This presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the

Transcription

1 NYSE:CRK June 2018

2 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 Forward-looking statements give our current expectations or forecasts of future events. These statements include estimates of future natural gas and oil reserves, expected natural gas and oil production and future expenses, assumptions regarding future natural gas and oil prices, budgeted capital expenditures and other anticipated cash outflows, as well as statements concerning anticipated cash flow and liquidity, business strategy and other plans and objectives for future operations. Our production forecasts are dependent upon many assumptions, including estimates of production decline rates from existing wells and the outcome of future drilling activity. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include the timing and extent of changes in market prices for oil and gas, operating risks, liquidity risks, including risks relating to our debt, political and regulatory developments and legislation, and other risk factors and known trends and uncertainties as described in our Annual Report on Form 10-K for fiscal year 2017 filed with the Securities and Exchange Commission. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in the forward-looking statements. 2

3 The New Comstock Comstock s Haynesville shale assets provide high-return, predictable drilling results Enhanced completion design has transformed the Haynesville shale into one of North America s highest return natural gas basins Extensive acreage position underpins over 800 locations for future development Haynesville shale drilling program creates natural gas production growth of ~30% in 2018 and 50% in 2019 Bakken Shale oil-weighted production contributed by Jerry Jones, along with Comstock s undeveloped locations in Eagle Ford, provide leverage to oil prices Commitment to maintain the strong balance sheet created by the Jones asset contribution Pro Forma Net Debt / LQA EBITDAX is 2.8x Corporate goal of Net Debt / LTM EBITDAX of <2.0x by YE 2019 Hedging program to protect cash flow Disciplined growth while spending within operating cash flow High-Return, Low-Risk Haynesville Assets + Production and Reserves from Jerry Jones = Disciplined Growth and Value Creation within Cash Flow 3

4 Jerry Jones Asset Contribution Jerry Jones will contribute Bakken Shale producing oil and gas properties valued at $620 million to Comstock in exchange for common stock in the Company. The effective date of the acquisition of the properties is April 1, 2018 Jones will receive approximately 88.6 million newly issued shares of Comstock common stock based on an agreed upon share price of $7.00 per share and will own approximately 84% of the Company's pro forma outstanding shares The acquisition is subject approval of the issuance of the common stock by our stockholders as well as other closing conditions including the refinancing of our debt The contribution provides Comstock with substantial cash flow to invest in our high return Haynesville shale drilling program and the capital to further grow our drilling prospect inventory The contribution will allow us to refinance and simplify our capital structure 4

5 New Consolidated Asset Base MONTANA Bakken Shale NORTH DAKOTA Williston Basin Proved Reserves 31 MMBOE Q1 18 Net Production 13.9 MBOE/d (1) E. Texas / N. Louisiana Proved Reserves 2,011 Bcfe ~69,000 Net Acres Q1 18 Net Production MMcfe/d Other Assets 4 Bcfe Q1 18 Net Production 3.8 MMcfe/d TEXAS Haynesville/ Bossier Shale LOUISIANA Company Overview Proved Reserves- 2.3 Tcfe 27% - proved developed 10% - oil 90% - gas 84% - operated (2) Q1 18 Net Production MMcfe/d Eagle Ford Shale (1) Current production rate for March (2) Pro Forma for the sale of Eagle Ford and the Jerry Jones asset contribution. South Texas Proved Reserves 18 MMBOE 8,700 Net Acres Production was sold in Q2 18 5

6 Bakken Shale Properties Bakken Play Williston Basin 332 (52.5 net) producing oil wells, 128 (13.0 net) drilled uncompleted wells and 10 (3.0 net) undrilled locations Producing approximately 11,028 barrels of oil per day and 17 MMcf of natural gas per day in March 2018 Proved reserves of 22.5 million barrels of oil and 48.5 billion cubic feet of natural gas Expected to generate approximately $200 million of operating cash flow in % 4% 4% Net 1P Reserves (By Operator) 20% 10% Total: ~31 MMBoe (1) 11% Whiting Continental Rimrock Other 47% Oasis Enerplus XTO 6

7 Comstock s Acreage Haynesville Shale Cotton Valley Cotton Valley Bossier Shale Drilling 36 (15.6 net) operated wells in 2018 Haynesville/Bossier Shale Net Acres 69,000* Resource Potential Average WI Average NRI 6 + Tcf 78.7% 80.5% *47,000 net acres prospective for the Bossier shale 7

8 Regional Natural Gas Price Advantage North East Pipelines (2) -77 N. Louisiana Pipelines (1) -9 Henry Hub Exports to Mexico +3.5 Bcf/d by 2020 LNG Exports +8.5 Bcf/d by 2020 Gulf Coast Industrial Demand +5.5 Bcf/d by 2020 (1) Based on monthly LTM average basis for Columbia Gulf Mainline per Bloomberg as of May 23, (2) Based on monthly LTM average basis for Dominion South per Bloomberg as of May 23,

9 Haynesville Shale Program Applying newest drilling and completion technologies to an established world class asset Extended laterals Larger stimulation treatment Strong rates of return with higher EURs Haynesville shale wells have high rates of return at current natural gas prices Premium gas market Comstock has competitive marketing arrangements and close proximity to Henry Hub Extensive inventory of drilling opportunities (82% Operated) Haynesville 4,500 ft ,500 ft ,000 ft Bossier 4,500 ft ,500 ft ,000 ft Cotton Valley 285 Extensive inventory of re-frac opportunities 175 older vintage Haynesville/Bossier shale wells Strong results from recent industry activity 9

10 Haynesville Well Economics Gen 2 Completion Design - Refrac 4,500' L 7,500' L 10,000' L Estimated Well Costs ($ millions) $4.5 $6.8 $10.3 $ Hr. IP (Mmcf per day) Decline B Factor Initial Decline (%) Proppant (Pounds per lateral ft.) 3,800 3,800 3,800 3,800 EUR (Bcf) Rate of Return (%) Net Present Value at 10% (Million $) % ROR 160% 140% 120% 100% 80% 60% 40% 20% 0% (in millions) $30 $28 $26 $24 $22 $20 $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 $2.00 $2.50 $3.00 $3.50 $4.00 $2.00 $2.50 $3.00 $3.50 $4.00 $/MCF $/MCF Refrac 4,500 ft. 7,500 ft. 10,000 ft. 10

11 Eagle Ford Shale Sale and New JV Sold 191 producing wells and 80 acre proration units to USG Energy Producer Frio Holdings, LLC for $125 million Atascosa Comstock retained all undeveloped acreage (8,740 (8,700 net acres) with 218 drilling locations Comstock and USG will form a joint development venture on ~23,000 net acres LaSalle Comstock contributes 45% interest in 218 drilling locations to USG USG contributes 50% of 108 infill drilling locations McMullen USG contributes 50% of the economics of refrac operations on the 191 producing wells Comstock and USG will start a one rig drilling program in the third quarter of

12 Gen II Haynesville Completion New completion design increases the total stages for a 7,500 lateral from 30 at 250 feet apart to 50 at 150 feet apart Total clusters increase from 150 to 250 Sand loading increases from 2,800 pounds per foot to 3,800 pounds per foot Total sand per well increases from 21 million pounds to 28.5 million pounds 3 Stages = 750 feet Gen I 50 5 Stages = 750 feet Gen II

13 Haynesville Shale Wells Pyle MMcf/d Holmes MMcf/d Harrison MMcf/d Holmes MMcf/d Harrison MMcf/d Pace MMcf/d Shahan MMcf/d Gamble MMcf/d Boggess MMcf/d Ramsey MMcf/d Headrick #1 33 MMcf/d Headrick #1 26 MMcf/d Headrick #2 37 MMcf/d Headrick #2 35 MMcf/d Nash #2 25 MMcf/d Nash #1 26 MMcf/d Derrick 21 #3 30 MMcf/d Derrick 21 #2 30 MMcf/d Ramsey MMcf/d Pace MMcf/d Horn MMcf/d Caraway MMcf/d Powell MMcf/d Claybrook MMcf/d Halsey MMcf/d Roberts #1 27 MMcf/d Roberts #2 28 MMcf/d Billingsley MMcf/d Furlow MMcf/d Furlow MMcf/d Bogle 36-1 #2 14 MMcf/d Bogle 36-1 #1 16 MMcf/d Grantham MMcf/d BSMC LA 12-1 #1 17 MMcf/d DeSoto Parish, Louisiana BSMC LA 18-7 #1 21 MMcf/d GEN 1 GEN 2 BSMC LA #3 20 MMcf/d Jordan MMcf/d 13

14 Haynesville Shale Wells IP rate per 1,000 feet of completed lateral Pyle MMcf/d Caraway MMcf/d Holmes MMcf/d Harrison MMcf/d Holmes MMcf/d Harrison MMcf/d Pace MMcf/d Shahan MMcf/d Ramsey MMcf/d Pace MMcf/d Horn MMcf/d Powell MMcf/d Claybrook MMcf/d Halsey MMcf/d Gamble MMcf/d Boggess MMcf/d Ramsey MMcf/d Roberts #2 3.1 MMcf/d Roberts #1 3.2 MMcf/d Headrick #1 5.3 MMcf/d Headrick #1 3.5 MMcf/d Furlow MMcf/d Nash #2 4.6 MMcf/d Billingsley MMcf/d Furlow MMcf/d Headrick #2 4.6 MMcf/d Headrick #2 4.6 MMcf/d Nash #1 4.9 MMcf/d Bogle 36-1 #2 2.0 MMcf/d Bogle 36-1 #1 2.7 MMcf/d Derrick 21 #3 6.5 MMcf/d Derrick 21 #2 6.6 MMcf/d Grantham MMcf/d BSMC LA 12-1 #1 1.9 MMcf/d DeSoto Parish, Louisiana BSMC LA 18-7 #1 2.8 MMcf/d GEN 1 GEN 2 BSMC LA #3 2.0 MMcf/d Jordan MMcf/d 14

15 Haynesville Shale JV Partnered with USG to jointly develop certain Haynesville/Bossier acreage Caddo Parish acreage is owned by USG and Comstock participates for 25% (Increasing to 40% after the 12 th well) Harrison and Panola acreage is owned by Comstock, USG pays $1.1 million per well for 50% interest USG is participating in 4 Bossier shale wells and is paying $1.4 million per well for 50% interest Comstock is also paid $80K per well for managing the drilling program in addition to customary operating fees (except for 4 Bossier wells) Harrison County, TX 34 Haynesville locations 5,800 net acres Flournoy #2 28 MMcf/d Flournoy #1 27 MMcf/d Panola County, TX 4 Bossier Shale wells / 800 net acres Hunter #1 27 MMcf/d Hunter #2 27 MMcf/d Caddo Parish, LA BSMC LA #3 20 MMcf/d Florsheim 9-16 #2 28 MMcf/d Florsheim 9-16 #1 27 MMcf/d DeSoto Parish, LA BSMC LA 12-1 #1 17 MMcf/d 34 Haynesville locations 6,300 net acres BSMC LA 18-7 #1 21 MMcf/d 15

16 Haynesville/Bossier Wells Wells exceeding expectations Gen 1 Type Curve (7500' Lateral) Gen I HV Wells (Average of 12 wells) Bossier Wells (Average of 2 wells) MMcf per day Gen II HV Wells (Average of 16 wells) Gen ll HV Short Lateral Wells (Average of 8 wells) Type Curve Days on production 16

17 Haynesville/Bossier Wells per 1,000 feet of completed lateral 4 MMcf/1,000 ft. of completed lateral per day Type Curve Gen I HV Wells (Average of 12 wells) - 7,194 ft. Bossier Shale Wells (Average of 2 wells) - 7,460 ft Gen II HV Wells (Average of 24 wells) - 7,130 ft Days on production Type Curve 17

18 Haynesville - Liner Refrac Design Original Completion- 5-8 Clusters/Stage Cluster Spacing 500-1,000 lbs/ft Sand Liner Refrac Design- 5 Clusters/Stage 30 Cluster Spacing 3,500 lbs/ft Sand 18

19 Pro Forma Proved Oil & Gas Reserves Proved Reserves as of 3/31/2018: Oil MBbls Gas Bcf Total Bcfe Producing Non-Producing / Behind Pipe Total Developed Undeveloped , ,684.5 Total Proved Reserves , ,310.3 PV 10 Value (000s) * $1,318.5 *SEC Prices were $49.70/Bbl and $2.89/Mcf Reserves by Type Reserves by Commodity Mix Reserves by Region PV-10 by Region Total: ~2.3 Tcfe 27% Total: ~2.3 Tcfe 10% 8% 5% Total: ~2.3 Tcfe 33% 2% 0% Total: ~$1.3Bn 65% 73% 90% 87% Developed Undeveloped Oil (MMcfe) Gas (MMcfe) Haynesville Eagle Ford Bakken Other Haynesville Eagle Ford Bakken Other 19

20 Capital Expenditures $179 $ Drilling Program ($ in millions) 2018 Gross WI Net $ Wells Wells Haynesville/Bossier Shale: Drilling and Completion $ Completion of 2017 Wells 22.0 ReFracs (7) 31.8 Other Non-operated Eagle Ford Shale $ Bakken Shale Net Wells Drilled Total Capital Expenditures $ Operated Haynesville Laterals: 5, , , Average Lateral Length ,085 ft. 8,519 ft. 20

21 Strong Balance Sheet and Leverage Profile Financial / Credit Metrics Operational Metrics Legacy Bakken Shale New + = ($ in millions) Comstock Properties Comstock Key Assets Haynesville/EagleFord Bakken Diversified Q1 '18 Net Prod. (MMcfe/d) % Gas 100% 21% 80% % Oil 0% 79% 20% 1P Reserves (Bcfe) 2, ,310 % Gas 96% 27% 90% % Oil 4% 73% 10% % Proved Developed 22% 90% 27% 1P PV10 (SEC Pricing) ($MM) $884 $435 $1,319 LTM EBITDAX (3/31/2018) ($ MM) $173 $167 $340 LQA EBITDAX (3/31/2018) ($ MM) $180 $196 $376 Cash ($ MM) $145 - $145 Net Debt ($ MM) $1,066 - $1,066 Net Debt / LTM EBITDAX 6.2x 3.1x Net Debt / LQA EBITDAX 5.9x 2.8x Borrowing Base ($ MM) $50 TBD Revolver Availability $50 Liquidity ($ MM) $195 Note: Legacy Comstock is pro forma for sale of South Texas assets and corresponding $109 million in net proceeds received. 21

22 Low Cost Structure (Per Mcfe) $ $ OPERATING COSTS 79 Pro Forma for Eagle Ford Sale and Bakken Acquisition $5.74 $4.84 DD & A $ $ $ $0.70 $2.26 $1.54 $1.90 $1.42 Pro Forma for Eagle Ford Sale and Bakken Acquisition $ Q Q1 Gathering Production Taxes Lifting Q Q1 22

23 Oil and Gas Hedging Program Plan to hedge up to 60% of next twelve months production Natural gas hedge positions to support Haynesville drilling program - Collars for Swaps at $3.00 (a) $2.50 to $3.30 (a) Mcf per day Collars for $2.50 to $3.50 (a) Total Hedged 2018 Q2 60, , Q3 60,000 30,000 30, , Q4 60,000 30,000 30, , Q1 47,000 30,000 30, , Q2-30,000 30,000 60,000 (a) Contracts are per MMbtu at an index price based on the NYMEX-Henry Hub monthly future prices 23