Comstock Resources, Inc.

Thank you for standing by, and welcome to Comstock Resources second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker 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. To remove yourself from the queue, you may press star 1-1 again. I would now like to hand the call over to Jay Allison, Chairman and CEO. Please go ahead.

Thank you. I want to thank everybody for spending the time with us this morning going over our results. We appreciate your time. Welcome to the Comstock Resources second 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 presentations. There you'll find a presentation entitled Second Quarter 2024 Results. I have Jay Allison, Chief Executive Officer of Comstock, and with me is Roland Barnes, our President and Chief Financial Officer, Dan Harrison, our Chief Operating Officer, and Ron Mills, our VP of Finance and Investment Relations. Please refer to slide two in our presentations and note that the discussions today will include overlooking statements within the meaning of securities laws that While we believe the expectations in such savings to be reasonable, there could be no assurance that such expectations will prove to be correct. Before I start in the formal part of the presentation, I'd like to make a few comments. As a pure play natural gas producer, with 750,000 net acres in the Hainesville fill basin, which is the best located to serve the growing natural gas demand, along the Gulf Coast, the future for the company has never, ever been brighter. However, the present challenge is managing through these times with natural gas prices at all time lows on an inflation adjusted basis. So now it's how you manage the present to shine the brightest when the rebound occurs. You know, we have all the tools to accomplish this, including a very experienced management team who has managed in much harder times strong financial liquidity of 1.2 billion dollars the industry's lowest cost structure no bond maturities until 2029 and a very supportive major shareholder with the jones family who recently directly invested a hundred million dollars in the company to support our leasing program Our 300,000 net acres in a legacy Hainesville still has over 1,400 net drilling locations, which represents over 30 years of future drilling. In addition, we have captured 450,000 net acres in our emerging western Hainesville area that continues to look promising with each new well that we drill. Our operations group, as Dan Harrison will address in a few minutes, It's becoming more efficient with each new well drilled and is bringing down our drilling and completion cost in the new place. So even when the quarterly numbers are weaker due to natural gas prices being low, we are more encouraged than ever about the future because we trust our core region as well as our western Haynesville region and know our task is to execute daily to continue to create wealth by de-risking our new play and by reducing will cost in our new play. We are in a very volatile time, but we have been here before, and I've never seen a broader future for natural gas in North America or the world that I see today. Now, we'll go to slide three, the second quarter 2024 highlights. On slide three, we summarize the highlights for the second quarter. Our financial results continue to be heavily impacted by the continued weak natural gas prices as our average realized gas price before hedging was $1.65 for the quarter. With hedging, it was $2.12. As a result, our oil and gas sales, including hedging, were $278 million in the quarter, and we generated cash flow from operations of $118 million. Our 41 cents per share in adjusted EBITDAX was $167 million. Our adjusted net loss was 20 cents per share for the quarter. In the second quarter, we drilled 11 successful operated Ainsville and Bossier shell horizontal wells in the quarter with an average lateral length of 11,346 feet. And we turned to sales 12 successful operated Ainsville and Bossier shell horizontal wells with an average IP rate of 22 million per day and average lateral length of 8,847 feet. we're continuing to advance our Western Hainesville exploratory play. The Western Hainesville acreage position totals more than 450,000 net acres now. We currently have 12 successful producing wells in our new play, six from the Hainesville shell and six from the Bossier shell. We recently completed the drilling activity on both two well pads in the Western Hainesville play. With the drilling efficiencies from the pad drilling we reduced the latest well drill times to 54 days. We expect to turn the next six Western Hainesville wells to sales around the end of the year, and we currently have two rigs running into play today. I'll have Roland go over the second quarter financial results. Roland?

Thanks, Jay. On slide four, we cover the second quarter financial results. Our production in the second quarter of 1.4 BCFE per day increased 4% from the second quarter of 2023. But the very low natural gas prices offset this production increase, which resulted in our oil and gas sales in the quarter of $278 million, declining 2% from 2023's second quarter. EBITDAX for the quarter was $167 million, and we generated $118 million of cash flow in the quarter. We reported an adjusted net loss of $58 million for the second quarter, or 20 cents per share, as compared to $1 million of net income in the second quarter of 2023. The higher DD&A in the quarter, which was attributable to the decline in approved undeveloped reserves, which results from having to use the very low natural gas prices required by the SEC to determine reserves accounted for much of the loss of the quarter. As natural gas prices improve, those proved end of up reserves will be back on the books and we'll see the DDA rate go back to its lower levels in future quarters. On slide five, we cover our year-to-date financial results. Our production in the first six months of 2024 of 1.5 BCFE per day was 6% higher than the first six months of 2023. Natural gas and oil sales in the first half of the year were $614 million, which was down 9% from 2023's first half, despite the increase in production, and that's also due to the lower natural gas prices. EBITDAX for the first six months of the year was $396 million, and we generated $300 million of cash flow during the first half of the year. We reported an adjusted net loss of $67 million for the first six months of the year, or 24 cents per share as compared to $93 million of net income for the same period in 2023. On slide six, we break down our natural gas price realization in the second quarter. It was a very challenging quarter as our quarterly NYMEX helmet price only averaged $1.89. The average Henry Hub spot price in the quarter was a little bit better at $2.04. Our realized gas price during the second quarter averaged $1.65, reflecting a 24-cent differential to the settlement price and a 30-cent differential to our reference price. In the second quarter, we were 28% hedged, which improved our realized gas price to $2.12. In slide seven, we detail our operating costs per MCFE and our EBITDAX margin. Our operating costs per MCFE averaged 84 cents in the second quarter, $0.08 higher than the first quarter rate, but the same as our second quarter rate of last year. Production and ad valorem taxes were $0.14, lifting costs were $0.27, gathering costs were $0.38, and our G&A costs were $0.05 in the quarter. Our EBITDAX margin after hedging came in at 61% in the second quarter, down from the 68% margin we had in the first quarter due to the even weaker natural gas prices. Slide eight, we recap our spending on drilling and other development activity during the quarter. We spent a total of $221 million on development activities in the second quarter. Virtually all of that was spent on our Hainesville and Bossier Shale drilling program. In the first six months of this year, we drilled 18 or 14.9 net horizontal Hainesville wells and nine or 8.6 net Bossier wells. We turned 30 wells to sales or 27.9 net operated wells, and they had an average IP rate of 25 million cubic feet per day. Slide nine recaps our balance sheet at the end of the second quarter. We ended the quarter with $325 million of borrowings outstanding under our credit facility, giving us a total of 2.9 billion in debt, including our outstanding senior notes. In early April, we issued $400 million of additional notes due in 2029, and used the proceeds to pay down outstanding borrowings under our bank credit facility. On April 30th, our bank reaffirmed our borrowing base at $2 billion, and our elected commitment stayed the same at $1.5 billion. So at the end of the second quarter, we had $1.2 billion of liquidity. I'll now turn the call over to Dan to discuss our operations.