Comstock Resources (CRK) Q4 Loss Narrows On Output Gains

Comstock Resources, Inc. (NYSE:CRK) reported fourth-quarter 2017 loss of 31 cents per share (excluding one-time items), narrower than the Zacks Consensus Estimate of a loss of 94 cents. The better-than-expected results were driven by growth in natural gas production. Further, Comstock’s quarterly loss also significantly narrowed from the year-ago adjusted loss of $2.58 per share.

Quarterly revenues increased to $73.2 million from $48.5 million a year ago, driven by higher natural gas sales. Revenues from natural gas sales jumped 75.4% to $61.2 million in the quarter under review. The top line was also slightly above the Zacks Consensus Estimate of $72 million.

Volume Analysis

Comstock’s quarterly volume was 23.5 billion cubic feet equivalent (Bcfe), 67.4% higher compared with 14 Bcfe in the prior-year quarter. Natural gas output, constituting 94.5% of total production, increased 81.2% whereas oil output plunged 27.7% in the reported quarter. Growth in natural gas production is attributable to the company's successful Haynesville shale drilling program.

Price Realizations

Average oil price realization (before hedging) was $56.48 per barrel, compared with $45.96 in fourth-quarter 2016. Average natural gas realization was $2.76 per thousand cubic feet/Mcf compared with $2.85 per Mcf in the year-earlier quarter.

Costs & Expenses

Total operating expenses soared 79.5% from fourth-quarter 2016 figure to $97.5 million primarily due to higher impairment charges. Impairment charges on oil and gas properties rose a whopping 1,617% to stand at $44 million in the quarter under review.

Production taxes increased 90.2% to come in at $1.6 million in the reported quarter. Gathering/Transportation and depreciation costs also witnessed a year-over-year increase in the fourth quarter of 2017. These were partially offset by lease operating and general/administrative expenses, which decreased in the reported quarter.

Cash Flow & EBITDAX

Comstock’s operating cash inflow from continuing operations were $37.6 million. This compared favorably with the operating cash inflow of about $9.2 million in the fourth quarter of 2016.

EBITDAX from continuing operations increased significantly. The metric surged 105.5% year over year to $56 million.

Capital Expenditure & Balance Sheet

In the reported quarter, Comstock’s capital expenditure amounted $49 million compared with $22.9 million in the year-ago quarter. The company spent $42.9 million on development drilling activities. As of Dec 31, 2017, the company had $61.3 million in cash and cash equivalents and $1,110.5 million in long-term debt.

Zacks Rank and Other Key Picks

Comstock is an independent energy company engaged in the acquisition, development, production and exploration of oil and natural gas properties. The company carries a Zacks Rank #2 (Buy).

Other top-ranked players in the same industry include Concho Resources, Inc. (NYSE:CXO) , Pioneer Natural Resources Co. (NYSE:PXD) and Continental Resources, Inc. (NYSE:CLR) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ConocoPhillips (NYSE:COP) delivered an average positive earnings surprise of 144.45% in the last four quarters.

Pioneer Natural delivered an average positive earnings surprise of 66.9% in the last four quarters.

Continental Resources delivered an average positive earnings surprise of 64.9% in the last four quarters.

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