Form S-3 December 16, 2003
As filed with the Securities and Exchange Commission on December 16, 2003
Registration No. 333-____________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
COMSTOCK RESOURCES, INC.
(and certain subsidiaries indentified in footnote (*) below)
(Exact name of registrant as specified in its charter)
NEVADA 1311 94-1667468
State or other jurisdiction of (Primary Standard Industries (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
5300 Town and Country Blvd., Suite 500 M. Jay Allison
Frisco, Texas 75034 President and Chief Executive Officer
(972) 668-8800 5300 Town and Country Blvd., Suite 500
Frisco, Texas 75034
(Address, including zip code, and (972) 668-8800
telephone number, including area code, (Name, Address, including zip
of Registrant's principal executive offices) code, and telephone number, including area
code, of agent for service)
Copies to:
Jack E. Jacobsen
Locke Liddell & Sapp LLP
2200 Ross Avenue, Suite 2200
Dallas, Texas 75201
(214) 740-8000
Approximate date of commencement of proposed sale to the public: From time to
time after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment, plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
Calculation of Registration Fee:
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE(1)(2)(3)(4) REGISTRATION FEE
Debt Securities (5) -- --
Common Stock, par value $0.50 per share (6) -- --
Preferred Stock, par value $10.00 per share (7) -- --
Warrants (8) -- --
Units (9) -- --
Guarantees of Debt Securities (10) -- --
Total $300,000,000 $24,270
(footnotes on next page)
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
(footnotes from previous page)
(1) The proposed maximum offering price per unit will be determined from time
to time by Comstock Resources, Inc. in connection with, and at the time of,
the issuance of the securities registered hereunder. The maximum offering
price per unit has been omitted pursuant to Securities Act Release No.
6964.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933.
(3) In no event will the aggregate initial offering price of all securities
issued from time to time pursuant to this registration statement exceed
$300,000,000. This amount is exclusive of accrued interest, distributions
and dividends, if any. Securities registered hereunder may be sold
separately, together or as units with other securities registered
hereunder. This total amount also includes such securities as may, from
time to time, be issued upon conversion or exchange of securities
registered hereunder, to the extent any such securities are, by their
terms, convertible into or exchangeable for other securities.
(4) Not specified as to each class of securities to be registered pursuant to
General Instruction II.D. of Form S-3 under the Securities Act of 1933.
(5) If any debt securities are issued at an original issue discount, then the
offering price of the debt securities shall be in such amount as shall
result in an aggregate initial offering price not to exceed $300,000,000,
less the offering price of any securities previously issued hereunder by
the Registrant.
(6) Subject to note (3) above, an indeterminate number of shares of common
stock as may be sold from time to time are being registered hereunder. Also
includes such indeterminate number of shares of common stock as may be (a)
issued upon conversion, redemption or exchange for any debt securities or
preferred stock that provide for conversion or exchange into common stock
or (b) issued upon exercise and settlement of any warrants. The aggregate
amount of common stock registered under this registration statement is
limited to that which is permissible under Rule 415(a)(4) promulgated under
the Securities Act of 1933.
(7) Subject to note (3) above, an indeterminate number of shares of preferred
stock as may be sold from time to time are being registered hereunder. Also
includes such indeterminate number of shares of preferred stock as may be
(a) issued upon conversion, redemption or exchange for any debt securities
that provide for conversion or exchange into preferred stock or (b) issued
upon exercise and settlement of any warrants.
(8) Subject to note (3) above, an indeterminate number of warrants as may be
sold from time to time are being registered hereunder. Warrants may be
exercised to purchase any of the other securities registered hereby.
(9) Subject to note (3) above, an indeterminate number of units as may be sold
from time to time are being registered hereunder. Units may consist of any
combination of the securities being registered hereunder.
(10) No separate consideration will be received for any guarantee of debt
securities; accordingly, pursuant to Rule 457(n) of the Securities Act of
1933, no separate filing fee is required.
(*) The following subsidiaries are co-registrants incorporated in the states
and having the I.R.S. Employer Identification Numbers indicated: (i)
Comstock Oil &Gas, Inc., a Nevada corporation (75- 2272352); (ii) Comstock
Oil & Gas-Louisiana, LLC, a Nevada limited liability company (28- 0012430);
Comstock Offshore, LLC, a Nevada limited liability company (75-2733811);
and Comstock Oil & Gas Holdings, Inc. a Nevada corporation (75-2968982).
2
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and we are not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to Completion, Dated December 16, 2003
PROSPECTUS
$300,000,000
COMSTOCK RESOURCES, INC.
DEBT SECURITIES
COMMON STOCK
PREFERRED STOCK
WARRANTS
UNITS
Comstock Resources, Inc. may offer and sell from time to time debt
securities, common stock, preferred stock, warrants or units. We will provide
specific terms of these securities in supplements to this prospectus. The terms
of the securities will include the initial offering price, aggregate amount of
the offering, listing on any securities exchange or quotation system, risk
factors and the agents, dealers or underwriters, if any, to be used in
connection with the sale of these securities. You should read this prospectus
and any supplement carefully before you invest.
Our common stock is traded on the New York Stock Exchange under the symbol
"CRK."
This prospectus may not be used to sell securities unless accompanied by a
supplement to this prospectus.
__________
This investment involves a high degree of risk. Please see the section in
this prospectus entitled "Risk Factors" beginning on page 8.
__________
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
__________
The date of this prospectus is ____________, 2003
TABLE OF CONTENTS
PAGE
About this Prospectus...................................................3
Forward-Looking Statements..............................................4
Comstock Resources, Inc.................................................5
Risk Factors............................................................8
Use of Proceeds........................................................13
Ratio of Earnings to Fixed Charges.....................................14
Description of Debt Securities.........................................14
Description of Capital Stock...........................................23
Description of Warrants............................................... 28
Description of Units...................................................29
Plan of Distribution...................................................30
Legal Matters..........................................................32
Experts................................................................32
Where You Can Find More Information....................................33
2
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission, or SEC, utilizing a "shelf" registration
process. Under this shelf registration process, we may sell any combination of
the securities described in this prospectus in one or more offerings up to a
total offering price of $300,000,000. This prospectus provides you with a
general description of the securities we may offer. Each time we offer to sell
securities, we will provide a prospectus supplement that will contain specific
information about the terms of that offering and the securities offered by us in
that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. If there is any inconsistency between
the information in this prospectus and any prospectus supplement, you should
rely on the information provided in the prospectus supplement. This prospectus
does not contain all of the information included in the registration statement.
The registration statement filed with the SEC includes exhibits that provide
more details about the matters discussed in this prospectus. You should
carefully read this prospectus, the related exhibits filed with the SEC and any
prospectus supplement, together with the additional information described below
under the heading "Where You Can Find More Information."
You should rely only on the information contained or incorporated by
reference in this prospectus and in any accompanying prospectus supplement. We
have not authorized any other person to provide you with different information.
If anyone provides you with different or inconsistent information, you should
not rely on it. We are not making an offer of the securities covered by this
prospectus in any state where the offer is not permitted. You should assume that
the information appearing in this prospectus, any prospectus supplement and any
other document incorporated by reference is accurate only as of the date on the
front cover of those documents. Our business, financial condition, results of
operations and prospects may have changed since those dates.
Under no circumstances should the delivery to you of this prospectus create
any implication that the information contained in this prospectus is correct as
of any time after the date of this prospectus.
Unless otherwise indicated or unless the context otherwise requires, all
references in this prospectus to "Comstock," "we," "us," and "our" mean Comstock
Resources, Inc. and its consolidated subsidiaries. In this prospectus, we
sometimes refer to the debt securities, common stock, preferred stock, warrants
and units collectively as the "securities."
3
FORWARD-LOOKING STATEMENTS
The information contained in this prospectus, including the documents
incorporated by reference herein and our public releases include
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
forward- looking statements are identified by their use of terms such as
"expect," "estimate," "anticipate," "project," "plan," "believe" and similar
terms. All statements, other than statements of historical facts, included in or
incorporated by reference to this prospectus, are forward-looking statements,
including statements under the caption "Risk Factors," regarding:
o budgeted capital expenditures;
o increases in oil and natural gas production;
o the number of anticipated wells to be drilled after the date hereof;
o our financial position;
o oil and natural gas reserve estimates;
o business strategy; and
o other plans and objectives for future operations.
Although we believe that the expectations reflected in these
forward-looking statements are reasonable, we can give no assurance that these
expectations will prove to be correct. Our actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including, among others:
o the risks described in the sections captioned "Risk Factors" in this
prospectus;
o the timing and success of our drilling activities;
o the volatility of prices and supply of, and demand for, oil and
natural gas;
o the numerous uncertainties inherent in estimating quantities of oil
and natural gas reserves and actual future production rates and
associated costs;
o our ability to successfully identify, execute or effectively integrate
future acquisitions;
o the usual hazards associated with the oil and gas industry, including
fires, well blowouts, pipe failure, spills, explosions and other
unforeseen hazards;
o our ability to effectively market our oil and natural gas;
o the availability of rigs, equipment, supplies and personnel;
o our ability to acquire or discover additional reserves;
o our ability to satisfy future capital requirements;
o changes in regulatory requirements;
o general economic and competitive conditions;
o our ability to retain key members of our senior management and key
employees; and
o continued hostilities in the Middle East and other sustained military
campaigns and acts of terrorism or sabotage.
4
There are numerous uncertainties inherent in estimating quantities of
proved oil and natural gas reserves and in projecting future rates of production
and timing of development expenditures, including many factors beyond our
control. Reserve engineering is a subjective process of estimating underground
accumulations of oil and natural gas that cannot be precisely measured.
Furthermore, the accuracy of any reserve estimate is a function of the quality
of available data and of engineering and geological interpretation and judgment.
As a result, estimates made by different engineers often vary from one to
another. In addition, results of drilling, testing and production subsequent to
the date of an estimate may justify revisions of the estimate and the revisions,
if significant, would change the schedule of any further production and
development drilling. Accordingly, reserve estimates are generally different
from the quantities of oil and natural gas that are ultimately recovered.
Additional important factors that could cause actual results to differ
materially from our expectations are discussed in "Risk Factors" and elsewhere
in this prospectus. Should one or more of these risks or uncertainties occur, or
should underlying assumptions prove incorrect, our actual results and plans for
2003 and beyond could differ materially from those expressed in the
forward-looking statements. All subsequent written and oral forward-looking
statements attributable to us or persons acting on our behalf are expressly
qualified in their entirety by such factors.
COMSTOCK RESOURCES, INC.
We are an independent energy company engaged in the acquisition,
development, production and exploration of oil and natural gas properties. Our
oil and natural gas operations are concentrated in the Gulf of Mexico, East
Texas / North Louisiana, Southeast Texas and South Texas regions. In addition,
we have properties in the Illinois Basin region in Kentucky and in the
Mid-Continent regions located in the Texas panhandle, Oklahoma and Kansas. Our
oil and natural gas properties are estimated to have proved reserves of 613.9
Bcfe as of December 31, 2002. Our proved oil and natural gas reserve base is 80%
natural gas and 66% proved developed on a Bcfe basis as of December 31, 2002.
Our proved reserves at December 31, 2002 and our 2002 average daily
production are summarized below:
Proved Reserves at December 31, 2002 2002 Daily Production
--------------------------------------- -------------------------------------
% of % of
Oil Gas Total Total Oil Gas Total Total
------- ------- ------- ------- -------- ------- -------- --------
(MMBbls) (Bcf) (Bcfe) (MBbls/d) (MMcf/d) (MMcfe/d)
Gulf of Mexico 15.6 96.1 189.7 30.9 2.2 20.7 33.6 29.8
East Texas / North Louisiana 1.1 182.0 188.5 30.7 0.3 32.4 34.2 30.4
Southeast Texas 3.1 107.1 125.5 20.4 0.9 24.3 29.5 26.2
South Texas 0.7 47.0 51.3 8.4 0.1 6.5 7.0 6.2
Other Regions 0.3 56.6 58.9 9.6 0.1 7.2 8.3 7.4
------- ------- ------- ------- ----- ----- ----- -----
Total 20.8 488.8 613.9 100.0% 3.6 91.1 112.6 100.0%
======= ======= ======= ======= ===== ===== ===== =====
Strengths
Quality Properties. Our operations are focused in four geographically
concentrated areas: the Gulf of Mexico, East Texas / North Louisiana, Southeast
Texas and South Texas regions, which account for approximately 31%, 31%, 20% and
8% of our proved reserves, respectively. We have high price realizations
relative to benchmark prices for natural gas and crude oil production. We also
have favorable operating costs which result in us having high cash margins.
Finally, our properties have an average reserve life of approximately 15.0 years
and have extensive development and exploration potential.
5
Successful Exploration and Development Program. In 2002, we spent $35.3
million on the exploitation and development of our oil and natural gas
properties for development drilling, recompletions, workovers and production
facilities. Overall, we drilled 27 development wells, 11.7 net to us, with a 96%
success rate. We also had a successful exploratory drilling program in 2002,
spending a total of $31.1 million to drill 20 wells, 7.6 net to us, with a 75%
success rate. We spent an additional $4.3 million in acquiring new acreage in
2002 to support our exploration program.
Successful Acquisitions. We have had significant growth over the years as a
result of acquisitions. Since 1991, we have added 711.7 Bcfe of proved oil and
natural gas reserves from 29 acquisitions at an average cost of $0.84 per Mcfe.
Our application of strict economic and reserve risk criteria have enabled us to
successfully evaluate and integrate our previous acquisitions.
Efficient Operator. We operate 60% of our proved oil and natural gas
reserve base as of December 31, 2002. This allows us to control operating costs,
the timing and plans for future development, the level of drilling and lifting
costs and the marketing of production. As an operator, we receive reimbursements
for overhead from other working interest owners, which reduces our general and
administrative expenses.
High Price Realizations. The majority of our wells are located in areas
which can access attractive natural gas and crude oil markets. In addition, our
natural gas production has a relatively high Btu content of approximately 1,079
Btu. Our crude oil production has a favorable API gravity of approximately 40
degrees. Due to these factors, we have relatively high price realizations
compared to benchmark prices. In 2002 our average natural gas price, before
gains from hedging activities, was $3.26 per Mcf, which represented a $0.04
premium to the 2002 NYMEX average monthly settlement price. Also in 2002, our
average crude oil price was $24.95 per barrel, which represented a $2.04 barrel
premium to the average monthly West Texas Intermediate crude oil price for 2002
posted by Koch Industries, Inc.
High Cash Margins. As a result of our quality properties, higher price
realizations and efficient operations, we believe we have higher cash margins
than most of our competitors. Consequently, our oil and natural gas reserves
have a higher value per Mcfe than reserves that generate lower cash margins.
Business Strategy
Exploit Existing Reserves. We seek to maximize the value of our oil and
natural gas properties by increasing production and recoverable reserves through
active workover, recompletion and exploitation activities. We utilize advanced
industry technology, including 3-D seismic data, improved logging tools, and
formation stimulation techniques. During 2002, we spent approximately $22.9
million to drill 27 development wells, 11.7 net to us, of which 26 wells, 10.7
net to us, were successful, representing a success rate of 96%. In addition, we
spent approximately $12.4 million for new production facilities, leasehold costs
and for recompletion and workover activities. For 2003, we have budgeted $49.0
million for development drilling and for workover and recompletion activity.
Pursue Exploration Opportunities. We conduct exploration activities to grow
our reserve base and to replace our production each year. In 2002 we replaced
131% of our 2002 production from new discoveries. In 2002, we spent
approximately $31.1 million to drill 20 exploratory wells, 7.6 net to us, of
which 15 wells, 5.3 net to us, were successful, representing a success rate of
75%. We also spent $4.3 million in acquiring new acreage in 2002 to support our
exploration program. We have budgeted $51.0 million in 2003 for exploration
activities which will be focused primarily in the Gulf of Mexico, Southeast
Texas and South Texas regions.
6
Maintain Low Cost Structure. We seek to increase cash flow by carefully
controlling operating costs and general and administrative expenses. Our average
oil and gas operating costs per Mcfe were $0.82 in 2002 and our general and
administrative expenses per Mcfe averaged only $0.12 in 2002.
Acquire High Quality Properties at Attractive Costs. We have a successful
track record of increasing our oil and natural gas reserves through
opportunistic acquisitions. Since 1991, we have added 711.7 Bcfe of proved oil
and natural gas reserves from 29 acquisitions at a total cost of $598.3 million,
or $0.84 per Mcfe. The acquisitions were acquired at an average of 63% of their
present value of proved reserves in the year the acquisitions were completed. We
apply strict economic and reserve risk criteria in evaluating acquisitions. We
target properties in our core operating areas with established production and
low operating costs that also have potential opportunities to increase
production and reserves through exploration and exploitation activities.
Maintain Flexible Capital Expenditure Budget. The timing of most of our
capital expenditures is discretionary because we have not made any significant
long-term capital expenditure commitments. Consequently, we have a significant
degree of flexibility to adjust the level of such expenditures according to
market conditions. We anticipate spending approximately $100.0 million on
development and exploration projects in 2003. We intend to primarily use
operating cash flow to fund our drilling expenditures in 2003. We may also make
additional property acquisitions in 2003 that would require additional sources
of funding. Such sources may include borrowings under our bank credit facility
or sales of our equity or debt securities.
7
RISK FACTORS
The securities to be offered by this prospectus may involve a high degree
of risk. When considering an investment in any of the securities, you should
consider carefully all of the risk factors described below and any similar
information contained in any Annual Report on Form 10-K or other document filed
by us with the SEC after the date of this prospectus. If applicable, we will
include in any prospectus supplement a description of those significant factors
that could make the offering described in the prospectus supplement speculative
or risky.
Our revenues, profitability and cash flow is dependent upon the prices for
oil and natural gas and these prices are volatile.
Our business is dependent upon the prices of, and demand for, oil and
natural gas. Historically, the prices for oil and natural gas have been volatile
and are likely to remain volatile in the future. The prices we receive for our
oil and natural gas production and the level of such production are subject to
wide fluctuations and depend on numerous factors beyond our control, including,
without limitation:
o seasonality;
o imports of crude oil and natural gas;
o political conditions in other oil-producing and natural gas-producing
countries;
o the actions of the Organization of Petroleum Exporting Countries;
o domestic government regulation, legislation and policies;
o price and availability of alternative fuels; and
o overall economic conditions.
Any continued and extended decline in the price of crude oil or natural gas
will adversely affect our:
o revenues, profitability and cash flow from operations;
o value of our proved oil and natural gas reserves;
o the economic viability of certain of our drilling prospects; o
borrowing capacity; and
o ability to obtain additional capital.
In order to reduce our exposure to price risks, we may enter into oil and
natural gas price swap arrangements to hedge a portion of our anticipated sales.
Such arrangements may limit our ability to benefit from increases in oil and
natural gas prices. Although we are not currently experiencing any significant
involuntary curtailment of our natural gas production, market, economic and
regulatory factors may in the future materially affect our ability to sell our
natural gas production.
We plan to pursue acquisitions as part of our growth strategy and there are
risks in connection with acquisitions.
Our growth in recent years is attributable in part to acquisitions of
producing properties and companies. We expect to continue to evaluate and, where
appropriate, pursue acquisition opportunities on terms we consider favorable.
However, we cannot assure you that suitable acquisition candidates will be
identified in the future, or that we will be able to finance such acquisitions
on favorable terms. In addition, we compete against other companies for
8
acquisitions, and we cannotassure you that we will successfully acquire any
material property interests. Further, we cannot assure you that future
acquisitions by us will be integrated successfully into our operations or will
increase our profits.
The successful acquisition of producing properties requires an assessment
of numerous factors beyond our control, including, without limitation:
o recoverable reserves;
o exploration potential;
o future oil and natural gas prices;
o operating costs; and
o potential environmental and other liabilities.
In connection with such an assessment, we perform a review of the subject
properties that we believe to be generally consistent with industry practices.
The resulting assessments are inexact and their accuracy uncertain, and such a
review may not reveal all existing or potential problems, nor will it
necessarily permit us to become sufficiently familiar with the properties to
fully assess their merits and deficiencies. Inspections may not always be
performed on every well, and structural and environmental problems are not
necessarily observable even when an inspection is made.
Additionally, significant acquisitions can change the nature of our
operations and business depending upon the character of the acquired properties,
which may be substantially different in operating and geologic characteristics
or geographic location than our existing properties. While our current
operations are focused in the Gulf of Mexico, East Texas/North Louisiana,
Southeast Texas, South Texas, the Illinois Basin and the Mid-Continent regions,
we may pursue acquisitions or properties located in other geographic areas.
We have substantial debt and debt service requirements which could adversely
affect our operations and limit our growth.
Large Amount of Debt
We have substantial debt and debt service requirements. As of September 30,
2003, our ratio of total debt to total capitalization was approximately 53%.
Consequences of Debt
Our substantial debt will have important consequences, including, without
limitation:
o a substantial portion of our cash flow from operations will be
required to make debt service payments;
o our ability to borrow additional amounts for working capital, capital
expenditures (including acquisitions) or other purposes will be
limited; and
o our debt could limit our ability to capitalize on significant business
opportunities, our flexibility in planning for or reacting to changes
in market conditions and our ability to withstand competitive
pressures and economic downturns.
9
In addition, future acquisition or development activities may require us to
alter our capitalization significantly. These changes in capitalization may
significantly increase our debt. Moreover, our ability to meet our debt service
obligations and to reduce our total debt will be dependent upon our future
performance, which will be subject to general economic conditions and financial,
business and other factors affecting our operations, many of which are beyond
our control. If we are unable to generate sufficient cash flow from operations
in the future to service our indebtedness and to meet other commitments, we will
be required to adopt one or more alternatives, such as refinancing or
restructuring our indebtedness, selling material assets or seeking to raise
additional debt or equity capital. We cannot assure you that any of these
actions could be effected on a timely basis or on satisfactory terms or that
these actions would enable us to continue to satisfy our capital requirements.
Restrictive Debt Covenants
Our bank credit facility contains a number of significant covenants. These
covenants will limit our ability to, among other things:
o borrow additional money;
o merge, consolidate or dispose of assets;
o make certain types of investments;
o enter into transactions with our affiliates; and
o pay dividends.
Our failure to comply with any of these covenants would cause a default
under our bank credit facility and the indenture governing the notes. A default,
if not waived, could result in acceleration of our indebtedness, in which case
the debt would become immediately due and payable. If this occurs, we may not be
able to repay our debt or borrow sufficient funds to refinance it. Even if new
financing is available, it may not be on terms that are acceptable to us.
Complying with these covenants may cause us to take actions that we otherwise
would not take or not take actions that we otherwise would take.
We may not have sufficient funds to meet our substantial capital requirements.
We make, and will continue to make, substantial capital expenditures for
the acquisition, development and exploration of oil and natural gas reserves.
Historically, we have financed these expenditures primarily with cash generated
by operations, bank borrowings and the sale of equity securities and non-
strategic assets. We believe that we will have sufficient cash provided by
operating activities to fund anticipated capital expenditures other than
significant acquisitions. We intend to borrow under our bank credit facility or
to obtain other debt or equity financing as needed to finance future
acquisitions. If revenues or our borrowing base decrease as a result of lower
oil and natural gas prices, operating difficulties or declines in reserves, our
ability to obtain the capital necessary to undertake or complete future
development programs and to pursue acquisition opportunities may be limited. We
cannot assure you that additional debt or equity financing or cash generated
from operations will be available to meet these requirements. If we need
additional funds, our inability to raise such funds may adversely affect our
operations.
Our future production and revenues depend on our ability to replace our
reserves.
Our future production and revenues depend upon our ability to find, develop
or acquire additional oil and natural gas reserves that are economically
recoverable. Our proved reserves will generally decline as reserves are
10
depleted, except to the extent that we conduct successful exploration or
development activities or acquire properties containing proved reserves, or
both. To increase reserves and production, we must continue our acquisition and
drilling activities. We cannot assure you, however, that our acquisition and
drilling activities will result in significant additional reserves or that we
will have continuing success drilling productive wells at low finding and
development costs. Furthermore, while our revenues may increase if prevailing
oil and natural gas prices increase significantly, our finding costs for
additional reserves could also increase.
Our drilling activities are subject to many risks.
Our drilling activities are subject to many risks, including the risk that
no commercially productive reservoirs will be encountered. We cannot assure you
that new wells we drill will be productive or that we will recover all or any
portion of our investment. Drilling for oil and natural gas may involve
unprofitable efforts, not only from dry wells, but from wells that are
productive but do not produce sufficient net revenues to return a profit after
drilling, operating and other costs. The cost of drilling, completing and
operating wells is often uncertain. Our drilling operations may be curtailed,
delayed or canceled as a result of numerous factors, many of which are beyond
our control, including, without limitation:
o title problems;
o adverse weather conditions;
o compliance with governmental requirements; and
o shortages or delays in the delivery of equipment and services.
Our operations are subject to operating hazards and uninsured risks.
Our operations are subject to all of the risks normally associated with the
exploration for and the production of oil and natural gas, including, without
limitation, blowouts, cratering, oil spills and fires, each of which could
result in damage to or destruction of oil and natural gas wells, production
facilities or other property, or injury to persons. In addition, we may from
time to time conduct relatively deep drilling which will involve increased
drilling risks of high pressures and mechanical difficulties, including stuck
pipe, collapsed casing and separated cable. We cannot assure you that our
insurance will adequately cover any losses or liabilities. Furthermore, we
cannot predict the continued availability of insurance, or availability at
commercially acceptable prices.
We operate in a highly competitive industry, and our failure to remain
competitive with our competitors, many of which have greater resources than us,
could adversely affect our results of operations.
The oil and natural gas industry is highly competitive in the search for
and development and acquisition of reserves. Our competitors for the
acquisition, development and exploration of oil and natural gas properties and
capital to finance such activities, include companies that have greater
financial and personnel resources than we do. These resources could allow those
competitors to price their products and services more aggressively than we can,
which could hurt our profitability. Moreover, our ability to acquire additional
properties and to discover reserves in the future will be dependent upon our
ability to evaluate and select suitable properties and to close transactions in
a highly competitive environment.
11
There are many uncertainties in estimating reserves and future net cash flows.
There are many uncertainties in estimating quantities and values of proved
reserves, projecting future rates of production and timing of development
expenditures, including many factors beyond our control. Reserve engineering is
a subjective process of estimating the recovery from underground accumulations
of oil and natural gas that cannot be precisely measured. The accuracy of any
reserve estimate depends on the quality of available data, production history
and engineering and geological interpretation and judgment. Because all reserve
estimates are to some degree speculative, the quantities of oil and natural gas
that are ultimately recovered, production and operating costs, the amount and
timing of future development expenditures and future oil and natural gas prices
may all differ materially from those assumed in these estimates. In addition,
different reserve engineers may make different estimates of reserve quantities
and cash flows based upon the same available data. The present value of the
future net cash flows attributable to our proved oil and natural gas reserves
set forth in this prospectus and in documents incorporated into this prospectus
are estimates only and should not be construed as the current market value of
the estimated oil and natural gas reserves attributable to our properties. Thus,
the information set forth in this prospectus includes revisions of certain
reserve estimates attributable to proved properties included in the preceding
year's estimates. Such revisions reflect additional information from subsequent
activities, production history of the properties involved and any adjustments in
the projected economic life of such properties resulting from changes in product
prices. Any future downward revisions could adversely affect our financial
condition, borrowing base under our bank credit facility, future prospects and
the market value of our securities.
If we are unsuccessful at marketing our oil and gas at commercially acceptable
prices, our profitability will decline.
Our ability to market oil and gas at commercially acceptable prices depends
on, among other factors, the following:
o the availability and capacity of gathering systems and pipelines;
o federal and state regulation of production and transportation;
o changes in supply and demand; and
o general economic conditions.
Our inability to respond appropriately to changes in these factors could
negatively effect our profitability.
We are subject to extensive governmental regulation, including environmental
regulations, that may adversely affect our costs.
Our business is affected by certain federal, state and local laws and
regulations relating to the development, production, marketing, pricing,
transportation and storage of oil and natural gas. Our business is also subject
to extensive and changing environmental and safety laws and regulations
governing plugging and abandonment of wells, the discharge of materials into the
environment or otherwise relating to environmental protection. Sanctions for
noncompliance with these laws and regulations may include administrative, civil
and criminal penalties, revocation of permits and corrective action orders.
These laws sometimes apply retroactively. In addition, a party can be liable for
environmental damage without regard to that party's negligence or fault.
Therefore, we could have liability for the conduct of others, or for acts that
were in compliance with all applicable laws at the time we performed them.
Environmental laws have become more stringent over the years. In addition, the
12
modification or interpretation of existing laws or regulations or the adoption
of new laws or regulations curtailing exploratory or development drilling for
oil and gas could limit well servicing opportunities. We cannot assure you that
present or future regulation will not adversely affect our operations.
We depend on our key personnel and the loss of any of these individuals could
have a material adverse effect on our operations.
We believe that the success of our business strategy and our ability to
operate profitably depend on the continued employment of M. Jay Allison,
President and Chief Executive Officer, and a limited number of other senior
management personnel. Loss of the services of Mr. Allison or any of those other
individuals could have a material adverse effect on our operations.
Shortage of rigs, equipment, supplies or qualified personnel may restrict our
operations.
Our industry is cyclical and, from time to time, there is a shortage of
drilling rigs, equipment, supplies or qualified personnel. During these periods,
the costs and delivery times of rigs, equipment and supplies are substantially
greater. In addition, demand for, and wage rates of, qualified drilling rig
crews rise with increases in the number of active rigs in service. Shortages of
drilling rigs, equipment or supplies could delay or restrict our exploration and
development operations, which in turn could adversely affect our financial
condition and results of operations.
Terrorist attacks and continued hostilities in the Middle East or other
sustained military campaigns may adversely impact our business.
The terrorist attacks that took place in the United States on September 11,
2001 were unprecedented events that have created many economic and political
uncertainties, some of which may materially adversely impact our business. The
long-term impact that terrorist attacks and the threat of terrorist attacks may
have on our business is not known at this time. Uncertainties surrounding
continued hostilities in the Middle East or other sustained military campaigns
may adversely impact our business in unpredictable ways. USE OF PROCEEDS
Unless otherwise specified in an accompanying prospectus supplement, we
expect to use the net proceeds from the sale of the securities offered by this
prospectus:
o to refinance certain existing indebtedness, including $220.0 million
of our 11 1/4% Senior Notes which may be redeemed by us on or after
May 1, 2004;
o to finance acquisitions; and
o for general corporate purposes.
We may invest funds not required immediately for these purposes in marketable
securities and short-term investments. The precise amount and timing of the
application of these proceeds will depend upon our funding requirements and the
availability and cost of other funds.
13
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratios of earnings to fixed charges on a
consolidated basis for the periods shown. You should read these ratios of
earnings to fixed charges in connection with our consolidated financial
statements, including the notes to those statements, incorporated by reference
into this prospectus.
Nine Months
Ended
Years Ended December 31, September 30,
------------------------------------------- ----------------
1998 1999 2000 2001 2002 2002 2003
------- ------- ------- ------- ------- ------- -------
Ratio of earnings -- -- 3.2x 3.3x 1.5x 1.1x 4.1x
to fixed charges
The ratios were computed by dividing earnings by fixed charges. For this
purpose, "earnings" represent the aggregate of (i) income from continuing
operations before income taxes and (ii) fixed charges. "Fixed charges" consists
of interest expense, capitalized interest expense, preferred stock dividends and
that portion of non-capitalized rental expense deemed to be the equivalent of
interest. Earnings were insufficient to cover fixed charges by $29.3 million and
$6.9 million for the years ended December 31, 1998 and 1999, respectively.
DESCRIPTION OF DEBT SECURITIES
This section describes the general terms and provisions of the debt
securities which may be offered by us from time to time. The applicable
prospectus supplement will describe the specific terms of the debt securities
offered by that prospectus supplement.
We may issue debt securities either separately or together with, or upon
the conversion of, or in exchange for, other securities. The debt securities are
to be either our senior obligations issued in one or more series and referred to
herein as the senior debt securities, or our subordinated obligations issued in
one or more series and referred to herein as the subordinated debt securities.
The debt securities will be general obligations of Comstock. Each series of debt
securities will be issued under an agreement, or indenture, between Comstock and
an independent third party, usually a bank or trust company, known as a trustee,
who will be legally obligated to carry out the terms of the indenture. The
name(s) of the trustee(s) will be set forth in the applicable prospectus
supplement. We may issue all the debt securities under the same indenture, as
one or as separate series, as specified in the applicable prospectus
supplement(s).
This summary of certain terms and provisions of the debt securities and
indentures is not complete. If we refer to particular provisions of an
indenture, the provisions, including definitions of certain terms, are
incorporated by reference as a part of this summary. The indentures are or will
be filed as an exhibit to the registration statement of which this prospectus is
a part, or as exhibits to documents that we may file under the Securities
Exchange Act of 1934 which are incorporated by reference into this prospectus.
The indentures are subject to and governed by the Trust Indenture Act of 1939.
You should refer to the applicable indenture for the provisions which may be
important to you.
14
General
The indentures may not limit the amount of debt securities which we may
issue. We may issue debt securities up to an aggregate principal amount as we
may authorize from time to time. The applicable prospectus supplement will
describe the terms of any debt securities being offered, including:
o the title and aggregate principal amount;
o the date(s) when principal is payable;
o the interest rate, if any, and the method for calculating the interest
rate;
o the interest payment dates and the record dates for the interest
payments;
o the places where the principal and interest will be payable;
o any mandatory or optional redemption or repurchase terms or
prepayment, conversion, sinking fund or exchangeability or
convertibility provisions;
o whether such debt securities will be senior debt securities or
subordinated debt securities and, if subordinated debt securities, the
subordination provisions and the applicable definition of senior
indebtedness;
o additional provisions, if any, relating to the defeasance and covenant
defeasance of the debt securities;
o if other than denominations of $1,000 or multiples of $1,000, the de
nominations the debt securities will be issued in;
o whether the debt securities will be issued in the form of global
securities, as discussed below, or certificates;
o whether the debt securities will be issuable in registered form,
referred to as registered securities, or in bearer form, referred to
as bearer securities, or both, and if bearer securities are issuable,
any restrictions applicable to the exchange of one form for another
and the offer, sale and delivery of bearer securities;
o any applicable material federal tax consequences;
o the dates on which premiums, if any, will be payable;
o our right, if any, to defer payment of interest and the maximum length
of such deferral period;
o any paying agents, transfer agents, registrars or trustees;
o any listing on a securities exchange;
o if convertible into common stock or preferred stock, the terms on
which such debt securities are convertible;
o the terms, if any, of the transfer, mortgage, pledge, or assignment as
security for any series of debt securities of any properties, assets,
proceeds, securities or other collateral, including whether certain
provisions of the Trust Indenture Act of 1939 are applicable, and any
corresponding changes to provisions of the indenture as then in
effect;
o restrictions on the declaration of dividends, if any;
o restrictions on issuing additional debt, if any;
o material limitations or qualifications on the debt securities imposed
by the rights of any of our other securities, if any;
15
o the initial offering price; and
o other specific terms, including covenants and any additions or changes
to the events of default provided for with respect to the debt
securities.
The terms of the debt securities of any series may differ, and without the
consent of the holders of the debt securities of any series, we may reopen a
previous series of debt securities and issue additional debt securities of such
series or establish additional terms of such series, unless otherwise indicated
in the applicable prospectus supplement.
Non-U.S. Currency
If the purchase price of any debt securities is payable in a currency other
than U.S. dollars or if principal of, or premium, if any, or interest, if any,
on any of the debt securities is payable in any currency other than U.S.
dollars, the specific terms with respect to such debt securities and such
foreign currency will be specified in the applicable prospectus supplement.
Original Issue Discount Securities
Debt securities may be issued as original issue discount securities to be
sold at a substantial discount below their principal amount. Original issue
discount securities may include "zero coupon" securities that do not pay any
cash interest for the entire term of the securities. In the event of an
acceleration of the maturity of any original issue discount security, the amount
payable to the holder thereof upon such acceleration will be determined in the
manner described in the applicable prospectus supplement. Material federal
income tax and other considerations applicable to original issue discount
securities will be described in the applicable prospectus supplement.
Covenants
Under the indentures, we will be required to:
o pay the principal, interest and any premium on the debt securities
when due;
o maintain a place of payment;
o deliver a report to the trustee at the end of each fiscal year
reviewing our obligations under the indentures; and
o deposit sufficient funds with any paying agent on or before the due
date for any principal, interest or any premium.
Any additional covenants will be described in the applicable prospectus
supplement.
Registration, Transfer, Payment and Paying Agent
Unless otherwise indicated in a prospectus supplement, each series of debt
securities will be issued in registered form only, without coupons. The
indentures, however, provide that we may also issue debt securities in bearer
form only, or in both registered and bearer form. Bearer securities must not be
offered, sold, resold or delivered in connection with their original issuance in
the United States or to any United States person other than offices located
outside the United States of certain United States financial institutions.
"United States person" means any citizen or resident of the United States, any
corporation, partnership or other entity created or organized in or under the
laws of the United States, any estate the income of which is subject to United
States federal income taxation regardless of its source, or any trust whose
administration is subject to the primary supervision of a United States court
16
and which has one or more United States fiduciaries who have the authority to
control all substantial decisions of the trust. "United States" means the United
States of America (including the states thereof and the District of Columbia),
its territories, its possessions and other areas subject to its jurisdiction.
Purchasers of bearer securities will be subject to certification procedures and
may be affected by certain limitations under United States tax laws. Such
procedures and limitations will be described in the prospectus supplement
relating to the offering of the bearer securities.
Unless otherwise indicated in a prospectus supplement, registered
securities will be issued in denominations of $1,000 or any integral multiple
thereof.
Unless otherwise indicated in a prospectus supplement, the principal,
premium, if any, and interest, if any, of or on the debt securities will be
payable, and debt securities may be surrendered for registration of transfer or
exchange, at an office or agency to be maintained by us in the City of New York,
provided that payments of interest with respect to any registered security may
be made at our option by check mailed to the address of the person entitled to
payment or by transfer to an account maintained by the payee with a bank located
in the United States. No service charge will be made for any registration of
transfer or exchange of debt securities, but we may require payment of a sum
sufficient to cover any tax or other governmental charge and any other expenses
that may be imposed in connection with the exchange or transfer.
Unless otherwise indicated in a prospectus supplement, payment of principal
of, premium, if any, and interest, if any, on bearer securities will be made,
subject to any applicable laws and regulations, at such office or agency outside
the United States as specified in the prospectus supplement and as we may
designate from time to time. Unless otherwise indicated in a prospectus
supplement, payment of interest due on bearer securities on any interest payment
date will be made only against surrender of the coupon relating to such interest
payment date. Unless otherwise indicated in a prospectus supplement, no payment
of principal, premium or interest with respect to any bearer security will be
made at any office or agency in the United States or by check mailed to any
address in the United States or by transfer to an account maintained with a bank
located in the United States; except that if amounts owing with respect to any
bearer securities shall be payable in U.S. dollars, payment may be made at the
Corporate Trust Office of the applicable trustee or at any office or agency
designated by us in the Borough of Manhattan, The City of New York, if (but only
if) payment of the full amount of such principal, premium or interest at all
offices outside of the United States maintained for such purpose by us is
illegal or effectively precluded by exchange controls or similar restrictions.
Unless otherwise indicated in the applicable prospectus supplement, we will
not be required to:
o issue, register the transfer of or exchange debt securities of any
series during a period beginning at the opening of business 15 days
before any selection of debt securities of that series of like tenor
to be redeemed and ending at the close of business on the day of that
selection;
o register the transfer of or exchange any registered security, or
portion thereof, called for redemption, except the unredeemed portion
of any registered security being redeemed in part;
o exchange any bearer security called for redemption, except to exchange
such bearer security for a registered security of that series and like
tenor that is simultaneously surrendered for redemption; or
o issue, register the transfer of or exchange any debt security which
has been surrendered for repayment at the option of the holder, except
the portion, if any, of the debt security not to be so repaid.
17
Ranking of Debt Securities
The senior debt securities will be our unsubordinated obligations and will
rank equally in right of payment with all other unsubordinated indebtedness of
ours. The subordinated debt securities will be obligations of ours and will be
subordinated in right of payment to all existing and future senior indebtedness.
The prospectus supplement will describe the subordination provisions and set
forth the definition of senior indebtedness applicable to the subordinated debt
securities, and will set forth the approximate amount of such senior
indebtedness outstanding as of a recent date.
Global Securities
The debt securities of a series may be issued in whole or in part in the
form of one or more global securities that will be deposited with, or on behalf
of, a depository, such as the Depository Trust Company, identified in the
prospectus supplement relating to such series. Global debt securities may be
issued in either registered or bearer form and in either temporary or permanent
form. Unless and until it is exchanged in whole or in part for individual
certificates evidencing debt securities, a global debt security may not be
transferred except as a whole:
o by the depository to a nominee of such depository;
o by a nominee of such depository to such depository or another nominee
of such depository; or
o by such depository or any such nominee to a successor of such
depository or a nominee of such successor.
The specific terms of the depository arrangement with respect to a series
of global debt securities and certain limitations and restrictions relating to a
series of global bearer securities will be described in the applicable
prospectus supplement.
Outstanding Debt Securities
In determining whether the holders of the requisite principal amount of
outstanding debt securities have given any authorization, demand, direction,
notice, consent or waiver under the relevant indenture, the amount of
outstanding debt securities will be calculated based on the following:
o the portion of the principal amount of an original issue discount
security that shall be deemed to be outstanding for such purposes
shall be that portion of the principal amount thereof that could be
declared to be due and payable upon a declaration of acceleration
pursuant to the terms of such original issue discount security as of
the date of such determination;
o the principal amount of a debt security denominated in a currency
other than U.S. dollars shall be the U.S. dollar equivalent,
determined on the date of original issue of such debt security, of the
principal amount of such debt security; and
o any debt security owned by us or any obligor on such debt security or
any affiliate of us or such other obligor shall be deemed not to be
outstanding.
Redemption and Repurchase
The debt securities may be redeemable at our option, may be subject to
mandatory redemption pursuant to a sinking fund or otherwise, or may be subject
to repurchase by us at the option of the holders, in each case upon the terms,
at the times and at the prices set forth in the applicable prospectus
supplement.
18
Conversion and Exchange
The terms, if any, on which debt securities of any series are convertible
into or exchangeable for common stock, preferred stock, or other debt securities
will be set forth in the applicable prospectus supplement. Such terms of
conversion or exchange may be either mandatory, at the option of the holders, or
at our option.
Consolidation, Merger and Sale of Assets
Each indenture generally will permit a consolidation or merger between us
and another corporation, if the surviving corporation meets certain limitations
and conditions. Subject to those conditions, each indenture may also permit the
sale by us of all or substantially all of our property and assets. If this
happens, the remaining or acquiring corporation shall assume all of our
responsibilities and liabilities under the indentures including the payment of
all amounts due on the debt securities and performance of the covenants in the
indentures.
We are only permitted to consolidate or merge with or into any other
corporation or sell all or substantially all of our assets according to the
terms and conditions of the indentures, as indicated in the applicable
prospectus supplement. The remaining or acquiring corporation will be
substituted for us in the indentures with the same effect as if it had been an
original party to the indenture. Thereafter, the successor corporation may
exercise our rights and powers under any indenture, in our name or in its own
name. Any act or proceeding required or permitted to be done by our board of
directors or any of our officers may then be done by the board or officers of
the successor corporation.
Events of Default
Unless otherwise specified in the applicable prospectus supplement, an
event of default, as defined in the indentures and applicable to debt securities
issued under such indentures, typically will occur with respect to the debt
securities of any series under the indentures upon:
o default for a period to be specified in the applicable prospectus
supplement in payment of any interest with respect to any debt
security of such series;
o default in payment of principal or any premium with respect to any
debt security of such series when due upon maturity, redemption,
repurchase at the option of the holder or otherwise;
o default in deposit of any sinking fund payment when due with respect
to any debt security of such series;
o default by us in the performance, or breach, of any other covenant or
warranty in such indentures, which shall not have been remedied for a
period to be specified in the applicable prospectus supplement after
notice to us by the applicable trustee or the holders of not less than
a fixed percentage in aggregate principal amount of the debt
securities of all series issued under the applicable indenture;
o certain events of bankruptcy, insolvency or reorganization of
Comstock; or
o any other event of default that may be set forth in the applicable
prospectus supplement, including an event of default based on other
debt being accelerated, known as a "cross- acceleration."
No event of default with respect to any particular series of debt
securities necessarily constitutes an event of default with respect to any other
series of debt securities. If the trustee considers it in the interest of the
holders to do so, the trustee under an indenture may withhold notice of the
19
occurrence of a default with respect to the debt securities to the holders of
any series outstanding, except a default in payment of principal, premium, if
any, or interest, if any.
Each indenture will provide that if an event of default with respect to any
series of debt securities issued thereunder shall have occurred and be
continuing, either the relevant trustee or the holders of at least a fixed
percentage in principal amount of the debt securities of such series then
outstanding may declare the principal amount of all the debt securities of such
series to be due and payable immediately. In the case of original issue discount
securities, the trustee may declare as due and payable such lesser amount as may
be specified in the applicable prospectus supplement. However, upon certain
conditions, such declaration and its consequences may be rescinded and annulled
by the holders of at least a fixed percentage in principal amount of the debt
securities of all series issued under the applicable Indenture.
The applicable prospectus supplement will provide the terms pursuant to
which an event of default shall result in acceleration of the payment of
principal of subordinated debt securities.
In the case of a default in the payment of principal of, or premium, if
any, or interest, if any, on any subordinated debt securities of any series, the
applicable trustee, subject to certain limitations and conditions, may institute
a judicial proceeding for the collection thereof.
No holder of any of the debt securities of any series will have any right
to institute any proceeding with respect to the indenture or any remedy
thereunder, unless the holders of at least a fixed percentage in principal
amount of the outstanding debt securities of such series:
o have made written request to the trustee to institute such proceeding
as trustee, and offered reasonable indemnity to the trustee;
o the trustee has failed to institute such proceeding within the time
period specified in the applicable prospectus supplement after receipt
of such notice; and
o the trustee has not within such period received directions
inconsistent with such written request by holders of a majority in
principal amount of the outstanding debt securities of such series.
Such limitations do not apply, however, to a suit instituted by a
holder of a debt security for the enforcement of the payment of the
principal of, premium, if any, or any accrued and unpaid interest on,
the debt security on or after the respective due dates expressed in
the debt security.
During the existence of an event of default under an indenture, the trustee
is required to exercise such rights and powers vested in it under the indenture
and use the same degree of care and skill in its exercise thereof as a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs. Subject to the provisions of the indenture relating to the duties
of the trustee, if an event of default shall occur and be continuing, the
trustee is under no obligation to exercise any of its rights or powers under the
indenture at the request or direction of any of the holders, unless such holders
shall have offered to the trustee reasonable security or indemnity. Subject to
certain provisions concerning the rights of the trustee, the holders of at least
a fixed percentage in principal amount of the outstanding debt securities of any
series have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the trustee, or exercising any power
conferred on the trustee with respect to such series.
The indentures provide that the trustee will, within the time period
specified in the applicable prospectus supplement after the occurrence of any
default, give to the holders of the debt securities of such series notice of
such default known to it, unless such default shall have been cured or waived;
provided that the trustee shall be protected in withholding such notice if it
determines in good faith that the withholding of such notice is in the interest
of such holders, except in the case of a default in payment of principal of
20
or premium, if any, on any debt security of such series when due or in the case
of any default in the payment of any interest on the debt securities of such
series.
We will be required to furnish to the trustee annually a statement as to
compliance with all conditions and covenants under the indentures.
Modification and Waivers
From time to time, when authorized by resolutions of our board of directors
and by the trustee, we may, without the consent of the holders of debt
securities of any series, amend, waive or supplement the indentures and the debt
securities of such series for certain specified purposes, including, among other
things:
o to cure ambiguities, defects or inconsistencies;
o to provide for the assumption of our obligations to holders of the
debt securities of such series in the case of a merger or
consolidation;
o to add to our events of default or our covenants or to make any change
that would provide any additional rights or benefits to the holders of
the debt securities of such series;
o to add or change any provisions of such indenture to facilitate the
issuance of bearer securities;
o to establish the form or terms of debt securities of any series and
any related coupons;
o to add guarantors with respect to the debt securities of such series;
o to secure the debt securities of such series;
o to maintain the qualification of the indenture under the Trust
Indenture Act of 1939; or
o to make any change that does not adversely affect the rights of any
holder.
Other amendments and modifications of the indentures or the debt securities
issued thereunder may be made by the trustee and us with the consent of the
holders of not less than a fixed percentage of the aggregate principal amount of
the outstanding debt securities of each series affected, with each series voting
as a separate class; provided that, without the consent of the holder of each
outstanding debt security affected, no such modification or amendment may:
o reduce the principal amount of, or extend the fixed maturity of the
debt securities, or alter or waive any redemption, repurchase or
sinking fund provision of the debt securities;
o reduce the amount of principal of any original issue discount
securities that would be due and payable upon an acceleration of the
maturity thereof;
o change the currency in which any debt securities or any premium or the
accrued interest thereon is payable;
o reduce the percentage in principal amount outstanding of debt
securities of any series which must consent to an amendment,
supplement or waiver or consent to take any action under the indenture
or the debt securities of such series;
o impair the right to institute suit for the enforcement of any payment
on or with respect to the debt securities;
o waive a default in payment with respect to the debt securities or any
guarantee;
21
o reduce the rate or extend the time for payment of interest on the debt
securities;
o adversely affect the ranking of the debt securities of any series;
o release any guarantor from any of its obligations under its guarantee
or the indenture, except in compliance with the terms of the
indenture; or
o solely in the case of a series of subordinated debt securities, modify
any of the applicable subordination provisions or the applicable
definition of senior indebtedness in a manner adverse to any holders.
The holders of a fixed percentage in aggregate principal amount of the
outstanding debt securities of any series may waive compliance by us with
certain restrictive provisions of the relevant indenture, including any set
forth in the applicable prospectus supplement. The holders of a fixed percentage
in aggregate principal amount of the outstanding debt securities of any series
may, on behalf of the holders of that series, waive any past default under the
applicable indenture with respect to that series and its consequences, except a
default in the payment of the principal of, or premium, if any, or interest, if
any, on any debt securities of such series, or in respect of a covenant or
provision which cannot be modified or amended without the consent of a larger
fixed percentage of holders or by the holders of each outstanding debt security
of the series affected.
Discharge, Termination and Covenant Termination
When we establish a series of debt securities, we may provide that such
series is subject to the termination and discharge provisions of the applicable
indenture. If those provisions are made applicable, we may elect either:
o to terminate and be discharged from all of our obligations with
respect to those debt securities subject to some limitations; or
o to be released from our obligations to comply with specified covenants
relating to those debt securities, as described in the applicable
prospectus supplement.
To effect that termination or covenant termination, we must irrevocably
deposit in trust with the relevant trustee an amount which, through the payment
of principal and interest in accordance with their terms, will provide money
sufficient to make payments on those debt securities and any mandatory sinking
fund or similar payments on those debt securities. This deposit may be made in
any combination of funds or government obligations. On such a termination, we
will not be released from certain of our obligations that will be specified in
the applicable prospectus supplement.
To establish such a trust we must deliver to the relevant trustee an
opinion of counsel to the effect that the holders of those debt securities:
o will not recognize income, gain or loss for U.S. federal income tax
purposes as a result of the termination or covenant termination; and
o will be subject to U.S. federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if the
termination or covenant termination had not occurred.
If we effect covenant termination with respect to any debt securities, the
amount of deposit with the relevant trustee must be sufficient to pay amounts
due on the debt securities at the time of their stated maturity. However, those
debt securities may become due and payable prior to their stated maturity if
there is an event of default with respect to a covenant from which we have not
been released. In that event, the amount on deposit may not be sufficient to pay
all amounts due on the debt securities at the time of the acceleration.
22
The applicable prospectus supplement may further describe the provisions,
if any, permitting termination or covenant termination, including any
modifications to the provisions described above.
Governing Law
The indentures and the debt securities will be governed by, and construed
in accordance with, the laws of the State of New York.
Regarding the Trustees
The Trust Indenture Act of 1939 contains limitations on the rights of a
trustee, should it become a creditor of ours, to obtain payment of claims in
certain cases or to realize on certain property received by it in respect of any
such claims, as security or otherwise. Each trustee is permitted to engage in
other transactions with us from time to time, provided that if such trustee
becomes subject to any conflicting interest, it must eliminate such conflict
upon the occurrence of an event of default under the relevant indenture, or else
resign as trustee.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 50,000,000 shares of common stock,
par value $0.50 per share and 5,000,000 shares of preferred stock, $10.00 par
value per share. At December 16, 2003 we had 34,259,111 shares of common
stock and no shares of preferred stock issued and outstanding. We also had
options and warrants outstanding to purchase 5,399,000 shares of our
common stock outstanding at that date.
The following is a summary of the key terms and provisions of our equity
securities. You should refer to the applicable provision of our restated
articles of incorporation, bylaws, the General Corporation Law of Nevada and the
documents we have incorporated by reference for a complete statement of the
terms and rights of our capital stock.
Common Stock
Voting Rights. Each holder of common stock is entitled to one vote per
share. Subject to the rights, if any, of the holders of any series of preferred
stock pursuant to applicable law or the provision of the certificate of
designation creating that series, all voting rights are vested in the holders of
shares of common stock. Holders of shares of common stock have no right to
cumulate votes in the election of directors, thus the holders of a majority of
the shares of common stock can elect all of the members of the board of
directors standing for election.
Dividends. Dividends may be paid to the holders of common stock when, as
and if declared by the board of directors out of funds legally available for
their payment, subject to the rights of holders of any preferred stock. We have
never declared a cash dividend on our common stock and intend to continue our
policy of using retained earnings for expansion of our business.
Rights upon Liquidation. In the event of our voluntary or involuntary
liquidation, dissolution or winding up, the holders of common stock will be
entitled to share equally, in proportion to the number of shares of common stock
held by them, in any of our assets available for distribution after the payment
in full of all debts and distributions and after the holders of all series of
outstanding preferred stock, if any, have received their liquidation preferences
in full.
23
Non-Assessable. All outstanding shares of common stock are fully paid and
non-assessable. Any additional common stock we offer and issue under this
prospectus and any related prospectus supplement will also be fully paid and
non-assessable.
No Preemptive Rights. Holders of common stock are not entitled to
preemptive purchase rights in future offerings of our common stock. Although our
restated articles of incorporation do not specifically deny preemptive rights,
pursuant to the Nevada General Corporation Law, our stockholders do not have
preemptive rights with respect to shares that are registered under Section 12 of
the Securities Exchange Act of 1934 and our common stock is so registered.
Listing. Our outstanding shares of common stock are listed on the New York
Stock Exchange under the symbol "CRK." Any additional common stock we issue will
also be listed on the NYSE and any other exchange on which our common stock is
then traded.
Preferred Stock
Our board of directors can, without approval of our stockholders, issue one
or more series of preferred stock and determine the number of shares of each
series and the rights, preferences and limitations of each series. The following
description of the terms of the preferred stock sets forth certain general terms
and provisions of our authorized preferred stock. If we offer preferred stock, a
description will be filed with the SEC and the specific designations and rights
will be described in a prospectus supplement, including the following terms:
o the series, the number of shares offered and the liquidation value of
the preferred stock;
o the price at which the preferred stock will be issued;
o the dividend rate, the dates on which the dividends will be payable
and other terms relating to the payment of dividends on the preferred
stock;
o the liquidation preference of the preferred stock;
o the voting rights of the preferred stock;
o whether the preferred stock is redeemable or subject to a sinking
fund, and the terms of any such redemption or sinking fund;
o whether the preferred stock is convertible or exchangeable for any
other securities, and the terms of any such conversion; and
o any additional rights, preferences, qualifications, limitations and
restrictions of the preferred stock.
The description of the terms of the preferred stock to be set forth in an
applicable prospectus supplement will not be complete and will be subject to and
qualified in its entirety by reference to the certificate of designation
relating to the applicable series of preferred stock. The registration statement
of which this prospectus forms a part will include the certificate of
designation as an exhibit or incorporate it by reference.
Undesignated preferred stock may enable our board of directors to render
more difficult or to discourage an attempt to obtain control of us by means of a
tender offer, proxy contest, merger or otherwise, and to thereby protect the
continuity of our management. The issuance of shares of preferred stock may
adversely affect the rights of the holders of our common stock. For example, any
preferred stock issued may rank prior to our common stock as to dividend rights,
liquidation preference or both, may have full or limited voting rights and may
24
be convertible into shares of common stock. As a result, the issuance of shares
of preferred stock may discourage bids for our common stock or may otherwise
adversely affect the market price of our common stock or any existing preferred
stock.
Any preferred stock will, when issued, be fully paid and non-assessable.
Stockholders' Rights Plan
On December 8, 2000, our board of directors adopted Comstock's
Stockholders' Rights Plan and we declared a dividend distribution of one
preferred stock purchase right for each outstanding share of our common stock.
Each purchase right entitles the registered holder to purchase from us one
one-hundredth of a share of our series A junior participating preferred stock,
$10.00 par value per share, at an exercise price of $15.00 per one one-hundredth
of a share of preferred stock, subject to adjustment. The description and terms
of the purchase rights are set forth in a rights agreement between us and
American Stock Transfer and Trust Company, as rights agent.
The purchase rights are initially evidenced by the common stock
certificates as no separate purchase rights certificates have been distributed.
The purchase rights separate from our common stock and a distribution date will
occur at the close of business on the earliest of:
o the tenth business day following a public announcement that a person
or group of affiliated or associated persons (Acquiring Person) has
acquired, or obtained the right to acquire, beneficial ownership of
20% or more of the outstanding shares of our common stock (Stock
Acquisition Date);
o the tenth business day (or such later date as may be determined by
action of our board of directors) following the commencement of a
tender offer or exchange offer that would result in a person or group
beneficially owning 20% or more of the outstanding shares of our
common stock, or;
o the tenth business day after our board of directors determines that
any individual, firm, corporation, partnership or other entity, alone
or together with its affiliates and associates, has become the
beneficial owner of an amount of our common stock which a majority of
the continuing directors who are not our officers determines to be
substantial (which amount shall in no event be less than 10% of the
shares of our common stock outstanding) and at least a majority of the
continuing directors who are not our officers, after reasonable
inquiry and investigation, including consultation with such adverse
person as the directors shall deem appropriate, shall determine that
such beneficial ownership by such adverse person is intended to cause
us to repurchase the common stock beneficially owned by such adverse
person or to cause pressure on us to take action or enter into a
transaction intended to provide such adverse person with short-term
financial gain under circumstances where the directors determine that
the best long-term interests of us and our stockholders would not be
served by taking such action or entering into such transaction or
series of transactions at that time, or that such beneficial ownership
is causing or is reasonably likely to cause a material adverse impact
on us.
The purchase rights are not exercisable until the distribution date
outlined above and will expire at the close of business on December 18, 2010,
unless earlier redeemed by us. If (i) a person becomes the beneficial owner of
20% or more of the then outstanding shares of our common stock (except (a)
pursuant to certain offers for all outstanding shares of common stock approved
by at least a majority of the continuing directors who are not our officers or
(b) solely due to a reduction in the number of shares of our common stock
outstanding as a result of the repurchase of shares of common stock by us) or
(ii) our board of directors determines that a person is an adverse person (as
discussed above), each holder of a purchase right will thereafter have the right
to receive, upon exercise, common stock (or, in certain circumstances, cash,
property or our other securities) having a value equal to two times the exercise
25
price of the purchase right. Notwithstanding any of the foregoing, following the
occurrence of either of the events set forth in this paragraph, all purchase
rights that are, or (under certain circumstances specified in the rights
agreement) were, beneficially owned by any Acquiring Person or adverse person
(as discussed above) will be null and void.
If at any time following the Stock Acquisition Date, (i) we are acquired in
a merger or other business combination transaction in which we are not the
surviving corporation, or in which we are the surviving corporation, but our
common stock is changed or exchanged (other than a merger which follows an offer
for all outstanding shares of common stock approved by at least a majority of
the continuing directors who are not our officers), or (ii) more than 50% of our
assets, cash flow or earning power is sold or transferred, each holder of a
purchase right (except purchase rights which previously have been voided as set
forth above) shall thereafter have the right to receive upon exercise, common
stock of the acquiring company having a value equal to two times the exercise
price of the purchase right.
At any time after the earlier to occur of (i) an Acquiring Person becoming
such or (ii) the date on which our board of directors declares an adverse person
to be such, our board of directors may cause us to exchange the purchase rights
(other than purchase rights owned by the adverse person or Acquiring Person, as
the case may be, which will have become null and void), in whole or in part, at
an exchange ratio of one share of common stock per purchase right (subject to
adjustment). Notwithstanding the foregoing, no such exchange may be effected at
any time after any person becomes the beneficial owner of 50% or more of our
outstanding common stock.
The rights plan has certain anti-takeover effects including making it
prohibitively expensive for a raider to try to control or take us over
unilaterally without negotiation with our board of directors. Although intended
to preserve for stockholders our long term value, the rights plan may make it
more difficult for stockholders to benefit from certain transactions which are
opposed by the incumbent board of directors
Anti-Takeover Provisions
In addition to the rights plan, our restated articles of incorporation and
bylaws and the Nevada General Corporation Law include certain provisions which
may have the effect of delaying or deterring a change in control or in our
management or encouraging persons considering unsolicited tender offers or other
unilateral takeover proposals to negotiate with our board of directors rather
than pursue non-negotiated takeover attempts. These provisions include a
classified board of directors, authorized blank check preferred stock,
restrictions on business combinations and the availability of authorized but
unissued common stock. Please see "Preferred Stock" above.
Our bylaws contain provisions dividing the board of directors into classes
with only one class standing for election each year. A staggered board of
directors makes it more difficult for stockholders to change the majority of the
directors and instead promotes a continuity of existing management.
Nevada's "Combinations with Interested Stockholders Statute," which applies
to any Nevada corporation subject to the reporting requirements of Section 12 of
the Securities Exchange Act of 1934, including us, prohibits an "interested
stockholder" from entering into a "combination" with the corporation for three
years, unless certain conditions are met. A "combination" includes:
o any merger of the corporation or a subsidiary of the corporation with
an "interested stockholder," or any other corporation which is or
after the merger would be, an affiliate or associate of the interested
stockholder;
26
o any sale, lease, exchange, mortgage, pledge, transfer or other
disposition, in one transaction or a series of transactions, to or
with an "interested stockholder," of assets:
(i) having an aggregate market value equal to 5% or more of the
aggregate market value of the corporation's assets;
(ii) having an aggregate market value equal to 5% or more of the
aggregate market value of all outstanding shares of the
corporation; or
(iii) representing 10% or more of the earning power or net income of
the corporation;
o any issuance or transfer of shares of the corporation or its
subsidiaries, to the "interested stockholder," having an aggregate
market value equal to 5% or more of the aggregate market value of all
of the outstanding shares of the corporation;
o the adoption of any plan or proposal for the liquidation or
dissolution of the corporation proposed by the "interested
stockholder;"
o certain transactions which would result in increasing the
proportionate share of shares of the corporation owned by the
"interested stockholder;"
o a recapitalization of the corporation; or
o the receipt by an "interested stockholder," except proportionately as
a stockholder, of the benefits of any loans, advances or other
financial benefits provided by the corporation.
An "interested stockholder" is a person who:
o directly or indirectly owns 10% or more of the voting power of the
outstanding voting shares of the corporation or
o an affiliate or associate of the corporation which at any time within
three years before the date in question was the beneficial owner,
directly or indirectly, of 10% or more of the voting power of the then
outstanding shares of the corporation.
A corporation to which the Combinations with Interested Stockholders
statute applies may not engage in a "combination" within three years after the
interested stockholder acquired its shares, unless the combination or the
interested stockholder's acquisition of shares was approved by the board of
directors before the interested stockholder acquired the shares. If this
approval is not obtained, the combination may be consummated after the three
year period expires if either (a)(i) the board of directors of the corporation
approved, prior to such person becoming an interested stockholder, the
combination or the purchase of shares by the interested stockholder or (ii) the
combination is approved by the affirmative vote of holders of a majority of
voting power not beneficially owned by the interested stockholder at a meeting
called no earlier than three years after the date the interested stockholder
became such or (b) the aggregate amount of cash and the market value of
consideration other than cash to be received by holders of shares of common
stock and holders of any other class or series of shares meets the minimum
requirements set forth in the statue, and prior to the completion of the
combination, except in limited circumstances, the "interested stockholder" has
not become the beneficial owner of additional voting shares of the corporation.
Combinations with Interested Stockholders
In addition to the foregoing statute, Nevada has an "Acquisition of
Controlling Interest " statute, which prohibits an acquiror, under certain
circumstances, from voting shares of a target corporation's stock after
27
crossing certain threshold ownership percentages, unless the acquiror obtains
the approval of the target corporation's stockholders. The Acquisition of
Controlling Interest Statute only applies to Nevada corporations with at least
200 stockholders, including at least 100 record stockholders who are Nevada
residents, and which do business directly or indirectly in Nevada and whose
articles of incorporation or bylaws in effect 10 days following the acquisition
of a controlling interest by an acquiror does not prohibit its application. We
do not intend to "do business" in Nevada within the meaning of the Acquisition
of Controlling Interest statute. Therefore, we believe it is unlikely that the
Acquisition of Controlling Interest statute will apply to us. The statute
specifies three thresholds: at least one-fifth but less than one-third, at least
one-third but less than a majority, and a majority or more, of the outstanding
voting power. Once an acquiror crosses one of the above thresholds, shares which
it acquired in the transaction taking it over the threshold or within ninety
days preceding the date thereof become "control shares" which could be deprived
of the right to vote until a majority of the disinterested stockholders restore
that right. A special stockholders' meeting may be called at the request of the
acquiror to consider the voting rights of the acquiror's shares. If the acquiror
requests a special meeting and gives an undertaking to pay the expenses of said
meeting, then the meeting must take place no earlier than 30 days (unless the
acquiror requests that the meeting be held sooner) and no more than 50 days
(unless the acquiror agrees to a later date) after the delivery by the acquiror
to the corporation of an information statement which sets forth the range of
voting power that the acquiror has acquired or proposes to acquire and certain
other information concerning the acquiror and the proposed control share
acquisition. If no such request for a stockholders' meeting is made,
consideration of the voting rights of the acquiror's shares must be taken at the
next special or annual stockholders' meeting. If the stockholders fail to
restore voting rights to the acquiror, or if the acquiror fails to timely
deliver an information statement to the corporation, then the corporation may,
if so provided in its articles or bylaws, call certain of the acquiror's shares
for redemption at the average price paid for the control shares by the acquiror.
Our articles of incorporation and bylaws do not currently permit us to redeem an
acquiror's shares under these circumstances. The Acquisition of Controlling
Interest statute also provides that in the event the stockholders restore full
voting rights to a holder of control shares that owns a majority of the voting
stock, then all other stockholders who do not vote in favor of restoring voting
rights to the control shares may demand payment for the "fair value" of their
shares (which is generally equal to the highest price paid by the acquiror in
the transaction subjecting the acquiror to the statute.)
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is American Stock
Transfer & Trust Company.
DESCRIPTION OF WARRANTS
We may issue warrants to purchase debt or equity securities. Warrants may
be issued independently or together with any other securities and may be
attached to, or separate from, such securities. Each series of warrants will be
issued under a separate warrant agreement to be entered into between us and a
warrant agent. The terms of any warrants to be issued and a description of the
material provisions of the applicable warrant agreement will be set forth in the
applicable prospectus supplement.
The applicable prospectus supplement will specify the following terms of
any warrants in respect of which this prospectus is being delivered:
o the title of such warrants;
o the aggregate number of such warrants;
o the price or prices at which such warrants will be issued;
28
o any changes or adjustments to the exercise price;
o the securities or other rights, including rights to receive payment in
cash or securities based on the value, rate or price of one or more
specified commodities, currencies, securities or indices, or any
combination of the foregoing, purchasable upon exercise of such
warrants;
o the price at which, and the currency or currencies in which the
securities or other rights purchasable upon exercise of, such warrants
may be purchased;
o the date on which the right to exercise such warrants shall commence
and the date on which such right shall expire;
o if applicable, the minimum or maximum amount of such warrants that may
be exercised at any one time;
o if applicable, the designation and terms of the securities with which
such warrants are issued and the number of such warrants issued with
each such security;
o if applicable, the date on and after which such warrants and the
related securities will be separately transferable;
o information with respect to book-entry procedures, if any;
o if applicable, a discussion of any material United States federal
income tax considerations; and
o any other terms of such warrants, including terms, procedures and
limitations relating to the exchange and exercise of such warrants.
DESCRIPTION OF UNITS
As specified in the applicable prospectus supplement, we may issue units
consisting of one or more debt securities, shares of common stock, shares of
preferred stock or warrants or any combination of such securities.
The applicable prospectus supplement will specify the following terms of
any units in respect of which this prospectus is being delivered:
o the terms of the units and of any of the debt securities, common
stock, preferred stock and warrants comprising the units, including
whether and under what circumstances the securities comprising the
units may be traded separately;
o a description of the terms of any unit agreement governing the units;
and
o a description of the provisions for the payment, settlement, transfer
or exchange of the units.
29
PLAN OF DISTRIBUTION
We may sell the securities offered by this prospectus and applicable
prospectus supplements in one or more of the following ways from time to time:
o through underwriters or dealers;
o through agents;
o directly to purchasers, including institutional investors; or
o through a combination of any such methods of sale.
Any such underwriter, dealer or agent may be deemed to be an underwriter
within the meaning of the Securities Act of 1933.
The applicable prospectus supplement relating to the securities will set
forth:
o the offering terms, including the name or names of any underwriters,
dealers or agents;
o the purchase price of the securities and the proceeds to us from such
sales;
o any underwriting discounts, commissions and other items constituting
compensation to underwriters, dealers or agents;
o any initial public offering price, if applicable;
o any discounts or concessions allowed or reallowed or paid by
underwriters or dealers to other dealers;
o in the case of debt securities, the interest rate, maturity and
redemption provisions; and
o any securities exchanges on which the securities may be listed.
If underwriters or dealers are used in the sale, the securities will be
acquired by the underwriters or dealers for their own account and may be resold
from time to time in one or more transactions:
o at a fixed price or prices, which may be changed;
o at market prices prevailing at the time of sale;
o at prices related to such prevailing market prices; or
o at negotiated prices.
The securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more of such firms. Unless otherwise stated in an applicable prospectus
supplement, the obligations of underwriters or dealers to purchase the
securities will be subject to certain customary closing conditions and the
underwriters or dealers will be obligated to purchase all the securities if any
of the securities are purchased. Any public offering price and any discounts or
concessions allowed or reallowed or paid by underwriters or dealers to other
dealers may be changed from time to time.
Securities may be sold directly by us or through agents designated by us
from time to time. Any agent involved in the offer or sale of the securities in
respect of which this prospectus and a prospectus supplement is delivered will
30
be named, and any commissions payable by us to such agent will be set forth, in
the prospectus supplement. Unless otherwise indicated in the prospectus
supplement, any such agent will be acting on a best efforts basis for the period
of its appointment.
If so indicated in the prospectus supplement, we will authorize
underwriters, dealers or agents to solicit offers from certain specified
institutions to purchase securities from us at the public offering price set
forth in the prospectus supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future. Such
contracts will be subject to any conditions set forth in the prospectus
supplement and the prospectus supplement will set forth the commission payable
for solicitation of such contracts. The underwriters and other persons
soliciting such contracts will have no responsibility for the validity or
performance of any such contracts.
Underwriters, dealers and agents may be entitled under agreements entered
into with us to be indemnified by us against certain civil liabilities,
including liabilities under the Securities Act of 1933, or to contribution by us
to payments which they may be required to make. The terms and conditions of such
indemnification will be described in an applicable prospectus supplement.
Underwriters, dealers and agents may be customers of, engage in transactions
with, or perform services for, us in the ordinary course of business.
Each class or series of securities will be a new issue of securities with
no established trading market, other than the common stock, which is listed on
the New York Stock Exchange. We may elect to list any other class or series of
securities on any exchange, other than the common stock, but we are not
obligated to do so. Any underwriters to whom securities are sold by us for
public offering and sale may make a market in such securities, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for any securities.
Certain persons participating in any offering of securities may engage in
transactions that stabilize, maintain or otherwise affect the price of the
securities offered in accordance with Regulation M under the Securities Exchange
Act of 1934. In connection with any such offering, the underwriters or agents,
as the case may be, may purchase and sell securities in the open market. These
transactions may include over- allotment and stabilizing transactions and
purchases to cover syndicate short positions created in connection with the
offering. Stabilizing transactions consist of certain bids or purchases for the
purpose of preventing or retarding a decline in the market price of the
securities; and syndicate short positions involve the sale by the underwriters
or agents, as the case may be, of a greater number of securities than they are
required to purchase from us, as the case may be, in the offering. The
underwriters may also impose a penalty bid, whereby selling concessions allowed
to syndicate members or other broker-dealers for the securities sold for their
account may be reclaimed by the syndicate if such securities are repurchased by
the syndicate in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the securities,
which may be higher than the price that might otherwise prevail in the open
market, and if commenced, may be discontinued at any time. These transactions
may be effected on the New York Stock Exchange in the over-the-counter market or
otherwise. These activities will be described in more detail in the sections
entitled "Plan of Distribution" or "Underwriting" in the applicable prospectus
supplement.
The prospectus supplement or pricing supplement, as applicable, will set
forth the anticipated delivery date of the securities being sold at that time.
LEGAL MATTERS
Locke Liddell & Sapp LLP, will issue an opinion for us regarding the
legality of the securities offered by this prospectus and applicable prospectus
31
supplement. If the securities are being distributed in an underwritten offering,
certain legal matters will be passed upon for the underwriters by counsel
identified in the applicable prospectus supplement.
EXPERTS
Our consolidated financial statements as of December 31, 2001 and 2002, and
for each of the years in the three-year period ended December 31, 2002, have
been incorporated by reference herein in reliance upon the report of KPMG LLP,
independent accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing. The audit report
contains an explanatory note that refers to a restatement of the consolidated
financial statements as of December 31, 2002 and for the two-year period then
ended. The audit report covering the December 31, 2001 consolidated financial
statements also refers to a change in our method for accounting for derivative
financial instruments.
With respect to the unaudited interim financial information for the periods
ended March 31, 2003, incorporated by reference herein, the independent
accountants have reported that they applied limited procedures in accordance
with professional standards for a review of such information. However, their
separate report included in our Quarterly Report on Form 10-Q for the quarter
ended March 31, 2003, and incorporated by reference herein, stated that they did
not audit and they do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their report on such
information should be restricted in light of the limited nature of the review
procedures applied. The accountants are not subject to the liability provisions
of Section 11 of the Securities Act of 1933 for their report on the unaudited
interim financial information because that report is not a "report" or a "part"
of the registration statement prepared or certified by the accountants within
the meaning of Sections 7 and 11 of the Securities Act of 1933. The review
report covering the March 31, 2003 financial statements refers to a change in
the method of accounting for asset retirements obligations related to the
adoption of Statement of Financial Accounting Standards No. 143, "Accounting for
Asset Retirement Obligations."
On May 16, 2003, we filed a Current Report on Form 8-K announcing that our
audit committee engaged Ernst & Young LLP as our independent public
accountants for fiscal 2003, replacing KPMG LLP. The decision to change
independent public accountants was not the result of any disagreement with KPMG
LLP on matters of accounting principles or practices, financial statement
disclosure or auditing scope and procedure. With respect to the unaudited
interim financial information for the periods ended June 30, 2003 and September
30, 2003, which are included in our Form 10-Q`s for the periods ended June 30,
2003 and September 30, 2003 and which are incorporated herein by reference,
Ernst & Young LLP has applied limited procedures in accordance with
professional standards for a review of such information. However, as stated in
their report included in our Quarterly Report on Form 10-Q for the quarter ended
June 30, 2003 and Form 10-Q for the quarter ended September 30, 2003
incorporated by reference herein, they did not audit and they do not express an
opinion on that interim financial information. Accordingly, the degree of
reliance on their report on such information should be restricted in light of
the limited nature of the review procedures applied. Ernst & Young LLP is
not subject to the liability provisions of Section 11 of the Securities Act of
1933 for their reports on the unaudited interim financial information because
those reports are not "reports" or a "part" of the registration statement
prepared or certified by an accountant within the meaning of Sections 7 and 11
of the Securities Act of 1933.
Certain estimates of our oil and natural gas reserves and related
information incorporated by reference in this prospectus have been derived from
engineering reports prepared by Lee Keeling & Associates as of December 31,
2000, 2001 and 2002, and all such information has been so included on the
authority of such firm as an expert regarding the matters contained in its
reports.
32
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934, and therefore we file annual, quarterly and current reports, proxy
statements and other documents with the SEC. You may read and copy any of the
reports, proxy statements and any other information that we file at the SEC's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC- 0330. In addition, the SEC maintains a website at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
We also maintain a website at http://www.comstockresources.com; however, the
information contained at this website does not constitute part of this
prospectus. Reports, proxy and information statements and other information
about us may be inspected at the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
We have filed with the SEC a registration statement on Form S-3 under the
Securities Act of 1933, with respect to the securities offered in this
prospectus. This prospectus is part of that registration statement and, as
permitted by the SEC's rules, does not contain all of the information set forth
in the registration statement. For further information about us and the
securities that may be offered, we refer you to the registration statement and
the exhibits that are filed with it. You can review and copy the registration
statement and its exhibits and schedules from the SEC at the address listed
above or from its web site.
The SEC allows us to "incorporate by reference" into this prospectus
certain information we file with the SEC in other documents. This means that we
can disclose important information to you by referring you to other documents
that we file with the SEC. The information may include documents filed after the
date of this prospectus which update and supersede the information you read in
this prospectus. We incorporate by reference the documents listed below, except
to the extent information in those documents is different from the information
contained in this prospectus, and all future documents filed by us with the SEC
under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
until the offering of the securities described herein is terminated:
o Our Annual Report on Form 10-K for the year ended December 31, 2002;
o Our Quarterly Report on Form 10-Q for the three months ended March 31,
2003;
o Our Quarterly Report on Form 10-Q for the six months ended June 30,
2003;
o Our Quarterly Report on Form 10-Q for the nine months ended September
30, 2003;
o Our Proxy Statement on Schedule 14A filed with the SEC on April 22,
2003 for the 2003 annual meeting of stockholders;
o Our Current Report on Form 8-K dated February 18, 2003;
o Our Current Report on Form 8-K dated March 21, 2003;
o Our Current Report on Form 8-K dated May 7, 2003;
o Our Current Report on Form 8-K dated May 5, 2003;
o Our Current Report on Form 8-K dated May 13, 2003;
o Our Current Report on Form 8-K dated May 16, 2003;
33
o Our Current Report on Form 8-K dated August 7, 2003;
o Our Current Report on Form 8-K dated November 5, 2003;
o Our Current Report on Form 8-K/A dated November 7, 2003; and
o Our Registration Statement on Form 8-A registering our common stock
filed with the SEC on September 6, 1996.
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this prospectus shall be deemed modified,
superseded or replaced for purposes of this prospectus to the extent that a
statement contained in this prospectus or in any subsequently filed document
that also is or is deemed to be incorporated by reference in this prospectus
modifies, supersedes or replaces such statement. Any statement so modified,
superseded or replaced shall not be deemed, except as so modified, superseded or
replaced, to constitute a part of this prospectus.
We will provide without charge to each person, including any beneficial
owner, to whom a copy of this prospectus is delivered, upon that person's
written or oral request, a copy of any or all of the information incorporated by
reference in this prospectus (other than exhibits to those documents, unless the
exhibits are specifically incorporated by reference into the information that
this prospectus incorporates). Requests should be directed to:
Comstock Resources, Inc.
Attention: Roland O. Burns, Senior Vice President
5300 Town and County Blvd., Suite 500
Frisco, Texas 75034
Telephone number: (972) 668-8800
34
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses, other than selling
or underwriting discounts and commissions, to be incurred by us in connection
with the issuance and distribution of the securities being registered hereby.
With the exception of the SEC registration fee, all fees and expenses set forth
below are estimates.
SEC registration fee $ 24,270
Printing and engraving expenses 40,000
Legal fees and expenses 20,000
Trustee fees and expenses 5,000
Rating agency fees 50,000
Accounting fees and expenses 15,000
Miscellaneous 5,730
--------
Total $160,000
========
Item 15. Indemnification of Directors and Officers.
Section 78.7502 of the General Corporation Law of Nevada permits a
corporation to indemnify any person who was, or is, or is threatened to be made
a party in a completed, pending or threatened proceeding, whether civil,
criminal, administrative or investigative (except an action by or in the right
of the corporation), by reason of being or having been an officer, director,
employee or agent of the corporation or serving in certain capacities at the
request of the corporation. Indemnification may include attorneys' fees,
judgments, fines and amounts paid in settlement. The person to be indemnified
must have acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the corporation and, with respect
to any criminal action, such person must have had no reasonable cause to believe
his or her conduct was unlawful.
With respect to actions by or in the right of the corporation,
indemnification may not be made for any claim, issue or matter as to which such
a person has been finally adjudged by a court of competent jurisdiction to be
liable to the corporation or for amounts paid in settlement to the corporation,
unless and only to the extent that the court in which the action was brought or
other court of competent jurisdiction determines upon application that in view
of all circumstances the person is fairly and reasonably entitled to indemnity
for such expenses as the court deems proper.
Unless indemnification is ordered by a court, the determination to pay
indemnification must be made by the stockholders, by a majority vote of a quorum
of our board of directors who were not parties to the action, suit or
proceeding, or in certain circumstances by independent legal counsel in a
written opinion. Section 78.751 of the General Corporation law of Nevada permits
the articles of incorporation or bylaws to provide for payment to an indemnified
person of the expenses of defending an action as incurred upon receipt of an
undertaking to repay the amount if it is ultimately determined by a court of
competent jurisdiction that the person is not entitled to indemnification.
II-1
Section 78.7502 also provides that to the extent a director, officer,
employee or agent has been successful on the merits or otherwise in the defense
of any such action, he or she must be indemnified by the corporation against
expenses, including attorneys' fees, actually and reasonably incurred in
connection with the defense.
Article VI, "Indemnification of Directors, Officers, Employees and Agents",
of our bylaws provides as follows with respect to indemnification of our
directors, officers, employees and agents:
"Section 1. To the fullest extent allowed by Nevada law, any director of
the Corporation shall not be liable to the Corporation or its stockholders for
monetary damages for an act or omission in the director's capacity as a
director, except that this Article VI does not eliminate or limit the liability
of a director for:
(a) an act or omission which involves intentional misconduct,
fraud or a knowing violation of law; or
(b) the payment of dividends in violation of N.R.S. 78.300.
Section 2. The Corporation shall indemnify each director, officer, employee
and agent, now or hereafter serving the Corporation, each former director,
officer, employee and agent, and each person who may now or hereafter serve or
who may have heretofore served at the Corporation's request as a director,
officer, employee or agent of another corporation or other business enterprise,
and the respective heirs, executors, administrators and personal representatives
of each of them against all expenses actually and reasonably incurred by, or
imposed upon, him in connection with the defense of any claim, action, suit or
proceeding, civil or criminal, against him by reason of his being or having been
such director, officer, employee or agent, except in relation to such matters as
to which he shall be adjudged by a court of competent jurisdiction after
exhaustion of all appeals therefrom in such action, suit or proceeding to be
liable for gross negligence or willful misconduct in the performance of duty.
For purposes hereof, the term "expenses" shall include but not be limited to all
expenses, costs, attorneys' fees, judgements (including adjudications other than
on the merits), fines, penalties, arbitration awards, costs of arbitration and
sums paid out and liabilities actually and reasonably incurred or imposed in
connection with any suit, claim, action or proceeding, and any settlement or
compromise thereof approved by the Board of Directors as being in the best
interests of the Corporation. However, in any case in which there is no
disinterested majority of the Board of Directors available, the indemnification
shall be made: (1) only if the Corporation shall be advised in writing by
counsel that in the opinion of counsel (a) such officer, director, employee or
agent was not adjudged or found liable for gross negligence or willful
misconduct in the performance of duty as such director, officer, employee or
agent or the indemnification provided is only in connection with such matters as
to which the person to be indemnified was not so liable, and in the case of
settlement or compromise, the same is in the best interests of the Corporation;
and (b) indemnification under the circumstances is lawful and falls within the
provisions of these Bylaws; and (2) only in such amount as counsel shall advise
the Corporation in writing is, in his opinion, proper. In making or refusing to
make any payment under this or any other provision of these Bylaws, the
Corporation, its directors, officers, employees and agents shall be fully
protected if they rely upon the written opinion of counsel selected by, or in
the manner designated by, the Board of Directors.
Section 3. Expenses incurred in defending a civil or criminal action, suit
or proceeding may be paid by the Corporation in advance of the final disposition
of such action, suit or proceeding as authorized by the Board of Directors upon
receipt of an undertaking by or on behalf of the director, officer, employee or
agent to repay such amount unless it shall ultimately be determined that he is
entitled to be indemnified by the Corporation as authorized in these Bylaws.
II-2
Section 4. The Corporation may indemnify each person, though he is not or
was not a director, officer, employee or agent of the Corporation, who served at
the request of the Corporation on a committee created by the Board of Directors
to consider and report to it in respect of any matter. Any such indemnification
may be made under the provisions hereof and shall be subject to the limitations
hereof, except that (as indicated) any such committee member need not be nor
have been a director, officer, employee or agent of the Corporation.
Section 5. The provisions hereof shall be applicable to actions, suits or
proceedings (including appeals) commenced after the adoption hereof, whether
arising from acts or omissions to act occurring before or after the adoption
hereof.
Section 6. The indemnification provisions herein provided shall not be
deemed exclusive of any other rights to which those indemnified may be entitled
under any bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, or by law or statute, both as to action in his official capacity and
as to action in another capacity while holding such office, and shall continue
as to a person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
Section 7. The Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, and persons described in Section 4 of this
Article VI above, against any liability asserted against him and incurred by him
in any such capacity or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provisions of these Bylaws."
Item 16. Exhibits.
Exhibit No. Description
1.1** Form of Underwriting Agreement for each of the securities
registered hereby.
3.1(a) Restated Articles of Incorporation of Comstock
(incorporated by reference to Exhibit 3.1 to Comstock's
Annual Report on Form 10-K for the year ended December 31,
1995).
3.1(b) Certificate of Amendment to the Restated Articles of
Incorporation of Comstock dated July 1, 1997 (incorporated
herein by reference to Exhibit 3.1 to Comstock's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997).
3.2 Bylaws of Comstock (incorporated by reference to Exhibit 3.2
to Comstock's Registration Statement on Form S-3, dated
October 25, 1996).
4.1* Specimen Stock Certificate.
4.2 Rights Agreement dated as of December 14, 2000, by and
between Comstock and American Stock Transfer and Trust
Company, as Rights Agent (incorporated herein by reference
to Exhibit 1 to our Registration Statement on Form 8-A dated
January 11, 2001).
4.3 Certificate of Designation, Preferences and Rights of Series
B Junior Participating Preferred Stock (incorporated herein
by reference to Exhibit 2 to our Registration Statement on
Form 8-A dated January 11, 2001).
II-3
4.4 Indenture dated April 29, 1999 between Comstock, the
subsidiary guarantors party thereto, and U.S. Trust Company
of Texas, N.A., Trustee for the 11 1/4 % Senior Notes due
2007 (incorporated herein by reference to Exhibit 10.5 to
our Current Report on Form 8-K dated April 29, 1999).
4.5 First Supplemental Indenture, dated March 7, 2002, between
Comstock, the subsidiary guarantors party thereto, and U.S.
Trust Company of Texas, N.A., Trustee for the 11 1/4% Senior
Notes due 2007 (incorporated by reference to Exhibit 4.1 to
our Current Report on Form 8-K dated March 12, 2002).
4.6* Form of Indenture between Comstock Resources, Inc. and
Trustee to be designated therein covering Debt Securities to
be offered hereunder, including form of Note or Debenture
attached thereto.
4.7** Form of Certificate of Designation for Preferred Stock,
including specimen certificate.
4.8** Form of Warrant Agreement covering Common Stock Warrants to
be offered hereunder, including Form of Common Stock Warrant
attached thereto.
5.1* Opinion of Locke Liddell & Sapp LLP as to the validity of
the securities being registered hereunder.
12.1* Computation of Ratio of Earnings to Fixed Charges.
15.1* Letter of Ernst & Young LLP as to unaudited interim
financial information.
15.2* Letter of KPMG LLP as to unaudited interim
financial information.
23.1* Consent of Locke Liddell & Sapp LLP (Included in Exhibit
5.1).
23.2* Consent of KPMG LLP.
24.1* Power of Attorney (Included on the Signature Page to the
Registration Statement).
25** Statement on Form T-1 of eligibility of Trustee for the Debt
Securities.
-----------------
* Filed herewith.
** To be filed by amendment or on Form 8-K.
II-4
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in this registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15 (d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the Company's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of 1933
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act of 1933
and will be governed by the final adjudication of such issue.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Frisco, State of Texas, on December 16, 2003.
COMSTOCK RESOURCES, INC.
By: /s/M. JAY ALLISON
--------------------
M. Jay Allison
President and Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints M. Jay Allison and Roland O. Burns, each
his true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and any registration statement related to the
offering contemplated by this registration statement that is to be effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission and any state or other
securities authority, granting unto each said attorney-in-fact and agent full
power and authority to do and perform each and every act in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or either
of them or their or his substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/M. JAY ALLISON President, Chief Executive Officer, December 16, 2003
-------------------- Chairman of the Board of Directors,
M. Jay Allison Director (Principal Executive Office)
/s/ROLAND O. BURNS Senior Vice President, Chief Financial December 16, 2003
-------------------- Officer, Director (Principal Financial
Roland O. Burns and Accounting Officer)
/s/DAVID K. LOCKETT Director December 16, 2003
--------------------
David K. Lockett
/s/CECIL E. MARTIN, JR. Director December 16, 2003
--------------------
Cecil E. Martin, Jr.
/s/DAVID W. SLEDGE Director December 16, 2003
--------------------
David W. Sledge
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Frisco, State of Texas,
on December 16, 2003
COMSTOCK OIL & GAS, INC.
By: /s/M. JAY ALLISON
--------------------
M. Jay Allison
President and Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints M. Jay Allison and Roland O. Burns, each
his true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and any registration statement related to the
offering contemplated by this registration statement that is to be effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission and any state or other
securities authority, granting unto each said attorney-in-fact and agent full
power and authority to do and perform each and every act in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or either
of them or their or his substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/M. JAY ALLISON President, Chief Executive Officer, December 16, 2003
-------------------- Chairman of the Board of Directors,
M. Jay Allison Director (Principal Executive Office)
/s/ROLAND O. BURNS Senior Vice President, Chief Financial December 16, 2003
-------------------- Officer, Director (Principal Financial
Roland O. Burns and Accounting Officer)
/s/DAVID K. LOCKETT Director December 16, 2003
--------------------
David K. Lockett
/s/CECIL E. MARTIN, JR. Director December 16, 2003
--------------------
Cecil E. Martin, Jr.
/s/DAVID W. SLEDGE Director December 16, 2003
--------------------
David W. Sledge
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Frisco, State of Texas,
on December 16, 2003
COMSTOCK OIL & GAS - LOUISIANA, LLC
By: /s/M. JAY ALLISON
-------------------------
M. Jay Allison
President and Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints M. Jay Allison and Roland O. Burns, each
his true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and any registration statement related to the
offering contemplated by this registration statement that is to be effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission and any state or other
securities authority, granting unto each said attorney-in-fact and agent full
power and authority to do and perform each and every act in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or either
of them or their or his substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/M. JAY ALLISON President, Chief Executive Officer, December 16, 2003
-------------------- Chairman of the Board of Managers
M. Jay Allison (Principal Executive Officer)
/s/ROLAND O. BURNS Senior Vice President, Chief Financial December 16, 2003
-------------------- Officer, Secretary, Treasurer and Manager
Roland O. Burns (Principal Financial and Accounting Officer)
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Frisco, State of Texas,
on December 16, 2003.
COMSTOCK OFFSHORE, LLC
By: /s/M. JAY ALLISON
-------------------------
M. Jay Allison
President and Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints M. Jay Allison and Roland O. Burns, each
his true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and any registration statement related to the
offering contemplated by this registration statement that is to be effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission and any state or other
securities authority, granting unto each said attorney-in-fact and agent full
power and authority to do and perform each and every act in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or either
of them or their or his substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/M. JAY ALLISON President, Chief Executive Officer, December 16, 2003
-------------------- Chairman of the Board of Managers
M. Jay Allison (Principal Executive Officer)
/s/ROLAND O. BURNS Senior Vice President, Chief Financial December 16, 2003
-------------------- Officer, Secretary, Treasurer and Manager
Roland O. Burns (Principal Financial and Accounting Officer)
II-9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Frisco, State of Texas,
on December 16, 2003
COMSTOCK OIL & GAS HOLDINGS, INC.
By: /s/M. JAY ALLISON
--------------------
M. Jay Allison
President and Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints M. Jay Allison and Roland O. Burns, each
his true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and any registration statement related to the
offering contemplated by this registration statement that is to be effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission and any state or other
securities authority, granting unto each said attorney-in-fact and agent full
power and authority to do and perform each and every act in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or either
of them or their or his substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/M. JAY ALLISON President, Chief Executive Officer, December 16, 2003
-------------------- Chairman of the Board of Directors,
M. Jay Allison Director (Principal Executive Office)
/s/ROLAND O. BURNS Senior Vice President, Chief Financial December 16, 2003
-------------------- Officer, Director (Principal Financial
Roland O. Burns and Accounting Officer)
/s/DAVID K. LOCKETT Director December 16, 2003
--------------------
David K. Lockett
/s/CECIL E. MARTIN, JR. Director December 16, 2003
--------------------
Cecil E. Martin, Jr.
/s/DAVID W. SLEDGE Director December 16, 2003
--------------------
David W. Sledge
II-10