Domestic energy explorer, Comstock Resources Inc. (CRK) reported strong second-quarter 2014 results, courtesy a significant increase in natural gas price realization.
Earnings per share − excluding one-time items – came in at 12 cents against the year-ago adjusted loss of 32 cents. The bottom line also surpassed the Zacks Consensus Estimate of 10 cents.
Total revenue increased 44.3% year over year to $155.7 million. Moreover, the top line beat the Zacks Consensus Estimate of $150 million.
Volume Analysis
Comstock’s quarterly volume contracted 4.2% year over year to 16.8 billion cubic feet equivalent (Bcfe), of which 60% was natural gas. The downtrend reflects output shrinkage from its East Texas/North Louisiana operations that comprised a significant part of the total volume.
Production in the East Texas/North Louisiana operating region decreased 33% year over year to 8.1 Bcfe (99% gas). Output from South Texas and Other properties came in at approximately 8.3 Bcfe and 0.4 Bcfe, respectively.
Price Realizations
Average oil price realization (before hedging) was $99.90 per barrel (versus $100.06 per barrel in the second quarter of 2013) and average natural gas realization was $4.42 per thousand cubic feet/Mcf (compared with $3.71 per Mcf in the year-earlier quarter).
Costs & Expenses
Gathering and transportation costs came in at $3.1 million, representing a decline of almost 30% from the year-ago quarter. However, lease operating cost of approximately $14 million was 8% higher year over year.
Total operating expenses increased 1.7% from the second quarter of 2013 to $128 million.
Cash Flow & EBITDAX
Comstock generated operating cash flow from continuing operations of $109.6 million in the reported quarter against $41.9 million in the year-earlier quarter. EBITDAX (earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other non-cash expenses) from continuing operations was $121.3 million, up 44.6% year over year.
Capital Expenditure & Balance Sheet
During the second quarter, Comstock spent $90.7 million on development drilling activities. As of Jun 30, 2014, Comstock had approximately $3.8 million in cash and cash equivalents and $975.2 million in long-term debt. The debt-to-capitalization ratio at the end of the quarter was approximately 50.8%.
Zacks Rating
Comstock currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can look at better-ranked players in the same industry like Callon Petroleum Company (CPE), Midstates Petroleum Company Inc. (MPO) and VOC Energy Trust (VOC). All these stocks sport a Zacks Rank #1 (Strong Buy).
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