transportation | 34,344 | 29,159 | 130,940 | 106,582 | |||||||||||||||||||
| Lease operating | 26,317 | 23,342 | 103,467 | 102,452 | |||||||||||||||||||
Cash general and administrative (2) | 9,484 | 4,319 | 28,145 | 25,576 | |||||||||||||||||||
| Total production costs | $ | 82,818 | $ | 66,019 | $ | 311,693 | $ | 271,577 | |||||||||||||||
| Production and ad valorem taxes (per Mcfe) | $ | 0.10 | $ | 0.09 | $ | 0.10 | $ | 0.08 | |||||||||||||||
| Gathering and transportation (per Mcfe) | 0.28 | 0.26 | 0.26 | 0.23 | |||||||||||||||||||
| Lease operating (per Mcfe) | 0.21 | 0.21 | 0.21 | 0.22 | |||||||||||||||||||
| Cash general and administrative (per Mcfe) | 0.08 | 0.04 | 0.06 | 0.06 | |||||||||||||||||||
| Total production costs (per Mcfe) | $ | 0.67 | $ | 0.60 | $ | 0.63 | $ | 0.59 | |||||||||||||||
| Unhedged operating margin | 87 | % | 76 | % | 83 | % | 68 | % | |||||||||||||||
| Hedged operating margin | 78 | % | 76 | % | 78 | % | 73 | % | |||||||||||||||
| Oil and Gas Capital Expenditures: | |||||||||||||||||||||||
| Proved property acquisitions | $ | 21,781 | $ | — | $ | 21,781 | $ | — | |||||||||||||||
| Unproved property acquisitions | 17,222 | 6,492 | 35,871 | 7,949 | |||||||||||||||||||
| Total oil and gas properties acquisitions | $ | 39,003 | $ | 6,492 | $ | 57,652 | $ | 7,949 | |||||||||||||||
| Exploration and Development: | |||||||||||||||||||||||
| Development leasehold | $ | 6,159 | $ | 5,659 | $ | 12,953 | $ | 13,022 | |||||||||||||||
| Exploratory drilling and completion | 6,966 | — | 6,966 | — | |||||||||||||||||||
| Development drilling and completion | 114,617 | 155,691 | 569,141 | 436,074 | |||||||||||||||||||
| Other development costs | 12,373 | 8,480 | 39,168 | 34,572 | |||||||||||||||||||
| Total exploration and development capital expenditures | $ | 140,115 | $ | 169,830 | $ | 628,228 | $ | 483,668 | |||||||||||||||
(1)Included in gain (loss) from derivative financial instruments in operating results.
(2)Excludes stock-based compensation.
COMSTOCK RESOURCES, INC.
NON-GAAP FINANCIAL MEASURES
(In thousands, except per share amounts)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| ADJUSTED NET INCOME AVAILABLE TO COMMON STOCKHOLDERS: | ||||||||||||||||||||||||||
| Net income (loss) available to common stockholders | $ | 355,990 | $ | 77,523 | $ | (259,225) | $ | (83,413) | ||||||||||||||||||
| Unrealized (gain) loss from derivative financial instruments | (469,830) | (80,158) | 140,934 | 124,545 | ||||||||||||||||||||||
| Non-cash interest amortization from adjusting debt assumed in acquisition to fair value | 2,659 | 5,811 | 12,621 | 22,112 | ||||||||||||||||||||||
| (Gain) loss on sale of assets | 162,170 | (1) | 162,077 | (17) | ||||||||||||||||||||||
| Loss on early retirement of debt | — | — | 352,599 | 861 | ||||||||||||||||||||||
| Non-cash accretion from adjusting preferred stock issued in acquisition to fair value | — | — | — | 5,417 | ||||||||||||||||||||||
| Impairment of unevaluated oil and gas properties | — | — | — | 27 | ||||||||||||||||||||||
| Adjustment to (provision for) benefit from income taxes | 47,777 | 31,408 | (106,000) | (19,930) | ||||||||||||||||||||||
Adjusted net income available to common stockholders (1) | $ | 98,766 | $ | 34,583 | $ | 303,006 | $ | 49,602 | ||||||||||||||||||
Adjusted net income available to common stockholders per share (2) | $ | 0.37 | $ | 0.14 | $ | 1.16 | $ | 0.23 | ||||||||||||||||||
| Diluted shares outstanding | 276,713 | 275,127 | 275,663 | 278,554 | ||||||||||||||||||||||
| ADJUSTED EBITDAX: | ||||||||||||||||||||||||||
| Net income (loss) | $ | 360,401 | $ | 81,923 | $ | (241,725) | $ | (52,417) | ||||||||||||||||||
Interest expense (3) | 46,811 | 66,301 | 218,322 | 235,218 | ||||||||||||||||||||||
| Income taxes | 85,571 | 36,967 | 11,403 | (9,210) | ||||||||||||||||||||||
| Depreciation, depletion, and amortization | 110,075 | 104,284 | 469,388 | 417,112 | ||||||||||||||||||||||
| Exploration | — | — | — | 27 | ||||||||||||||||||||||
| Unrealized (gain) loss from derivative financial instruments | (469,830) | (80,158) | 140,934 | 124,545 | ||||||||||||||||||||||
| Stock-based compensation | 1,508 | 1,730 | 6,799 | 6,464 | ||||||||||||||||||||||
| Loss on early extinguishment of debt | — | — | 352,599 | 861 | ||||||||||||||||||||||
| (Gain) loss on sale of assets | 162,170 | (1) | 162,077 | (17) | ||||||||||||||||||||||
Total Adjusted EBITDAX (4) | $ | 296,706 | $ | 211,046 | $ | 1,119,797 | $ | 722,583 | ||||||||||||||||||
(1)Adjusted net income available to common stockholders is presented because of its acceptance by investors and by Comstock management as an indicator of the Company's profitability excluding loss on early retirement of debt, non-cash unrealized gains and losses on derivative financial instruments, gains and losses on sales of assets and other unusual items.
(2)Adjusted net income available to common stockholders per share is calculated to include the dilutive effects of unvested restricted stock pursuant to the two-class method and performance stock units and preferred stock pursuant to the treasury stock method.
(3)Includes realized gains or losses from interest rate derivative financial instruments.
(4)Adjusted EBITDAX is presented in the earnings release because management believes that adjusted EBITDAX, which represents Comstock's results from operations before interest, income taxes, and certain non-cash items, including loss on early retirement of debt, depreciation, depletion and amortization and exploration expense, is a common alternative measure of operating performance used by certain investors and financial analysts.
COMSTOCK RESOURCES, INC.
NON-GAAP FINANCIAL MEASURES
(In thousands)
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
OPERATING CASH FLOW (1): | |||||||||||||||||||||||
| Net income (loss) | $ | 360,401 | $ | 81,923 | $ | (241,725) | $ | (52,417) | |||||||||||||||
| Reconciling items: | |||||||||||||||||||||||
| Unrealized (gain) loss from derivative financial instruments | (469,830) | (80,158) | 140,934 | 124,545 | |||||||||||||||||||
| Deferred income taxes (benefit) | 81,377 | 37,034 | (3,565) | (9,409) | |||||||||||||||||||
| Depreciation, depletion and amortization | 110,075 | 104,284 | 469,388 | 417,112 | |||||||||||||||||||
| Loss on early retirement of debt | — | — | 352,599 | 861 | |||||||||||||||||||
| Amortization of debt discount and issuance costs | 4,116 | 9,807 | 21,703 | 34,038 | |||||||||||||||||||
| Stock-based compensation | 1,508 | 1,730 | 6,799 | 6,464 | |||||||||||||||||||
| Exploration | — | — | — | 27 | |||||||||||||||||||
| (Gain) loss on sale of assets | 162,170 | (1) | 162,077 | (17) | |||||||||||||||||||
| Operating cash flow | $ | 249,817 | $ | 154,619 | $ | 908,210 | $ | 521,204 | |||||||||||||||
| (Increase) decrease in accounts receivable | (24,573) | (44,827) | (121,952) | 34,555 | |||||||||||||||||||
| (Increase) decrease in other current assets | (2,883) | (1,272) | (2,033) | 7,019 | |||||||||||||||||||
| Increase in accounts payable and accrued expenses | 18,091 | 77,226 | 74,780 | 12,923 | |||||||||||||||||||
| Net cash provided by operating activities | $ | 240,452 | $ | 185,746 | $ | 859,005 | $ | 575,701 | |||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
FREE CASH FLOW (2): | |||||||||||||||||||||||
| Operating cash flow | $ | 249,817 | $ | 154,619 | $ | 908,210 | $ | 521,204 | |||||||||||||||
| Less: | |||||||||||||||||||||||
| Exploration and development capital expenditures | (140,115) | (169,830) | (628,228) | (483,668) | |||||||||||||||||||
| Preferred dividends | (4,411) | (4,400) | (17,500) | (25,580) | |||||||||||||||||||
| Free cash flow from operations | $ | 105,291 | $ | (19,611) | $ | 262,482 | $ | 11,956 | |||||||||||||||
| Acquisition of oil and gas properties | (39,003) | (6,492) | (57,652) | (7,949) | |||||||||||||||||||
| Proceeds from divestiture of oil and gas properties | 138,099 | — | 138,099 | — | |||||||||||||||||||
| Free cash flow after acquisition and divestiture activity | $ | 204,387 | $ | (26,103) | $ | 342,929 | $ | 4,007 | |||||||||||||||
(1)Operating cash flow is presented in the earnings release because management believes it to be useful to investors as a common alternative measure of cash flows which excludes changes to other working capital accounts.
(2)Free cash flow from operations and free cash flow after acquisition and divestiture activity are presented in the earnings release because management believes them to be useful indicators of the Company's ability to internally fund acquisitions and debt maturities after exploration and development capital expenditures, preferred dividend payments, proved and unproved property acquisitions and proceeds from divestiture of oil and gas properties.