SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 2
TO
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): May 16, 1995
Date of Amendment: September 22, 1995
COMSTOCK RESOURCES, INC.
(Exact name of registrant as specified in its charter)
NEVADA 0-16741 94-1667468
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
5005 LBJ Freeway, Suite 1000, Dallas, Texas 75244
(Address of principal executive offices)
(214) 701 - 2000
(Registrant's Telephone No.)
<PAGE>
Item 2. Acquisition or Disposition of Assets
On July 31, 1995, Comstock Resources, Inc. (together with its wholly owned
subsidiaries, the "Company") closed an acquisition of producing oil and gas
properties and natural gas gathering systems located in East Texas and North
Louisiana from Sonat Exploration Company, a wholly owned subsidiary of Sonat
Inc. ("Sonat") for total cash consideration of $50.6 million (the "Sonat
Acquisition").
The Company acquired interests in 319 (188 net) oil and gas wells from
Sonat for $49.1 million. In addition, the Company acquired the managing general
partner interest of and a 20.31% limited partner interest in Crosstex Pipeline
Partners, Ltd. ("Crosstex"), as well as certain other gas gathering systems
primarily located in Harrison County, Texas from Sonat for $1.5 million.
The acquisition was funded by borrowing under the Company's $110 million
bank credit facility, consisting of a $100 million revolving credit facility and
a one year term loan of $10 million. Amounts outstanding under the revolving
credit facility bear interest at the agent bank's prime rate plus 1 1/2% and are
subject to a borrowing base redetermined semiannually by the banks. The
borrowing base as of July 31, 1995, for the revolving credit facility was
$70,000,000 and reduces by $1,060,000 each month beginning September 1, 1995.
The revolving credit facility has a final maturity of October 1, 1998. Amounts
outstanding under the term loan bear interest at the agent bank's prime rate
plus 4% and are payable in full on July 31, 1996.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
Page in
This Report
(a) Financial Statements.
Sonat Acquisition:
Report of Independent Public Accountants F-1
Statements of Revenues and Direct Operating Expenses
for the Years ended December 31, 1992, 1993 and 1994
and Six Months Ended June 30, 1994 and 1995 F-2
Notes to Statements of Revenues and Direct Operating Expenses F-3
(b) Pro Forma Financial Information.
Comstock Resources, Inc.:
Pro Forma Consolidated Financial Statements (Unaudited) P-1
Pro Forma Consolidated Balance Sheet as of June 30, 1995 P-2
Pro Forma Consolidated Statement of Operations
for the Year Ended December 31, 1994 P-3
Pro Forma Consolidated Statement of Operations
for the Six Months Ended June 30, 1995 P-4
Notes to Pro Forma Consolidated Financial Statements P-5
2
<PAGE>
(c) Exhibits.
2(a) Purchase and Sale Agreement between Comstock Resources, Inc. and
Sonat Exploration Company dated May 16, 1995.
99(a) Press Release issued May 17, 1995.
99(b) Press Release issued August 1, 1995.
99(c) Credit Agreement dated as of July 31, 1995 between Comstock
Resources, Inc., Comstock Oil & Gas, Inc., Comstock Oil & Gas --
Louisiana, Inc., Comstock Offshore Energy, Inc., the Banks and
NBD Bank, as Agent.
3
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Comstock Resources, Inc.:
We have audited the accompanying statements of revenues and direct operating
expenses of the Sonat Acquisition (see Note 1) for the years ended December 31,
1992, 1993 and 1994. These financial statements are the responsibility of the
management of Comstock Resources, Inc. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, such statements present fairly, in all material respects, the
revenues and direct operating expenses of the Sonat Acquisition described in
Note 1 for the years ended December 31, 1992, 1993 and 1994 in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Dallas, Texas
September 15, 1995
F-1
<PAGE>
<TABLE>
SONAT ACQUISITION
STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
For the Years Ended December 31, 1992, 1993 and 1994
and for the Six Months Ended June 30, 1994 and 1995
<CAPTION> Six Months
Year Ended December 31, Ended June 30,
1992 1993 1994 1994 1995
____________ ___________ ___________ _________ __________
(Unaudited)
<S> <C> <C> <C> <C> <C>
REVENUES
Oil and gas
sales $17,609,853 $23,611,827 $16,765,986 $9,822,554 $5,111,689
Gas gathering 481,962 453,042 393,296 240,699 94,902
___________ ___________ ___________ __________ _________
Total 18,091,815 24,064,869 17,159,282 10,063,253 5,206,591
DIRECT OPERATING
EXPENSES
Oil and gas
operating 3,726,482 5,171,624 5,302,652 2,625,659 2,386,225
Gas gathering 81,848 76,108 69,363 32,280 35,210
___________ ___________ __________ __________ __________
Total 3,808,330 5,247,732 5,372,015 2,657,939 2,421,435
EXCESS OF REVENUES OVER
DIRECT OPERATING
EXPENSES ___________ ___________ ___________ __________ __________
$14,283,485 $18,817,137 $11,787,267 $7,405,314 $2,785,156
=========== =========== =========== ========== ==========
</TABLE>
F-2
<PAGE>
SONAT ACQUISITION
NOTES TO STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
(1) BASIS OF PRESENTATION -
On July 31, 1995, Comstock Resources, Inc. (together with its wholly owned
subsidiaries, the "Company") closed an acquisition of producing oil and gas
properties and natural gas gathering systems located in East Texas and North
Louisiana from Sonat Exploration Company, a wholly owned subsidiary of Sonat
Inc. ("Sonat") for total cash consideration of $50.6 million (the "Sonat
Acquisition").
The Company acquired interests in 319 (188 net) oil and gas wells from Sonat
for $49.1 million. In addition, the Company acquired the managing general
partner interest of and a 20.31% limited partner interest in Crosstex Pipeline
Partners, Ltd. ("Crosstex"), as well as certain other gas gathering systems
primarily located in Harrison County, Texas from Sonat for cash consideration of
$1.5 million.
The acquisition was funded by borrowing under the Company's $110 million bank
credit facility, consisting of a $100 million revolving credit facility and a
one year term loan of $10 million. Amounts outstanding under the revolving
credit facility bear interest at the agent bank's prime rate plus 1 1/2% and are
subject to a borrowing base redetermined semiannually by the banks. The
borrowing base as of July 31, 1995, for the revolving credit facility was
$70,000,000 and reduces by $1,060,000 each month beginning September 1, 1995.
The revolving credit facility has a final maturity of October 1, 1998. Amounts
outstanding under the term loan bear interest at the agent bank's prime rate
plus 4% and are payable in full on July 31, 1996.
The accompanying statements of revenues and direct operating expenses do not
include general and administrative expense, interest income or expense, a
provision for depreciation, depletion and amortization or any provision for
income taxes because the property interests acquired represent only a portion of
a business and the costs incurred by Sonat are not necessarily indicative of the
costs to be incurred by the Company.
Historical financial information reflecting financial position, results of
operations and cash flows of the Sonat Acquisition is not presented because
substantially all of the acquisition cost was assigned to the oil and gas
property interests and the interests in gas gathering systems acquired.
Accordingly, the historical statements of revenues and direct operating expenses
have been presented in lieu of the financial statements required under Rule 3-05
of Securities and Exchange Commission Regulation S-X.
(2) SUPPLEMENTAL OIL AND GAS RESERVE INFORMATION (UNAUDITED) -
Estimated Quantities of Proved Oil and Gas Reserves
The estimates of proved oil and gas reserves utilized in the preparation of
the financial statements were estimated by independent petroleum engineers in
accordance with guidelines established by the Securities and Exchange Commission
F-3
<PAGE>
SONAT ACQUISITION
NOTES TO STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES (Continued)
and the Financial Accounting Standards Board, which require that reserve reports
be prepared under existing economic and operating conditions. The Company
emphasizes that reserve estimates of new discoveries or undeveloped properties
are more imprecise than those of producing oil and gas properties. Accordingly,
these estimates are expected to change as future information becomes available.
PROVED OIL AND GAS RESERVES AS OF JUNE 30, 1995:
Oil (Bbls) Gas (Mcf)
Proved Reserves 859,541 105,932,800
Proved Developed Reserves 768,485 77,112,700
Standardized Measure of Discounted Future Net Cash Flows Relating to Proved
Oil and Gas Reserves
The standardized measure of discounted future net cash flows (the
"Standardized Measure") is prepared using assumptions required by the Financial
Accounting Standards Board. Such assumptions include the use of June 30, 1995
oil and gas prices and current costs for estimated future production and
development expenditures with no provision for escalation except as provided for
by contractual agreements. Discounted future net cash flows are calculated
using a 10% discount rate.
The Standardized Measure does not represent the Company's estimate of future
net cash flows or the value of proved oil and gas reserves. Probable and
possible reserves, which may become proved in the future, are excluded from the
calculations. Furthermore, the relatively low June 30, 1995 prices, used to
determine the standardized measure of discounted cash flows, are influenced by
seasonal demand and other factors and may not be the most representative in
estimating future revenues or reserve data.
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS AT JUNE 30, 1995:
Future Cash Inflows $ 173,535,000
Future Costs:
Production (63,498,000)
Development (32,476,000)
_______________
Future Net Cash Flows 77,561,000
10% Discount Factor (38,095,000)
_______________
Standardized Measure of Discounted Future
Net Cash Flows before Income Taxes $ 39,466,000
===============
The future net cash flows presented above do not include estimated cash flows
from the interests acquired in the gas gathering systems.
F-4
<PAGE>
COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
The accompanying Pro Forma Consolidated Financial Statements have been
prepared by recording pro forma adjustments to the historical consolidated
financial statements of Comstock Resources, Inc. and subsidiaries (the
"Company"). The Pro Forma Consolidated Balance Sheet as of June 30, 1995 has
been prepared as if the Sonat Acquisition and Other Acquisition, as described in
Note 1, were consummated on June 30, 1995. The Pro Forma Consolidated
Statements of Operations for the year ended December 31, 1994 and for the six
months ended June 30, 1995 have been prepared as if such transactions were
consummated immediately prior to January 1, 1994 and January 1, 1995,
respectively.
The Pro Forma Consolidated Financial Statements are not necessarily
indicative of the financial position or results of operations that would have
occurred had the transactions been effected on the assumed dates. Additionally,
future results may vary significantly from the results reflected in the Pro
Forma Consolidated Statements of Operations due to normal production declines,
changes in oil and gas prices, future transactions and other factors. These
statements should be read in conjunction with the Company's audited consolidated
financial statements and the related notes included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1994 and the Company's
consolidated financial statements and the related notes included in the
Company's quarterly report on Form 10-Q for the six months ended June 30, 1995.
P-1
<PAGE>
<TABLE>
COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET (Unaudited)
JUNE 30, 1995
<CAPTION>
ASSETS
Pro Forma
Adjustments
(Note 2)
Sonat
Historical Acquisition (a) Pro Forma
____________ _______________ ____________
<S> <C> <C> <C>
Cash and Cash Equivalents $ 560,451 $ (11,812) $ 548,639
Accounts Receivable:
Oil and gas sales 3,185,718 - 3,185,718
Gas marketing sales 5,150,642 - 5,150,642
Joint interest operations 668,567 - 668,567
Prepaid Expenses and Other 319,155 - 319,155
Inventory 87,150 - 87,150
___________ _____________ ___________
Total current assets 9,971,683 (11,812) 9,959,871
Property and Equipment:
Oil and gas properties 122,294,396 49,086,697 171,381,093
Other 1,307,974 1,425,115 2,733,089
Accumulated depreciation,
depletion and
amortization (40,351,084) - (40,351,084)
___________ ____________ ___________
Net property and equipment 83,251,286 50,511,812 133,763,098
Other Assets 1,121,713 - 1,121,713
____________ ____________ ____________
$ 94,344,682 $ 50,500,000 $144,844,682
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Portion
of Long-term Debt $ 179,285 $ - $ 179,285
Accounts Payable and
Accrued Expenses 7,640,469 - 7,640,469
Accrued Natural Gas Purchases 2,070,520 - 2,070,520
____________ ____________ ____________
Total current liabilities 9,890,274 - 9,890,274
Long-term Debt,
less Current Portion 26,590,000 50,500,000 77,090,000
Deferred Revenue 430,000 - 430,000
Other Noncurrent Liabilities 1,336,267 - 1,336,267
Stockholders' Equity:
Preferred stock -
$10.00 par, 3,100,000
shares outstanding 31,000,000 - 31,000,000
Common stock -
$.50 par, 12,578,168
shares outstanding 6,289,084 - 6,289,084
Additional paid-in capital 37,100,673 - 37,100,673
Retained deficit (18,197,085) - (18,197,085)
Less: Deferred compensation -
restricted stock (94,531) - (94,531)
____________ ____________ ____________
Total stockholders' equity 56,098,141 - 56,098,141
____________ ____________ ____________
$ 94,344,682 $ 50,500,000 $144,844,682
============ ============ ============
See Notes to Pro Forma Consolidated Financial Statements.
P-2
</TABLE>
<PAGE>
<TABLE>
COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
For the Year Ended December 31, 1994
Pro Forma Adjustments (Note 2)
Sonat Other
Historical Acquisition (b) Acquisition (c) Other Pro Forma
___________ ____________ ____________ _____________ ____________
<S> <C> <C> <C> <C> <C>
Revenues:
Oil and gas sales $16,854,665 $ 16,765,986 $ 1,766,996 $ - $35,387,647
Gas marketing sales 14,957,760 - - - 14,957,760
Gas gathering 71,983 393,296 - - 465,279
Gain on sales of property 327,760 - - - 327,760
Other income 442,286 - - 85,800 (e) 528,086
___________ ____________ ____________ ___________ ___________
Total revenues 32,654,454 17,159,282 1,766,996 85,800 51,666,532
Expenses:
Oil and gas operating 6,098,972 5,302,652 404,525 - 11,806,149
Natural gas purchases 14,521,066 - - - 14,521,066
Gas gathering 10,548 69,363 - - 79,911
Depreciation, depletion
and amoritization 7,389,847 - - 4,731,814 (d) 12,121,661
General and administrative, net 1,823,543 - - (761,959)(f) 1,061,584
Interest 2,869,455 - - 5,243,920 (h) 8,113,375
___________ ____________ ___________ __________ ___________
Total expenses 32,713,431 5,372,015 404,525 9,213,775 47,703,746
Income (loss) before income
taxes and extraordinary item (58,977) 11,787,267 1,362,471 (9,127,975) 3,962,786
Provision for income taxes - - - - -
------------ ------------ ------------ ------------ ------------
Income (loss) before
extraordinary item (58,977) 11,787,267 1,362,471 (9,127,975) 3,962,786
Preferred stock dividends (817,610) - - - (817,610)
------------ ------------ ------------ ------------ ------------
Net income (loss) attributable
to common stock before
extraordinary item (876,587) 11,787,267 1,362,471 (9,127,975) 3,145,176
------------ ------------ ------------ ------------ ------------
Extraordinary item - loss on
early extinguishment of debt (615,793) - - - (615,793)
------------ ------------ ------------ ------------ ------------
Net income (loss) attributable
to common stock after
extraordinary item $(1,492,380) $ 11,787,267 $ 1,362,471 $(9,127,975) $ 2,529,383
============ ============ ============ ============ ============
Net income (loss) per share:
Before extraordinary item $ (.07) $ .26
Extraordinary item (.05) (.05)
------------ ----------------
After extraordinary item $ (.12) $ .21
============ ================
Weighted average common
shares outstanding 12,065,481 12,065,481
See Notes to Pro Forma Consolidated Financial Statements.
</TABLE>
P-3
<PAGE>
<TABLE>
COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
For the Six Months Ended June 30, 1995
Pro Forma Adjustments (Note 2)
Sonat Other
Historical Acquisition (b) Acquisition(c) Other Pro Forma
___________ ____________ _____________ _________ ___________
<S> <C> <C> <C> <C> <C>
Revenues:
Oil and gas sales $ 8,372,425 $ 5,111,689 $ 1,175,155 $ - $14,659,269
Gas marketing sales 23,255,456 - - - 23,255,456
Gas gathering and processing 336,526 94,902 - - 431,428
Other income 133,315 - - 42,900 (e) 176,215
___________ ____________ ____________ ___________ ___________
Total revenues 32,097,722 5,206,591 1,175,155 42,900 38,522,368
___________ ____________ ____________ ___________ ___________
Expenses:
Oil and gas operating 2,767,351 2,386,225 212,566 - 5,366,142
Natural gas purchases 22,677,327 - - - 22,677,327
Gas gathering and processing 86,039 35,210 - - 121,249
Depreciation, depletion
and amortization 3,862,787 - - 1,946,013 (d) 5,808,800
General and administrative, net 981,579 - - (380,979)(f) 600,600
Interest 1,919,197 - - 2,994,335 (h) 4,913,532
___________ ____________ _____________ ___________ ___________
Total expenses 32,294,280 2,421,435 212,566 4,559,369 39,487,650
Income (loss)
before income taxes (196,558) 2,785,156 962,589 (4,516,469) (965,282)
Provision for income taxes - - - - -
___________ ____________ _____________ ___________ ___________
Income (loss) (196,558) 2,785,156 962,589 (4,516,469) (965,282)
Preferred stock dividends (626,431) - - - (626,431)
___________ ____________ _____________ ___________ ___________
Net income (loss) attributable
to common stock $ (822,989) $ 2,785,156 $ 962,589 $(4,516,469) $(1,591,713)
=========== ============ ============ ============ ============
Net income (loss) per share $ (.07) $ (.13)
=========== ============
Weighted average common
shares outstanding 12,412,040 12,412,040
=========== ============
See Notes to Pro Forma Consolidated Financial Statements.
</TABLE>
P-4
<PAGE>
COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(1) BASIS OF PRESENTATION -
On July 31, 1995, the Company closed an acquisition of producing oil and
gas properties and natural gas gathering systems located in East Texas and North
Louisiana from Sonat Exploration Company, a wholly owned subsidiary of Sonat
Inc. ("Sonat") for total cash consideration of $50.6 million (the "Sonat
Acquisition").
The Company acquired interests in 319 (188 net) oil and gas wells from
Sonat for $49.1 million. The interests were acquired with an effective date of
March 1, 1995. In addition, the Company acquired the managing general partner
interest of and a 20.31% limited partner interest in Crosstex Pipeline Partners,
Ltd. ("Crosstex"), as well as certain other gas gathering systems primarily
located in Harrison County, Texas from Sonat for cash consideration of $1.5
million.
On May 15, 1995, the Company closed an acquisition of producing offshore
oil and gas properties located in Louisiana State waters in the Gulf of Mexico.
The Company acquired interests in 14 oil and gas wells (3.5 net wells) for
$8,199,000 (the "Other Acquisition"). The effective date of the acquisition was
November 1, 1994.
The acquisitions were funded by borrowings under the Company's $110 million
bank credit facility, consisting of a $100 million revolving credit facility and
a one year term loan of $10 million. Amounts outstanding under the revolving
credit facility bear interest at the agent bank's prime rate plus 1 1/2% (10%
and 10.5% at December 31, 1994 and June 30, 1995, respectively). and are subject
to a borrowing base redetermined semiannually by the banks. The borrowing base
as of July 31, 1995, for the revolving credit facility was $70,000,000 and
reduces by $1,060,000 each month beginning September 1, 1995. The revolving
credit facility has a final maturity of October 1, 1998. Amounts outstanding
under the term loan bear interest at the agent bank's prime rate plus 4% (12.5%
and 13% at December 31, 1994 and June 30, 1995, respectively) and are payable in
full on July 31, 1996.
The accompanying Pro Forma Consolidated Balance Sheet at June 30, 1995 and
the Pro Forma Consolidated Statements of Operations for the year ended December
31, 1994 and the six months ended June 30, 1995, have been prepared assuming the
Company consummated, immediately prior to each of the periods presented, the
Sonat Acquisition and the Other Acquisition, funded by borrowings under the
Company's bank credit facility (see Note 2).
No adjustment has been made to reflect income taxes related to the Sonat
Acquisition or Other Acquisition due to the Company's net operating loss
carryforwards which would offset any current or deferred tax liabilities.
The Pro Forma Consolidated Statements of Operations are not necessarily
indicative of the results of operations had the above described transactions
occurred on the assumed dates.
P-5
<PAGE>
COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Continuted)
(2) PRO FORMA ADJUSTMENTS -
Pro forma adjustments necessary to adjust the Consolidated Balance Sheet
and Statements of Operations are as follows:
(a) To record the Sonat Acquisition funded primarily by borrowings under
the Company's bank credit facility.
(b) To record revenue and direct operating expenses of the Sonat
Acquisition, based on the statements of revenue and direct operating
expenses for the year ended December 31, 1994 and for the six months
ended June 30, 1995.
(c) To record revenue and direct operating expenses of the Other
Acquisition.
(d) To record estimated depreciation and depletion expense attributable to
the Sonat Acquisition and Other Acquisition using the unit-of-
production method applied to the net cost of the properties acquired.
(e) To record management fee income from Crosstex for the year ended
December 31, 1994 and the six months ended June 30, 1995.
(f) To record the estimated increase in general and administrative expense
of $250,000 less the operating fee income of $1,011,959 attributable
to the Sonat Acquisition for the year ended December 31, 1994.
(g) To record the estimated increase in general and administrative expense
of $125,000 less the operating fee income of $505,979 attributable to
the Sonat Acquisition for the six months ended June 30, 1995.
(h) To record interest expense attributable to the increase in debt to
finance the purchase of the Sonat Acquisition and Other Acquisition.
Interest expense is based upon the weighted average interest rate
incurred by the Company under its bank credit facility, assuming the
entire cost of the acquisitions had been funded with bank borrowings
at January 1 of each period.
P-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COMSTOCK RESOURCES, INC.
Dated: September 22, 1995 By:/s/ROLAND O. BURNS
________________________________
Roland O. Burns
Senior Vice President, Chief Financial
Officer, Secretary, and Treasurer
(Principal Financial and Accounting
Officer)
