Business Context and Reporting Period
Comstock Resources, Inc. filed this Form 8-K on December 31, 2007, to report the completion of a material asset acquisition. The transaction closed on December 28, 2007, with an effective date of October 1, 2007.
Key Financial Metrics and Transaction Details
- Acquisition Cost: $170.0 million.
- Target Assets: Oil and gas properties and related assets from SWEPI LP (an affiliate of Shell Oil Company).
- Production Capacity: 67 producing wells (43.0 net) in South Texas, currently producing 22 million cubic feet of natural gas equivalent per day.
- Reserves: Approximately 57 billion cubic feet (Bcf) of net proved natural gas reserves (all developed category).
- Resource Potential: Estimated additional 90 Bcf from future exploitation.
- Funding Source: Borrowings under Comstock's bank credit facility, administered by Bank of Montreal.
Material Changes
The primary material change is the addition of significant producing assets and reserves to Comstock's portfolio. The filing does not provide comparative financial statements or specific changes to revenue, profit, or cash flow metrics for the period, as this is a current report focused on the transaction event rather than a periodic financial statement.
Outlook, Risks, and Management Commentary
Management highlighted the strategic expansion of proved reserves and production capabilities in South Texas. The filing notes that the transaction was funded via existing credit facilities. No specific forward-looking guidance, risk factors, or contingencies beyond the standard transaction details were included in this specific 8-K text.
Investor Verification Checklist
- Verify the impact of the $170.0 million debt increase on the company's leverage ratios and liquidity position.
- Confirm the integration timeline and operational status of the 43.0 net wells acquired from Shell.
- Review the full press release (Exhibit 99.1) for any additional terms or conditions not detailed in the 8-K summary.
- Assess the valuation of the acquired reserves relative to current natural gas market prices.