crk-20210930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 001-03262

COMSTOCK RESOURCES, INC.

(Exact name of registrant as specified in its charter)


Nevada			94-1667468
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

5300 Town and Country Blvd., Suite 500, Frisco, Texas 75034

(Address of principal executive offices)

Telephone No.: (972) 668-8800

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.50 (per share)	CRK	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐

Emerging growth company ☐

Accelerated filer x

Non-accelerated ☐

Smaller reporting 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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No x

The number of shares outstanding of the registrant's common stock, par value $0.50, as of November 3, 2021 was 232,924,646.

COMSTOCK RESOURCES, INC.

QUARTERLY REPORT

For the Quarter Ended September 30, 2021

INDEX


			Page
PART I. Financial Information

Item 1. Financial Statements (Unaudited):
Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020			4
Consolidated Statements of Operations – for the three months and nine months ended September 30, 2021 and 2020			5
Consolidated Statements of Stockholders' Equity – for the three months and nine months ended September 30, 2021 and 2020			6
Consolidated Statements of Cash Flows – for the nine months ended September 30, 2021 and 2020			7
Notes to Consolidated Financial Statements			8

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			20

Item 3. Quantitative and Qualitative Disclosure About Market Risk			24

Item 4. Controls and Procedures			25

PART II. Other Information

Item 6. Exhibits			25

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

COMSTOCK RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	September 30, 2021		December 31, 2020
	(In thousands)
ASSETS
Cash and cash equivalents	$	27,841	$	30,272
Accounts receivable:
Oil and gas sales	213,661		125,016
Joint interest operations	20,241		14,615
From affiliates	9,263		6,155
Derivative financial instruments	26,392		8,913

Other current assets	12,194		14,839
Total current assets	309,592		199,810
Property and equipment:
Oil and natural gas properties, successful efforts method:
Proved	5,180,782		4,647,188
Unproved	307,593		332,765
Other	6,630		6,858
Accumulated depreciation, depletion and amortization	(1,260,528)		(902,261)
Net property and equipment	4,234,477		4,084,550
Goodwill	335,897		335,897

Derivative financial instruments	342		661
Operating lease right-of-use assets	6,792		3,025
Other assets	37		40
	$	4,887,137	$	4,623,983

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	324,811	$	259,284
Accrued costs	109,122		133,019
Operating leases	2,356		2,284
Derivative financial instruments	627,166		47,005
Total current liabilities	1,063,455		441,592
Long-term debt	2,801,312		2,517,149
Deferred income taxes	115,585		200,583
Derivative financial instruments	50,127		2,364
Long-term operating leases	4,486		740
Reserve for future abandonment costs	21,867		19,290
Other non-current liabilities	24		492
Total liabilities	4,056,856		3,182,210
Commitments and contingencies
Mezzanine equity:
Series B 10% Convertible Preferred stock — 5,000,000 shares authorized, 175,000 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	175,000		175,000
Stockholders' equity:
Common stock—$0.50 par, 400,000,000 shares authorized, 232,924,646 and 232,414,718 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	116,462		116,206
Additional paid-in capital	1,098,851		1,095,384
Accumulated earnings (deficit)	(560,032)		55,183
Total stockholders' equity	655,281		1,266,773
	$	4,887,137	$	4,623,983

The accompanying notes are an integral part of these statements.

COMSTOCK RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(In thousands, except per share amounts)
Revenues:
Natural gas sales	$	488,303	$	168,374	$	1,133,783	$	547,975
Oil sales	22,873		9,637		61,571		35,449
Total oil and gas sales	511,176		178,011		1,195,354		583,424
Operating expenses:
Production and ad valorem taxes	16,675		9,798		36,468		27,768
Gathering and transportation	35,402		22,422		96,596		77,423
Lease operating	26,576		25,412		77,150		79,110
Depreciation, depletion and amortization	128,739		99,056		359,313		312,828
General and administrative	8,052		8,974		23,952		25,991
Exploration	—		—		—		27
Gain on sale of assets	(14)		(16)		(93)		(16)
Total operating expenses	215,430		165,646		593,386		523,131

Operating income	295,746		12,365		601,968		60,293
Other income (expenses):
Loss from derivative financial instruments	(510,319)		(121,579)		(756,026)		(71,978)
Other expense	197		489		1,008		793

Interest expense	(49,954)		(63,890)		(170,645)		(168,764)
Loss on early retirement of debt	—		—		(352,599)		(861)
Total other expenses	(560,076)		(184,980)		(1,278,262)		(240,810)
Loss before income taxes	(264,330)		(172,615)		(676,294)		(180,517)
Benefit from (provision for) income taxes	(23,976)		46,123		74,168		46,177
Net loss	(288,306)		(126,492)		(602,126)		(134,340)
Preferred stock dividends and accretion	(4,411)		(4,398)		(13,089)		(26,596)
Net loss available to common stockholders	$	(292,717)	$	(130,890)	$	(615,215)	$	(160,936)

Net loss per share:
Basic	$	(1.26)	$	(0.57)	$	(2.66)	$	(0.77)
Diluted	$	(1.26)	$	(0.57)	$	(2.66)	$	(0.77)
Weighted average shares outstanding:
Basic