Comstock Resources CEO Discusses Q3 2010 Results - Earnings Call Transcript
Comstock Resources, Inc. (
)
Q3 2010 Earnings Call
November 02, 2010 10:30 am ET
Executives
Jay Allison - Chairman, President and CEO
Roland Burns - SVP and CFO
Mack Good - VP, Operations
Analysts
Brian Corales - Howard Weil
Jack Aydin - Keybanc
John Freeman - Raymond James
Kim Pacanovsky - MLV
Noel Parks - Ladenburg Thalmann
Ray Deacon - Pritchard Capital
Don Crist - Johnson Rice
Rehan Rashid - FBR Capital Markets
Justin Tugman - Perkins Investment Management
Presentation
Operator
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Comstock Resources, Inc. Q3 2009 Earnings Call Transcript
Welcome to the Q3 2010 Comstock Resources’ Earnings Conference Call. (Operator Instructions) As a reminder this conference is being recorded for replay purposes.
I would now like to turn the conference over to your host for today, Mr. Jay Allison, Chairman and CEO. Please proceed sir.
Jay Allison
Welcome to the Comstock Resources’ third quarter 2010 financial and operating results conference call. You can view a slide presentation during or after this call by going to our website at www.comstockresources.com and clicking Presentations. There you will find a presentation entitled Third Quarter 2010 Results.
I am Jay Allison, President of Comstock and with me this morning is Roland Burns, our Chief Financial Officer; and Mack Good, our Chief Operating Officer. During this call we will review our 2010 third quarter financial and operating results as well as updated results of our 2010 drilling program and our outlook for the rest of this year.
Please refer to slide two in our presentation and note that our discussions today will include forward-looking statements within the meaning of securities laws. While we believe the expectations in such statements to be reasonable, there can be no assurance that such expectations will prove to be correct.
Please refer to Page 3 of the presentation where we summarized the third quarter results; higher oil and gas prices improved our financial results in the third quarter compared to the third quarter of 2009.
Our production in the third quarter increased 1% to 17.2 Bcfe. For the quarter we reported revenues of $80 million, generated EBITDAX of $55 million and net operating cash flow of $47 million or $1 per share.
We had a small net loss in the quarter of $4.7 million or $0.10 per share. We continue to have strong results in our Haynesville Shale drilling program; we drilled 58 successful wells including 54 horizontal Haynesville and Bossier Shale wells in the first nine months of this year.
We got on track from the strong production growth we had in the first two quarters of this year, due to the unavailability of high-pressure pumping services that are needed in order for us to complete our Haynesville Shale wells.
We reported earlier that we have secured completion services, starting in the fourth quarter, which will allow us to timely complete the Haynesville Shale wells we are currently drilling and begin to address the backlog of 26 wells waiting on completion that we had at the end of the third quarter.
Despite the production setback, we are anticipating strong reserved growth this year driven by our Haynesville Shale drilling program and lastly, we are maintaining our strong balance sheet and liquidity position despite the low natural gas environment we are currently in.
I will turn it over to Roland Burns to review the financial results for this quarter in more detail. Roland?
Roland Burns
Thanks, Jay. On slide 4, we break out our production by quarter and by a region. And then we highlighted new productions from our Haynesville Shale Wells in red on the chart. For the third quarter of this year, our production averaged a 187 million cubic feet of natural gas equivalent per day, which is 1% higher than the production in the third quarter of 2009 of 184 million per day.
As Jay mentioned earlier, production was down to almost 15% from our second quarter average rate of 219 millions per day due to completion delays in the Haynesville Shale program.
Our East Texas/North Louisiana region averaged a 134 million per day with 49 million coming for our Cotton Valley Wells and 85 million per day coming from Haynesville Shale wells. The Haynesville wells made up 45% of our total rate.
Our South Texas region averaged 39 million per day and our other regions averaged 14 million per day in the quarter. As we announced earlier we are selling our Mississippi properties, which make up 8 million per day of the 14 million per day in our other regions and we separated that production on this slide as sold properties.
We expect our production to begin increasing again starting this month with completion activity picking up in the fourth quarter in the Haynesville program. We now expect production for all of 2010 to approximate 73 to 75 Bcfe, which would represented 11% to 15% growth over 2009.
Slide five shows our average gas price. Our average gas price increased 17% in the third quarter to $4.24 per Mcf as compared to $3.63 in the third quarter of 2009. For the first nine months of this year, our average gas price increased 12% to $4.55 per Mcf as compared to $4.05 for the same period in 2009.
Our realized gas prices have averaged to 97% of the NYMEX Henry-Hub gas price in the third quarter of this year. Last year we had 9% of our gas production hedged in then none of our gas productions was hedged this year.
Our realized oil prices are shown on slide 6. Our realized oil price increased 12% of the third quarter 2010 to $64.97 per barrel compared to $57.96 per barrel in the third quarter of 2009. For the first nine months of this year our average oil price was $66.54, 43% higher than our oil price of $46.42 for the same period in 2009. Our realized oil price has averaged 85% of the average bench mark NYMEX WTI price in the third quarter.
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