Business Context and Reporting Period
Company: Comstock Resources, Inc.
Filing Type: Form 8-K (Current Report)
Date: July 30, 2012
Context: The filing discloses a strategic participation agreement with Kohlberg Kravis Roberts & Co L.P. (KKR) regarding the development of Comstock's Eagle Ford shale properties in South Texas.
Key Financial Metrics and Transaction Terms
This filing does not report standard financial performance metrics such as revenue, profit, cash flow, or debt levels. Instead, it details the financial terms of a specific asset development agreement:
- Asset Scope: 28,000 net acres in the Eagle Ford Shale.
- KKR Participation: KKR acquires the right to participate in one-third of Comstock's working interest in future wells.
- Consideration: KKR provides a drilling carry valued at $25,000 per acre for the net acreage acquired.
- Commitment Volume: KKR is committed to providing drilling carry for the next 100 wells, with the option to continue on the same terms.
- Development Plan: Comstock expects to develop most acreage based on spacing units of approximately 80 acres.
Material Changes and Scope of Agreement
The agreement applies specifically to wells spud by Comstock on or after March 31, 2012. Comstock retains 100% of its interest in all wells spud prior to this date. This represents a material change in the capitalization and development strategy for the specified acreage, introducing a major private equity partner to share future development costs and working interests.
Guidance, Outlook, and Risks
Outlook: The company anticipates utilizing the KKR agreement to accelerate the development of its Eagle Ford Shale acreage. The filing does not provide specific production guidance or financial forecasts beyond the transaction terms.
Risks/Contingencies: The KKR commitment is subject to certain conditions not detailed in this summary. The filing explicitly states that the information is not deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 and is not incorporated by reference except as expressly set forth.
Key Facts for Investor Verification
- Verify the specific conditions attached to KKR's commitment to fund the drilling carry.
- Confirm the exact number of wells spud prior to March 31, 2012, to understand the portion of assets retained fully by Comstock.
- Review the attached press release (Exhibit 99.1) for detailed terms regarding the "drilling carry" mechanism and exit provisions.
- Assess the impact of the one-third working interest dilution on future cash flows from the 28,000 net acres.