OilVoice - Comstock Resources Announces Year-end Proved Oil and Gas Reserves

Comstock Resources Announces Year-end Proved Oil and Gas Reserves

Thursday, February 05, 2009

Comstock Resources, Inc. has announced that the company's proved oil and natural gas reserves as of December 31, 2008 are estimated at 524 billion cubic feet ("Bcf") of natural gas and 9.7 million barrels of crude oil or 582 Bcf equivalent of natural gas ("Bcfe"), as compared to total proved reserves as of December 31, 2007 of 651 Bcfe, excluding the 398 Bcfe in proved reserves attributable to Bois d'Arc Energy which was sold in August 2008 to Stone Energy Corporation. Natural gas reserves account for 90% of total proved reserves and 67% of the total proved reserves were classified as proved developed at the end of 2008. Comstock operates 85% of the proved reserve base. The present value, using a 10% discount rate, of the future net cash flows before income taxes of the estimated proved oil and natural gas reserves (the "PV 10 Value") at the end of 2008 is approximately $820 million using year end December 31, 2008 oil and natural gas prices of $34.49 per barrel for oil and $5.33 per Mcf for natural gas. The PV 10 Value is different than the standardized measure of discounted estimated future net cash flows which is calculated after income taxes.

Comstock produced 59.9 Bcfe in 2008 and divested of 58.8 Bcfe in 2008 of proved reserves relating to certain non-core properties. The proved reserves at December 31, 2008 were negatively impacted by downward revisions of 52.8 Bcfe. These revisions were primarily the result of the lower crude oil and natural gas prices used at December 31, 2008 to determine whether the production or development of future reserves would be economic. Using twelve-month average prices as of the first day of each month for crude oil and natural gas prices realized by the Company in 2008 of $78.09 per barrel and $8.32 per Mcf, the Company's proved reserves would increase to 617 Bcfe with a PV 10 Value of $1.8 billion. For the three months ending December 31, 2008, Comstock's average realized crude oil price was $52.16 per barrel and average realized natural gas price (including hedging gains) was $6.44 per Mcf, reflecting weaker differentials from NYMEX market prices than the Company experienced in the first three quarters of 2008.

Comstock spent approximately $426.1 million in 2008 on exploration and development activities which added 102.4 Bcfe to its proved reserve base. Capital expenditures of $116.0 million in 2008 relate to the acquisition of unevaluated leases primarily in the emerging Haynesville Shale play in East Texas and North Louisiana.

The decrease in the proved reserve base in 2008 from the decline in crude oil and natural gas prices has increased the Company's depletion, depreciation and amortization ("DD&A") unit of production rate. The Company's average per unit DD&A rate for the three months ended December 31, 2008 is estimated to be $3.34 per Mcf equivalent ("Mcfe") as compared to the third quarter average rate of $3.07 per Mcfe.

The Company also announced that the recent declines in crude oil and natural gas prices and the significant decline in the value of equity securities that began during the latter part of 2008 and have continued into early 2009, will result in the recognition of impairment charges during the fourth quarter of 2008 for Comstock's investment in Stone Energy Corporation. The Company currently expects to recognize an other than temporary impairment of its investment in Stone Energy of approximately $162.6 million ($105.8 million after income taxes). The Company will also have an impairment of $0.9 million ($0.6 after income taxes) attributable to certain producing oil and gas properties. These non-cash charges will be reported in income from continuing operations in the Company's financial and operating results.