SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
[X] For The Quarter Ended June 30, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
Commission File No. 0-16741
COMSTOCK RESOURCES, INC.
(Exact name of registrant as specified in its charter)
NEVADA 94-1667468
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5005 LBJ Freeway, Suite 1000, Dallas, Texas 75244
(Address of principal executive offices)
Telephone No.: (972) 701-2000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
filing requirements for the past 90 days. Yes [X] No
The number of shares outstanding of the registrant's common stock, par
value $.50, as of August 12, 1998 was 24,320,863.
<PAGE>
COMSTOCK RESOURCES, INC.
QUARTERLY REPORT
FOR THE QUARTER ENDED JUNE 30, 1998
INDEX
PART I. Financial Information Page No.
--------
Item 1. Financial Statements
Consolidated Balance Sheets -
June 30, 1998 and December 31, 1997..............................4
Consolidated Statements of Operations -
Three Months and Six Months ended June 30, 1998 and 1997.........5
Consolidated Statement of Stockholders' Equity -
Six Months ended June 30, 1998...................................6
Consolidated Statements of Cash Flows -
Six Months ended June 30, 1998 and 1997..........................7
Notes to Consolidated Financial Statements............................8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................11
PART II. Other Information
Item 5. Other Information................................................15
Item 6. Exhibits and Reports on Form 8-K.................................15
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
3
<PAGE>
COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, December 31,
1998 1997
-------- ----------
(Unaudited)
(In thousands)
Cash and Cash Equivalents ................................$ 2,138 $ 14,504
Accounts Receivable:
Oil and gas sales ................................... 15,585 24,509
Joint interest operations ........................... 2,017 6,732
Other Current Assets ..................................... 2,470 172
--------- ---------
Total current assets ..................... 22,210 45,917
Property and Equipment:
Unevaluated oil and gas properties .................. 36,423 30,291
Oil and gas properties, successful efforts method ... 469,926 456,606
Other ............................................... 1,640 1,561
Accumulated depreciation, depletion and amortization (103,449) (77,677)
--------- ---------
Net property and equipment ............... 404,540 410,781
Other Assets ............................................. 161 102
--------- ---------
$ 426,911 $ 456,800
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Portion of Long-term Debt ........................$ 238 $ --
Accounts Payable and Accrued Expenses .................... 20,812 56,184
--------- ---------
Total current liabilities ................ 21,050 56,184
Long-term Debt, less Current Portion ..................... 265,000 260,000
Deferred Taxes Payable ................................... 10,812 11,207
Reserve for Future Abandonment Costs ..................... 5,475 4,815
Stockholders' Equity:
Common stock--$0.50 par, 50,000,000 shares authorized,
24,235,863 and 24,208,785 shares outstanding at
June 30, 1998 and December 31, 1997, respectively... 12,118 12,104
Additional paid-in capital............................ 110,971 110,273
Retained earnings .................................... 1,499 2,234
Less: Deferred compensation-restricted stock grants... (14) (17)
--------- ---------
Total stockholders' equity ............... 124,574 124,594
--------- ---------
$ 426,911 $ 456,800
========= =========
The accompanying notes are an integral part of these statements.
4
<PAGE>
COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------- -------------------
1998 1997 1998 1997
-------- -------- -------- --------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Revenues:
Oil and gas sales .......................... $ 24,822 $ 18,039 $ 50,264 $ 41,451
Other income ............................... 72 200 188 468
Gain on sale of properties ................. -- 40 -- 88
-------- -------- -------- --------
Total revenues ..................... 24,894 18,279 50,452 42,007
-------- -------- -------- --------
Expenses:
Oil and gas operating ...................... 6,124 4,085 12,445 8,734
Exploration ................................ 2,818 -- 3,877 --
Depreciation, depletion and amortization ... 13,176 5,959 25,798 10,949
General and administrative, net ............ 594 592 1,016 1,281
Interest ................................... 4,189 1,284 8,446 2,494
-------- -------- -------- --------
Total expenses ..................... 26,901 11,920 51,582 23,458
-------- -------- -------- --------
Income (loss) before income taxes ............ (2,007) 6,359 (1,130) 18,549
Provision for income taxes ................... 703 (2,225) 396 (6,492)
-------- -------- -------- --------
Net income (loss) ............................ (1,304) 4,134 (734) 12,057
Preferred stock dividends .................... -- (161) -- (320)
Net income (loss) attributable to common stock $ (1,304) $ 3,973 $ (734) $ 11,737
======== ======== ======== ========
Net income (loss) per share:
Basic .............................. $ (0.05) $ 0.16 $ (0.03) $ 0.49
======== ======== ======== ========
Diluted ............................ $ 0.16 $ 0.46
======== ========
Weighted average number of common and
common stock equivalent shares outstanding:
Basic .............................. 24,228 24,186 24,224 24,168
======== ======== ======== ========
Diluted ............................ 26,383 26,425
======== ========
The accompanying notes are an integral part of these statements.
</TABLE>
5
<PAGE>
COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Six Months Ended June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Deferred
Additional Compensation-
Common Paid-In Retained Restricted
Stock Capital Earnings Stock Grants Total
-------- -------- -------- -------- --------
(In thousands)
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1997 ..... $ 12,104 $110,273 $ 2,234 $ (17) $124,594
Issuance of common stock .... 14 200 -- -- 214
Value of stock options issued
for exploration prospect -- 498 -- -- 498
Restricted stock grants ..... -- -- -- 3 3
Net loss .................... -- -- (735) -- (735)
-------- -------- -------- -------- --------
Balance at June 30, 1998 ......... $ 12,118 $110,971 $ 1,499 $ (14) $124,574
======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30,
(Unaudited)
1998 1997
--------- ---------
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ..................................... $ (735) $ 12,057
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Compensation paid in common stock ................... 131 125
Exploration ......................................... 3,877 --
Depreciation, depletion and amortization ............ 25,798 10,949
Deferred income taxes ............................... (395) 6,492
Gain on sale of properties........................... -- (88)
-------- --------
Working capital provided by operations ............ 28,676 29,535
Decrease in accounts receivable ..................... 13,639 4,867
Increase in other current assets .................... (2,298) (521)
Decrease in accounts payable and accrued expenses ... (35,372) (7,487)
-------- --------
Net cash provided by operating activities ......... 4,645 26,394
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of properties ................... 7 5,034
Capital expenditures ................................ (22,342) (33,813)
-------- --------
Net cash used for investing activities ............ (22,335) (28,779)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings .......................................... 10,238 20,000
Proceeds from common stock issuances ................ 86 472
Stock issuance costs ................................ -- (15)
Principal payments on debt .......................... (5,000) (26,071)
Dividends paid on preferred stock ................... -- (320)
-------- --------
Net cash provided by (used by) financing activities 5,324 (5,934)
-------- --------
Net decrease in cash and cash equivalents ....... (12,366) (8,319)
Cash and cash equivalents, beginning of period .. 14,504 16,162
-------- --------
Cash and cash equivalents, end of period ........ $ 2,138 $ 7,843
======== ========
The accompanying notes are an integral part of these statements.
7
<PAGE>
COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998
(Unaudited)
(1) SIGNIFICANT ACCOUNTING POLICIES -
Basis of Presentation -
In management's opinion, the accompanying consolidated financial statements
contain all adjustments (consisting solely of normal recurring adjustments)
necessary to present fairly the financial position of Comstock Resources, Inc.
and subsidiaries (the "Company") as of June 30, 1998 and the related results of
operations for the three months and six months ended June 30, 1998 and 1997 and
cash flows for the six months ended June 30, 1998 and 1997.
The accompanying unaudited financial statements have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission. Certain
information and disclosures normally included in annual financial statements
prepared in accordance with generally accepted accounting principles have been
omitted pursuant to those rules and regulations, although the Company believes
that the disclosures made are adequate to make the information presented not
misleading. These financial statements should be read in conjunction with the
Company's financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997.
The results of operations for the six months ended June 30, 1998 are not
necessarily an indication of the results expected for the full year.
Supplementary Information with Respect to the Statements of Cash Flows -
For the Six Months
Ended June 30,
------------------
1998 1997
------- -------
(In thousands)
Cash Payments -
Interest ...................................... $8,446 $2,482
Income taxes .................................. 276 300
Noncash Investing and Financing Activities -
Common stock issued for director compensation . $ 128 $ 113
Value of vested stock options under exploration
joint venture ......................... 498 --
Income Taxes -
Deferred income taxes are provided to reflect the future tax consequences
of differences between the tax basis of assets and liabilities and their
reported amounts in the financial statements using enacted tax rates. For the
six months ended June 30, 1998, the Company had a deferred income tax benefit
based on an expected tax rate for 1998 of 35%.
8
<PAGE>
COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Earnings Per Share -
Basic earnings per share is determined without the effect of any
outstanding potentially dilutive stock options or other convertible securities
and diluted earnings per share is determined with the effect of outstanding
stock options and other convertible securities that are potentially dilutive.
Basic and diluted earnings per share for the three months and six months ended
June 30, 1998 and 1997 were determined as follows:
<TABLE>
<CAPTION>
For the Three Months Ended June 30,
-----------------------------------------------------
1998 1997
------------------------- ------------------------
Per Per
Income Shares Share Income Shares Share
-------- -------- ------ -------- ------- -----
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Basic Earnings Per Share:
Net Income (Loss) $ (1,304) 24,228 $ 4,134 24,186
Less Preferred Stock Dividends -- -- (161) --
-------- -------- -------- -------
Net Income Available to Common Stockholders (1,304) 24,228 $(0.05) 3,973 24,186 $0.16
====== =====
Diluted Earnings Per Share:
Effect of Dilutive Securities:
Stock Options -- -- -- 852
Convertible Preferred Stock -- -- 161 1,345
-------- -------- -------- -------
Net Income (Loss) Available to Common
Stockholders and Assumed Conversions $ (1,304) 24,228 $(0.05) $ 4,134 26,383 $0.16
======== ======= ====== ======== ====== =====
For the Six Months Ended June 30,
-----------------------------------------------------
1998 1997
------------------------- ------------------------
Per Per
Income Shares Share Income Shares Share
-------- -------- ------ -------- ------- -----
(In thousands, except per share amounts)
Basic Earnings Per Share:
Net Income (Loss) $ (734) 24,224 $ 12,057 24,168
Less Preferred Stock Dividends -- -- (320) --
-------- -------- -------- -------
Net Income Available to Common Stockholders (734) 24,224 $(0.03) 11,737 24,168 $0.49
====== =====
Diluted Earnings Per Share:
Effect of Dilutive Securities:
Stock Options -- -- -- 912
Convertible Preferred Stock -- -- 320 1,345
-------- -------- -------- -------
Net Income (Loss) Available to Common
Stockholders and Assumed Conversions $ (734) 24,224 $(0.03) $ 12,057 26,425 $0.46
======== ======= ====== ======== ====== =====
</TABLE>
New Accounting Standard -
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities". The Statement establishes accounting and reporting
standards that are effective after June 15, 1999 which require that every
derivative instrument (including certain derivative instruments embedded in
other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. The Statement requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. As of June 30, 1998, the Company had no
derivative instruments in place.
9
<PAGE>
COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
(2) ACQUISITION OF OIL AND GAS PROPERTIES -
On May 8, 1998, the Company purchased a 33% working interest in 13,722
acres at South Timbalier Blocks 34 and 50, and South Pelto Block 15 located
offshore Louisiana in the Gulf of Mexico in 35 to 55 feet of water for $1.8
million. Current daily production from the properties is 1,500 Mcf and 50
barrels of oil from seven active wells at depths ranging from 800 feet to 9,500
feet. The Company has identified several exploratory prospects to drill on the
acquired acreage. The facilities acquired include four platforms and
infrastructure which enable the Company to accelerate production from any
successful exploratory wells drilled in the area.
(3) LONG-TERM DEBT -
As of June 30, 1998, the Company had $265.0 million outstanding under its
bank revolving credit facility. Borrowings under the bank credit facility cannot
exceed a borrowing base determined semiannually by the banks. The borrowing base
as of June 30, 1998 was $275.0 million. Amounts outstanding under the bank
credit facility bear interest at a floating rate based on The First National
Bank of Chicago's base rate (as defined) plus 0% to 0.05% or, at the Company's
option, at a fixed rate for up to six months based on the London Interbank
Offered Rate ("LIBOR") plus 0.625% to 1.5%, depending upon the utilization of
the available borrowing base. As of June 30, 1998, the Company had placed the
outstanding advances under the revolving credit facility under fixed rate loans
based on LIBOR at an average rate of approximately 7.0% per annum. In addition,
the Company incurs a commitment fee of 0.2% to 0.375%, depending upon the
utilization of the available borrowing base, on the unused portion of the
borrowing base.
10
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The following table reflects certain summary operating data for the periods
presented:
<TABLE>
Three Months Ended Six Months Ended
--------------------- ----------------------
June 30, June 30,
1998 1997 1998 1997
------ ------ ------- -------
<S> <C> <C> <C> <C>
Net Production Data:
Oil (thousand barrels) 693 306 1,375 605
Natural gas (million cubic feet) 6,697 5,581 13,333 11,101
Average Sales Price:
Oil (per barrel) $12.73 $19.02 $13.73 $20.64
Natural gas (per thousand cubic feet - Mcf) 2.39 2.19 2.35 2.61
Expenses ($ per equivalent Mcf):
Oil and gas operating (l) $ 0.56 $ 0.55 $0.58 $ 0.59
General and administrative, net 0.05 0.08 0.05 0.09
Depreciation, depletion and
amortization(2) 1.21 0.80 1.19 0.74
<FN>
(1)Includes lease operating costs and production and ad valorem taxes.
(2)Represents depreciation, depletion and amortization of oil and gas
properties only.
</FN>
</TABLE>
Revenues -
The Company's oil and gas sales increased $6.8 million (38%) in the second
quarter of 1998, to $24.8 million from $18.0 million in 1997's second quarter
due to a 20% increase in the Company's natural gas production and a 126%
increase in the Company's oil production. The production increases were
partially offset by a 33% decrease in the Company's average realized oil price.
The Company's average second quarter gas price increased in 1998 by 9%. For the
six months ended June 30, 1998, oil and gas sales increased $8.8 million (21%),
to $50.3 million from $41.5 million for the six months ended June 30, 1997. The
increase is attributable to a 20% increase in natural gas production and a 127%
increase in oil production offset by 10% lower realized natural gas prices and
33% lower realized oil prices. The significant increases in production are
attributable to a $200.9 million acquisition of offshore properties completed in
December 1997.
Other income decreased $128,000 (64%) to $72,000 in the second quarter of
1998 from $200,000 in the second quarter of 1997. Other income for the six
months ended June 30, 1998 decreased $280,000 (60%) to $188,000 from $468,000
for the six months ended June 30, 1997. The decrease is attributable to a lower
level of short-term cash deposits outstanding during the quarter as well as a
decrease in management fee income received by the Company in 1998.
11
<PAGE>
Costs and Expenses -
Oil and gas operating expenses, including production taxes, increased $2.0
million (50%) to $6.1 million in the second quarter of 1998 from $4.1 million in
the second quarter of 1997 due primarily to the 46% increase in oil and natural
gas production (on an equivalent Mcf basis). Oil and gas operating expenses per
equivalent Mcf produced increased 1(cent) to 56(cent) in the second quarter of
1998 from 55(cent) in the second quarter of 1997. Oil and gas operating costs
for the six months ended June 30, 1998 increased $3.7 million (42%) to $12.4
million from $8.7 million for the six months ended June 30, 1997 due to the 47%
increase in oil and natural gas production (on an equivalent Mcf basis). Oil and
gas operating expenses per equivalent Mcf produced decreased 1(cent) to 58(cent)
for six months ended June 30, 1998 from 59(cent) for the same period in 1997.
In the second quarter of 1998, the Company had $2.8 million in exploration
expense. The charge is related to the write off of the Habanero prospect drilled
in the Gulf of Mexico at Bay Marchand Block 5. The well was temporally abandoned
due to numerous well control problems encountered. Exploration expense for the
first six months of 1998 was $3.9 million which relates to the write off of the
Habanero prospect drilling costs as well as a dry hole drilled at South
Timbalier Block 32 in the Gulf of Mexico.
Depreciation, depletion and amortization ("DD&A") increased $7.2 million
(121%) to $13.2 million in the second quarter of 1998 from $6.0 million in the
second quarter of 1997 due to the 46% increase in oil and natural gas production
(on an equivalent Mcf basis) and due to higher costs per unit of amortization.
DD&A per equivalent Mcf produced increased by 41(cent) to $1.21 for the three
months ended June 30, 1998 from 80(cent) for the three months ended June 30,
1997. For the six months ended June 30, 1998, DD&A increased $14.9 million
(136%) to $25.8 million from $10.9 million for the six months ended June 30,
1997. The increase is due to the 47% increase in oil and natural gas production
and to higher costs per unit of amortization. DD&A per equivalent Mcf increased
by 45(cent) to $1.19 for the six months ended June 30, 1998 from 74(cent) for
the six months ended June 30, 1997. The increases in the DD&A rate relate to the
higher costs of the offshore properties acquired in December 1997.
General and administrative expenses, which are reported net of overhead
reimbursements, of $594,000 for the second quarter of 1998 were comparable to
general and administrative expenses of $592,000 for the second quarter of 1997.
For the first six months of 1998, general and administrative expenses decreased
$265,000 (21%) to $1.0 million from $1.3 million for the six months ended June
30, 1997. The decrease for the six months ended June 30, 1998 is attributable to
an increase in overhead reimbursements received by the Company in 1998 which was
greater than the increase in the Company's overhead costs before reimbursements.
Interest expense increased $2.9 million (226%) to $4.2 million for the
three months ended June 30, 1998 from $1.3 million for the three months ended
June 30, 1997. Interest expense for the six months ended June 30, 1998 increased
$6.0 million (239%) to $8.4 million in 1998 from $2.5 million for the six months
ended June 30, 1997. The increases are related to a higher level of outstanding
advances under the Company's bank credit facility due to the December 1997
$200.9 million acquisition as well as a higher average interest rate on the
Company's bank credit facility. The weighted average annual interest rate under
the Company's bank credit facility increased to 7.1% in 1998's second quarter as
compared to 6.4% in the second quarter of 1997. For the six months ended June
30, 1998, the Company's weighted average interest rate under the Company's bank
credit facility was 7.1% as compared to 6.5% for the six months ended June 30,
1997. The increase in the rate was attributable to a higher utilization of the
borrowing base under the bank credit facility after the December 1997
acquisition.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(continued)
The Company had a deferred tax benefit of $703,000 and $396,000 for the
three months and six months ended June 30, 1998, respectively, using an
estimated tax rate of 35%.
The Company reported a net loss of $1.3 million for the three months ended
June 30, 1998, as compared to net income of $4.0 million for the three months
ended June 30, 1997. Net loss per share for the second quarter was 5(cent) on
weighted average shares outstanding of 24.2 million as compared to net income
per share of 16(cent) for the second quarter of 1997 on diluted weighted average
shares outstanding of 26.4 million.
The net loss for the six months ended June 30, 1998 was $734,000, as
compared to net income of $11.7 million, for the six months ended June 30, 1997.
Net loss per share for the six months ended June 30, 1998 was 3(cent) on
weighted average shares outstanding of 24.2 million as compared to net income
per share of 46(cent) for the six months ended June 30, 1997 on diluted weighted
average shares outstanding of 26.4 million.
Capital Expenditures
The following table summarizes the Company's capital expenditure activity
for the six months ended June 30, 1998 and 1997:
Six Months Ended June 30,
1998 1997
------- -------
(In thousands)
Acquisitions $ 2,230 $20,044
Other leasehold costs 2,117 1,271
Development drilling 5,616 8,832
Exploratory drilling 6,124 2,339
Workovers and recompletions 6,084 1,227
Other 171 100
------- -------
Total $22,342 $33,813
======= =======
Capital Resources and Liquidity
During the six months ended June 30, 1998, the primary sources of funds for
the Company were cash generated from operations of $28.7 million, before working
capital changes, and borrowings of $10.2 million. Primary uses of funds for the
three months ended June 30, 1998 were capital expenditures for development and
exploratory activities of $22.3 million and the repayment of debt of $5.0
million.
The timing of most of the Company's capital expenditures is discretionary
with no material long-term capital expenditure commitments. Consequently, the
Company has a significant degree of flexibility to adjust the level of such
expenditures as circumstances warrant. For the six months ended June 30, 1998
and 1997, the Company spent $19.9 million and $13.7 million, respectively, on
development and exploration activities. The Company currently anticipates
spending an additional $40.0 million on development and exploration projects
during the remainder of 1998. The Company does not have a specific acquisition
budget, as a result of the unpredictability of the timing and size of
forthcoming acquisition activities.
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(continued)
The Company intends to primarily use internally generated cash flow to fund
capital expenditures other than significant acquisitions. The Company
anticipates that such sources will be sufficient to fund the expected 1998
development and exploration expenditures. Significant future acquisitions would
require the Company to seek other debt or equity financings. The availability
and attractiveness of these sources of financing will depend upon a number of
factors, some of which will relate to the financial condition and performance of
the Company, and some of which will be beyond the Company's control, such as
prevailing interest rates, oil and natural gas prices and other market
conditions.
The Company's bank credit facility consists of a $290.0 million revolving
credit commitment provided by a syndicate of ten banks for which The First
National Bank of Chicago serves as agent. Indebtedness under the credit facility
is secured by substantially all of the Company's assets. The Company's bank
credit facility is subject to borrowing base availability which is generally
redetermined semiannually based on the banks' estimates of the future net cash
flows of the Company's oil and gas properties. As of June 30, 1998, the
borrowing base was $275.0 million. Such borrowing base may be affected from time
to time by the performance of the Company's oil and natural gas properties and
changes in oil and natural gas prices. The revolving credit line bears interest
at the option of the Company at either (i) LIBOR plus 0.625% to 1.5% or (ii) the
"corporate base rate" plus 0% to 0.5%, depending in each case on the utilization
of the available borrowing base. The Company incurs a commitment fee of up to
0.2% to 0.375% per annum, depending on the utilization of the available
borrowing base, on the unused portion of the borrowing base. The average annual
interest rate as of June 30, 1998, of all outstanding indebtedness under the
Company's bank credit facility was approximately 7.0%. The revolving credit line
matures on December 9, 2002 or such earlier date as the Company may elect. The
credit facility contains covenants which, among other things, restrict the
payment of cash dividends, limit the amount of consolidated debt, and limit the
Company's ability to make certain loans and investments.
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 5: OTHER INFORMATION
Shareholder proposals to be presented at the 1999 Annual Meeting of
Stockholders, for inclusion in the Company's Proxy Statement and form of Proxy
relating to that meeting, must be received by the Company at its principal
executive offices in Dallas, Texas, addressed to the Secretary of the Company,
not later than December 11, 1998. Such proposals, and any nomination of
candidates for election as directors, must comply with the bylaws of the Company
and the requirements of Regulation 14A of the Securities Exchange Act of 1934.
The Company intends to exercise discretionary voting authority granted under any
Proxy which is executed and returned to the Company on any matter that may
properly come before the 1999 Annual Meeting of Shareholders, unless written
notice of the matter is delivered to the Company at its principal executive
offices in Dallas, Texas, addressed to the Secretary of the Company, not later
than February 26, 1999, or such other date specified by the Company's bylaws.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
--------
27. Financial Data Schedule for the Six Months ended June 30, 1998.
b. Reports on Form 8-K
-------------------
None.
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, thereunto duly authorized.
COMSTOCK RESOURCES, INC.
Date August 12, 1998 /s/M. JAY ALLISON
--------------- --------------------
M. Jay Allison, Chairman, President and Chief
Executive Officer (Principal Executive Officer)
Date August 12, 1998 /s/ROLAND O. BURNS
--------------- --------------------
Roland O. Burns, Senior Vice President,
Chief Financial Officer, Secretary, and
Treasurer (Principal Financial and Accounting
Officer)
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial data extracted from the Consolidated
Financial Statements of Comstock Resources, Inc. and Subsidiaries for the six
months ended June 30, 1998 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,138
<SECURITIES> 0
<RECEIVABLES> 17,602
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 22,210
<PP&E> 507,989
<DEPRECIATION> (103,449)
<TOTAL-ASSETS> 426,911
<CURRENT-LIABILITIES> 21,050
<BONDS> 265,000
0
0
<COMMON> 12,118
<OTHER-SE> 112,456
<TOTAL-LIABILITY-AND-EQUITY> 426,911
<SALES> 50,264
<TOTAL-REVENUES> 50,452
<CGS> 0
<TOTAL-COSTS> 42,120
<OTHER-EXPENSES> 1,016
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,446
<INCOME-PRETAX> (1,130)
<INCOME-TAX> (396)
<INCOME-CONTINUING> (734)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (734)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
