Comstock Resources, Inc. · NYSE:CRK
Comstock Resources — Merger or Acquisition (August 2016)
29 slides from Comstock Resources's merger presentation, Aug 16, 2016
Slide 1: Updated Presentation to Stock Holders and Note Holder
Updated Presentation to Stock Holders and Note Holder August 15, 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 return natural gas basins ? Comstock’s acreage position provi
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 could save up to $109 million in cash inter
Slide 5: Exchange Summary
Exchange Summary ? Existing unsecured noteholders: ? Par for par into new second lien PIK notes ? Convertible into 72.3% 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
Slide 6: Terms of New Notes
Terms of New Notes Issuer: Comstock Resources, Inc. $700MM 10.00% $289MM 7.75% $175MM 9.50% Existing Notes: 1st Lien Senior Notes due Senior Unsecured Notes due Senior Unsecured Notes due 2020 2019 2020 $700MM 10.00% $289MM 7.75% $175MM 9.50% New Exchange 1st Lien Toggle Notes due 2nd Lien Convertib
Slide 7: Collateral Enhancement
Collateral Enhancement New Collateral will Cover Substantially All the Company’s Assets Existing New Notes 10% 20% Proved Proved 80% Mortgaged 90% Mortgaged Not Mortgaged Reserves* Not Mortgaged Reserves* 10% 15% Probable Probable Drilling Mortgaged Drilling 90% Mortgaged Locations 85% Not Mortgaged
Slide 8: Process Timeline
Process Timeline August ? Exchange offer scheduled expiration ? Closing and settlement, subject to extension as August necessary to complete SEC registration September ? Scheduled interest payment on senior secured notes 8
Slide 9: Transaction Rationale
Transaction Rationale ? Enhance liquidity and put rigs to work, allowing Rebuildin Comstock to maintain and grow enterprise value Balance Sheet ? Delever the balance sheet through conversion of unsecured debt into equity ? Refocus on Comstock’s core strategy of drilling Focus on Drilling, wells with
Slide 10: 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 ? A
Slide 11: Assets and Operations Update
Assets and Operations Update
Slide 12: Major Properties
Major Properties Oth Proved Reserves Bcf Wells 332 E. Texas / N. Louisian Proved Reserves 593 Bc San Juan Wells 924 South Texas Proved Reserves 106 Bcf Wells 322 Logansport Texas Blocker Darco TMS Toledo Bend South Texas Douglass Company Overvie Eagle Ford Louisiana Proved Reserv 704 Bcfe Las 56% pr
Slide 13: Areas of Focus
Areas of Focus Haynesville/ Bossier Tuscaloosa Marine Shale Texas Mississippi South Eagle Texas Ford Louisiana Company Overvie Proved Reserv 704 Bcfe 56% proved develope % 93% gas 98% operate 13
Slide 14: 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 Gas Total MBbls Bcf Bcfe Proved Reserves as of 12/31/1
Slide 15: East Texas / North Louisiana Region
East Texas / North Louisiana Region East Texas / North L Reserves 593 Bc ? Own interests in 924 producing wells in 28 fields ? ~ 67,000 net acres Longwood with Lower Waskom Blocker Haynesville shale Drew Logansport development Beckville potential Mansfield North ? ~ 47,000 net acres Texas Toledo wit
Slide 16: Haynesville/Bossier Shale
Haynesville/Bossier Shale Haynesville Shale Cotton Valley and Cotton Valley Cotton Valley 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 (2. net) extended lateral wells in 2016 16
Slide 17: 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 $3.00/
Slide 18: Haynesville Shale Program
Haynesville Shale Program Harrison 30-31 24 MMcf/d Bagley A-4 3 MMcf/d Re-Frac Completed Gamble 4-33 24 MMcf/d 28 MMcf/d Holmes 29-20 24 MMcf/d Boggess 5 -8 21 MMcf/d Pyle 6-7 DeSoto Ramsey 7-18 23 M Parish, Louisiana Caraway 20-29 Jordan 16-21 24 MMcf/d Ramsey 4-9 22 MMcf/d 23 MMcf/d Acquired in Ex
Slide 19: Haynesville Extended Lateral Wells Type Curve
Haynesville Extended Lateral Wells 25 Type Curve Pyle 6-7 Shahan 5-8 Boggess 5-8 Horn 8-17 20 Harrison 30-19 Ramsey 7-18 Holmes 29-32 Gamble 4—33 Caraway 20-29 15 Jordan 16—21 day Ramsey 4—9 per Harrison 30—31 MMcf 10 5 Type Curve Days on production 0 0 100 200 300 400 500 New wells exceeding expect
Slide 20: Haynesville Well Economics
Haynesville Well Economics 4,500’ L 7,500’ L 10,000’ L Estimated Well Costs ($ millions) $6.5 $8.5 $10.8 24 Hr IP (Mmcf per day) 15 20 24 Decline B Factor 0.99 0.99 0.99 Initial Decline (%) 73 67 64 Proppant/Cluster (K lbs) 150 150 150 EUR (Bcf per lateral ft.) 2.07 2.07 2.07 EUR (Bcf) 9.0 15.5 20.7
Slide 21: 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 70 ROR 60 4,500 ft. % 50 7,500 ft. 40 30 10,000 ft. 20 10 0 $2.00 $2.50 $3.00 $3.50 $/MCF 21
Slide 22: 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 22
Slide 23: Improving Haynesville Gas Differentials
Improving Haynesville Gas Differentials 52¢ 42¢ 20¢ 38¢ 34¢ 15¢ 12¢ 10¢ 32¢ 27¢ 26¢ 24¢ 2015 2016 2017 2018 Regional Transport & Basis vs Henry Hub Wellhead Gathering & Treating 23
Slide 24: Haynesville Staggered Lateral Potential
Haynesville Staggered Lateral Potential UPSIDE 640-acre Section • More Reserves 8 Wells/Section Recovered ~600’ Spacing • More Efficient Reservoir Drainage, Less Waste • Potential to add 83 Additional Upper 200’ extended lateral Haynesville locations 4 Lower HAYNESVILLE Upper 200’ Lower 24
Slide 25: South Texas Region
South Texas Region South Texa Reserves 106 Bc South Texas Eagle Ford Texas in 322 producing wells in 13 fields Las Hermanitas Rosita Fandango Javelina 25
Slide 26: South Texas Eagle Ford Shale Program
South Texas Eagle Ford Shale Program 26,000 gross acres (19,000 net) prospective for oil in the Eagle Ford shale 83 future drilling locations in oil window 26
Slide 27: Eagle Ford Stacked / Staggered Lateral Development
Eagle Ford Stacked / Staggered Lateral Development • 253 Potential Additional In-Fill Locations 130’ Eagle Ford Sh 27
Slide 28: TMS Acreage
TMS Acreage 81,000 gross acres (76,000 net) in the Tuscaloosa Marine shale in Louisiana and Mississippi 327 future drilling locations Mississippi Louisiana 28
Slide 29: Low Cost Structure
Low Cost Structure $ 2.09 $0.61 ? Comstock total producing costs $1.39 G & A are 33% lower $0.26 than the average Lifting E&P producing costs $1.48 $1.13 CRK Average 29 IMPORTANT ADDITIONAL INFORMATION FILED WITH THE SEC This communication is for informational purposes only and is neither an offer t
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