crk-20230731
0000023194FALSE00000231942023-07-312023-07-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): July 31, 2023
COMSTOCK RESOURCES, INC.
(Exact Name of Registrant as Specified in Charter)
Nevada001-0326294-1667468
(State or other
jurisdiction incorporation)		(Commission File Number)(I.R.S. Employer
Identification Number)
5300 Town and Country Boulevard
Suite 500
Frisco, Texas 75034
(Address of principal executive offices)
(972) 668-8800
(Registrant's Telephone No.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.50 (per share)CRKNew York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02     Results of Operations and Financial Condition
On July 31, 2023, Comstock Resources, Inc. ("Comstock" or the "Company") announced financial results for the quarter ended June 30, 2023. A copy of the press release announcing Comstock's earnings and operating results for these periods and other matters is attached hereto as Exhibit 99.1.
The earnings press release contains financial measures that are not in accordance with generally accepted accounting principles in the United States ("GAAP"). Comstock has provided reconciliations within the earnings release of the non-GAAP financial measures to the most directly comparable GAAP financial measures. The non-GAAP financial measures should be considered in addition to, but not as a substitute for, measures of financial performance prepared in accordance with GAAP that are presented in the earnings release.
The information in this Form 8-K and the Exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to the liability of that section, and shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01     Financial Statements and Exhibits
Exhibit No.
Description



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
COMSTOCK RESOURCES, INC.
Dated: July 31, 2023By:/s/ ROLAND O. BURNS
Roland O. Burns
President and Chief Financial Officer


Exhibit 99.1
boxa.jpg
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
SECOND QUARTER 2023 FINANCIAL AND OPERATING RESULTS
FRISCO, TEXAS, July 31, 2023 – Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) today reported financial and operating results for the quarter ended June 30, 2023.
Highlights of 2023's Second Quarter
•Weak natural gas prices have weighed heavily on the second quarter results.
•Natural gas and oil sales, including realized hedging gains, were $285 million.
•Operating cash flow was $145 million or $0.53 per diluted share.
•Adjusted EBITDAX for the quarter was $182 million.
•Adjusted net income was just over break even for the quarter.
•Solid results from Haynesville shale drilling program with 15 (12.0 net) operated wells turned to sales since the Company's last update with an average initial production of 21 MMcf per day.
•Comstock continues to have success in its Western Haynesville exploratory play. Comstock's fourth and fifth well were recently turned to sales with strong initial production rates.
Financial Results for the Three Months Ended June 30, 2023
Comstock's natural gas and oil sales in the second quarter of 2023 totaled $285.2 million (including realized hedging gains of $55.5 million). Operating cash flow (excluding changes in working capital) generated in the second quarter of 2023 was $145.5 million, and net loss available to common stockholders for the second quarter was $45.7 million or $0.17 per share. The reported net loss in the quarter included a pre-tax $60.0 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 second quarter of 2023 was $1.0 million, or $0.00 per diluted share.
Comstock's production cost per Mcfe in the second quarter averaged $0.84 per Mcfe, which was comprised of $0.36 for gathering and transportation costs, $0.27 for lease operating costs, $0.15 for production and other taxes and $0.06 for cash general and administrative expenses. Comstock's unhedged operating margin was 54% in the second quarter of 2023 and 63% after hedging.



Financial Results for the Six Months Ended June 30, 2023
Natural gas and oil sales for the six months ended June 30, 2023 totaled $675.6 million (including realized hedging gains of $65.9 million). Operating cash flow (excluding changes in working capital) generated during the first six months of 2023 was $400.4 million, and net income available to common stockholders was $88.8 million or $0.32 per share. Net income during the first six months of 2023 included a pre-tax $4.0 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 six months ended June 30, 2023 was $93.0 million or $0.33 per diluted share.
Comstock's production cost per Mcfe during the six months ended June 30, 2023 averaged $0.84 per Mcfe, which was comprised of $0.36 for gathering and transportation costs, $0.27 for lease operating costs, $0.14 for production and other taxes and $0.07 for cash general and administrative expenses. Comstock's unhedged operating margin was 65% during the first six months of 2023 and 69% after hedging.
Drilling Results
Comstock drilled 21 (17.2 net) operated horizontal Haynesville/Bossier shale wells in the second quarter of 2023 which had an average lateral length of 10,887 feet. Comstock turned 17 (13.0 net) operated wells to sales in the second quarter of 2023.
Since its last operational update in May, Comstock has turned 15 (12.0 net) operated Haynesville/Bossier shale wells to sales. These wells had initial daily production rates that averaged 21 MMcf per day. The completed lateral length of these wells averaged 10,671 feet.
Included in the wells turned to sales were the Dinkins JG #1 and the McCullough Ingram A #1, Comstock's fourth and fifth successful Western Haynesville wells. The Dinkins well was drilled to a total vertical depth of 18,042 feet and has a 9,565 foot completed lateral. The well's initial production rate was 34 MMcf per day. The McCullough Ingram well was drilled to a total vertical depth of 17,836 feet and has a 8,256 foot completed lateral. The well's initial production rate was 35 MMcf per day.
Declaration of Quarterly Dividend
On July 31, 2023, Comstock's Board of Directors declared a quarterly dividend of $0.125 per common share. The dividend will be payable on September 15, 2023 to stockholders of record at the close of business on September 1, 2023.
Earnings Call Information
Comstock has planned a conference call for 10:00 a.m. Central Time on August 1, 2023, to discuss the second quarter 2023 operational and financial results. Investors wishing to listen should visit the Company's website at www.comstockresources.com for a live webcast. Investors wishing to participate in the conference call telephonically will need to register at https://register.vevent.com/register/BId240081b2bc14ea8931c4866b16b9dbd. Upon registering to participate in the conference call, participants will receive the dial-in number and a personal PIN number to access the conference call. On the day of the call, please dial in at least 15 minutes in advance to ensure a timely connection to the call. The conference call will also be broadcast live in listen-only mode and can be accessed via the website URL: https://edge.media-server.com/mmc/p/mtj2p68k.


If you are unable to participate in the original conference call, a web replay will be available for twelve months beginning at 1:00 p.m. CT on August 1, 2023. The replay of the conference can be accessed using the webcast link: https://edge.media-server.com/mmc/p/mtj2p68k.
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
June 30,		Six Months Ended
June 30,
2023202220232022
Revenues:
Natural gas sales$228,892 $858,838 $606,924 $1,381,795 
Oil sales860 2,504 2,802 4,388 
Total natural gas and oil sales229,752 861,342 609,726 1,386,183 
Gas services58,459 84,912 168,063 129,485 
Total revenues288,211 946,254 777,789 1,515,668 
Operating expenses:
Production and ad valorem taxes19,599 21,729 34,505 35,549 
Gathering and transportation45,395 36,964 90,969 69,057 
Lease operating34,031 25,079 68,861 51,265 
Exploration— 2,342 1,775 3,363 
Depreciation, depletion and amortization140,177 119,201 274,160 225,929 
Gas services55,390 82,778 156,685 123,453 
General and administrative10,038 9,063 22,406 17,286 
Loss (gain) on sale of assets648 (19)(125)(21)
Total operating expenses305,278 297,137 649,236 525,881 
Operating income (loss)(17,067)649,117 128,553 989,787 
Other income (expenses):
Gain (loss) from derivative financial instruments(4,495)(72,826)61,914 (510,319)
Other income598 182 1,058 450 
Interest expense(39,188)(44,320)(77,458)(90,811)
Loss on early retirement of debt— (46,840)— (46,840)
Total other expenses(43,085)(163,804)(14,486)(647,520)
Income (loss) before income taxes(60,152)485,313 114,067 342,267 
(Provision for) benefit from income taxes14,446 (108,422)(25,270)(76,800)
Net income (loss)(45,706)376,891 88,797 265,467 
Preferred stock dividends— (4,363)— (8,678)
Net income (loss) available to common stockholders$(45,706)$372,528 $88,797 $256,789 
Net income (loss) per share:
Basic$(0.17)$1.60 $0.32 $1.10 
Diluted$(0.17)$1.36 $0.32 $0.96 
Weighted average shares outstanding:
Basic276,669 232,045 276,610 232,011 
Diluted276,669 277,614 276,610 277,485 
Dividends per share$0.125 $— $0.25 $— 






COMSTOCK RESOURCES, INC.
OPERATING RESULTS
(In thousands, except per unit amounts)
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Natural gas production (MMcf)126,307 123,950 253,374 238,856 
Oil production (Mbbls)13 24 40 45 
Total production (MMcfe)126,386 124,092 253,612 239,127 
Natural gas sales$228,892 $858,838 $606,924 $1,381,795 
Natural gas hedging settlements (1)
55,494 (257,363)65,877 (374,549)
Total natural gas including hedging284,386 601,475 672,801 1,007,246 
Oil sales860 2,504 2,802 4,388 
Total natural gas and oil sales including hedging$285,246 $603,979 $675,603 $1,011,634 
Average natural gas price (per Mcf)$1.81 $6.93 $2.40 $5.79 
Average natural gas price including hedging (per Mcf)$2.25 $4.85 $2.66 $4.22 
Average oil price (per barrel)$66.15 $104.33 $70.05 $97.51 
Average price (per Mcfe)$1.82 $6.94 $2.40 $5.80 
Average price including hedging (per Mcfe)$2.26 $4.87 $2.66 $4.23 
Production and ad valorem taxes$19,599 $21,729 $34,505 $35,549 
Gathering and transportation45,395 36,964 90,969 69,057 
Lease operating34,031 25,079 68,861 51,265 
Cash general and administrative (2)
7,733 7,482 18,054 14,210 
Total production costs$106,758 $91,254 $212,389 $170,081 
Production and ad valorem taxes (per Mcfe)$0.15 $0.18 $0.14 $0.15 
Gathering and transportation (per Mcfe)0.36 0.30 0.36 0.29 
Lease operating (per Mcfe)0.27 0.20 0.27 0.21 
Cash general and administrative (per Mcfe)0.06 0.06 0.07 0.06 
Total production costs (per Mcfe)$0.84 $0.74 $0.84 $0.71 
Unhedged operating margin54%89%65%88%
Hedged operating margin63%85%69%83%
Gas services revenue$58,459 $84,912 $168,063 $129,485 
Gas services expenses55,390 82,778 156,685 123,453 
Gas services margin3,069 2,134 11,378 6,032 
Natural Gas and Oil Capital Expenditures:
Proved property acquisitions$— $(69)$— $205 
Unproved property acquisitions15,953 21,551 56,648 25,182 
Total natural gas and oil properties acquisitions$15,953 $21,482 $56,648 $25,387 
Exploration and Development:
Development leasehold$4,975 $655 $13,718 $5,287 
Exploratory drilling and completion74,622 18,840 104,312 30,397 
Development drilling and completion231,038 225,371 511,214 414,419 
Other development costs11,353 18,325 17,450 36,937 
Total exploration and development capital expenditures$321,988 $263,191 $646,694 $487,040 
(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 June 30,Six Months Ended
June 30,
2023202220232022
ADJUSTED NET INCOME AVAILABLE TO COMMON STOCKHOLDERS:
Net income (loss) available to common stockholders$(45,706)$372,528 $88,797 $256,789 
Unrealized (gain) loss from derivative financial instruments59,989 (184,537)3,963 135,770 
Loss on early retirement of debt— 46,840 — 46,840 
Non-cash interest amortization from adjusting debt assumed in
acquisition to fair value		— 1,414 — 4,174 
Exploration expense— 2,342 1,775 3,363 
Loss (gain) on sale of assets648 (19)(125)(21)
Adjustment to (provision for) benefit from income taxes(13,892)35,050 (1,364)(37,539)
Adjusted net income available to common stockholders (1)
$1,039 $273,618 $93,046 $409,376 
Adjusted net income available to common stockholders per share (2)
$— $1.00 $0.33 $1.50 
Diluted shares outstanding276,669 277,614 276,610 277,484 

ADJUSTED EBITDAX:
Net income (loss)$(45,706)$376,891 $88,797 $265,467 
Interest expense39,188 44,320 77,458 90,811 
Income taxes(14,446)108,422 25,270 76,800 
Depreciation, depletion, and amortization140,177 119,201 274,160 225,929 
Exploration— 2,342 1,775 3,363 
Unrealized (gain) loss from derivative financial instruments59,989 (184,537)3,963 135,770 
Stock-based compensation2,305 1,581 4,351 3,076 
Loss on early extinguishment of debt— 46,840 — 46,840 
Loss (gain) on sale of assets648 (19)(125)(21)
Total Adjusted EBITDAX (3)
$182,155 $515,041 $475,649 $848,035 
(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)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 June 30,Six Months Ended
June 30,
2023202220232022
OPERATING CASH FLOW(1):
Net income (loss)$(45,706)$376,891 $88,797 $265,467 
Reconciling items:
Unrealized (gain) loss from derivative financial instruments59,989 (184,537)3,963 135,770 
Deferred income taxes (benefit)(13,910)95,117 25,270 70,329 
Depreciation, depletion and amortization140,177 119,201 274,160 225,929 
Loss on early retirement of debt— 46,840 — 46,840 
Amortization of debt discount and issuance costs1,994 2,873 3,991 7,098 
Stock-based compensation2,305 1,581 4,351 3,076 
Loss (gain) on sale of assets648 (19)(125)(21)
Operating cash flow$145,497 $457,947 $400,407 $754,488 
(Increase) decrease in accounts receivable60,218 (232,043)316,210 (203,918)
(Increase) decrease in other current assets2,715 (2,104)1,201 881 
Increase in accounts payable and accrued expenses123,080 187,116 56 145,083 
Net cash provided by operating activities$331,510 $410,916 $717,874 $696,534 

Three Months Ended June 30,Six Months Ended
June 30,
2023202220232022
FREE CASH FLOW(2):
Operating cash flow$145,497 $457,947 $400,407 $754,488 
Less:
Exploration and development capital expenditures(321,988)(263,191)(646,694)(487,040)
Other capital expenditures(6,970)(18,057)(11,513)(18,079)
Preferred stock dividends— (4,363)— (8,678)
Free cash flow (deficit) from operations$(183,461)$172,336 $(257,800)$240,691 
Acquisitions of natural gas and oil properties(15,953)(21,482)(56,648)(25,387)
Proceeds from divestitures41,165 48 41,295 93 
Free cash flow (deficit) after acquisition and divestiture activity$(158,249)$150,902 $(273,153)$215,397 
(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 natural gas and oil properties.







COMSTOCK RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30,
2023		December 31,
2022
ASSETS
Cash and cash equivalents$9,919 $54,652 
Accounts receivable193,917 510,127 
Derivative financial instruments17,553 23,884 
Other current assets60,777 56,324 
Total current assets282,166 644,987 
Property and equipment, net5,026,001 4,622,655 
Goodwill335,897 335,897 
Operating lease right-of-use assets192,670 90,716 
$5,836,734 $5,694,255 
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable$552,315 $530,195 
Accrued costs132,057 183,111 
Operating leases77,690 38,411 
Derivative financial instruments— 4,420 
Total current liabilities762,062 756,137 
Long-term debt2,176,418 2,152,571 
Deferred income taxes451,004 425,734 
Derivative financial instruments2,052 — 
Long-term operating leases115,048 52,385 
Asset retirement obligation29,964 29,114 
Total liabilities3,536,548 3,415,941 
Stockholders' Equity:
Common stock139,246 138,759 
Additional paid-in capital1,255,382 1,253,417 
Accumulated earnings905,558 886,138 
Total stockholders' equity2,300,186 2,278,314 
$5,836,734 $5,694,255