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Comstock Resources' CEO Discusses Q3 2011 Results - Earnings Call Transcript

I'll turn it over to Ronald Burns to review the financial results for this quarter in more detail. Roland?

Roland O. Burns

Thanks, Jay. Slide 4 in the presentation shows our oil and gas production on a daily basis for the last 15 quarters, and it's broken out by operating region. Production from our Haynesville shale program is shown in blue on that chart.

In the third quarter this year, our production averaged 285 million cubic feet of natural gas equivalent per day, a 53% increase over the third quarter of last year and 8% higher than the production in the second quarter of this year. The production this quarter set a third consecutive new record high for us.

Haynesville production increased to 200 million per day, as compared to 176 million per day in the prior quarter. Production from our Cotton Valley wells decreased a little this quarter to 38 million a day, and we averaged 40 million in our south Texas region and 7 million in our other regions. Looking ahead, we believe our production will come in between 94 and 97 Bcfe in 2011, which represents a 28% to 32% growth over 2010's production.

During the fourth quarter, our completion crew worked primarily in our south Texas region and our Eagle Ford program and returns to the Haynesville in late December to complete 9 wells in a 10-well pad development project. As a result, we expect fourth quarter production to decline by about 2% to 4% from our high third quarter level and then increase substantially in the first quarter of 2012 when this project is put online.

Oil prices continue to be strong in the third quarter, which we cover on Slide 5. Our realized oil price increase 35% in the third quarter of 2011 to $87.50 per barrel, as compared to $64.97 per barrel in the third quarter of 2010. For the first 9 months of this year, our average oil price was $92.50, 39% higher than our average oil price of $66.54 for the same period in 2010. Our realized oil price in the third quarter has averaged 98% of the average benchmark NYMEX WTI price. We expect our oil price differential to improve in our Eagle Ford program as much as $5 a barrel based on new marketing arrangements we are making, as we've been able to capture some of the spread that exist between the WTI price in the Louisiana Gulf Coast market.

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