Oil and natural gas firm Comstock Resources Inc. (CRK) reported weaker-than-expected fourth quarter results as low natural gas prices more than offset a rise in production volumes. The loss from operations came in at 15 cents per share, much wider than the Zacks Consensus Estimate of 7 cents. In the year-ago period, the company earned 22 cents per share (adjusted for after-tax impairment charges). Oil and gas sales were down 9.9% year-over-year to $90.2 million.

Estimate Surprise Trend

It was the company’s third negative earnings surprise in the past four quarters. Comstock has performed poorly during this period, with its average earnings surprise being -48.4%. This implies that the company has missed the Zacks Consensus Estimate by 48.4% over the last four quarters.

Volume Growth

The company’s operational performance during the quarter continued to reflect the success of its enhanced onshore drilling programs and property acquisitions, resulting in quarterly volume growth of 26.7% year-over-year to 19.1 billion cubic feet equivalent (Bcfe), of which 94% was natural gas. Production in the East Texas/North Louisiana operating region increased 55.8% to 13.0 Bcfe, while production from the South Texas properties came in at 4.6 Bcfe, an approximately 10.2% decrease from the year-earlier level.

Natural Gas Realizations Down

Average price realization per thousand cubic feet equivalent (Mcfe) was $4.73, down 28.9% from the year-ago quarter. Average oil price realization was $64.76 per barrel and average natural gas realization was $4.34 per Mcf, compared to $52.16 per barrel and $6.44 per Mcf, respectively, in the year-earlier quarter.
 
Costs & Expenses

Oil and gas operating costs were down 9.2% from the fourth quarter of 2008 to $18.7 million. However, overall operating expenses increased 9.9% year-over-year to $92.1 million.

Cash Flow & EBITDAX

Comstock generated operating cash flow from continuing operations of $67.5 million, a decrease of 15.0% from the year-earlier period. Quarterly EBITDAX (earnings before interest, taxes, depreciation, depletion, amortization, exploration expense, and other non-cash expenses) decreased 10.0% year-over-year to $64.4 million.

Capital Expenditure

During the fourth quarter of 2009, Comstock spent $90.9 million on its exploration and development activities. For 2010, management guided towards drilling spending budget of $385 million. Of the 2010 spending budget, 96% is dedicated to the company’s East Texas/North Louisiana operating region. The 2010 drilling program consists of approximately 59 wells (42.6 net). Of these, 56 wells (41.1 net) are horizontal Haynesville shale wells.

Balance Sheet

At the end of 2009, Comstock had approximately $90.5 million in cash and cash equivalents and $470.8 million in long-term debt. Debt-to-capitalization at the end of the quarter was 30.6%.

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