Comstock Resources, Inc. reported financial and operating results for the three months and year ended December 31, 2011.

Financial Results for the Three Months and Year Ended December 31, 2011

Comstock reported a net loss of $41.1 million or 89 cents per share for the three months ended December 31, 2011 as compared to a net loss of $20.6 million or 45 cents per share for the three months ended December 31, 2010. The fourth quarter 2011 financial results include an impairment charge to write-down proved oil and gas properties of $60.8 million ($39.5 million after tax or 86 cents per share) and a gain realized from the sale of marketable securities of $2.9 million ($1.9 million after tax or 4 cents per share). Financial results for the fourth quarter of 2010 included a loss on disposal of oil and gas properties of $25.8 million ($16.8 million after tax or 37 cents per share) and a gain on sale of marketable securities of $10.8 million ($7.0 million after tax, or 15 cents per share).

Comstock produced 25.5 billion cubic feet of natural gas equivalent ("Bcfe") in the fourth quarter of 2011, an increase of 48% over the 17.3 Bcfe produced in the fourth quarter of 2010. Daily average production increased to 277 million cubic feet of natural gas equivalent ("MMcfe") from 188 MMcfe per day in the fourth quarter of 2010. Crude oil production increased to 8% of total production in the fourth quarter of 2011 as compared to 4% in the third quarter of 2011. Production from the Company's Eagle Ford shale operations increased 123% from the third quarter of 2011, averaging 3,300 barrels of oil equivalent per day in the fourth quarter and accounting for 7% of the Company's total production. Production from the Company's Haynesville shale operations of 184 MMcfe per day in the fourth quarter of 2011 comprised 66% of the Company's total production.

Comstock's average realized natural gas price decreased 9% to $3.40 per Mcf in the fourth quarter of 2011 as compared to $3.73 per Mcf in the fourth quarter of 2010. The Company's average realized oil price improved by 34% to $100.18 per barrel in the fourth quarter of 2011 as compared to $74.75 per barrel in the fourth quarter of 2010. Oil and gas sales increased by 58% to $114.5 million in the fourth quarter of 2011 as compared to 2010's fourth quarter sales of $72.7 million. Operating cash flow (before changes in working capital accounts) increased 75% to $78.8 million in the fourth quarter of 2011 from $44.9 million in 2010's fourth quarter and EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses in the quarter was up 75% to $89.9 million from $51.3 million in 2010's fourth quarter.

With weak natural gas prices and strong crude oil prices persisting, Comstock is redirecting most of its drilling activity to unconventional oil prospects. In 2012, 92% of the net wells drilled by the Company are expected to be oil wells. Comstock expects to spend 77% of its 2012 capital budget for oil prospects in its Eagle Ford shale properties in South Texas and its Permian basin properties in West Texas. On December 31, 2011, 16% of the Company's production (based on a six Mcf to one barrel conversion) is attributable to oil and approximately 2% is attributable to natural gas liquids. At the beginning of 2011 only 4% of the Company's production was oil.

Comstock reported a net loss of $33.5 million or 73 cents per share for the year ended December 31, 2011 as compared to a net loss of $19.6 million or 43 cents per share for the year ended December 31, 2010. The financial results for the year ended December 31, 2011 include impairment charges of $70.6 million ($45.9 million after tax or $1.00 per share), a gain realized from the sale of marketable securities of $35.1 million ($22.8 million after tax or 50 cents per share), and a loss on early retirement of debt of $1.1 million ($0.7 million after taxes or 2 cents per share). The net loss for the year ended December 31, 2010 included a loss on disposal of oil and gas properties of $25.8 million ($16.8 million after tax or 37 cents per share) and a gain realized from sale of marketable securities of $16.5 million ($10.7 million after tax or 24 cents per share).

Comstock's production in 2011 increased by 31% to 95.6 Bcfe as compared to the 73.3 Bcfe produced in 2010. Natural gas prices continued to weaken in 2011. Comstock's average realized natural gas price decreased 10% to $3.91 per Mcf for 2011 as compared to $4.35 per Mcf for 2010. Oil prices continued to be very strong in 2011 and the Company's average realized oil price increased by 40% to $95.73 per barrel as compared to $68.35 per barrel for 2010. The 31% increase in production and stronger oil prices overcame the lower natural gas prices, resulting in Comstock's oil and gas sales increasing by 24% to $434.4 million in 2011 as compared to 2010's sales of $349.1 million. Operating cash flow (before changes in working capital accounts) increased 35% to $297.6 million in 2011 from 2010's operating cash flow of $219.7 million. Higher sales and lower operating cost per Mcfe produced account for the operating cash flow growth. EBITDAX, or earnings before interest, taxes, depreciation, depletion, amortization, exploration expense and other noncash expenses, also increased 35% to $336.3 million in 2011 from EBITDAX of $249.1 million in 2010.

2011 Drilling Results

Comstock reported on the results of its 2011 drilling program. The Company spent $573.4 million in 2011 on its drilling activities. Also in 2011, Comstock spent $218.7 million to acquire 163.7 Bcfe in proved reserves primarily in the Permian basin in West Texas and $255.7 million to acquire exploratory acreage in the Permian basin, the Eagle Ford shale in South Texas, and the Haynesville shale in North Louisiana. In 2011, Comstock drilled 87 wells (47.7 net) and completed 105 wells (59.8 net). As of December 31, 2011 the Company also had three wells (1.6 net) in the process of being drilled.

In the East Texas/North Louisiana region, Comstock drilled 64 wells (28.3 net) during 2011, sixty-two of which were Haynesville or Bossier shale horizontal wells. During 2011, Comstock completed 84 (42.3 net) Haynesville or Bossier shale horizontal wells, including 33 wells (22.2 net) that were drilled in 2010. Wells drilled and completed in 2011 were put on production at an average per well initial production rate of 10.7 MMcfe per day. As of December 31, 2011, Comstock had 14 (9.8 net) Haynesville or Bossier horizontal wells waiting on completion.

In the South Texas region, the Company drilled 20 (19.2 net) horizontal Eagle Ford shale wells in 2011. Comstock completed 17 wells (17.0 net) including one well that was drilled in 2010. These wells had an average per well initial production rate of 820 barrels of oil equivalent ("BOE") per day. Four wells (3.2 net) were awaiting completion at year end. Since the last update, Comstock has completed four additional wells in its Eagle Ford shale program. The Gloria Wheeler "A" #1H was drilled to a vertical depth of 11,358 feet with a 6,725 foot lateral. This well was tested at an initial rate of 1,070 barrels of oil per day and 1.1 MMcf of natural gas per day or 1,254 BOE per day. The Gloria Wheeler "B" #1H was drilled to a vertical depth of 10,908 feet with a 5,175 foot lateral. This well was tested at an initial rate of 916 barrels of oil per day and 1.0 MMcf of natural gas per day or 1,085 BOE per day. The Donnell "A" #1H was drilled to a vertical depth of 9,404 feet with a 6,481 foot lateral. This well was tested at an initial rate of 646 barrels of oil per day and 0.2 MMcf of natural gas per day or 686 BOE per day. The Cutter Creek #2H was drilled to a vertical depth of 10,013 feet with a 5,541 foot lateral. This well was tested at an initial rate of 471 barrels of oil per day and 0.4 MMcf of natural gas per day or 541 BOE per day. All of the reported well results were obtained while following Comstock's restricted choke program.

During December 2011, production from the wells acquired as part of Comstock's Permian basin acquisition averaged 1,000 barrels of oil and 1.9 MMcf of natural gas per day. At year end 2011 there were three wells (0.8 net) in the process of being drilled and four wells (2.5 net) that were awaiting completion on these West Texas properties.