Domestic energy explorer Comstock Resources Inc. CRK reported second-quarter 2015 loss of $1.11 per share (excluding one-time items), narrower than the Zacks Consensus Estimate of a loss of $1.18. The outperformance came on the back of excellent natural gas volumes from its Haynesville shale program.

However, Comstock’s performance deteriorated from the year-ago adjusted profit of 12 cents per share amid sliding oil and gas prices. 

Quarterly revenues plunged 50.4% year over year to $77.3 million but managed to edge past the Zacks Consensus Estimate of $76 million.

Volume Analysis

Comstock’s quarterly volume remained essentially unchanged year over year at 16.6 billion cubic feet equivalent (Bcfe), of which nearly 67% was natural gas. Output shrinkage from its South Texas operations was offset by higher production from East Texas/North Louisiana properties. Natural gas output was up by 9.6% but oil production fell 16.9%.

While volume in the South Texas operating region decreased 10.6% year over year to 7.4 Bcfe, output from East Texas/North Louisiana and Other properties came in at approximately 8.8 Bcfe (up 8.9%) and 0.4 Bcfe (up 1.1%), respectively.

Price Realizations

Average oil price realization (before hedging) was $55.34 per barrel (compared with $99.90 per barrel in the second quarter of 2014) and average natural gas realization was $2.37 per thousand cubic feet/Mcf (compared with $4.42 per Mcf in the year-earlier quarter).

Costs & Expenses

Gathering and transportation costs came in at $3.3 million, representing an increase of 3.9% from the year-ago quarter. Meanwhile, lease operating cost of $17.8 million saw a 27.5% year-over-year rise.

Total operating expenses more than doubled from the second quarter of 2014 to $259.5 million.

Cash Flow & EBITDAX

Comstock’s operating cash flow from continuing operations turned negative in the reported quarter, as it spend $36 million more cash than it generated by producing and selling oil and gas. On the contrary, the company reported operating cash flow of $109.6 million last year.  

Earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other non-cash expenses (EBITDAX) from continuing operations was $47.7 million, down 60.7% year over year.

Capital Expenditure & Balance Sheet

In the reported quarter, Comstock spent $46.3 million on development drilling activities, almost 50% decline from the $90.7 million incurred a year ago.

As of Jun 30, 2015, the company had $130.2 million in cash and cash equivalents and $1,379.4 million in long-term debt. The debt-to-capitalization ratio at the end of the quarter was approximately 67.7%.

Zacks Rank

Currently, Comstock Resources holds a Zacks Rank #3 (Hold).

Better-ranked players from the sector include Apache Corp. APA, Linn Energy LLC LINE and Murphy Oil Corp. MUR. All these stocks carry a Zacks Rank #2 (Buy).

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