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2023 ReportPeers and competitors of Comstock Resources:
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B O S S I E R S H A L E
T E X A S
L O U I S I A N A
Comstock Resources is a leading independent
natural gas producer with operations focused
on the development of the Haynesville shale
in North Louisiana and East Texas
TO OUR STOCKHOLDERS:
2022 was a break-out year for the
Company driven by strong natural gas
prices. We were able to exceed the goals we
put in place for the year for generating free
cash flow and strengthening our balance
sheet. We also were able to advance our
Western Haynesville exploratory play by
adding 98,000 net acres in the play and
drilling two very successful wells.
natural gas per day with our second Western
Haynesville well averaging 42 million cubic
feet per day.
GREW PROVED RESERVE BASE AT LOW
FINDING COSTS
Our 2022 drilling activity added 1.1 trillion
cubic feet of natural gas equivalent (“Tcfe”)
of proved reserve additions at a low finding
cost of 95¢ per Mcfe. Our proved reserves
grew 9% in 2022 to 6.7 Tcfe and we replaced
CREATING A STRONG BALANCE SHEET
216% of our 2022 production. The present value discounted
at 10% of our proved reserves was $15.5 billion on December
We significantly strengthened our balance sheet in 2022
using the $673 million of free cash flow we generated to
retire $506 million of debt. We improved our leverage ratio to
1.1x, down from 2.4x in 2021, exceeding our goal of reducing
31, 2022.
STRONG FINANCIAL RESULTS
leverage to under 1.5x that we had established for 2022.
Our adjusted net income increased in 2022 by 238% from 2021
In November, we entered into a new five-year credit facility
to $1 billion or $3.73 per diluted share. Net income was
with 17 banks, which lowered our interest costs and
adjusted to exclude certain items not related to normal
increased our availability. We repaid the outstanding
operating activities, which in 2022 was primarily losses from
borrowings on the bank credit facility and retired $271
the early retirement of debt and the unrealized loss related to
ADJUSTED NET INCOME ($ IN MILLIONS)
million of our outstanding senior notes. We extended the
date of the earliest maturity of our debt to 2029.
The $175 million of preferred stock that helped fund the
Covey Park acquisition was converted into common stock,
which further enhanced our balance sheet.
SOLID RESULTS FROM OUR 2022 DRILLING PROGRAM
We had another strong year with the drill bit in the Haynesville
and Bossier shales, drilling 73 or 57.0 net wells in 2022. We
drilled two very successful exploratory wells in our Western
Haynesville play. The results so far of both wells put them
among the best wells ever drilled in the Haynesville.
We increased the average lateral length of the wells we drilled
by 14% compared to 2021 to almost 10,000 feet. We set a new
corporate record with our record longest lateral to date of
15,726 feet. By continuing to execute our long lateral strategy,
we are able to offset some of the higher service costs that we
experienced in 2022. The wells we put on sales in 2022 had an
average initial production rate of 26 million cubic feet of
2022
2021
2020
2022
2021
2020
2022
2021
2020
$303
$50
EPS
$1.16
$0.23
ADJUSTED EBITDAX ($ IN MILLIONS)
$1,120
$723
$1,023
$3.73
$1,924
We significantly strengthened our balance sheet in 2022 using the $673 million of free cash flow we generated to retire $506 million of debt. H A Y N E S V I L L E /
B O S S I E R S H A L E
T E X A S
L O U I S I A N A
Comstock Resources is a leading independent
natural gas producer with operations focused
on the development of the Haynesville shale
in North Louisiana and East Texas
TO OUR STOCKHOLDERS:
2022 was a break-out year for the
Company driven by strong natural gas
prices. We were able to exceed the goals we
put in place for the year for generating free
cash flow and strengthening our balance
sheet. We also were able to advance our
Western Haynesville exploratory play by
adding 98,000 net acres in the play and
drilling two very successful wells.
CREATING A STRONG BALANCE SHEET
We significantly strengthened our balance sheet in 2022
using the $673 million of free cash flow we generated to
retire $506 million of debt. We improved our leverage ratio to
1.1x, down from 2.4x in 2021, exceeding our goal of reducing
leverage to under 1.5x that we had established for 2022.
In November, we entered into a new five-year credit facility
with 17 banks, which lowered our interest costs and
natural gas per day with our second Western
Haynesville well averaging 42 million cubic
feet per day.
GREW PROVED RESERVE BASE AT LOW
FINDING COSTS
Our 2022 drilling activity added 1.1 trillion
cubic feet of natural gas equivalent (“Tcfe”)
of proved reserve additions at a low finding
cost of 95¢ per Mcfe. Our proved reserves
grew 9% in 2022 to 6.7 Tcfe and we replaced
216% of our 2022 production. The present value discounted
at 10% of our proved reserves was $15.5 billion on December
31, 2022.
STRONG FINANCIAL RESULTS
Our adjusted net income increased in 2022 by 238% from 2021
to $1 billion or $3.73 per diluted share. Net income was
adjusted to exclude certain items not related to normal
increased our availability. We repaid the outstanding
borrowings on the bank credit facility and retired $271
million of our outstanding senior notes. We extended the
date of the earliest maturity of our debt to 2029.
The $175 million of preferred stock that helped fund the
Covey Park acquisition was converted into common stock,
which further enhanced our balance sheet.
SOLID RESULTS FROM OUR 2022 DRILLING PROGRAM
We had another strong year with the drill bit in the Haynesville
and Bossier shales, drilling 73 or 57.0 net wells in 2022. We
drilled two very successful exploratory wells in our Western
Haynesville play. The results so far of both wells put them
among the best wells ever drilled in the Haynesville.
We increased the average lateral length of the wells we drilled
by 14% compared to 2021 to almost 10,000 feet. We set a new
corporate record with our record longest lateral to date of
15,726 feet. By continuing to execute our long lateral strategy,
we are able to offset some of the higher service costs that we
experienced in 2022. The wells we put on sales in 2022 had an
average initial production rate of 26 million cubic feet of
operating activities, which in 2022 was primarily losses from
the early retirement of debt and the unrealized loss related to
ADJUSTED NET INCOME ($ IN MILLIONS)
2022
2021
2020
2022
2021
2020
2022
2021
2020
$303
$50
EPS
$1.16
$0.23
ADJUSTED EBITDAX ($ IN MILLIONS)
$1,120
$723
$1,023
$3.73
$1,924
We significantly strengthened our balance sheet in 2022 using the $673 million of free cash flow we generated to retire $506 million of debt. our contracts to hedge future
successful. In 2022, we added 98,000 net acres that are
natural gas prices.
prospective for the Haynesville and Bossier shales to our
We produced 501 billion cubic feet
Western Haynesville area for $54.1 million, or $550 per acre.
equivalent of natural gas in 2022.
Stronger natural gas prices drove a 58%
growth in our natural gas and oil sales,
after hedging, to $2.3 billion. We generated
Adjusted EBITDAX of $1.9 billion, which
increased 72% over 2021. Our operating cash flow in 2022 of
$1.7 billion grew 90% over 2021. Our EBITDAX margin in 2022
was 85%, one of the highest in the industry. We also achieved
a 28% return on average capital employed and a 62% return
on average equity.
ENVIRONMENTAL STEWARDSHIP
We are committed to environmental stewardship and a
responsible energy future. We already have a low green
house gas emissions profile and we have several initiatives
ongoing to continue to improve, including using cleaner
burning natural gas rather than diesel fuel to reduce
emissions in our drilling and completion operations. In 2022,
we deployed BJ Energy Solutions’ next generation hydraulic
fracturing fleet, which is fueled by 100% natural gas, in our
Haynesville shale development program and will add a
Our most significant environmental
initiative
is our
SUBSTANTIAL FREE CASH FLOW GENERATION AND
RETURN OF CAPITAL
second fleet in 2023.
We generated free cash flow from operations of $673 million
partnership with MiQ to certify our natural gas production
in 2022, representing a free cash flow yield of 39%. Including
under the MiQ methane standard. MiQ oversees an
the acquisition and divestitures we completed in 2022, we
independent, third-party audited assessment of methane
generated a total of $605 million in free cash flow. We used
emissions from our natural gas production activities. We
the free cash flow toward debt reduction, and we reinstated
achieved independent certification for 100% of our operated
our quarterly common stock dividend of 12.5¢ in the fourth
quarter of 2022.
INDUSTRY LEADING LOW OPERATING COST STRUCTURE
We continue to have one of the industry’s lowest operating
cost structures. Our total operating cost per Mcfe produced
averaged 76¢ in 2022. Our gathering and transportation
costs averaged 31¢ per Mcfe in 2022, which is substantially
lower than any other significant natural gas producer. Our
general and administrative costs averaged only 7¢ per Mcfe
in 2022 and our other operating costs per Mcfe, including
production taxes, averaged 38¢ per Mcfe in 2022.
SUBSTANTIAL UPSIDE FROM EXPLORATION PROGRAM
We are conducting an active exploration program and we are
investing a part of our annual capital budget to expand our
acreage holdings and delineate the emerging Western
Haynesville and Bossier shale play in East Texas. Our first
two Haynesville and Bossier shale wells in this play were very
2022
2021
2020
2022
2021
2020
2022
2021
2020
CASH FLOW ($ IN MILLIONS)
$908
$521
CFPS
$3.29
$2.08
FREE CASH FLOW ($ IN MILLIONS)
$262
$12
$1,722
$6.21
$673
We reinstated our quarterly common stock dividend of 12.5¢ in the fourth quarter of 2022. our contracts to hedge future
natural gas prices.
We produced 501 billion cubic feet
equivalent of natural gas in 2022.
Stronger natural gas prices drove a 58%
growth in our natural gas and oil sales,
after hedging, to $2.3 billion. We generated
Adjusted EBITDAX of $1.9 billion, which
increased 72% over 2021. Our operating cash flow in 2022 of
$1.7 billion grew 90% over 2021. Our EBITDAX margin in 2022
was 85%, one of the highest in the industry. We also achieved
a 28% return on average capital employed and a 62% return
on average equity.
SUBSTANTIAL FREE CASH FLOW GENERATION AND
RETURN OF CAPITAL
We generated free cash flow from operations of $673 million
in 2022, representing a free cash flow yield of 39%. Including
the acquisition and divestitures we completed in 2022, we
successful. In 2022, we added 98,000 net acres that are
prospective for the Haynesville and Bossier shales to our
Western Haynesville area for $54.1 million, or $550 per acre.
ENVIRONMENTAL STEWARDSHIP
We are committed to environmental stewardship and a
responsible energy future. We already have a low green
house gas emissions profile and we have several initiatives
ongoing to continue to improve, including using cleaner
burning natural gas rather than diesel fuel to reduce
emissions in our drilling and completion operations. In 2022,
we deployed BJ Energy Solutions’ next generation hydraulic
fracturing fleet, which is fueled by 100% natural gas, in our
Haynesville shale development program and will add a
second fleet in 2023.
Our most significant environmental
is our
partnership with MiQ to certify our natural gas production
under the MiQ methane standard. MiQ oversees an
independent, third-party audited assessment of methane
initiative
generated a total of $605 million in free cash flow. We used
the free cash flow toward debt reduction, and we reinstated
our quarterly common stock dividend of 12.5¢ in the fourth
quarter of 2022.
INDUSTRY LEADING LOW OPERATING COST STRUCTURE
We continue to have one of the industry’s lowest operating
cost structures. Our total operating cost per Mcfe produced
averaged 76¢ in 2022. Our gathering and transportation
costs averaged 31¢ per Mcfe in 2022, which is substantially
lower than any other significant natural gas producer. Our
general and administrative costs averaged only 7¢ per Mcfe
in 2022 and our other operating costs per Mcfe, including
production taxes, averaged 38¢ per Mcfe in 2022.
SUBSTANTIAL UPSIDE FROM EXPLORATION PROGRAM
We are conducting an active exploration program and we are
investing a part of our annual capital budget to expand our
acreage holdings and delineate the emerging Western
Haynesville and Bossier shale play in East Texas. Our first
two Haynesville and Bossier shale wells in this play were very
emissions from our natural gas production activities. We
achieved independent certification for 100% of our operated
CASH FLOW ($ IN MILLIONS)
$908
$521
CFPS
$3.29
$2.08
FREE CASH FLOW ($ IN MILLIONS)
$262
$12
2022
2021
2020
2022
2021
2020
2022
2021
2020
$1,722
$6.21
$673
We reinstated our quarterly common stock dividend of 12.5¢ in the fourth quarter of 2022. natural gas production under the MiQ methane standard for
responsibly sourced natural gas during 2022.
The certification covers
over 2 billion cubic feet of
natural gas that we produce
for ourselves and our partners.
This initiative demonstrates our
to produce our
natural gas under strict environmental standards and allows
us to deliver differentiated, responsibly sourced natural gas to
our customers.
commitment
OUTLOOK FOR 2023
2023 is expected to be a volatile year for natural gas as a
warm winter and the prolonged outage at the Freeport LNG
export facility reduced natural gas demand and increased
storage levels in the first two months of 2023. In 2023, we
plan to continue to de-risk and delineate our Western
Haynesville play with a two rig program. We will manage our
drilling activity levels to prudently respond to the lower
natural gas price environment we have had so far this year
and have already released two of our operated rigs to reduce
our activity in response to lower natural gas prices.
We will remain focused on maintaining the strong balance
sheet we created in 2022. As a result, we will continue to
evaluate our activity with the intent to fund our drilling
program with operating cash flow. Our industry leading
lowest cost structure provides acceptable drilling returns
even at current natural gas prices since our cost structure is
substantially lower than the other public natural gas
producers.
We plan to retain our quarterly dividend of 12.5¢ per
common share and we will continue to maintain our very
strong financial liquidity, which totaled more than $1.5
billion at the end of 2022.
The directors and management of Comstock want to thank
the stockholders for their continued support.
M. Jay Allison
Chairman and Chief Executive Officer
2022
2021
2020
2022
2021
2020
2022
2021
2020
LEVERAGE RATIO
1.1x
2.4x
PROVED RESERVES (Tcfe)
3.8x
6.7
6.1
5.6
HAYNESVILLE NET ACRES
470,427
371,998
323,044
WEBSITE
www.comstockresources.com
PRIMARY SUBSIDIARIES
Comstock Oil & Gas, LLC
Comstock Oil & Gas – Louisiana, LLC
Comstock Gas Services LLC
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP
INDEPENDENT PETROLEUM CONSULTANTS
Netherland, Sewell & Associates, Inc.
EXCHANGE LISTING
The Company’s common stock is listed for trading on the
New York Stock Exchange (“NYSE”) under the symbol “CRK”.
TRANSFER AGENT AND REGISTRAR
For stock certificate transfers, changes of address or lost stock certificates,
please contact:
American Stock Transfer & Trust Company
Requests for additional information should be directed to:
6201 15th Avenue
Brooklyn, New York 11219
(800) 937-5449
help@astfinancial.com
INVESTOR RELATIONS
Ron Mills
5300 Town and Country Blvd.
Suite 500,
Frisco, Texas 75034
(972) 668-8834
rmills@comstockresources.com
BOARD OF DIRECTORS
Jay Allison 1
Jim Turner 2
Roland Burns
Elizabeth Davis
Morris Foster
1 Chairman of the Board of Directors
2 Lead Independent Director
MANAGEMENT
Jay Allison
Chief Executive Officer and
Chairman of the Board of Directors
Roland Burns
President, Chief Financial Officer,
Secretary and Director
Dan Harrison
Chief Operating Officer
Trey Newell
Chief Commercial Officer
Patrick McGough
Vice President of Operations
Ron Mills
Dan Presley
LaRae Sanders
Vice President of Land
Vice President of Finance and Investor Relations
Vice President of Accounting, Controller and Treasurer
CORPORATE GOVERNANCE AND EXECUTIVE CERTIFICATIONS
Our Corporate Governance Guidelines are available by selecting Investor Info on
our web site at www.comstockresources.com. We have included as exhibits to our
Brian Claunch
2022 Annual Report on Form 10-K filed with the Securities and Exchange
Vice President of Financial Reporting
Commission, certificates of our chief executive officer and chief financial officer
regarding the quality of our public disclosure. We have also submitted to the NYSE
a certificate of our chief executive officer certifying that he is not aware of any
violation by the company of the NYSE corporate governance listing standards.
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