SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): December 9, 1997
COMSTOCK RESOURCES, INC.
(Exact name of registrant as specified in its charter)
NEVADA 0-16741 94-1667468
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
5005 LBJ Freeway, Suite 1000, Dallas, Texas 75244
(Address of principal executive offices)
(972) 701 - 2000
(Registrant's Telephone No.)
1
Item 2. Acquisition or Disposition of Assets
On December 9, 1997, Comstock Resources, Inc. (the "Company"), through a
newly formed wholly owned subsidiary, Comstock Offshore, LLC, acquired working
interests in certain producing offshore Louisiana oil and gas properties as well
as interests in undeveloped offshore oil and gas leases for total cash
consideration of approximately $203.4 million from Bois d'Arc Resources ("Bois
d' Arc") and certain affiliates and working interest partners of Bois d' Arc.
The Company acquired interests in 38 wells (24.0 net wells) and eight
separate production complexes located in the Gulf of Mexico offshore of
Plaquemines and Terrebonne Parishes, Louisiana. The acquisition included
interests in the Louisiana State and Federal offshore areas of Main Pass Blocks
21 and 25, Ship Shoal Blocks 66, 67, 68 and 69 and South Pelto Block 1. The
Company also acquired interests in six undrilled prospects which have been
delineated by 3-D seismic. Approximately $30 million of the purchase price was
attributed to the undrilled prospects.
The acquisition was financed under a new five year $290.0 million revolving
credit facility. The Company financed the acquisition and refinanced $77.0
million of outstanding indebtedness under its existing revolving credit facility
with borrowings under the new credit facility.
Item 7. Financial Statements and Exhibits
Page in
This Report
(a) Financial Statements.
Bois d' Arc Acquisition:
Report of Independent Public Accountants .............................F-1
Statements of Revenues and Direct Operating Expenses
for the Years ended December 31, 1994, 1995 and 1996
and Nine Months Ended September 30, 1996 and 1997................F-2
Notes to Statements of Revenues and Direct Operating Expenses.........F-3
(b) Pro Forma Financial Information (Unaudited)
Comstock Resources, Inc.:
Pro Forma Consolidated Financial Statements ..........................P-1
Pro Forma Consolidated Balance Sheet as of September 30, 1997.........P-2
Pro Forma Consolidated Statement of Operations
for the Year Ended December 31, 1996.............................P-3
Pro Forma Consolidated Statement of Operations
for the Nine Months Ended September 30, 1997.....................P-4
Notes to Pro Forma Consolidated Financial Statements..................P-5
2
(c) Exhibits.
2 Agreement For Purchase and Sale - Bois d' Arc Resources et.al.
as Seller and Comstock Oil & Gas - Louisiana, Inc.as Buyer.
10 Credit Agreement dated as of December 9, 1997 between Comstock
Resources, Inc., Comstock Oil & Gas, Inc., Comstock Oil & Gas --
Louisiana, Inc., Comstock Offshore, LLC, the Banks named therein
and The First National Bank of Chicago, as Agent and Bank One,
Texas, N.A., as Documentation Agent.
3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Comstock Resources, Inc.:
We have audited the accompanying statements of revenues and direct
operating expenses of the Bois d' Arc Acquisition (see Note 1) for the years
ended December 31, 1994, 1995 and 1996. These financial statements are the
responsibility of the management of Comstock Resources, Inc. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such statements present fairly, in all material respects,
the revenues and direct operating expenses of the Bois 'd Arc Acquisition
described in Note 1 for the years ended December 31, 1994, 1995 and 1996 in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Dallas, Texas,
December 9, 1997
F-1
BOIS d' ARC ACQUISITION
STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
For the Years Ended December 31, 1994, 1995 and
1996 and for the Nine Months Ended September 30,
1996 and 1997
(In thousands)
Nine Months
Year Ended December 31, Ended September 30,
1994 1995 1996 1996 1997
---- ---- ---- ---- ----
REVENUES (Unaudited)
Oil and gas sales $ 10,785 $ 14,884 $ 41,002 $ 27,406 $ 44,311
DIRECT OPERATING EXPENSES
Oil and gas operating 2,211 3,348 5,680 3,933 6,539
-------- ------- ------- ------- --------
EXCESS OF REVENUES OVER
DIRECT OPERATING EXPENSES $ 8,574 $ 11,536 $ 35,322 $ 23,473 $ 37,772
======== ======== ======== ======== ========
See Notes to Statements of Revenues and Direct Operating Expenses.
F-2
BOIS d' ARC ACQUISITION
NOTES TO STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES (Continued)
BOIS d' ARC ACQUISITION
NOTES TO STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
(1) BASIS OF PRESENTATION -
On December 9, 1997, Comstock Resources, Inc. (the "Company"), through a
newly formed wholly owned subsidiary, Comstock Offshore, LLC, acquired working
interests in certain producing offshore Louisiana oil and gas properties as well
as interests in undeveloped offshore oil and gas leases for total cash
consideration of approximately $203.4 million from Bois d'Arc Resources ("Bois
d' Arc") and certain affiliates and working interest partners of Bois d' Arc
(the "Bois d' Arc Acquisition").
The Company acquired interests in 38 wells (24.0 net wells) and eight
separate production complexes located in the Gulf of Mexico offshore of
Plaquemines and Terrebonne Parishes, Louisiana. The acquisition included
interests in the Louisiana State and Federal offshore areas of Main Pass Blocks
21 and 25, Ship Shoal Blocks 66, 67, 68 and 69 and South Pelto Block 1. The
Company also acquired interests in six undrilled prospects which have been
delineated by 3-D seismic. Approximately $30 million of the purchase price was
attributed to the undrilled prospects.
The acquisition was financed under a new five year $290.0 million revolving
credit facility. The Company financed the acquisition and refinanced $77.0
million of outstanding indebtness under its existing revolving credit facility
with borrowings under the new credit facility.
The accompanying statements of revenues and direct operating expenses do
not include general and administrative expense, interest income or expense, a
provision for depreciation, depletion and amortization or any provision for
income taxes because the property interests acquired represent only a portion of
a business and the costs incurred by the sellers of the properties are not
necessarily indicative of the costs to be incurred by the Company.
Historical financial information reflecting financial position, results of
operations and cash flows of the Bois d' Arc Acquisition is not presented
because all of the acquisition cost was assigned to the oil and gas property
interests. Accordingly, the historical statements of revenues and direct
operating expenses have been presented in lieu of the financial statements
required under Rule 3-05 of Securities and Exchange Commission Regulation S-X.
F-3
COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
The accompanying Pro Forma Consolidated Financial Statements have been
prepared by recording pro forma adjustments to the historical consolidated
financial statements of Comstock Resources, Inc. and subsidiaries (the
"Company"). The Pro Forma Consolidated Balance Sheet as of September 30, 1997
has been prepared as if the Bois d' Arc Acquisition was consummated on September
30, 1997. The Pro Forma Consolidated Statements of Operations for the year ended
December 31, 1996 and for the nine months ended September 30, 1997 have been
prepared as if the Bois d' Arc Acquisition and the Other 1996 and 1997
Acquisitions, as described in Note 1, were consummated immediately prior to
January 1, 1996 and January 1, 1997, respectively.
The Pro Forma Consolidated Financial Statements are not necessarily
indicative of the financial position or results of operations that would have
occurred had the transactions been effected on the assumed dates. Additionally,
future results may vary significantly from the results reflected in the Pro
Forma Consolidated Statements of Operations due to normal production declines,
changes in oil and gas prices, future transactions and other factors. These
statements should be read in conjunction with the Company's audited consolidated
financial statements and the related notes included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996 and the Company's
consolidated financial statements and the related notes included in the
Company's quarterly report on Form 10-Q for the nine months ended September 30,
1997.
P-1
COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET (Unaudited)
SEPTEMBER 30, 1997
(In thousands)
ASSETS
Pro Forma
Adjustments
(Note 2)
Bois d' Arc
Historical Acquisition(a) Pro Forma
---------- -------------- ---------
Cash and Cash Equivalents $ 6,342 $ - $ 6,342
Accounts Receivable:
Oil and gas sales 12,260 5,000 17,260
Joint interest operations 3,641 - 3,641
Other Assets 390 - 390
--------- ---------- --------
Total current assets 22,633 5,000 27,633
--------- ---------- --------
Property and Equipment:
Unevaluated oil and gas leases - 30,000 30,000
Oil and gas properties 275,411 172,986 448,397
Other 548 1,000 1,548
Accumulated depreciation,
depletion and amortization (68,015) - (68,015)
--------- ---------- ----------
Net property and equipment 207,944 203,986 411,930
--------- ---------- ---------
Other Assets 115 - 115
--------- ---------- ---------
$ 230,692 $ 208,986 $ 439,678
========= ========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Portion of Long-term Debt $ 9 $ - $ 9
Accounts Payable and Accrued Expenses 19,385 - 19,385
--------- ---------- ---------
Total current liabilities 19,394 - 19,394
--------- ---------- ---------
Long-term Debt, less Current Portion 83,000 204,442 287,442
Deferred Taxes Payable 8,796 - 8,796
Other Noncurrent Liabilities 905 4,544 5,449
Stockholders' Equity:
Common stock - $.50 par,
24,204,785 shares outstanding 12,102 - 12,102
Additional paid-in capital 110,099 - 110,099
Retained deficit (3,585) - (3,585)
Less: Deferred compensation -
restricted stock (19) - (19)
--------- --------- ----------
Total stockholders' equity 118,597 - 118,597
--------- --------- ----------
$ 230,692 $ 208,986 $ 439,678
========= ========= =========
See Notes to Pro Forma Consolidated Financial Statements.
P-2
COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
For the Year Ended December 31, 1996
(In thousands except for per share amounts)
Pro Forma Adjustments (Note 2)
Other
Bois d' Arc 1996 and 1997
Historical Acquisition Acquisitions Other Pro Forma
---------- ----------- ------------ ----- ---------
Revenues:
Oil and gas sales $ 68,915 $ 41,002(b) $ 14,940(c) $ - $ 124,857
Gain on sales of property 1,447 - - - 1,447
Other income 593 - - - 593
--------- --------- --------- --------- ---------
Total revenues 70,955 41,002 14,940 - 126,897
--------- --------- --------- --------- ---------
Expenses:
Oil and gas operating 13,838 5,680(b) 1,531(c) - 21,049
Exploration 436 - - - 436
Depreciation, depletion
and amortization 18,269 - - 22,381 (d) 40,650
General and administrative, net 2,239 - - (286)(e) 1,953
Interest 10,086 - - 15,628 (f) 25,714
--------- --------- --------- --------- ---------
Total expenses 44,868 5,680 1,531 37,723 89,802
--------- --------- --------- --------- ---------
Income from continuing operations
before income taxes 26,087 35,322 13,409 (37,723) 37,095
Provision for income taxes - - - 3,853 (g) 3,853
--------- --------- --------- --------- ---------
Income from continuing operations 26,087 35,322 13,409 (41,576) 33,242
Preferred stock dividends (2,021) - - - (2,021)
Net income from continuing operations
attributable to common stock 24,066 35,322 13,409 (41,576) 31,221
Income from discontinued operations 1,866 - - - 1,866
Net income attributable to
common stock $ 25,932 $ 35,322 $ 13,409 $ (41,576) $ 33,087
========= ========= ========= ========= =========
Net income per share:
Primary $ 1.58 $ 2.02
========== =========
Fully diluted $ 1.31 $ 1.64
========== =========
Weighted average common shares
outstanding:
Primary 16,370 16,370
========== =========
Fully diluted 21,408 21,408
========== =========
See Notes to Pro Forma Consolidated Financial Statements.
P-3
COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
For the Nine Months Ended September 30, 1997
(In thousands, except per share amounts)
Pro Forma Adjustments (Note 2)
Other
Bois d' Arc 1996 and 1997
Historical Acquisition Acquisitions Other Pro Forma
---------- ----------- ------------ ---------- ---------
Revenues:
Oil and gas sales $ 59,610 $ 44,311 (b) $ 1,338(c) $ - $ 105,259
Gain on sales of property 85 - - - 85
Other income 597 - - - 597
--------- ---------- --------- ---------- --------
Total revenues 60,292 44,311 1,338 - 105,941
--------- ---------- --------- ---------- --------
Expenses:
Oil and gas operating 12,849 6,539 (b) 124(c) - 19,512
Exploration 280 - - - 280
Depreciation, depletion
and amortization 16,335 - - 23,223 (d) 39,558
General and administrative, net 1,811 - - (242)(e) 1,569
Interest 3,884 - - 9,710 (f) 13,594
--------- --------- --------- ---------- --------
Total expenses 35,159 6,539 124 32,691 74,513
--------- --------- --------- ---------- --------
Income before income taxes 25,133 37,772 1,214 (32,691) 31,428
Provision for income taxes 8,796 - - 2,203 (g) 10,999
--------- --------- --------- ---------- --------
Income 16,337 37,772 1,214 (34,894) 20,429
Preferred stock dividends (410) - - - (410)
--------- --------- --------- ---------- --------
Net income attributable
to common stock $ 15,927 $ 37,772 $ 1,214 $ (34,894) $ 20,019
========= ========= ========= ========== ========
Net income per share:
Primary $ .63 $ .80
========= ========
Fully diluted $ .62 $ .78
========= ========
Weighted average common
shares outstanding
Primary 25,114 25,114
========= ========
Fully diluted 26,306 26,306
========= ========
See Notes to Pro Forma Consolidated Financial Statements.
P-4
COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(1) BASIS OF PRESENTATION -
On December 9, 1997, Comstock Resources, Inc. (the "Company") through a
newly formed wholly owned subsidiary, Comstock Offshore, LLC, acquired working
interests in certain producing offshore Louisiana oil and gas properties as well
as interests in undeveloped offshore oil and gas leases for total cash
consideration of approximately $203.4 million from Bois d'Arc Resources ("Bois
d' Arc") and certain affiliates and working interest partners of Bois d' Arc.
The Company acquired interests in 38 wells (24.0 net wells) and eight
separate production complexes located in the Gulf of Mexico offshore of
Plaquemines and Terrebonne Parishes, Louisiana. The acquisition included
interests in the Louisiana State and Federal offshore areas of Main Pass Blocks
21 and 25, Ship Shoal Blocks 66, 67, 68 and 69 and South Pelto Block 1. The
Company also acquired interests in six undrilled prospects which have been
delineated by 3-D seismic. Approximately $30 million of the purchase price was
attributed to the undrilled prospects.
In May 1996, the Company purchased working interests in the Double A Wells
field in Polk County, Texas for a net purchase price of $100.4 million. The
Company acquired 100% of the capital stock of Black Stone Oil Company, the
operator of the field, together with additional interests held by other working
interest owners in 19 producing oil and gas properties as well as interests in
adjacent undeveloped oil and gas leases. In May 1997, the Company purchased
certain producing oil and gas properties located in the Lisbon field in
Claiborne Parish, Louisiana for a net purchase price of $20.1 million. The
acquisition included interests in 13 wells (7.1 net wells) and approximately
6,400 gross acres. The acquisition closed in 1996 and the acquisition closed in
May 1997 are hereafter referred to as the "Other 1996 and 1997 Acquisitions."
The accompanying Pro Forma Consolidated Balance Sheet at September 30, 1997
and the Pro Forma Consolidated Statements of Operations for the year ended
December 31, 1996 and the nine months ended September 30, 1997, have been
prepared assuming the Company consummated, immediately prior to each of the
periods presented, the Bois d' Arc Acquisition and the Other 1996 and 1997
Acquisitions, funded by borrowings under the Company's bank credit facility.
The Pro Forma Consolidated Statements of Operations are not necessarily
indicative of the results of operations had the above described transactions
occurred on the assumed dates.
(2) PRO FORMA ADJUSTMENTS -
Pro forma adjustments necessary to adjust the Consolidated Balance Sheet
and Statements of Operations are as follows:
(a) To record the assets acquired with the Bois d' Arc Acquisition funded
by borrowings under the Company's new bank credit facility.
P-5
COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Continued)
(b) To record revenue and direct operating expenses of the Bois d'
Acquisition, based on the statements of revenue and direct operating
expenses for the year ended December 31, 1996 and for the nine months
ended September 30, 1997.
(c) To record revenue and direct operating expenses of the Other 1996 and
1997 Acquisitions.
(d) To record estimated depreciation and depletion expense attributable to
the Bois d' Arc Acquisition and Other 1996 and 1997 Acquisitions using
the unit-of-production method applied to the net cost of the
properties acquired.
(e) To record the operating fee income attributable to Bois d' Arc and the
Other 1996 and 1997 Acquisitions, which is netted against general and
administrative expense.
(f) To record interest expense attributable to the increase in debt to
finance the purchase of the Bois d' Arc Acquisition and the Other 1996
and 1997 Acquisitions. Interest expense is based upon the weighted
average interest rate incurred by the Company under its bank credit
facility in assuming the entire cost of the acquisitions had been
funded with bank borrowings at January 1 of each period and is net of
capitalized interest of $2,048,000 and $1,569,000 for the year ended
December 31, 1996 and the nine months ended September 30, 1997,
respectively.
(g) To record income tax expense attributable to the Bois d' Arc
Acquisition and the Other 1996 and 1997 Acquisitions.
(3) OIL AND GAS RESERVE INFORMATION (Unaudited)
The estimates of proved oil and gas reserves were estimated by independent
petroleum engineers in accordance with guidelines established by the Securities
and Exchange Commission and the Financial Accounting Standards Board, which
require that reserve reports be prepared under existing economic and operating
conditions with no provision for price and cost escalation except by contractual
agreement.
The following table sets forth proved oil and gas reserves after the Bois
d' Arc Acquisition at November 1, 1997, the effective date of the acquisition:
OIL GAS
(barrels) (mcf)
------------- -------------
Proved Developed Reserves 11,539,000 22,733,000
Proved Undeveloped Reserves 3,089,000 7,851,000
------------- -------------
Total Proved Reserves 14,628,000 30,584,000
============= =============
P-6
The following table set forth the standardized measure of discounted future
net cash flows, excluding future income taxes, relating to proved reserves of
the Bois d' Arc Acquisition at November 1, 1997:
Future Cash Flows $ 357,760,000
Future Cost
Production (68,343,000)
Development (24,192,000)
--------------
Future Net Cash Flows 265,225,000
10% Discount Factor (70,444,000)
--------------
Standardized Measure of
Discounted future Net Cash Flows $ 194,781,000
==============
Future cash flows were based on September 1997 price for future oil and gas
sales.
P-7
COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Continued)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COMSTOCK RESOURCES, INC.
Dated: December 12, 1997 By:/s/ROLAND O. BURNS
------------------
Roland O. Burns
Senior Vice President, Chief Financial Officer,
Secretary, and Treasurer (Principal Financial and
Accounting Officer)
P-8