Comstock Resources, Inc. · NYSE:CRK
Comstock Resources — IPO Roadshow (August 2016)
28 slides from Comstock Resources's IPO roadshow presentation, Aug 2, 2016
Slide 1: Presentation to Equity and Noteholders August 2016
NYSE:CRK Presentation to Equity and Noteholders August 2016
Slide 2: Forward-looking statements
This presentation includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements give our current expectations or forecasts of future events. These statements include estimates o
Slide 3: Situation Overview
Situation Overview Comstock has assembled a high quality portfolio of oil and gas assets in the Haynesville and Eagle Ford Comstock’s enhanced completion design has transformed the Haynesville shale into one of North America’s highest natural gas return basins Comstock’s acreage position provides a
Slide 4: Repositioning Comstock Towards Growth
Repositioning Comstock Towards Growth The exchange offer will allow Comstock to redirect cash flow from interest expense to capital expenditures Deploy two rigs in 2017 and drill a total of 24 wells Fueling growth in production and EBITDAX Comstock will save up to $109 million in cash interest in 20
Slide 5: Exchange Summary
Exchange Summary Existing unsecured noteholders: Par for par into new second lien PIK notes Convertible into 73.5% of the pro forma common stock Existing secured noteholders: Par for par into new first lien notes Same terms as today, except for Company option to pay up to $75 million of interest in
Slide 6: Terms of New Notes
Terms of New Notes Issuer:Comstock Resources, Inc. Existing Notes:$700mm 10.00% 1st Lien Senior Notes due 2020$289mm 7.75% Senior Unsecured Notes due 2019$175mm 9.50% Senior Unsecured Notes due 2020 New Exchange$700mm 10.00%$289mm 7.75%$175mm 9.50% Notes:1st Lien Toggle Notes due 20202nd Lien Conver
Slide 7: Process Timeline
Process Timeline August 12 Early participation deadline for exchange offer August 15 Exchange ratio for declines by Early Tender Premium August 26 Exchange offer scheduled expiration August 31 Closing and settlement, subject to extension as necessary to complete SEC registration September 15 Schedul
Slide 8: Transaction Rationale
Transaction Rationale Rebuilding Balance Sheet Enhance liquidity and put rigs to work, allowing Comstock to maintain and grow enterprise value Delever the balance sheet through conversion of unsecured debt into equity Focus on Drilling, Production Growth and Value Creation Refocus on Comstock’s core
Slide 9: Risks of the Status Quo
Risks of the Status Quo Apart from the exchange offer, the Company’s alternatives may cause significant risks and uncertainties for investors Passage of time without drilling will erode asset value Joint ventures entered into out of necessity could reduce collateral and will add complexity Asset sal
Slide 10: Assets and Operations Update
Assets and Operations Update
Slide 11: Major Properties
Major Properties Other Proved Reserves – 5 Bcfe Wells – 332 E. Texas / N. Louisiana San Juan Proved Reserves – 593 Bcfe Wells – 924 South Texas Proved Reserves – 106 Bcfe Wells – 322 Texa Blocker Logansport Darco TMS Toledo Bend South Texas Douglass Eagle Ford Louisiana Company Overview Proved Reser
Slide 12: Areas of Focus
Areas of Focus Haynesville/ Bossier Tuscaloosa Marine Shale Texas Mississippi South Texas Eagle Ford Louisiana Company Overview Proved Reserves-704 Bcfe 56% - proved developed 7% - oil 93% - gas 98% - operated 12
Slide 13: Proved Oil and Gas Reserves
Proved Oil and Gas Reserves Despite a very limited drilling program, Comstock achieved an all-in finding cost of 20¢ per Mcf in the first half of 2016 with total proved reserves additions of 151 Bcf and capital expenditures of $30.3 million. Oil GasTotal MBblsBcfBcfe Proved Reserves as of 12/31/159,
Slide 14: East Texas / North Louisiana Region
East Texas / North Louisiana Region East Texas / North LA Reserves: 593 Bcfe Own interests in 924 producing wells in 28 fields 67,000 net acres with Lower Haynesville shale development potential 47,000 net acres with Upper Haynesville (Bossier) shale development potential Horizontal Cotton Valley de
Slide 15: Haynesville/Bossier Shale
Haynesville/Bossier Shale Haynesville Shale Cotton Valley and Cotton Valley Cotton Valley Haynesville and Bossier Shale Haynesville/Bossier Shale Net Acres 67,000 Resource 6 + Tcf Potential Drilled 10 (9.6 net) extended lateral wells in 2015 Drilled 3 (2.8 net) extended lateral wells in 2016 15
Slide 16: Haynesville Shale Program
Haynesville Shale Program Applying newest drilling and completion technologies to an established world class asset Extended laterals Larger stimulation treatment Rates of return improve as well costs decline New wells have 49% to 79% rates of return at natural gas prices of $2.50 to $3.00/Mcf at cur
Slide 17: Haynesville Shale Program
Haynesville Shale Program Pyle 6-7 26 MMcf/d Shahan 5-8 22 MMcf/d Pace 33 4 MMcf/d DeSoto Parish, Louisiana 17 Re-Frac Completed Bagley A- 4 3 MMcf/d Harrison 30-19 24 MMcf/d Boggess 5 -8 21 MMcf/d Horn 8-17 21 MMcf/d Ramsey 7-18 23 MMcf/d Holmes 29-32 28 MMcf/d Gamble 4-33 24 MMcf/d Jordan 16-21 22
Slide 18: Haynesville Extended Lateral Wells
Haynesville Extended Lateral Wells Haynesville shale 7,500 foot lateral wells 25 Type Curve Pyle 6-7 Shahan 5-8 Boggess 5-8 Horn 8-17 20 Harrison 30-19 Ramsey 7-18 Holmes 29-32 Gamble 4—33 Caraway 20-29 15 Jordan 16—21 day Ramsey 4—9 per Harrison 30—31 MMcf 10 5 Type Curve Days on production 0 0 100
Slide 19: Haynesville Well Economics
Haynesville Well Economics 4,500’ L7,500’ L10,000’ L Estimated Well Costs ($ millions)$6.5$8.5$10.8 24 Hr IP (Mmcf per day)152024 Decline B Factor0.990.990.99 Initial Decline (%)736764 Proppant/Cluster (K lbs)150150150 EUR (Bcf per lateral ft.)2.072.072.07 EUR (Bcf)9.015.520.7 19
Slide 20: Haynesville Well Economics: Rate of Return vs. Natural Gas Prices
Haynesville Well Economics Rate of Return vs. Natural Gas Prices 120 110 100 90 80 OR70 R604,500 FT. %50 7,500 ft. 40 3010,000 ft. 20 10 0 $2.00$2.50$3.00$3.50 $/MCF 20
Slide 21: Haynesville Well Economics: NPV vs. Natural Gas Prices
Haynesville Well Economics NPV 10 vs. Natural Gas Prices $20 $18 $16 $14 10 $12 NPV $10 4,500 ft. $ MM $8 7,500 ft. $6 10,000 ft. $4 $2 $0 $2.00 $2.50 $3.00 $3.50 $/MCF 21
Slide 22: Improving Haynesville Gas Differentials
Improving Haynesville Gas Differentials 52¢ 42¢ 20¢ 38¢ 15¢ 34¢ 12¢ 10¢ 32¢ 27¢ 26¢ 24¢ 2015 2016 2017 2018 Regional Transport & Basis vs Henry Hub Wellhead Gathering & Treating 22
Slide 23: Haynesville Staggered Lateral Potential
Haynesville Staggered Lateral Potential UPSIDE 640-acre Section More Reserves Recovered 8 Wells/Section 600’ Spacing More Efficient Reservoir Drainage, Less Waste Potential to add 83 Additional extended lateral locations 4 Upper 200’ Haynesvill 4 Lower HAYNESVILLE Upper 200’ Lower 23
Slide 24: South Texas Region
Own interests in 322 producing wells in 13 fields South Texas Reserves: – 106 Bcfe South Texas Region Texas South Texas Eagle Ford Las Hermanitas Fandango Javelina Rosita 24
Slide 25: South Texas Eagle Ford Shale Program
South Texas Eagle Ford Shale Program McMullen LaSalle Atascosa Frio 25 26,000 gross acres (19,000 net) prospective for oil in the Eagle Ford shale 83 future drilling locations in oil window
Slide 26: Eagle Ford Stacked / Staggered Lateral Development
Eagle Ford Stacked / Staggered Lateral Development Eagle Ford Shale 130’ 253 Potential Additional In-Fill Locations 26
Slide 27: TMS Acreage
TMS Acreage East Feliciana St. Helena Amite Wilkinson Louisiana Mississippi 81,000 gross acres (76,000 net) in the Tuscaloosa Marine shale in Louisiana and Mississippi 327 future drilling locations 27
Slide 28: Low Cost Structure
$1.13 $1.48 $0.26 $0.61 CRK Average G & A Lifting 2016 Q1 Producing Costs Per Mcfe Low Cost Structure $1.39 $2.09 Comstock total producing costs are 33% lower than the average E&P producing costs 28