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Comstock Resources, Inc. Reports First Quarter 2011 Financial and Operating Results

May 2, 2011

FRISCO, Texas, May 2, 2011 /PRNewswire/ — Comstock Resources, Inc. (“Comstock” or the “Company”) (NYSE: CRK) today reported financial and operating results for the three months ended March 31, 2011.

Financial Results for the Three Months Ended March 31, 2011

Comstock reported net income of $2.4 million or 5 cents per diluted share for the first quarter of 2011 as compared to net income of $7.3 million or 16 cents per share for the three months ended March 31, 2010.

Comstock’s production in the first quarter of 2011 of 19.9 billion cubic feet of natural gas equivalent (“Bcfe”) increased 6% over the 18.8 Bcfe produced in the first quarter of 2010. Comstock’s daily production rate, which averaged 222 million cubic feet of natural gas equivalent (“MMcfe”) per day, grew 18% over production in the fourth quarter of 2010, which averaged 188 MMcfe per day. Production from the Company’s Haynesville shale operations averaged 133 MMcfe per day in the first quarter of 2011 and accounted for 60% of the Company’s total production. Haynesville shale production has increased 42% from the 94 MMcfe per day in the fourth quarter of 2010. The production increases are a result of the Company overcoming the shortages in completion services that adversely impacted production in the third and fourth quarters of 2010. During the first quarter of 2011, Comstock completed 21 (11.2 net) of its Haynesville or Bossier shale wells. As of March 31, 2011, Comstock had 29 wells (19.2 net) waiting on completion, down from 35 wells (23.4 net) at December 31, 2010.

During the first quarter of 2011 Comstock sold $300.0 million in new senior notes due in 2019 and used the proceeds to redeem $172.0 million in outstanding senior notes due in 2012 and to repay amounts outstanding under its bank credit facility. As a result of these transactions, the average life of the Company’s debt increased to 7.3 years from 4.5 years. The first quarter 2011 results include a charge of $1.1 million ($0.7 million after tax or 2 cents per share) related to the early redemption of the 2012 senior notes. Other unusual items reflected in the first quarter financial results include an impairment of $9.5 million ($6.1 million after tax or 13 cents per share) to write off exploratory leases that Comstock expects to expire during 2011 without drilling activity. In addition, Comstock realized a gain of $21.2 million ($13.8 million after tax, or 30 cents per share) from sales of marketable securities during the first quarter of 2011.

Natural gas prices adversely impacted the first quarter 2011 results as they weakened in the first quarter of 2011 as compared to 2010′s first quarter. Comstock’s average realized natural gas price decreased 25% to $3.96 per Mcf for the first quarter of 2011 as compared to $5.30 per Mcf for the first quarter of 2010. The Company’s average realized oil price improved by 34% to $89.94 per barrel for the first quarter of 2011 as compared to $67.08 per barrel for the first quarter of 2010. Lower natural gas prices caused oil and gas sales to decrease by 17% to $88.0 million in the first quarter of 2011 as compared to 2010′s first quarter sales of $106.1 million. Operating cash flow (before changes in working capital accounts) was $56.1 million in the first quarter of 2011 and EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses, was $65.2 million.

2011 Drilling Results

Comstock reported on the results to date of its 2011 drilling program. During the first three months of 2011, Comstock spent $145.5 million on development and exploration activities and $12.7 million to acquire exploration acreage. Comstock drilled 19 wells (8.9 net) and completed 23 wells (13.2 net) in the first quarter of 2011. As of March 31, 2011 the Company also had eight wells (4.5 net) in the process of being drilled, seven Haynesville and Bossier shale wells and one Eagle Ford shale well.

In the East Texas/North Louisiana region, Comstock has drilled 15 wells (6.9 net) in the first quarter of 2011, all of which were Haynesville or Bossier shale wells. During 2011′s first quarter, Comstock has completed 13 operated and 8 non-operated Haynesville or Bossier shale wells which have been put on production at an average per well initial production rate of 11.2 MMcfe per day.

In the first quarter of 2011, Comstock drilled two (2.0 net) Eagle Ford shale wells in its South Texas region. The Carlson #1H was drilled in McMullen County to a vertical depth of 9,070 feet with a 5,874 foot lateral. This well was tested at an initial rate of 548 barrels of oil per day and 0.2 MMcf of natural gas per day or 585 barrels of oil equivalent (“BOE”) and is currently producing to sales on a restricted choke with a shallow production decline. The Swenson #1H well was also drilled in McMullen County on the Company’s Wheeler Ranch acreage to a vertical depth of 11,150 feet with a 6,118 foot lateral. This well was tested at an initial rate of 1,045 barrels of oil and 1.3 MMcf of natural gas per day or 1,264 BOE. During the first quarter of 2011 the Company also completed the Coates A #1H, which was drilled during 2010 in Karnes County to a vertical depth of 9,706 feet with a 5,422 foot lateral. This well was tested at an initial rate of 507 barrels of oil per day and 0.2 MMcf of natural gas per day or 538 BOE.

With recent efficiencies achieved in the Company’s Haynesville and Bossier shale program in North Louisiana both in shorter drilling and completion time, Comstock has revised its capital expenditure budget for 2011 to reflect increased activity as well as expected expenditures to increase the Company’s exploratory acreage primarily in the Eagle Ford shale trend in South Texas. Comstock now expects to spend $570.0 million for drilling and completion activity and $40.0 million on lease acquisitions in 2011. $115.0 million of the drilling and completion budget is related to completing the wells drilled in 2010 that are being carried over to 2011. Comstock expects to drill 46 (29.7 net) wells in the Haynesville or Bossier shale in East Texas and North Louisiana region in 2011 and 21 (21.0 net) wells on its Eagle Ford shale acreage targeting primarily liquid hydrocarbons. The Company released one drilling rig during the first quarter of 2011 and currently has four rigs working in the East Texas/North Louisiana region on Haynesville/Bossier shale projects and one rig working in the South Texas region on Eagle Ford shale prospects. Comstock expects to move one of the Haynesville rigs to the Eagle Ford by the middle of the year.

The increase in activity is expected to generate higher production in 2011 than the Company’s original guidance. 2011 production is now expected to reach 92 to 96 Bcfe which would represent a 30% to 36% growth over pro forma 2010 production excluding production from properties sold in 2010.

Comstock has planned a conference call for 9:30 a.m. Central Time on May 3, 2011, to discuss the operational and financial results for the first quarter of 2011. Investors wishing to participate should visit the Company’s website at www.comstockresources.com for a live web cast or dial 1-800-798-2864 (international dial-in use 617-614-6206) and provide access code 48984419 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.

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 managements 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.

Comstock Resources, Inc. is an independent energy company based in Frisco, Texas and is engaged in oil and gas acquisitions, exploration and development primarily in Texas and Louisiana. The Companys stock is traded on the New York Stock Exchange under the symbol CRK.

             COMSTOCK RESOURCES, INC.
                OPERATING RESULTS
    (In thousands, except per share amounts)
                                                Three Months
                                                Ended March
                                                         31,
                                                    -------------
                                                2011               2010
                                                ----               ----

    Revenues:
        Oil and gas sales                    $88,038           $106,089

    Operating expenses:
        Production taxes                         726              1,675
        Gathering and
         transportation                        5,628              4,528
        Lease operating                       11,548             14,160
        Exploration                            9,537              1,169
        Depreciation, depletion
         and amortization                     60,325             59,409
        Impairment of oil and
         gas properties                            -                159
        Loss on sale of
         properties                              109                  -
        General and
         administrative                        8,428              9,801
                                               -----              -----

           Total operating expenses           96,301             90,901
                                              ------             ------

    Operating income (loss)                   (8,263)            15,188

    Other income (expenses):
        Interest income                            -                139
        Other income                             310                 20
        Interest expense                     (10,284)            (7,844)
        Gain on sale of
         marketable securities                21,249                  -
                                              ------                ---

           Total other income
            (expenses)                        11,275             (7,685)
                                              ------             ------

    Income before income
     taxes                                     3,012              7,503
    Provision for income
     taxes                                      (608)              (161)
                                                ----               ----
    Net income                                $2,404             $7,342

    Net income per share:
        Basic                                  $0.05              $0.16
                                               =====              =====
        Diluted                                $0.05              $0.16
                                               =====              =====

    Weighted average shares
     outstanding:
        Basic                                 45,974             45,408
                                              ======             ======
        Diluted                               45,974             45,544
                                              ======             ======

             COMSTOCK RESOURCES, INC.
                OPERATING RESULTS
                  (In thousands)
                                                 Three Months
                                                  Ended March
                                                           31,
                                                     -------------
                                       2011                 2010
                                       ----                 ----

    OPERATING CASH FLOW:

       Net income                               $2,404                 $7,342
       Reconciling items:
        Deferred income taxes                      449                    (55)
        Depreciation, depletion
         and amortization                       60,325                 59,409
        Impairments                              9,454                    159
        Gain on sale of assets                 (21,140)                     -
        Debt issuance cost and
         discount amortization                   1,465                    602
        Stock-based compensation                 3,162                  4,233
           Operating cash flow                  56,119                 71,690
             Excess income taxes from
              stock-based compensation             487                 (1,490)
             Increase in accounts
              receivable                        (5,299)                (4,786)
             Decrease (increase) in
              other current assets              (1,116)                45,817
             Increase in accounts
              payable and accrued
              expenses                             736                 13,505
                                                   ---                 ------

               Net cash provided by
                operating activities           $50,927               $124,736
                                               =======               ========

    EBITDAX:

        Net income                              $2,404                 $7,342
        Interest expense                        10,284                  7,844
        Income taxes                               608                    161
        Depreciation, depletion
         and amortization                       60,325                 59,409
        Exploration                              9,537                  1,169
        Impairments                                  -                    159
        Gain on sale of assets                 (21,140)                     -
        Stock-based compensation                 3,162                  4,233

               EBITDAX                         $65,180                $80,317
                                               =======                =======

                                                  As of March
                                                           31,
                                                      ------------
                                       2011                 2010
                                       ----                 ----

    BALANCE SHEET DATA:

      Cash and cash equivalents                 $4,196               $122,197
      Marketable securities                     80,956                 94,378
      Other current assets                      55,782                 52,254
      Property and equipment,
       net                                   1,904,818              1,610,604
      Other                                     17,481                  9,136
                                                ------                  -----

         Total assets                       $2,063,233             $1,888,569
                                            ==========             ==========

      Accounts payable and
       accrued expenses                       $145,564               $100,288
      Current deferred income
       taxes payable                            16,014                  6,029
      Long-term debt                           596,506                470,970
      Deferred income taxes                    216,381                225,481
      Other non-current
       liabilities                               9,360                  6,716
      Stockholders' equity                   1,079,408              1,079,085

         Total liabilities and
          stockholders' equity              $2,063,233             $1,888,569
                                            ==========             ==========

             COMSTOCK RESOURCES, INC.
            REGIONAL OPERATING RESULTS
     (In thousands, except per unit amounts)
                            For the Three Months Ended
                                  March 31, 2011
                                  --------------------------

                        East
                       Texas/
                       North     South
                     Louisiana   Texas             Other      Total
                     ---------   -----             -----      -----

    Oil
     production
     (thousand
     barrels)                 34         94                10          138
     Gas
      production
      (MMcf)              15,444      2,865               800       19,109
    Total
     production
     (MMcfe)              15,647      3,431               857       19,935

    Oil sales             $2,945     $8,639              $806      $12,390
    Gas sales             58,610     13,150             3,888       75,648
        Total oil
         and gas
         sales           $61,555    $21,789            $4,694      $88,038
                         =======    =======            ======      =======

    Average oil
     price (per
     barrel)              $87.16     $91.61            $83.46       $89.94
    Average gas
     price (per
     Mcf)                  $3.80      $4.59             $4.86        $3.96
    Average
     price (per
     Mcfe)                 $3.93      $6.35             $5.48        $4.42

    Production
     taxes                   $29       $382              $315         $726
    Gathering
     and
     transportation       $5,076       $457               $95       $5,628
    Lease
     operating            $7,199     $3,367              $982      $11,548
    Production
     taxes (per
     Mcfe)          $          -      $0.11             $0.37        $0.04
    Gathering
     and
     transportation
     (per Mcfe)            $0.32      $0.13             $0.11        $0.28
    Lease
     operating
     (per Mcfe)            $0.47      $0.99             $1.14        $0.58

    Oil and Gas
     Capital
     Expenditures:
      Leasehold
       costs             $10,975     $1,680        $        -      $12,655
      Exploratory
       drilling           16,844     20,428                 -       37,272
      Development
       drilling           95,588     11,538                98      107,224
      Other
       development           853         94                94        1,041
                             ---        ---               ---        -----
        Total           $124,260    $33,740              $192     $158,192
                        ========    =======              ====     ========


                               For the Three Months Ended
                                     March 31, 2010

                      East
                     Texas/
                     North         South
                    Louisiana      Texas             Other      Total
                    ---------      -----             -----      -----

    Oil
     production
     (thousand
     barrels)               37             42                97          176
     Gas
      production
      (MMcf)            12,979          4,113               702       17,794
    Total
     production
     (MMcfe)            13,200          4,367             1,280       18,847

    Oil sales           $2,744         $3,184            $5,845      $11,773
    Gas sales           66,467         23,725             4,124       94,316
        Total oil
         and gas
         sales         $69,211        $26,909            $9,969     $106,089
                       =======        =======            ======     ========

    Average oil
     price (per
     barrel)            $74.75         $75.23            $60.58       $67.08
    Average gas
     price (per
     Mcf)                $5.12          $5.77             $5.87        $5.30
    Average
     price (per
     Mcfe)               $5.24          $6.16             $7.79        $5.63

    Production
     taxes              $1,116            $82              $477       $1,675
    Gathering
     and
     transportation     $3,660           $773               $95       $4,528
    Lease
     operating          $7,948         $3,468            $2,744      $14,160
    Production
     taxes (per
     Mcfe)               $0.08          $0.02             $0.37        $0.09
    Gathering
     and
     transportation
     (per Mcfe)          $0.28          $0.18             $0.07        $0.24
    Lease
     operating
     (per Mcfe)          $0.60          $0.79             $2.15        $0.75

    Oil and Gas
     Capital
     Expenditures:
      Leasehold
       costs            $9,855    $         -               $56       $9,911
      Exploratory
       drilling         17,031              -                 -       17,031
      Development
       drilling         63,242          1,594                 -       64,836
      Other
       development       1,034            629               246        1,909
                         -----            ---               ---        -----
        Total          $91,162         $2,223              $302      $93,687
                       =======         ======              ====      =======

SOURCE Comstock Resources, Inc.


Source: newswire



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