(Mark One) | ||||
þ
|
ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 |
|||
For the fiscal year ended December 31, 2009 | ||||
OR | ||||
o
|
TRANSITION REPORT PURSUANT TO SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 |
|||
For the transition period from to |
NEVADA | 94-1667468 | |
(State or other jurisdiction
of
incorporation or organization) |
(I.R.S. Employer
Identification Number) |
Common Stock, $.50 Par Value | New York Stock Exchange | |
Preferred Stock Purchase Rights
|
New York Stock Exchange | |
(Title of class)
|
(Name of exchange on which registered) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
1
| amount and timing of future production of oil and natural gas; | |
| the availability of exploration and development opportunities; | |
| amount, nature and timing of capital expenditures; | |
| the number of anticipated wells to be drilled after the date hereof; | |
| our financial or operating results; | |
| our cash flow and anticipated liquidity; | |
| operating costs including lease operating expenses, administrative costs and other expenses; | |
| finding and development costs; | |
| our business strategy; and | |
| other plans and objectives for future operations. |
| the risks described in Risk Factors and elsewhere in this report; | |
| the volatility of prices and supply of, and demand for, oil and natural gas; | |
| the timing and success of our drilling activities; | |
| the numerous uncertainties inherent in estimating quantities of oil and natural gas reserves and actual future production rates and associated costs; | |
| our ability to successfully identify, execute or effectively integrate future acquisitions; | |
| the usual hazards associated with the oil and natural gas industry, including fires, well blowouts, pipe failure, spills, explosions and other unforeseen hazards; | |
| our ability to effectively market our oil and natural gas; | |
| the availability of rigs, equipment, supplies and personnel; | |
| our ability to discover or acquire additional reserves; | |
| our ability to satisfy future capital requirements; | |
| changes in regulatory requirements; | |
| general economic conditions, status of the financial markets and competitive conditions; | |
| our ability to retain key members of our senior management and key employees; and | |
| hostilities in the Middle East and other sustained military campaigns and acts of terrorism or sabotage that impact the supply of crude oil and natural gas. |
2
3
4
5
Reserves at December 31, 2009
2009 Average Daily Production
Natural
Natural
Oil
Gas
Total
% of
Oil
Gas
Total
% of
(MMBbls)
(Bcf)
(Bcfe)
Total
(MBbls/d)
(MMcf/d)
(MMcfe/d)
Total
1.3
502.6
510.2
70.3
%
0.6
107.0
110.4
61.5
%
1.3
153.3
161.3
22.2
%
0.4
51.8
54.5
30.4
%
4.6
26.5
54.2
7.5
%
1.1
7.8
14.5
8.1
%
7.2
682.4
725.7
100.0
%
2.1
166.6
179.4
100.0
%
6
Table of Contents
7
Table of Contents
Natural
Oil
Gas
Total
PV 10
Value
(1)
(MBbls)
(MMcf)
(MMcfe)
%
(000s)
%
30
203,294
203,472
28.0
%
$
90,460
18.5
%
104,069
104,069
14.3
%
3,816
0.8
%
144
54,132
54,996
7.6
%
36,276
7.4
%
440
34,407
37,045
5.1
%
18,315
3.7
%
106
24,952
25,590
3.5
%
18,304
3.7
%
21,269
21,269
2.9
%
4,830
1.0
%
293
14,016
15,774
2.2
%
21,031
4.3
%
46
11,833
12,110
1.7
%
4,092
0.8
%
3
7,816
7,835
1.1
%
5,650
1.2
%
41
6,878
7,125
1.0
%
4,587
0.9
%
54
4,176
4,501
0.6
%
3,283
0.7
%
109
15,765
16,426
2.3
%
10,789
2.3
%
1,266
502,607
510,212
70.3
%
221,433
45.3
%
54,163
54,163
7.5
%
50,676
10.4
%
974
26,586
32,431
4.5
%
45,459
9.3
%
1
31,429
31,437
4.3
%
29,721
6.1
%
3
14,382
14,397
2.0
%
13,323
2.7
%
54
12,936
13,258
1.8
%
16,114
3.3
%
13
3,889
3,970
0.5
%
6,712
1.4
%
298
9,893
11,673
1.6
%
17,947
3.6
%
1,343
153,278
161,329
22.2
%
179,952
36.8
%
4,358
56
26,205
3.6
%
60,406
12.4
%
14
4,609
4,693
0.6
%
5,426
1.1
%
39
3,460
3,696
0.5
%
3,962
0.8
%
194
18,379
19,540
2.8
%
17,935
3.6
%
4,605
26,504
54,134
7.5
%
87,729
17.9
%
7,214
682,389
725,675
100.0
%
489,114
100.0
%
(62,524
)
$
426,590
(1)
The PV 10 Value represents the
discounted future net cash flows attributable to our proved oil
and gas reserves before income tax, discounted at 10%. Although
it is a non-GAAP measure, we believe that the presentation of
the PV 10 Value is relevant and useful to our investors because
it presents the discounted future net cash flows attributable to
our proved reserves prior to taking into account corporate
future income taxes and our current tax structure. We use this
measure when assessing the potential return on investment
related to our oil and gas properties. The standardized measure
of discounted future net cash flows represents the present value
of future cash flows attributable to our proved oil and natural
gas reserves after income tax, discounted at 10%.
8
Table of Contents
9
Table of Contents
10
Table of Contents
11
Table of Contents
12
Table of Contents
13
Table of Contents
Oil
Natural Gas
Total
PV 10 Value
(MBbls)
(MMcf)
(MMcfe)
(000s)
3,220
301,149
320,471
$
425,366
1,674
65,953
75,998
86,937
4,894
367,102
396,469
512,303
2,320
315,287
329,206
(23,189
)
7,214
682,389
725,675
489,114
(62,524
)
$
426,590
(1)
The PV 10 Value represents the
discounted future net cash flows attributable to our proved oil
and natural gas reserves before income tax, discounted at 10%.
Although it is a non-GAAP measure, we believe that the
presentation of the PV 10 Value is relevant and useful to our
investors because it presents the discounted future net cash
flows attributable to our proved reserves prior to taking into
account corporate future income taxes and our current tax
structure. We use this measure when assessing the potential
return on investment related to our oil and gas properties. The
standardized measure of discounted future net cash flows
represents the present value of future cash flows attributable
to our proved oil and natural gas reserves after income tax,
discounted at 10%.
14
Table of Contents
2007
2008
2009
Oil
Natural Gas
Oil
Natural Gas
Oil
Natural Gas
(Mbbls)
(MMcf)
(Mbbls)
(MMcf)
(Mbbls)
(MMcf)
7,449
370,339
5,446
354,934
4,894
367,102
3,061
217,379
4,222
168,709
2,320
315,287
10,510
587,718
9,668
523,643
7,214
682,389
Year Ended December 31,
2007
2008
2009
$60.96
$87.15
$50.94
$6.89
$8.83
$4.13
$1.02
$0.95
$0.82
Natural
Oil Price
Gas Price
(per Bbl)
(per Mcf)
$
81.36
$
6.70
$
34.49
$
5.33
$
49.60
$
3.54
15
Table of Contents
Natural
Oil
Gas
Total
PV 10 Value
(Mbbls)
(MMcf)
(MMcfe)
(000s)
7,214
682,389
725,675
$
489,114
7,633
754,170
799,967
$
1,151,871
16
Table of Contents
2007
2008
2009
Gross
Net
Gross
Net
Gross
Net
5
4.8
152
115.7
127
71.5
37
27.2
3
2.6
3
1.0
160
123.1
130
72.5
37
27.2
1
0.6
5
2.7
17
11.4
4
2.5
1
0.5
5
3.1
6
3.2
17
11.4
165
126.2
136
75.7
54
38.6
17
Table of Contents
Oil
Natural Gas
Gross
Net
Gross
Net
15
8.0
8
4.4
87
77.1
16
6.2
392
206.5
58
50.5
5
2.1
1
96
14.6
9
1.2
122
16.9
34
16.8
772
497.2
26
1.9
118
74.7
1,523
828.7
Developed
Undeveloped
Gross
Net
Gross
Net
1,280
684
6,400
4,064
7,206
5,773
654
654
81,909
45,751
29,899
26,505
3,076
1,878
8,929
8,368
10,240
1,896
38,080
5,707
121,707
67,395
18,623
12,269
13,440
927
283,338
134,075
58,105
47,796
15
%
66
%
4
%
15
%
100
%
18
Table of Contents
19
Table of Contents
20
Table of Contents
21
Table of Contents
22
Table of Contents
23
Table of Contents
24
Table of Contents
President, Chief Executive Officer and Chairman of the Board of
Directors
54
Senior Vice President, Chief Financial Officer, Secretary,
Treasurer and Director
49
Vice President of Land and General Counsel
64
Chief Operating Officer
60
Vice President of Marketing
60
Vice President of Accounting and Controller
49
Vice President of Financial Reporting
55
Director
55
Director
68
Director
53
Director
58
25
Table of Contents
26
Table of Contents
ITEM 1A.
RISK
FACTORS
27
Table of Contents
the domestic and foreign supply of oil and natural gas;
weather conditions;
the price and quantity of imports of crude oil and natural gas;
political conditions and events in other oil-producing and
natural gas-producing countries, including embargoes,
hostilities in the Middle East and other sustained military
campaigns, and acts of terrorism or sabotage;
the actions of the Organization of Petroleum Exporting
Countries, or OPEC;
domestic government regulation, legislation and policies;
the level of global oil and natural gas inventories;
technological advances affecting energy consumption;
the price and availability of alternative fuels; and
overall economic conditions.
our revenues, profitability and cash flow from operations;
the value of our proved oil and natural gas reserves;
the economic viability of certain of our drilling prospects;
our borrowing capacity; and
our ability to obtain additional capital.
28
Table of Contents
29
Table of Contents
a portion of our cash flow from operations will be required to
make debt service payments;
our ability to borrow additional amounts for working capital,
capital expenditures (including acquisitions) or other purposes
will be limited; and
our debt could limit our ability to capitalize on significant
business opportunities, our flexibility in planning for or
reacting to changes in market conditions and our ability to
withstand competitive pressures and economic downturns.
borrow additional money;
merge, consolidate or dispose of assets;
make certain types of investments;
enter into transactions with our affiliates; and
pay dividends.
30
Table of Contents
unusual or unexpected geological formations;
fires;
explosions;
blow-outs and surface cratering;
uncontrollable flows of natural gas, oil and formation water;
natural disasters, such as hurricanes, tropical storms and other
adverse weather conditions;
pipe, cement, or pipeline failures;
casing collapses;
mechanical difficulties, such as lost or stuck oil field
drilling and service tools;
abnormally pressured formations; and
environmental hazards, such as natural gas leaks, oil spills,
pipeline ruptures and discharges of toxic gases.
injury or loss of life;
severe damage to and destruction of property, natural resources
and equipment;
pollution and other environmental damage;
clean-up
responsibilities;
regulatory investigation and penalties;
suspension of our operations; and
repairs to resume operations.
31
Table of Contents
recoverable reserves;
exploration potential;
future oil and natural gas prices;
operating costs; and
potential environmental and other liabilities.
32
Table of Contents
33
Table of Contents
the availability and capacity of gathering systems and pipelines;
federal and state regulation of production and transportation;
changes in supply and demand; and
general economic conditions.
34
Table of Contents
lease permit restrictions;
drilling bonds and other financial responsibility requirements,
such as plug and abandonment bonds;
spacing of wells;
unitization and pooling of properties;
safety precautions;
regulatory requirements; and
taxation.
personal injuries;
property and natural resource damages;
well reclamation costs; and
governmental sanctions, such as fines and penalties.
require the acquisition of a permit before drilling commences;
restrict the types, quantities and concentration of substances
that can be released into the environment in connection with
drilling and production activities;
limit or prohibit drilling activities on certain lands lying
within wilderness, wetlands and other protected areas; and
impose substantial liabilities for pollution resulting from our
operations.
35
Table of Contents
the assessment of administrative, civil and criminal penalties;
the incurrence of investigatory or remedial obligations; and
the imposition of injunctive relief.
36
Table of Contents
allowing for authorized but unissued shares of common and
preferred stock;
a classified board of directors;
requiring special stockholder meetings to be called only by our
chairman of the board, our chief executive officer, a majority
of the board or the holders of at least 10% of our outstanding
stock entitled to vote at a special meeting;
requiring removal of directors by a supermajority stockholder
vote;
prohibiting cumulative voting in the election of
directors; and
Nevada control share laws that may limit voting rights in shares
representing a controlling interest in us.
ITEM 1B.
UNRESOLVED
STAFF COMMENTS
ITEM 3.
LEGAL
PROCEEDINGS
ITEM 4.
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
37
Table of Contents
ITEM 5.
MARKET
FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
High
Low
2008
First Quarter
$
40.92
$
28.52
Second Quarter
$
85.26
$
38.84
Third Quarter
$
90.61
$
43.96
Fourth Quarter
$
52.62
$
24.34
2009
First Quarter
$
52.70
$
26.62
Second Quarter
$
43.93
$
28.13
Third Quarter
$
42.65
$
27.88
Fourth Quarter
$
49.14
$
35.47
Number of
Number of securities
securities
authorized for future
to be issued upon
Weighted average
issuance under equity
exercise of
exercise price of
compensation plans
outstanding options,
outstanding options,
(excluding outstanding
warrants and rights
warrants and rights
options, warrants and rights)
424,620
$23.73
3,447,675
38
Table of Contents
ITEM 6.
SELECTED
FINANCIAL DATA
Year Ended December 31,
2005
2006
2007
2008
2009
(In thousands, except per share data)
$
264,806
$
257,218
$
331,613
$
563,749
$
290,863
26,560
213
264,806
257,218
331,613
590,309
291,076
44,267
53,903
64,791
86,730
69,179
16,899
1,424
7,039
5,032
907
53,123
75,278
125,349
182,179
213,238
3,400
8,812
482
922
115
14,686
20,395
27,813
32,266
39,172
132,375
159,812
225,474
307,129
322,611
132,431
97,406
106,139
283,180
(31,535
)
388
682
877
1,537
245
209
184
144
119
133
(20,266
)
(20,733
)
(32,293
)
(25,336
)
(16,086
)
(162,672
)
(13,556
)
10,716
(33,225
)
(9,151
)
(31,272
)
(186,352
)
(15,708
)
before income taxes
99,206
88,255
74,867
96,828
(47,243
)
(36,525
)
(34,190
)
(29,223
)
(38,611
)
10,772
62,681
54,065
45,644
58,217
(36,471
)
(2,202
)
16,600
23,257
193,745
(2)
$
60,479
$
70,665
$
68,901
$
251,962
$
(36,471
)
$
1.57
$
1.25
$
1.03
$
1.27
$
(0.81
)
(0.06
)
0.38
0.52
4.23
$
1.51
$
1.63
$
1.55
$
5.50
$
(0.81
)
$
1.51
$
1.22
$
1.01
$
1.26
$
(0.81
)
(0.06
)
0.38
0.52
4.20
$
1.45
$
1.60
$
1.53
$
5.46
$
(0.81
)
39,216
42,220
43,415
44,524
45,004
40,852
43,252
44,080
44,813
45,004
(1)
Includes lease operating costs and
production and ad valorem taxes.
(2)
Includes gain of
$158.1 million, net of income taxes of $85.3 million,
from the sale of our offshore operations.
39
Table of Contents
As of December 31,
2005
2006
2007
2008
2009
(In thousands)
$
89
$
1,228
$
5,565
$
6,281
$
90,472
706,928
917,854
1,310,559
1,444,715
1,576,287
252,258
913,478
981,682
1,016,663
1,878,125
2,354,387
1,577,890
1,858,961
243,000
355,000
680,000
210,000
470,836
582,859
902,912
1,039,085
1,062,085
1,066,111
Year Ended December 31,
2005
2006
2007
2008
2009
(In thousands)
continuing operations
$
173,193
$
186,169
$
201,539
$
450,533
$
176,257
continuing operations
(327,234
)
(281,505
)
(531,493
)
(289,194
)
(348,777
)
continuing operations
2,127
132,882
334,357
(452,883
)
256,711
operations
150,747
(36,407
)
(66
)
292,260
ITEM 7.
MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
40
Table of Contents
41
Table of Contents
Year Ended December 31,
2008
2009
53,867
60,820
1,009
775
59,923
65,468
$87.15
$50.94
$8.92
$3.70
$8.83
$4.13
$9.49
$4.04
$9.41
$4.44
$1.45
$1.06
$3.03
$3.25
(1)
Includes lease operating costs and
production and ad valorem taxes.
(2)
Represents depreciation, depletion
and amortization of oil and gas properties only.
42
Table of Contents
Year Ended
December 31,
2007
2008
39,231
53,867
1,008
1,009
45,282
59,923
$60.96
$87.15
$6.89
$8.92
$6.89
$8.83
$7.32
$9.49
$7.32
$9.41
$1.43
$1.45
$2.76
$3.03
(1)
Includes lease operating costs and
production and ad valorem taxes.
(2)
Represents depreciation, depletion
and amortization of oil and gas properties only.
43
Table of Contents
44
Table of Contents
45
Table of Contents
Year Ended December 31,
2007
2008
2009
(In thousands)
$
191,290
$
$
6,202
113,023
26,040
2,780
6,242
1,898
302,355
230,604
205,901
14,289
61,113
101,049
8,799
14,248
9,579
525,715
425,230
344,467
1,257
1,171
374
$
526,972
$
426,401
$
344,841
46
Table of Contents
2010
2011
2012
2013
2014
Thereafter
Total
(In thousands)
$
$
$
175,000
$
$
$
$
175,000
300,000
300,000
37,156
37,156
27,136
25,125
25,125
70,141
221,839
1,701
1,701
1,701
1,701
1,200
2,000
10,004
7,153
7,434
7,434
6,157
2,729
5,959
36,866
50,771
32,151
14,292
97,214
$
96,781
$
78,442
$
225,563
$
32,983
$
29,054
$
378,100
$
840,923
47
Table of Contents
48
Table of Contents
ITEM 7A.
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
49
Table of Contents
ITEM 8.
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
50
Table of Contents
ITEM 9.
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
ITEM 9A.
CONTROLS
AND PROCEDURES
51
Table of Contents
52
Table of Contents
ITEM 9B.
OTHER
INFORMATION
ITEM 10.
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 11.
EXECUTIVE
COMPENSATION
ITEM 12.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
ITEM 13.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORS
INDEPENDENCE
ITEM 14.
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
53
Table of Contents
ITEM 15.
EXHIBITS AND
FINANCIAL STATEMENT SCHEDULES
F-2
F-3
F-4
F-5
F-6
F-7
Restated Articles of Incorporation (incorporated by reference to
Exhibit 3.1 to our Annual Report on
Form 10-K
for the year ended December 31, 1995).
Certificate of Amendment to the Restated Articles of
Incorporation dated July 1, 1997 (incorporated by reference
to Exhibit 3.1 to our Quarterly Report on
Form 10-Q
for the quarter ended June 30, 1997).
Certificate of Amendment to the Restated Articles of
Incorporation dated May 19, 2009 (incorporated by reference
to Exhibit 3.1 to our Registration Statement on
Form S-3
dated October 5, 2009).
Bylaws (incorporated by reference to Exhibit 3.2 to our
Registration Statement on
Form S-3,
dated October 25, 1996).
Rights Agreement dated as of December 14, 2000, by and
between Comstock and American Stock Transfer and
Trust Company, as Rights Agent (incorporated herein by
reference to Exhibit 1 to our Registration Statement on
Form 8-A
dated January 11, 2001).
Certificate of Designation, Preferences and Rights of
Series B Junior Participating Preferred Stock (incorporated
by reference to Exhibit 2 to our Registration Statement on
Form 8-A
dated January 11, 2001).
Indenture dated February 25, 2004 between Comstock, the
guarantors and The Bank of New York Trust Company, N.A.,
Trustee for debt securities issued by Comstock Resources, Inc.
(incorporated by reference to Exhibit 4.6 to our Annual
Report on
Form 10-K
for the year ended December 31, 2003).
54
Table of Contents
First Supplemental Indenture, dated February 25, 2004
between Comstock, the guarantors and The Bank of New York
Trust Company, N.A., Trustee for the
6
7
/
8
% Senior
Notes due 2012 (incorporated by reference to Exhibit 4.7 to
our Annual Report on
Form 10-K
for the year ended December 31, 2003).
Second Supplemental Indenture, dated March 11, 2004 between
Comstock, the guarantors and The Bank of New York
Trust Company, N.A. for the
6
7
/
8
% Senior
Notes due 2012 (incorporated by reference to Exhibit 4.1 to
our Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2004).
Third Supplemental Indenture dated July 16, 2004 between
Comstock, the guarantors and The Bank of New York
Trust Company, N.A., Trustee (incorporated by reference to
Exhibit 4.1 to our Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2004).
Fourth Supplemental Indenture dated May 20, 2005 between
Comstock, the guarantors and The Bank of New York
Trust Company, N.A., Trustee (incorporated by reference to
Exhibit 4.1 to our Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2005).
Indenture dated October 9, 2009 between Comstock, the
guarantors and The Bank of New York Mellon Trust Company,
N.A., Trustee for debt securities (incorporated by reference to
Exhibit 4.1 to our Current Report on
Form 8-K
dated October 9, 2009).
First Supplemental Indenture, dated October 9, 2009 between
Comstock, the guarantors and The Bank of New York Mellon
Trust Company, N.A., Trustee for the
8
3
/
8
% Senior
Notes due 2017 (incorporated by reference to Exhibit 4.2 to
our Current Report on
Form 8-K
dated October 9, 2009).
Employment Agreement dated December 22, 2008 by and between
Comstock and M. Jay Allison (incorporated by reference to
Exhibit 99.1 to our Current Report on
Form 8-K
dated December 22, 2008).
Employment Agreement dated December 22, 2008 by and between
Comstock and Roland O. Burns (incorporated by reference to
Exhibit 99.2 to our Current Report on
Form 8-K
dated December 22, 2008).
Comstock Resources, Inc. 2009 Long-term Incentive Plan
(incorporated by reference to Exhibit 99 to our
Registration Statement on
Form S-8
dated May 19, 2009).
Form of Restricted Stock Agreement under the Comstock Resources,
Inc. 2009 Long-term Incentive Plan.
Lease between Stonebriar I Office Partners, Ltd. and Comstock
Resources, Inc. dated May 6, 2004 (incorporated by
reference to Exhibit 10.24 to our Annual Report on
Form 10-K
for the year ended December 31, 2004).
First Amendment to the Lease Agreement dated August 25,
2005, between Stonebriar I Office Partners, Ltd. and Comstock
Resources, Inc. (incorporated by reference to Exhibit 10.20
to our Annual Report on
Form 10-K
for the year ended December 31, 2005).
Second Amendment to the Lease Agreement dated October 15,
2007 between Stonebriar I Office Partners, Ltd. and Comstock
Resources, Inc. (incorporated by reference to Exhibit 10.10
to our Annual Report on
Form 10-K
for the year ended December 31, 2008).
Third Amendment to the Lease Agreement dated September 30,
2008 between Stonebriar I Office Partners, Ltd. and Comstock
Resources, Inc. (incorporated by reference to Exhibit 10.11
to our Annual Report on
Form 10-K
for the year ended December 31, 2008).
55
Table of Contents
Fourth Amendment to the Lease Agreement dated September 30,
2008 between Stonebriar I Office Partners, Ltd. and Comstock
Resources, Inc. (incorporated by reference to Exhibit 10.2
to our Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2009).
Second Amended and Restated Credit Agreement, dated
December 15, 2006, among Comstock, as the borrower, the
lenders from time to time thereto, Bank of Montreal, as
administrative agent and issuing bank, Bank of America, N.A., as
syndication agent and Comerica Bank, Fortis Capital Corp., and
Union Bank of California, N.A. as co-documentation agents
(incorporated by reference to Exhibit 10.1 to our Annual
Report on
Form 10-K
for the year ended December 31, 2006).
First Amendment to Second Amended and Restated Credit Agreement
dated April 30, 2008, among Comstock as the borrower, the
lenders, from time to time thereto, and Bank of Montreal, as
administrative agent (incorporated by reference to
Exhibit 10.2 to our Quarterly report on
Form 10-Q
for the quarter ended March 31, 2008).
Second Amendment to Second Amended and Restated Credit Agreement
dated May 1, 2009, among Comstock as the borrower, the
lenders, from time to time thereto, and Bank of Montreal, as
administrative agent (incorporated by reference to
Exhibit 10.1 to our Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2009).
Third Amendment to Second Amended and Restated Credit Agreement
dated October 5, 2009, among Comstock as the borrower, the
lenders, from time to time thereto, and Bank of Montreal, as
administrative agent (incorporated by reference to
Exhibit 99.1 to our Current Report on
Form 8-K
dated October 6, 2009).
Base Contract for Sale and Purchase of Natural Gas between
Comstock Oil & Gas-Louisiana, LLC and BP Energy
Company dated November 7, 2008, as amended by Third Amended
and Restated Special Provisions dated January 5, 2010.
Subsidiaries of the Company.
Consent of Ernst & Young LLP.
Consent of Independent Petroleum Engineers.
Chief Executive Officer certification under Section 302 of
the Sarbanes-Oxley Act of 2002.
Chief Financial Officer certification under Section 302 of
the Sarbanes-Oxley Act of 2002.
Chief Executive Officer certification under Section 906 of
the Sarbanes-Oxley Act of 2002.
Chief Financial Officer certification under Section 906 of
the Sarbanes-Oxley Act of 2002.
Report of Independent Petroleum Engineers on Proved Reserves as
of December 31, 2009.
*
Filed herewith.
+
Furnished herewith.
#
Management contract or compensatory
plan document.
56
Table of Contents
By:
President, Chief Executive Officer and Chairman of the Board of
Directors (Principal Executive Officer)
February 26, 2010
Senior Vice President, Chief Financial Officer, Secretary,
Treasurer and Director (Principal Financial and Accounting
Officer)
February 26, 2010
Director
February 26, 2010
Director
February 26, 2010
Director
February 26, 2010
Director
February 26, 2010
57
Table of Contents
Table of Contents
F-2
Table of Contents
F-3
Table of Contents
2007
2008
2009
(In thousands, except per share amounts)
$
331,613
$
563,749
$
290,863
26,560
213
331,613
590,309
291,076
64,791
86,730
69,179
7,039
5,032
907
125,349
182,179
213,238
482
922
115
27,813
32,266
39,172
225,474
307,129
322,611
106,139
283,180
(31,535
)
877
1,537
245
144
119
133
(32,293
)
(25,336
)
(16,086
)
(162,672
)
(31,272
)
(186,352
)
(15,708
)
74,867
96,828
(47,243
)
(29,223
)
(38,611
)
10,772
45,644
58,217
(36,471
)
23,257
193,745
$
68,901
$
251,962
$
(36,471
)
$
1.03
$
1.27
$
(0.81
)
0.52
4.23
$
1.55
$
5.50
$
(0.81
)
$
1.01
$
1.26
$
(0.81
)
0.52
4.20
$
1.53
$
5.46
$
(0.81
)
43,415
44,524
45,004
44,080
44,813
45,004
F-4
Table of Contents
CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY
AND COMPREHENSIVE INCOME
For the Years Ended December 31, 2007, 2008 and
2009
Non-
Accumulated
Controlling
Common
Additional
Other
Interest in
Common
Stock-
Paid-in
Retained
Comprehensive
Discontinued
Shares
Par Value
Capital
Earnings
Income
Operations
Total
(In thousands)
44,395
$
22,197
$
367,323
$
293,043
$
$
220,349
$
902,912
596
298
2,571
2,869
437
219
10,570
10,789
6,522
6,522
68,901
68,901
Bois dArc
39,905
39,905
756
756
(1,942
)
(1,942
)
8,373
8,373
45,428
22,714
386,986
361,944
267,441
1,039,085
591
295
8,033
8,328
423
212
12,051
12,263
8,805
8,805
251,962
251,962
9,083
9,083
261,045
Bois dArc
46,883
46,883
4,612
4,612
(3,009
)
(3,009
)
19,294
19,294
(335,221
)
(335,221
)
46,442
23,221
415,875
613,906
9,083
1,062,085
113
57
2,024
2,081
549
274
15,509
15,783
1,097
1,097
(36,471
)
(36,471
)
(9,083
)
(9,083
)
30,619
30,619
(14,935
)
47,104
$
23,552
$
434,505
$
577,435
$
30,619
$
$
1,066,111
F-5
Table of Contents
2007
2008
2009
(In thousands)
$
68,901
$
251,962
$
(36,471
)
(23,257
)
(193,745
)
(26,560
)
(213
)
162,672
482
922
115
25,543
43,620
30,796
6,846
4,113
125,349
182,179
213,238
810
810
1,162
10,789
12,263
15,783
(6,522
)
(8,805
)
(1,097
)
(11,605
)
6,418
1,997
(230
)
(9,646
)
(27,927
)
4,433
24,330
(21,126
)
201,539
450,533
176,257
(531,493
)
(418,730
)
(349,987
)
129,536
1,210
(531,493
)
(289,194
)
(348,777
)
325,000
85,000
430,713
(555,000
)
(170,000
)
(34
)
(16
)
(7,180
)
2,869
8,328
2,081
6,522
8,805
1,097
334,357
(452,883
)
256,711
4,403
(291,544
)
84,191
235,412
240,332
292,260
(213,878
)
(159,368
)
(213,878
)
132,892
(21,600
)
(80,964
)
(66
)
292,260
4,337
716
84,191
1,228
5,565
6,281
$
5,565
$
6,281
$
90,472
F-6
Table of Contents
(1)
Summary
of Significant Accounting Policies
For the Year Ended December 31,
2007
2008
(In thousands)
$
355,460
$
360,719
(228,364
)
(198,894
)
127,096
161,825
(7,980
)
(2,630
)
(55,954
)
(76,626
)
(39,905
)
(46,883
)
23,257
35,686
158,059
$
23,257
$
193,745
F-7
Table of Contents
F-8
Table of Contents
As of December 31,
2008
2009
(In thousands)
$5,273
$ 195
358
523
6,172
2,060
1,480
6
1
$11,809
$ 4,259
F-9
Table of Contents
2007
2008
2009
(In thousands)
$
9,052
$
7,512
$
5,480
(2,179
)
(1,537
)
853
774
(684
)
(939
)
(86
)
549
444
314
$
7,512
$
5,480
$
6,561
F-10
Table of Contents
F-11
Table of Contents
Year Ended December 31,
2007
2008
Increase (decrease) from previously reported amounts
$
(0.02
)
$
(0.04
)
(0.02
)
(0.12
)
$
(0.04
)
$
(0.16
)
$
(0.02
)
$
(0.02
)
0.01
(0.05
)
$
(0.01
)
$
(0.07
)
2007
2008
2009
Income
Shares
Per Share
Income
Shares
Per Share
Income
Shares
Per Share
(In thousands except per share data)
$
45,644
$
58,217
$
(36,471
)
(1,088
)
(1,648
)
$
44,556
43,415
$
1.03
$
56,569
44,524
$
1.27
$
(36,471
)
45,004
$
(0.81
)
665
289
$
44,556
44,080
$
1.01
$
56,569
44,813
$
1.26
$
(36,471
)
45,004
$
(0.81
)
$
23,257
$
193,745
(554
)
(5,486
)
$
22,703
43,415
$
0.52
$
188,259
44,524
$
4.23
665
289
$
22,703
44,080
$
0.52
$
188,259
44,813
$
4.20
F-12
Table of Contents
2007
2008
2009
(In thousands)
1,060
1,297
1,583
2007
2008
2009
(In thousands except per share data)
235
40
447
$
32.60
$
54.36
$
24.93
F-13
Table of Contents
Carrying Value
Measured at Fair
Value at December
31, 2009
Level 1
Level 2
Level 3
(In thousands)
$90,472
$
90,472
$
$
95,973
95,973
$186,445
$
186,445
$
$
2008
2009
(In thousands)
$
$
13,974
4,810
(26,322
)
(4,810
)
26,322
13,974
(13,974
)
$
13,974
$
F-14
Table of Contents
2008
2009
Carrying
Fair
Carrying
Fair
Value
Value
Value
Value
(In thousands)
$
210,000
$
169,750
$
470,836
$
479,938
2007
2008
2009
(In thousands)
$
31,864
$
27,022
$
15,827
$
3,492
$
140,198
$
(4,924
)
F-15
Table of Contents
For the Year Ended December 31,
2007
2008
2009
(In thousands)
$
45,644
$
58,217
$
(36,471
)
9,083
(9,083
)
30,619
45,644
67,300
(14,935
)
23,257
193,745
$
68,901
$
261,045
$
(14,935
)
F-16
Table of Contents
Accumulated
Natural Gas
Other
Price Swap
Marketable
Comprehensive
Agreements
Securities
Income (Loss)
(In thousands)
$
9,083
$
$
9,083
(35,405
)
30,619
(4,786
)
26,322
26,322
$
$
30,619
$
30,619
(2)
Acquisitions
and Dispositions of Oil and Gas Properties
F-17
Table of Contents
(3)
Oil and
Gas Producing Activities
As of December 31,
2008
2009
(In thousands)
$
116,489
$
130,364
845,097
864,380
1,115,447
1,425,191
(636,530
)
(847,568
)
$
1,440,503
$
1,572,367
2007
2008
2009
(In thousands)
$
3,875
$
113,023
$
26,040
192,064
313,938
249,527
218,191
14,482
62,031
101,956
$
524,359
$
424,581
$
346,187
(4)
Long-term
Debt
As of December 31,
2008
2009
(In thousands)
$
35,000
$
175,000
175,000
300,000
(4,164
)
$
210,000
$
470,836
F-18
Table of Contents
2010
2011
2012
2013
2014
Thereafter
Total
(In thousands)
$
$
$
175,000
$
$
$
$
175,000
295,836
295,836
$
$
$
175,000
$
$
$
295,836
$
470,836
F-19
Table of Contents
(5)
Commitments
and Contingencies
(In thousands)
$
1,701
1,701
1,701
1,701
1,200
2,000
$
10,004
(6)
Stockholders
Equity
F-20
Table of Contents
(7)
Stock-based
Compensation
2007
2008
$10.32
$19.76
36.0%
38.9%
3.9 yrs.
4.3 yrs.
4.9%
3.3%
F-21
Table of Contents
Weighted Average
Number of
Number of
Exercise
Remaining Life
Options
Options
(in years)
Outstanding
Exercisable
0.5
168,750
168,750
1.0
8,720
8,720
0.4
5,000
5,000
2.3
30,000
30,000
1.4
30,000
30,000
5.9
57,500
57,500
7.0
84,650
61,150
3.4
40,000
40,000
424,620
401,120
2007
2008
2009
Weighted
Weighted
Weighted
Number of
Average
Number of
Average
Number of
Average
Options
Exercise Price
Options
Exercise Price
Options
Exercise Price
1,468,970
$11.59
914,970
$16.68
456,870
$23.56
40,000
$29.49
40,000
$54.36
(588,500
)
$4.70
(492,350
)
$13.17
(32,250
)
$21.37
(5,500
)
$33.02
(5,750
)
$33.06
914,970
$16.68
456,870
$23.56
424,620
$23.73
797,470
$14.28
389,245
$21.92
401,120
$23.17
2007
2008
2009
(In thousands)
$
2,765
$
6,483
$
480
$
17,307
$
26,169
$
2,405
F-22
Table of Contents
Number of
Weighted
Restricted
Average Grant
Shares
Price
1,206,750
$27.08
436,500
$34.10
(183,750
)
$19.50
1,459,500
$30.14
426,750
$44.31
(191,000
)
$20.36
(3,500
)
$34.30
1,691,750
$34.81
552,325
$36.80
(203,625
)
$22.48
(4,000
)
$41.81
2,036,450
$36.57
(8)
Retirement
Plan
(9)
Income
Taxes
2007
2008
2009
(In thousands)
$
3,680
$
(5,009
)
$
(41,568
)
25,543
43,620
30,796
$
29,223
$
38,611
$
(10,772
)
F-23
Table of Contents
2007
2008
2009
(In thousands)
$
26,203
$
33,890
$
(16,535
)
1,885
3,536
4,339
862
1,639
441
597
(324
)
(454
)
983
$
29,223
$
38,611
$
(10,772
)
2007
2008
2009
35.0
%
35.0
%
35.0
%
2.5
3.7
(9.2
)
1.1
1.7
(0.9
)
0.8
(0.4
)
(0.5
)
(2.1
)
39.0
%
39.9
%
22.8
%
2008
2009
(In thousands)
$
9,886
$
(6,588
)
(4,891
)
4,995
(6,588
)
(193,398
)
(287,052
)
4,116
6,417
14,079
14,079
58,032
(8,043
)
(8,043
)
(2,624
)
(4,115
)
(185,870
)
(220,682
)
$
(180,875
)
$
(227,270
)
F-24
Table of Contents
Years of
Expiration
Carryforward
Amounts
(In thousands)
2017 2021
$40,226
Unlimited
$58,032
(10)
Derivatives
and Hedging Activities
F-25
Table of Contents
(11)
Supplementary
Quarterly Financial Data (Unaudited)
2008
First
Second
Third
Fourth
Total
(In thousands, except per share data)
$
127,721
$
172,022
$
163,852
$
100,154
$
563,749
$
56,372
$
118,760
$
91,673
$
16,375
$
283,180
$
29,402
$
70,428
$
54,764
$
(96,377
)
$
58,217
$
11,693
$
12,199
$
169,853
$
$
193,745
$
41,095
$
82,627
$
224,617
$
(96,377
)
$
251,962
$
0.65
$
1.55
$
1.19
$
(2.09
)
$
1.27
0.26
0.27
3.69
4.23
$
0.91
$
1.82
$
4.88
$
(2.09
)
$
5.50
$
0.64
$
1.53
$
1.18
$
(2.09
)
$
1.26
0.26
0.27
3.67
4.20
$
0.90
$
1.80
$
4.85
$
(2.09
)
$
5.46
2009
First
Second
Third
Fourth
Total
(In thousands, except per share data)
$
68,351
$
64,875
$
67,436
$
90,201
$
290,863
$
(5,712
)
$
(12,588
)
$
(11,547
)
$
(1,688
)
$
(31,535
)
$
(5,657
)
$
(11,475
)
$
(12,572
)
$
(6,767
)
$
(36,471
)
$
(0.12
)
$
(0.26
)
$
(0.28
)
$
(0.15
)
$
(0.81
)
$
(0.12
)
$
(0.26
)
$
(0.28
)
$
(0.15
)
$
(0.81
)
F-26
Table of Contents
(12)
Oil and
Gas Reserves Information (Unaudited)
2007
2008
2009
Natural
Natural
Natural
Oil
Gas
Oil
Gas
Oil
Gas
(MBbls)
(MMcf)
(MBbls)
(MMcf)
(MBbls)
(MMcf)
11,984
435,508
10,510
587,718
9,668
523,643
(1,449
)
14,145
551
(56,153
)
(1,590
)
(130,224
)
891
98,665
528
99,232
19
349,920
92
78,631
(912
)
(53,287
)
(108
)
(130
)
(1,008
)
(39,231
)
(1,009
)
(53,867
)
(775
)
(60,820
)
10,510
587,718
9,668
523,643
7,214
682,389
7,912
241,243
7,449
370,339
5,446
354,934
7,449
370,339
5,446
354,934
4,894
367,102
2008
2009
(In thousands)
$
3,126,215
$
2,774,542
(1,161,911
)
(1,091,305
)
(495,465
)
(725,795
)
(328,649
)
(99,572
)
1,140,190
857,870
(503,899
)
(431,280
)
$
636,291
$
426,590
F-27
Table of Contents
2007
2008
2009
(In thousands)
$
747,494
$
1,162,548
$
636,291
256,216
(594,456
)
(436,544
)
160,294
165,036
49,029
15,550
(90,587
)
(176,742
)
98,128
157,781
82,011
(160,541
)
(32,538
)
144,388
(23,205
)
83,223
52,762
296,534
157,529
177,264
220,372
(126,666
)
(1,480
)
(266,822
)
(477,019
)
(221,684
)
(181,472
)
231,440
121,295
$
1,162,548
$
636,291
$
426,590
F-28
1
|
Date | Percentage of Shares Vested | ||
|
||||
|
||||
|
|
100% |
2
COMSTOCK RESOURCES, INC.
|
||||
By: | ||||
3
Copyright © 2006 North American Energy Standards Board, Inc. | NAESB Standard 6.3.1 | ||
All Rights Reserved | September 5, 2006 |
BP ENERGY COMPANY | PARTY NAME | COMSTOCK OIL & GAS-LOUISIANA, LLC | ||||||
|
||||||||
By:
/s/ GREGORY L. SHARP
|
SIGNATURE | By: /s/ STEPHEN E. NEUKOM | ||||||
Name Gregory L. Sharp
|
PRINTED NAME | Name Stephen E. Neukom | ||||||
Title Vice President
|
TITLE | Title Vice President of Marketing |
Copyright © 2006 North American Energy Standards Board, Inc. | NAESB Standard 6.3.1 | |
All Rights Reserved | September 5, 2006 |
Page 2 of 12
Copyright
©
2006 North American Energy Standards Board, Inc.
All Rights Reserved |
NAESB Standard 6.3.1
September 5, 2006 |
Page 3 of 12
Copyright
©
2006 North American Energy Standards Board, Inc.
All Rights Reserved |
NAESB Standard 6.3.1
September 5, 2006 |
Page 4 of 12
Copyright
©
2006 North American Energy Standards Board, Inc.
All Rights Reserved |
NAESB Standard 6.3.1
September 5, 2006 |
Page 5 of 12
Copyright
©
2006 North American Energy Standards Board, Inc.
All Rights Reserved |
NAESB Standard 6.3.1
September 5, 2006 |
Page 6 of 12
Copyright
©
2006 North American Energy Standards Board, Inc.
All Rights Reserved |
NAESB Standard 6.3.1
September 5, 2006 |
Page 7 of 12
Copyright
©
2006 North American Energy Standards Board, Inc.
All Rights Reserved |
NAESB Standard 6.3.1
September 5, 2006 |
Page 8 of 12
Copyright
©
2006 North American Energy Standards Board, Inc.
All Rights Reserved |
NAESB Standard 6.3.1
September 5, 2006 |
Page 9 of 12
Copyright © 2006 North American Energy Standards Board, Inc. | NAESB Standard 6.3.1 | |
All Rights Reserved | September 5, 2006 |
Page 10 of 12
Copyright © 2006 North American Energy Standards Board, Inc. | NAESB Standard 6.3.1 | |
All Rights Reserved | September 5, 2006 |
Page 11 of 12
Copyright © 2006 North American Energy Standards Board, Inc. | NAESB Standard 6.3.1 | |
All Rights Reserved | September 5, 2006 |
Page 12 of 12
Page 1 of 16
(i) | if, upon the occurrence of an event of Force Majeure, and as a result of the event of Force Majeure (a) Seller is unable to sell and deliver or (b) Buyer is unable to purchase and receive, the Contract Quantity of Fixed Price Gas, either in whole or in part, for such transaction, | ||
(ii) | then, for the duration of the event of Force Majeure, for each Day that Seller is unable to sell and deliver, or Buyer is unable to purchase and receive, such Fixed Price Gas, as set out in Section 3.5(i) above, the following settlement obligations between the parties shall apply: |
a. | if the FOM Price (as defined below) exceeds the Fixed Price, Seller shall pay Buyer the difference between the FOM Price and the Fixed Price for each MMBtu of such Gas not delivered and/or received on that Day, or | ||
b. | if the Fixed Price exceeds the FOM Price, Buyer shall pay Seller the difference between the Fixed Price and the FOM Price for each MMBtu of such Gas not delivered and/or received on that Day. |
Page 2 of 16
Page 3 of 16
(i) | any Gas under that certain Transaction Confirmation No.4234667 dated July 30, 2009, as it has been amended thereafter ( CP1 ); | ||
(ii) | any Gas under that certain Transaction Confirmation No. 3617164 dated July 30, 2009 ( LIG1 ); | ||
(iii) | any Gas under that certain Transaction Confirmation No. 4700460 dated April 1, 2010 ( GSPL1 ); | ||
(iv) | any Gas under any future transactions related to the Dedicated Acreage for a fixed Contract Quantity (e.g., 10,000 MMBtus/Day, etc.) (collectively Future Fixed Contract Quantity Transactions ), with the order of flow for such Future Fixed Contract Quantity Transactions flowing in the order that they were entered into by the Parties; or | ||
(v) | any Gas under that certain Transaction Confirmation dated July 16, 2009 ( DA1 ) (collectively CP1, LIG1, GSPL1, the Future Fixed Contract Quantity Transactions and DA1 shall be called the Dedicated Acreage Transactions ). |
Page 4 of 16
Page 5 of 16
Page 6 of 16
(i) | Replace the words whether or not then due with the words whether or not yet invoiced or due in the second line; | ||
(ii) | Insert the following: (either firm or indicative) after physical gas trading markets in the sixth line of the second paragraph of Section 10.3.1, and insert any other information available to the Non-Defaulting Party, either internally or supplied to it by one or more third parties, including, without limitation, quotations (either firm or indicative) of relevant rates, prices, yields, yield curves, volatilities, spreads or other relevant market data for the relevant markets, before all adjusted for the length of term... in the sixth line of the second paragraph of Section 10.3.1.; | ||
(iii) | Add the following provision at the end of the second paragraph: | ||
In determining the Early Termination Damages, damages shall be attributable only to Terminated Transactions for Firm Gas transactions. The Parties understand and appreciate that utilizing good faith and commercially reasonable efforts, the Non-Defaulting Party should obtain quotes or other reliable third party information authorized under the terms of this Contract for the purposes of calculating the Net Settlement Amount(s), and that to the extent such information is received from such third parties such information is to be preferred and utilized over internal information and valuations.; | |||
(iv) | Add the following as the third paragraph of Section 10.3.1. Early Termination Damages Apply: | ||
The Non-Defaulting Party shall also aggregate the costs that the Non-Defaulting Party incurs in liquidating and accelerating each Terminated Transaction, or otherwise settling obligations arising from the cancellation and termination of each Terminated Transaction, including brokerage fees, commissions, and other similar transaction costs and expenses reasonably incurred by the Non-Defaulting Party including costs associated with hedging its obligations, transaction costs associated with obtaining replacement suppliers or markets (e.g. brokerage fees, or other such payments), additional transmission costs, ancillary services costs and like costs incurred in moving the replacement Gas to or from the Delivery Point, and reasonable attorneys fees and other reasonable litigation costs incurred in connection with enforcing its rights under this Contract (collectively Costs) and such Costs shall be due to the Non-Defaulting Party.; and |
Page 7 of 16
(v) | Adding the following provision as the fourth paragraph: | ||
The purpose of calculating the Market Value with respect to a Terminated Transaction shall be the determination of the amount that would be incurred or realized by the Non-Defaulting Party to replace or to provide the economic equivalent of the remaining payments or deliveries in respect of the Terminated Transaction.. |
(i) | Deleting the second sentence and replacing it with the following: | ||
The Notice shall include a written statement explaining in reasonable detail the calculation of the Net Settlement Amount, and the reduction of such amount(s) by (a) the application of any margin, collateral or security by the Non-Defaulting Party against such Net Settlement Amount, or (b) any setoffs allowed under the terms of this Contract (such adjusted amount after the exercise of rights under (a) or (b) being defined as the Final Settlement Amount ); | |||
(ii) | Adding the following sentence after the insert in (i) above: | ||
The Non-Defaulting Partys failure to give such Notice of the Net Settlement Amount/Final Settlement Amount calculations shall not affect the validity or enforceability of the liquidation and termination of the Terminated Transaction, or give rise to any claim by the Defaulting Party against the Non-Defaulting Party with respect to the Non-Defaulting Party becoming the Defaulting Party due to its failure to timely fulfill such obligation; however, such failure shall extend the start of the time period |
Page 8 of 16
that the Defaulting Party may dispute the calculations as provided for in this Section 10.4.until such detailed Notice is appropriately given by the Non-Defaulting Party.; | |||
(iii) | Replacing second in the sixth line with fifth; | ||
(iv) | Adding the following as Section 10.4.1.: | ||
10.4.1. Notwithstanding anything herein to the contrary, if the Non-Defaulting Party owes the Net Settlement Amount/Final Settlement Amount to the Defaulting Party, the Non-Defaulting Party shall not be required to pay to the Defaulting Party the Net Settlement Amount/Final Settlement Amount, nor shall interest be owed on such amount, until (i) the Non-Defaulting Party receives confirmation satisfactory to it, in its reasonable discretion, that all other obligations of any kind whatsoever of the Defaulting Party to make any payments to the Non-Defaulting Party under this Contract and transactions hereunder, or under any other agreements between the Parties, which are due and payable as of the Early Termination Date, have been paid (or netted, setoff, recouped, or the like) in full; and (ii) the Defaulting Party executes a release in a form satisfactory to the Non-Defaulting Party that acts as the final resolution of the amounts due and owing as the Net Settlement Amount/Final Settlement Amount under the terms of this Contract and transactions hereunder. To the extent that either Party believes that bankruptcy court approval of the release is required, the Non-Defaulting Party may withhold payment of the Net Settlement Amount/Final Settlement Amount until such time as appropriate court approval has been obtained and is final and non-appealable.; and | |||
(v) | Adding the following as Section 10.4.2.: | ||
10.4.2. Notwithstanding anything set forth in the Contract, nothing shall in any manner preclude the Defaulting Party from disputing the Non-Defaulting Partys calculation of the Net Settlement Amount or the Final Settlement Amount. In the event the Defaulting Party disputes the calculation of the Net Settlement Amount/Final Settlement Amount, such Party shall notify the other Non-Defaulting Party of such dispute within five (5) Business Days of the date the Non-Defaulting Party provides the Notice required under this Section 10.4 to the Defaulting Party; provided, further that as soon as commercially reasonable thereafter, the Defaulting Party shall provide a statement showing its calculation of the Net Settlement Amount/Final Settlement Amount. In the event of a dispute as to the Net Settlement Amount/Final Settlement Amount, the Defaulting Party shall, if applicable, within the time prescribed in Section 10.4, pay the undisputed amount of the Net Settlement Amount/Final Settlement Amount to the Non-Defaulting Party. If the Parties have not been able to resolve their dispute within five (5) Business Days of receipt of Notice of such dispute, such dispute relating to the calculation of the Net Settlement Amount/Final Settlement Amount shall be resolved by arbitration in accordance with Section 15.18 of this Contract. During the five (5) Business Day period, the Parties shall exchange, in addition to the detailed information otherwise required under the Contract supporting their initial Net Settlement Amount/Final Settlement Amount calculations, such other information, including quotations, that such Party is utilizing to justify its position. Each Party shall submit its detailed calculation of the Net Settlement Amount/Final Settlement Amount, as the same |
Page 9 of 16
may be revised by the Parties after the exchange of the information required hereunder and as otherwise may be exchanged between the Parties prior to the initiation of the arbitration, to the arbitration panel. The Parties shall be entitled to appropriate discovery in the arbitration proceeding, which may be used to revise the Parties positions prior to submitting the final version of the Net Settlement Amount/Final Settlement Amount calculations for a decision by the arbitrators. |
(i) | Delete the and in front of (v); | ||
(ii) | Insert the following before the period at the end of the first sentence: (vi) the occurrence of a Regulatory Event that renders a Party unable to continue to perform, either in whole or in part, under any transaction, or the occurrence of a Regulatory Event that has a material adverse economic impact on a Party; and (vii) any of the events described in (i)-(iii) of Section 5. If a Party declares an event of Force Majeure based upon the event described in (vi), the event of Force Majeure shall terminate upon the earlier to occur of (a) the time a Party liquidates and terminates the affected transactions on the Early Termination Date in accordance with Section 3.6, or (b) the expiration of six (6) Business Days after the Notice of the event of Force Majeure is provided by the claiming Party unless a Regulatory Event Notice to Terminate has been declared by either Party in accordance with Section 3.6.; and | ||
(iii) | Insert the following at the end of Section 11.2 To the extent an event of Force Majeure occurs,: |
(a) | prior to curtailing or interrupting any transaction for a Firm obligation, Seller/Buyer shall first curtail or interrupt its interruptible delivery or purchase obligations, as applicable, and | ||
(b) | Seller or Buyer will treat all similarly situated Firm customers in a fair and reasonable manner by allocating the supply or purchase of Firm Gas, as applicable, on a pro rata basis. |
Page 10 of 16
Page 11 of 16
Page 12 of 16
Page 13 of 16
Page 14 of 16
enforcement of such decisions and awards. Any right to appeal from, or to cause judicial review of, any arbitration decision and award shall be subject to and limited by the provisions concerning appeals set forth in the Federal Arbitration Act. If a Party files a complaint in any court with respect to any matter subject to arbitration hereunder, the defendant in such court action shall be entitled to recover its reasonable attorneys fees in connection with the court action. |
Page 15 of 16
BP ENERGY COMPANY | COMSTOCK OIL & GAS LOUISIANA, LLC | |||||||||||||
By:
|
/s/ JAMES A. TAYLOR | By: | /s/ STEPHEN E. NEUKOM | |||||||||||
|
||||||||||||||
|
Name: | James A. Taylor | Name: | Stephen E. Neukom | ||||||||||
|
Title: | Senior Vice President | Title: | Vice President of Marketing | ||||||||||
|
South Marketing & Origination | |||||||||||||
Date: 1/6/2010 | Date: 1/5/2010 |
Page 16 of 16
Name | Incorporation | Business Name | ||
Comstock Oil & Gas GP, LLC
|
Nevada | Comstock Oil & Gas GP, LLC | ||
Comstock Oil & Gas Investments, LLC
|
Nevada | Comstock Oil & Gas Investments, LLC | ||
Comstock Oil & Gas, LP
(1)
|
Nevada | Comstock Oil & Gas, LP | ||
Comstock Oil & Gas Holdings, Inc.
(2)
|
Nevada | Comstock Oil & Gas Holdings, Inc. | ||
Comstock Oil & Gas Louisiana,
LLC
(3)
|
Nevada | Comstock Oil & Gas Louisiana, LLC |
(1) | Comstock Oil & Gas GP, LLC is the general partner and Comstock Oil & Gas Investments, LLC is the limited partner of this partnership | |
(2) | 100% owned by Comstock Oil & Gas, LP | |
(3) | Subsidiary of Comstock Oil & Gas Holdings, Inc. |
/s/ ERNST & YOUNG LLP | ||||
1. | I have reviewed this December 31, 2009 Form 10-K of Comstock Resources, Inc; | ||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: February 26, 2010 | /s/ M. JAY ALLISON | |||
President and Chief Executive Officer | ||||
1. | I have reviewed this December 31, 2009 Form 10-K of Comstock Resources, Inc; | ||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: February 26, 2010 | /s/ ROLAND O. BURNS | |||
Sr. Vice President and Chief Financial Officer | ||||
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
/s/ M. JAY ALLISON | ||||
M. Jay Allison | ||||
Chief Executive Officer | ||||
February 26, 2010 |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
/s/ ROLAND O. BURNS | ||||
Roland O. Burns | ||||
Chief Financial Officer | ||||
February 26, 2010 |
TULSA OFFICE
First Place Tower 15 East Fifth Street Suite 3500 Tulsa, Oklahoma 74103-4350 (918) 587-5521 Fax: (918) 587-2881 |
HOUSTON OFFICE
Kellog Brown and Root Tower 601 Jefferson Ave. Suite 3790 Houston, Texas 77002-7912 (713) 651-8006 Fax: (281) 754-4934 |
Attention:
|
Mr. M. Jay Allison | |||||
|
President and C.E.O. | |||||
|
RE: | Estimated Reserves and | ||||
|
Future Net Revenue | |||||
|
Comstock Resources, Inc. | |||||
|
Constant Prices and Expenses | |||||
|
(Revised 2009 SEC Pricing) | |||||
Gentlemen:
|
ESTIMATED REMAINING | NET GAS* | FUTURE NET REVENUE | ||||||||||||||||||
NET RESERVES | EQUIVALENT | Present Worth | ||||||||||||||||||
RESERVE | Oil | Gas | Total | Disc.@10% | ||||||||||||||||
CLASSIFICATION | (Barrels) | (MCF) | (MCFE) | (M$) | (M$) | |||||||||||||||
Proved Developed
|
||||||||||||||||||||
Producing
|
3,220.284 | 301,149.438 | 320,471.125 | 504,073.000 | 425,366.406 | |||||||||||||||
Non-Producing
|
1.980 | 22,987.037 | 22,998.920 | 56,363.695 | 37,984.148 | |||||||||||||||
Behind-Pipe
|
1,672.187 | 42,965.676 | 52,998.793 | 140,988.953 | 48,952.852 | |||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Sub-Total
|
4,894.451 | 367,102.151 | 396,468.838 | 701,425.648 | 512,303.406 | |||||||||||||||
|
||||||||||||||||||||
Proved Undeveloped
|
2,319.926 | 315,286.625 | 329,206.219 | 256,017.344 | -23,189.504 | |||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
Total All Reserves
|
7,214.377 | 682,388.776 | 725,675.057 | 957,442.992 | 489,113.902 | |||||||||||||||
|
* | Net Gas Equivalent is calculated based on a conversion factor of 6 MCF of Gas per BBL of Oil. |
2
3
4
Very truly yours,
|
||||
/s/ LEE KEELING AND ASSOCIATES, INC. | ||||
LEE KEELING AND ASSOCIATES, INC. | ||||
5