Comstock Resources, Inc.

Good day and thank you for standing by. Welcome to the Comstock Resources, Inc. first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jay Allison, Chief Executive Officer. Please go ahead.

Thank you. Thank you. Welcome to the Comstock Resources first quarter 2024 financial and operating results conference call. You can view a slide presentation during or after this call by going to our website at www.comstockresources.com and downloading the quarterly results presentation. Here you'll find a presentation entitled First Quarter 2024 Results. I have Jay Allison, Chief Executive Officer of Gompstock, and with me is Roland Burns, our President and Chief Financial Officer, Dan Harrison, our Chief Operating Officer, and Ron Mills, our VP of Finance and Best Relations. Please refer to slide two on our presentations and note that our discussion today will include forward-looking statements within the meaning of securities laws. While we believe the expectations in such statements to be reasonable, there can be no assurance that such expectations will prove to be correct. If you would turn to slide three. Our corporate team of 255 strong want to thank you for joining the call today. We've been very active over the last 100 days with all hands focused on continuing to batten down the hatches in order to manage our assets and continue to create value during this week period for natural gas. Actions and achievements in the last 100 days have involved many of our stakeholders, including our bondholders, our bank group, our major stakeholder, Jerry Jones, and our service providers. On March 15th, we closed on an acquisition that enabled us to add 198,000 net acres to our Western Hainesville place which were substantially held by production, so we do not have to increase our drilling activity in order to retain the acreage. In the quarter, we turned four new Western Angel wells to cells. Each one looks fantastic. We're now drilling on two well pads, which will reduce our cost, and we recently also reduced our drilling days to 54. Dan Harrison will give a full report on our progress on the 450,000 that acre played later in the call. On March the 25th, the Jones family purchased an additional $100.5 million of Comstock stock that demonstrated their confidence in our business plan, including the Western Hainesville acreage acquisition. On April the 2nd, our bondholders stepped up in our $400 million new senior notes offering. The bonds were priced tighter to treasuries than any of our other bonds that we have issued since 1999. Then on April the 30th, our bank lending group reaffirmed our borrowing base of $2 billion with a $1.5 billion commitment. That has allowed us now to have $1.3 billion of liquidity. With the demand for natural gas growing in the future to service increased power generation, industrial and LNG demand, as well as future demand to power AI, we're well positioned to deliver clean, responsible, produced natural gas from our 800,000 net acres in the Hainesville. We have over 30 years of building inventory, which we are adding to as we unlock value in our 450,000 net acres in the Western Hainesville, one well at a time. Want to thank you for supporting your company, Comstock Resources. On slide three, we'll summarize the highlights of the first quarter. The financial results continue to be heavily impacted by the continued weak natural gas prices. Oil and gas sales, including hedging, were $336 million in the quarter, and we generated cash flow from operations of $182 million, or 65 cents per share, and adjusted EBITDAX was $230 million. Our adjusted net loss was 3 cents per share for the quarter, To strengthen our balance sheet, we added $100.5 million to our liquidity with a private placement of equity with our major stockholder, Jerry Jones. We continue to have strong results from our drilling program. In the first quarter, we drilled 16 successful operated Hainesville and Bossier Shale horizontal wells in the quarter with an average lateral length of 9,845 feet. and we turned to sales 18 successful operated Hainesville and Bossier Shell horizontal wells with an average IP rate of 27 million cubic feet per day and an average lateral length of 9,227 feet. We're continuing to progress in our Western Hainesville exploratory play. We added 198,000 net acres to our expensive Western Hainesville acreage position in the first quarter, increasing our total acreage position in the play to over 450,000 net acres. Since we last reported earnings, we have turned four additional wells to sales in the Western Hainesville and now have 12 successful wells in our new play. The Glass, Farley, Harrison, and Ingram Martin wells were all completed in the Hainesville and each had IP rates of 35 to 38 million cubic feet per day. We currently have two rigs running into play, both of which are drilling on two well pads. We continue to lower our cost to drill these wells, and our last well, we were able to reduce the drilling days to 54 days. I'll now have Roland go over the first quarter financial results. Roland?

All right. Thanks. Thanks, Jay. On slide four, we cover our first quarter financial results. Our production in the quarter of 1.5 BCFE per day increased 10% from the first quarter of 2023. The low natural gas prices resulted in our oil and gas sales in the quarter of $336 million, declining 14% from 2023's first quarter level, despite the 10% production increase. EBITDAX for the quarter was $230 million, and we generated $182 million of cash flow during the first quarter. We reported an adjusted net loss of $8.5 million for the first quarter, or $0.03 per share, as compared to income of $92 million in the first quarter of 2023. Slide five, we kind of break down our natural gas price realization in the quarter. During the first quarter, the quarterly NIMAC settlement price averaged $2.24, which was $0.17 lower than the average Henry Hub spot price in the quarter are the daily prices of $2.41. Our realized gas price during the first quarter averaged $2.06, reflecting an 18 cent differential to the settlement price and a 23 cent differential to our reference price. In the first quarter, we were 26% hedged, so this improved our realized price in the quarter to $2.40. In the volatile quarter, We also lost $800,000 on our third-party marketing activities. Slide six, we update our hedge position. Since we last reported, we've been very busy adding some hedges to kind of build out our hedge positions for next year in 2026, as well as improving the map that we've hedged for the fourth quarter of this year. We added $300 million a day of swaps covering the period of April I mean, October 2024 through December 2026 at an average price of $3.51 for MCF. We added $75 million a day of swaps just for 25 at an average swap price of $3.50. And then we added $150 million a day of collars in 2025 with a floor price of $3.50 and an average ceiling price of $3.80. We've also had some in 2026. We have $250 million a day of collars that we added for 2026, which had a floor price of $3.50 and an average ceiling price of $3.98. So as a result of this activity, we're almost 50% hedged for the fourth quarter of this year, and we're about a third hedged for each of 2025 and 2026. So we'll continue to look to opportunistically add to our hedge positions over time in order to get close to that 50% hedge kind of target that we have. And we continue to put in positions that give us very meaningful floor protection. And as you can see, that's kind of sitting around the $3.50 area. On slide seven, we detail our operating costs per MCFE and our EBITDAX margin in the first quarter. So our operating cost averaged 76 cents per MCFE produced, which was five cents lower than our fourth quarter rate. We saw some improvement in our production and ad valorem taxes, which were down 10%, but our other costs were up a little bit to slightly offset that. Our EBITDAX margin after hedging came in at 68% in the first quarter. That was a similar margin to the the margin that we had in the fourth quarter, despite the fact that we had lower prices in the first quarter of this year. On slide eight, we recap our spending on drilling and other development activity. For the quarter, we spent a total of $256 million on our drilling activities, including $252 million that directly relates to the Hainesville and Bossier Shale Drilling Program. And then we only spent $4 million on other development activity in the quarter. We drilled 16 or 14.3 net wells in our Haines School program, and we turned 18 or 16.3 operated wells to sales in the quarter. These wells had an average IP rate of $27 million per day. In the quarter, we did have four short lateral Bossier wells, which were drilled, which probably dilute the numbers a little bit. but they were drilled to hold acreage. On slide nine, we recap our balance sheet at the end of the first quarter. We ended the quarter with $540 million in borrowings outstanding in our credit facility, giving us $2.7 billion in total debt, including our outstanding senior notes. As Jay referenced, on March 25th, we sold 12.5 million shares to our majority stockholder for $100.5 million in in a private placement. The proceeds from that offering helped offset some of the cost of our Western Hainesville acreage acquisition program. Just after the end of the first quarter, we issued $400 million of additional senior notes due in 2029, and we used the proceeds to pay down the borrowings under our bank facility. The bond offering increased our liquidity on a pro-forum basis to $1.3 billion. Lastly, on April 30th, our bank group reaffirmed our borrowing base at $2 billion, and then our elected commitment of $1.5 billion kind of remained the same. So I'll now turn the call over to Dan to discuss the operations in more detail.