COMSTOCK RESOURCES, INC. REPORTS SECOND QUARTER 2023 FINANCIAL AND OPERATING RESULTS

Comstock Resources, Inc.

FRISCO, TX, July 31, 2023 (GLOBE NEWSWIRE) -- 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,
		2023				2022				2023				2022
Revenues:
Natural gas sales	$	228,892			$	858,838			$	606,924			$	1,381,795
Oil sales		860				2,504				2,802				4,388
Total natural gas and oil sales		229,752				861,342				609,726				1,386,183
Gas services		58,459				84,912				168,063				129,485
Total revenues		288,211				946,254				777,789				1,515,668
Operating expenses:
Production and ad valorem taxes		19,599				21,729				34,505				35,549
Gathering and transportation		45,395				36,964				90,969				69,057
Lease operating		34,031				25,079				68,861				51,265
Exploration		—				2,342				1,775				3,363
Depreciation, depletion and amortization		140,177				119,201				274,160				225,929
Gas services		55,390				82,778				156,685				123,453
General and administrative		10,038				9,063				22,406				17,286
Loss (gain) on sale of assets		648				(19	)			(125	)			(21	)
Total operating expenses		305,278				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 income		598				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 taxes		14,446				(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:
Basic		276,669				232,045				276,610				232,011
Diluted		276,669				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,
		2023				2022				2023				2022
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 hedging		284,386				601,475				672,801				1,007,246
Oil sales		860				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 transportation		45,395				36,964				90,969				69,057
Lease operating		34,031				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 margin		54	%			89	%			65	%			88	%
Hedged operating margin		63	%			85	%			69	%			83	%
Gas services revenue	$	58,459			$	84,912			$	168,063			$	129,485
Gas services expenses		55,390				82,778				156,685				123,453
Gas services margin		3,069				2,134				11,378				6,032
Natural Gas and Oil Capital Expenditures:
Proved property acquisitions	$	—			$	(69	)		$	—			$	205
Unproved property acquisitions		15,953				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 completion		74,622				18,840				104,312				30,397
Development drilling and completion		231,038				225,371				511,214				414,419
Other development costs		11,353				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,
		2023				2022				2023				2022
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 instruments		59,989				(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 assets		648				(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 outstanding		276,669				277,614				276,610				277,484

ADJUSTED EBITDAX:
Net income (loss)	$	(45,706	)		$	376,891			$	88,797			$	265,467
Interest expense		39,188				44,320				77,458				90,811
Income taxes		(14,446	)			108,422				25,270				76,800
Depreciation, depletion, and amortization		140,177				119,201				274,160				225,929
Exploration		—				2,342				1,775				3,363
Unrealized (gain) loss from derivative financial instruments		59,989				(184,537	)			3,963				135,770
Stock-based compensation		2,305				1,581				4,351				3,076
Loss on early extinguishment of debt		—				46,840				—				46,840
Loss (gain) on sale of assets		648				(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,
		2023				2022				2023				2022
OPERATING CASH FLOW(1):
Net income (loss)	$	(45,706	)		$	376,891			$	88,797			$	265,467
Reconciling items:
Unrealized (gain) loss from derivative financial instruments		59,989				(184,537	)			3,963				135,770
Deferred income taxes (benefit)		(13,910	)			95,117				25,270				70,329
Depreciation, depletion and amortization		140,177				119,201				274,160				225,929
Loss on early retirement of debt		—				46,840				—				46,840
Amortization of debt discount and issuance costs		1,994				2,873				3,991				7,098
Stock-based compensation		2,305				1,581				4,351				3,076
Loss (gain) on sale of assets		648				(19	)			(125	)			(21	)
Operating cash flow	$	145,497			$	457,947			$	400,407			$	754,488
(Increase) decrease in accounts receivable		60,218				(232,043	)			316,210				(203,918	)
(Increase) decrease in other current assets		2,715				(2,104	)			1,201				881
Increase in accounts payable and accrued expenses		123,080				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,
		2023				2022				2023				2022
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 divestitures		41,165				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 receivable		193,917			510,127
Derivative financial instruments		17,553			23,884
Other current assets		60,777			56,324
Total current assets		282,166			644,987
Property and equipment, net		5,026,001			4,622,655
Goodwill		335,897			335,897
Operating lease right-of-use assets		192,670			90,716
	$	5,836,734		$	5,694,255
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	552,315		$	530,195
Accrued costs		132,057			183,111
Operating leases		77,690			38,411
Derivative financial instruments		—			4,420
Total current liabilities		762,062			756,137
Long-term debt		2,176,418			2,152,571
Deferred income taxes		451,004			425,734
Derivative financial instruments		2,052			—
Long-term operating leases		115,048			52,385
Asset retirement obligation		29,964			29,114
Total liabilities		3,536,548			3,415,941
Stockholders' Equity:
Common stock		139,246			138,759
Additional paid-in capital		1,255,382			1,253,417
Accumulated earnings		905,558			886,138
Total stockholders' equity		2,300,186			2,278,314
	$	5,836,734		$	5,694,255

CONTACT: Ron Mills VP - Finance and Investor Relations Comstock Resources 972-668-8834 rmills@comstockresources.com