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Comstock (CRK) Earnings and Revenues Beat Estimates in Q3


Domestic energy explorer Comstock Resources, Inc. CRK reported third-quarter 2017 loss of $1.10 per share (excluding one-time items), narrower than the Zacks Consensus Estimate of a loss of $1.45. The better-than-expected results were driven by cost-containment efforts, production growth and higher commodity price realizations. In particular, oil and natural gas prices moved up 10.4% and 7.25%, respectively, compared with the year-ago quarter, which provided an impetus to the finances of the company. Further, Comstock’s quarterly loss significantly narrowed from the year-ago adjusted loss of $3.27 per share.

Quarterly revenues increased to $66.8 million from $50.3 million a year ago. The higher realized prices and increased natural gas production resulted in higher revenues. Revenues from the natural gas sales jumped 52.7% to $56.2 million in the quarter under review. The top line also surpassed the Zacks Consensus Estimate of $65 million.

Comstock Resources, Inc. Price, Consensus and EPS Surprise

Comstock Resources, Inc. Price, Consensus and EPS Surprise | Comstock Resources, Inc. Quote

Volume Analysis

Comstock’s quarterly volume was 21.4 billion cubic feet equivalent (Bcfe), 33.7% higher compared with 16 Bcfe in the prior-year quarter. Natural gas output — constituting 93.6% of total production — increased 42% whereas oil output plunged 28% in the reported quarter. Growth in natural gas production is attributable to the company's successful Haynesville shale drilling program. However, the decline in oil production was due to the lack of drilling in the company's South Texas Eagle Ford shale properties.

Price Realizations

Average oil price realization (before hedging) was $46.45 per barrel, compared with $42.07 in third-quarter 2016. Average natural gas realization was $2.81 per thousand cubic feet/Mcf compared with $2.62 per Mcf in the year-earlier quarter.

Costs & Expenses

Total operating expenses were down 62.7% from third-quarter 2016 figure to $55.6 million primarily due to the absence of exploration expenses.

Exploration costs were not incurred in the quarter under review compared with the prior-year figure of $76.4 million. Further, total expenses in the quarter did not include impairment charges too. Loss on oil and gas properties reduced 92.1% from the year-ago quarter to $1 million. Lease operating cost of $9.4 million witnessed year-over-year decline of 24%. Depreciation charges were down by 12.6% to $32.8 million in the reported quarter.

These were partially offset by transportation and administrative expenses which increased in the reported quarter.

Cash Flow & EBITDAX

Comstock’s operating cash inflow from continuing operations were $32.2 million. This compared favorably with the operating cash inflow of about $4.9 million in the third quarter of 2016.

EBITDAX from continuing operations increased significantly. The metric surged 69.3% year over year to $50.3 million.

Capital Expenditure & Balance Sheet

In the reported quarter, Comstock’s capital expenditure amounted $43.2 million compared with $6.3 million in the year-ago quarter. The company spent $40 million on development drilling activities in the reported quarter. As of Sep 30, 2017, the company had $25.4 million in cash and cash equivalents and $1,089.7 million in long-term debt.

Zacks Rank and Key Picks

Comstock is an independent energy company engaged in the acquisition, development, production and exploration of oil and natural gas properties. The company currently carries a Zacks Rank #3 (Hold).

Some better-ranked players in the same industry include Concho Resources, Inc. CXO, Abraxas Petroleum Corporation AXAS and Bill Barrett Corporation BBG. All three companies sport a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Concho Resources reported positive earnings surprise in the preceding four quarters, the average being 118.57%.

Abraxas Petroleum reported average positive earnings surprise of 62.5% in the trailing four quarters.

Bill Barrett delivered average positive earnings surprise of 19.41% in the last four quarters.

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