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Haynesville Surge Pushes Comstock 4Q2009 Production

A successful drilling program in the Haynesville Shale helped Comstock Resources Inc. achieve an average daily production rate of 207.5 MMcfe in 4Q2009, a 13% increase from 3Q2009 and sharply higher than the 1.5 MMcfe/d of production reported in 4Q2008, the Frisco, TX-based company said.

4Q2009 production was 19.1 Bcfe, a 27% increase from 15.1 Bcfe in 4Q2008. The increase was primarily attributable to Comstock's Haynesville wells, which accounted for 83.6 MMcfe/d of the total 207.5 MMcfe/d production rate in 4Q2009.

"We did that without buying anything," CEO Jay Allison said during a conference call with financial analysts. "We did that through the drilling program. Today, the Haynesville gas production makes up 40% of our total production at Comstock."

Last year Comstock set aside $450 million for development and exploration to prove up its Haynesville Shale leasehold in Louisiana and to continue to develop its Cotton Valley leasehold in East Texas (see NGI, Jan. 12, 2009). About $399 million was earmarked for the company's East Texas-North Louisiana properties alone.

Comstock drilled 54 wells (38.6 net) in 2009, 46 of them horizontal wells and all of them successful. The company drilled 45 wells in the Haynesville; 40 of 43 horizontal wells in the Haynesville were successfully completed and tested at an average initial production rate of 13.2 MMcfe/d. Eight nonoperated wells drilled in DeSoto Parish in North Louisiana have an average initial production rate of 13.6 MMcfe/d. Comstock recently completed nine additional successful operated Haynesville shale horizontal wells in DeSoto Parish -- three in its Toledo Bend North field, five in the Logansport field and one in its Mansfield field.

Comstock expects to drill 56 Haynesville wells this year, Allison said.

Comstock should see 24% production growth in 2010, according to FBR Research analysts.

Comstock reported a net loss of $6.8 million (minus 15 cents/share) for 4Q2009, compared with a net loss of $96.4 million (minus $2.09/share) in 4Q2008. The loss was due primarily to low natural gas prices in 2009, the company said. Comstock averaged $4.34/Mcf for sales of its natural gas production in 4Q2009, 33% less than the $6.44/Mcf it realized in 4Q2008. Lower natural gas prices caused oil and gas sales to decrease to $90.2 million in 4Q2009, compared with $100.2 million in 4Q2008, despite the significant increase in production. Comstock lost $36.5 million (minus 81 cents/share) for all of 2009 compared with earnings of $58.2 million ($1.26/share) in 2008.

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