Comstock Resources Inc. said Wednesday it is raising its 2006 capital expenditure budget for development and exploration activities by 67% over the previous year to $200 million. In 2005, the Frisco, TX-based company spent $120 million on E&P.
Development projects comprise $179 million of the 2006 budget and $21 million of the budget is allocated to exploration activities. Comstock expects to drill 149 (79.7 net) wells in 2006, including 137 (76.5 net) development wells and 12 (3.2 net) exploratory wells.
The company said its East Texas/North Louisiana operating region accounts for the largest portion of the 2006 budget with forecasted expenditures of $134 million. It will drill 96 (57.9 net) development wells in this region in 2006. Comstock expects to spend $28 million in South Texas to drill 21 (4.8 net) wells in 2006, including 10 (2.3 net) development wells and 11 (2.5) exploration wells. Comstock has budgeted a total of $30 million for its Mississippi properties, on which it will drill 15 (11.2 net) development wells and one (0.8 net) exploration well. The remaining $8 million will be spent on Comstock’s properties in its other regions.
Comstock currently has four drilling rigs contracted for its operated drilling activities. To support the increase in drilling activities in 2006, the company said it has recently contracted for four additional drilling rigs to be added in 2006.
“The increased drilling program will be the primary driver of our production growth that we expect to have next year,” said CEO M. Jay Allison. “Given the current strong natural gas prices, we expect that the operating cash flow that we generate will exceed our planned spending for exploration and development projects in 2006.”
Comstock also announced that its board of directors has approved the repurchase of up to $25 million of the company’s common stock in a common stock repurchase program. “We believe the repurchase of our common stock provides a very attractive investment for our stockholders compared to the current cost of acquiring producing oil and natural properties,” Allison added.
The 2006 budget does not include capital expenditures expected to be made by Bois d’Arc Energy, Inc., in which Comstock has a 48% ownership stake.
Comstock expects its average fourth quarter 2006 natural gas price to be $10.20/Mcf, $2.77 less than the average last day Nymex price of $12.97 for the fourth quarter. Comstock’s realized oil price for its fourth quarter 2006 production is expected to be $49.40/bbl.
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