What changed in this filing

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Item 1. Financial Statements

2021-11-04 compared with 2021-08-05 · 107 added, 87 removed, 497 unchanged (28% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30,

2021 December 31,

ASSETS (In thousands)

(In thousands)

Cash and cash equivalents $ 27,841 $ 30,272

39 unchanged sentences

Mezzanine equity:

Series B 10 % Convertible Preferred stock — 5,000,000 shares authorized, 175,000 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

Series B 10 % Convertible Preferred stock — 5,000,000 shares authorized, 175,000 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

175,000 175,000

Stockholders' equity:

Common stock—$ 0.50 par, 400,000,000 shares authorized, 232,850,477 and 232,414,718 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

Common stock—$ 0.50 par, 400,000,000 shares authorized, 232,924,646 and 232,414,718 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

116,462 116,206

9 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

21 unchanged sentences

Other income (expenses):

Gain (loss) from derivative financial instruments ( 223,958 ) ( 12,298 ) ( 245,707 ) 49,601

Other income (expense) 530 ( 9 ) 811 304

Loss from derivative financial instruments ( 510,319 ) ( 121,579 ) ( 756,026 ) ( 71,978 )

Other expense 197 489 1,008 793

Interest expense

4 unchanged sentences

Loss before income taxes ( 264,330 ) ( 172,615 ) ( 676,294 ) ( 180,517 )

Benefit from income taxes 68,177 11,445 98,144 54

Benefit from (provision for) income taxes ( 23,976 ) 46,123 74,168 46,177

Net loss ( 288,306 ) ( 126,492 ) ( 602,126 ) ( 134,340 )

31 unchanged sentences

Balance at June 30, 2020 232,580 $ 116,290 $ 1,092,662 $ 108,549 $ 1,317,501

Stock-based compensation ( 46 ) ( 22 ) 1,774 — 1,752

Income tax withholdings on equity awards ( 113 ) ( 58 ) ( 619 ) — ( 677 )

Stock issuance costs — — ( 6 ) — ( 6 )

Net loss — — — ( 126,492 ) ( 126,492 )

Payment of preferred dividends — — — ( 4,398 ) ( 4,398 )

Balance at September 30, 2020 232,421 $ 116,210 $ 1,093,811 $ ( 22,341 ) $ 1,187,680

Balance at January 1, 2021 232,415 $ 116,206 $ 1,095,384 $ 55,183 $ 1,266,773

17 unchanged sentences

Balance at June 30, 2021 232,850 $ 116,425 $ 1,098,300 $ ( 267,315 ) $ 947,410

Stock-based compensation 298 149 1,653 — 1,802

Income tax withholdings on equity awards ( 223 ) ( 112 ) ( 1,102 ) — ( 1,214 )

Net loss — — — ( 288,306 ) ( 288,306 )

Payment of preferred dividends — — — ( 4,411 ) ( 4,411 )

Balance at September 30, 2021 232,925 $ 116,462 $ 1,098,851 $ ( 560,032 ) $ 655,281

The accompanying notes are an integral part of these statements.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands)

7 unchanged sentences

359,313 312,828

(Gain) loss on derivative financial instruments 245,707 ( 49,601 )

Loss on derivative financial instruments 756,026 71,978

Cash settlements of derivative financial instruments

5 unchanged sentences

(Increase) decrease in accounts receivable ( 97,379 ) 79,382

(Increase) decrease in other current assets 5,528 ( 2,803 )

Decrease in other current assets 850 8,291

Increase (decrease) in accounts payable and accrued expenses 56,689 ( 64,303 )

23 unchanged sentences

Net cash used for financing activities ( 113,194 ) ( 47,874 )

Net decrease in cash and cash equivalents ( 10,545 ) ( 6,937 )

Net increase (decrease) in cash and cash equivalents ( 2,431 ) 9,736

Cash and cash equivalents, beginning of period

6 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021

September 30, 2021

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –

2 unchanged sentences

and its wholly-owned subsidiaries (collectively, "Comstock" or the "Company").

In management's opinion, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position of Comstock as of June 30, 2021, and the related results of operations and cash flows for the periods being presented.

In management's opinion, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position of Comstock as of September 30, 2021, and the related results of operations and cash flows for the periods being presented.

Net income and comprehensive income are the same in all periods presented.

All adjustments are of a normal recurring nature unless otherwise disclosed.

Certain amounts in prior periods have been reclassified to conform with current period presentation.

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission.

1 unchanged sentence

These unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in Comstock's Annual Report on Form 10-K for the year ended December 31, 2020.

The results of operations for the period through June 30, 2021 are not necessarily an indication of the results expected for the full year.

The results of operations for the period through September 30, 2021 are not necessarily an indication of the results expected for the full year.

Property and Equipment

15 unchanged sentences

As a result of these changes, there may be future impairments in the carrying values of these or other properties.

The Company had goodwill of $ 335.9 million as of June 30, 2021 that was recorded in 2018.

The Company had goodwill of $ 335.9 million as of September 30, 2021 that was recorded in 2018.

The Company is not required to amortize goodwill as a charge to earnings;

however, the Company is required to conduct an annual review of goodwill for impairment.

The Company performs an annual assessment of goodwill on October 1 st of each year and performs interim assessments if indicators of impairment are present.

however, the Company is required to conduct an annual review of

goodwill for impairment.

The Company performs an annual assessment of goodwill on October 1 of each year and performs interim assessments if indicators of impairment are present.

If the carrying value of goodwill exceeds the fair value, an impairment charge would be recorded for the difference between fair value and carrying value.

16 unchanged sentences

The costs associated with drilling rig operations are accounted for under the successful efforts method, which generally require that these costs be capitalized as part of our proved oil and natural gas properties on our balance sheet unless they are incurred on exploration wells that are unsuccessful, in which case they are charged to exploration expense.

Lease costs recognized during the three months and six months ended June 30, 2021 were as follows:

Three Months Ended

June 30, 2021 Six Months Ended

June 30, 2021

Lease costs recognized during the three months and nine months ended September 30, 2021 and 2020 were as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

(In thousands)

1 unchanged sentence

Operating lease cost included in lease operating expense 218 229 640 578

Short-term lease cost (drilling rig costs included in proved oil and gas properties) 7,659 19,243

Short-term lease cost (drilling rig costs included in proved oil

and gas properties) 8,239 7,324 27,482 26,605

$ 8,892 $ 7,975 $ 29,421 $ 28,432

Cash payments for operating leases associated with right-of-use assets included in cash provided by operating activities were $ 625 thousand and $ 1.3 million for the three months and six months ended June 30, 2021.

As of June 30, 2021, expected future payments related to contracts that contain operating leases were as follows:

Cash payments for operating leases associated with right-of-use assets included in cash provided by operating activities were $ 0.7 million in each of the three months ended September 30, 2021 and 2020, and $ 1.9 million and $ 1.8 million for the nine months ended September 30, 2021 and 2020, respectively.

As of September 30, 2021, expected future payments related to contracts that contain operating leases were as follows:

(In thousands)

July 1 to December 31, 2021 $ 1,141

October 1 to December 31, 2021 $ 552

Total lease payments

2 unchanged sentences

The weighted average term of these operating leases was 3.0 years and the weighted average interest rate used in lease computations was 2.7 %.

As of June 30, 2021, the Company also had expected future payments for contracted drilling services of $ 4.8 million.

As of September 30, 2021, the Company also had expected future payments for contracted drilling services of $ 4.3 million.

Accrued Costs

Accrued costs at June 30, 2021 and December 31, 2020 consisted of the following:

Accrued costs at September 30, 2021 and December 31, 2020 consisted of the following:

As of September 30, 2021 As of

December 31, 2020

1 unchanged sentence

Accrued interest payable $ 28,956 $ 67,265

Accrued capital expenditures 25,744 24,959

Accrued transportation costs 24,703 25,353

Accrued employee compensation 7,562 7,519

Accrued ad valorem taxes 6,000 —

Accrued capital expenditures 21,938 24,959

Accrued income and other taxes 12,595 2,168

Accrued ad valorem taxes 9,000 —

Accrued employee compensation 6,518 7,519

Accrued lease operating expenses 2,685 3,466

4 unchanged sentences

The following table summarizes the changes in Comstock's total estimated liability for such obligations during the periods presented:

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

7 unchanged sentences

Comstock minimizes credit risk to counterparties of its derivative financial instruments through formal credit policies, monitoring procedures, and diversification.

The Company is not required to provide

any credit support to its counterparties other than cross collateralization with the assets securing its bank credit facility.

The Company is not required to provide any credit support to its counterparties other than cross collateralization with the assets securing its bank credit facility.

None of the Company's derivative financial instruments involve payment or receipt of premiums.

1 unchanged sentence

All of Comstock's natural gas derivative financial instruments, except for certain basis swaps, are tied to the Henry Hub-NYMEX price index and all of its crude oil derivative financial instruments are tied to the WTI-NYMEX index price.

The Company had the following oil and natural gas price derivative financial instruments at June 30, 2021:

The Company had the following oil and natural gas price derivative financial instruments at September 30, 2021:

Future Production Period

Six Months Ending December 31, 2021 Year Ending December 31, 2022 Year Ending December 31, 2023 Total

Three Months Ending December 31, 2021 Year Ending December 31, 2022 Year Ending December 31, 2023 Total

Natural Gas Swap Contracts:

29 unchanged sentences

_____________________________

(1) For the six months ending December 31, 2021, natural gas price swap contracts include 22,080,000 MMBtu at an average price of $ 2.51 that are part of certain natural gas price swaption contracts which include a call to extend the price swap by the counterparty as described in (2) below.

(2) The counterparty has the right to exercise a call option to enter into a price swap with the Company on 43,800,000 MMBtu in 2022 at an average price $ 2.51 .

The call option expires for 36,500,000 MMBtu at an average price of $ 2.52 in October 2021 and 7,300,000 MMBtu at an average price of $ 2.50 in November 2021.

(1) For the three months ending December 31, 2021, natural gas price swap contracts include 11,040,000 MMBtu at an average price of $ 2.51 that are part of certain natural gas price swaption contracts which include a call to extend the price swap by the counterparty as described in (2) below.

(2) The counterparties have the right to exercise a call option to enter into a price swap with the Company on 43,800,000 MMBtu in 2022 at an average price $ 2.51 .

The call option was exercised for 36,500,000 MMBtu at an average price of $ 2.52 on October 29, 2021 and the call option on 7,300,000 MMBtu at an average price of $ 2.50 expires on November 26, 2021.

(3) Contracts fix the differential between NYMEX Henry Hub and the Houston Ship Channel indices.

1 unchanged sentence

These contracts settle monthly through April 2023.

The fair value of these contracts was a net liability of $ 1.0 million at June 30, 2021.

The fair value of these contracts was a net liability of $ 0.9 million at September 30, 2021.

None of the Company's derivative contracts were designated as cash flow hedges.

1 unchanged sentence

The classification of derivative financial instruments between assets and liabilities, consists of the following:

Type Consolidated Balance Sheet Location June 30,

2021 December 31, 2020

Type Consolidated Balance Sheet Location September 30, 2021 December 31, 2020

(in thousands)

16 unchanged sentences

Gain (Loss) on Derivatives

Recognized in Earnings Three Months Ended June 30, Six Months Ended June 30,

Recognized in Earnings Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

4 unchanged sentences

$ ( 510,319 ) $ ( 121,579 ) $ ( 756,026 ) $ ( 71,978 )

Subsequent to June 30, 2021, the Company entered into natural gas swap contracts to hedge 2,750,000 MMBtu of natural gas production from April 2022 to December 2022 at an average price of $ 3.00 per MMBtu.

The Company also entered into natural gas collar contracts to hedge 6,350,000 MMBtu of natural gas production from January 2022 to December 2022 at an average floor price of $ 2.85 per MMBtu and an average ceiling price of $ 5.13 per MMBtu.

Stock-Based Compensation

1 unchanged sentence

Compensation cost is measured at the grant date based on the fair value of the award and is recognized over the award vesting period and included in general and administrative expenses for awards of restricted stock and performance stock units ("PSUs") to the Company's employees and directors.

The Company recognized $ 1.8 million and $ 1.6 million of stock-based compensation expense within general and administrative expenses related to awards of restricted stock and PSUs to its employees and directors during the three months ended June 30, 2021 and 2020, respectively, and $ 3.5 million and $ 3.0 million for the six months ended June 30, 2021 and 2020, respectively.

On June 8, 2021, the Company granted 473,162 shares of restricted stock to its employees and directors with a per share value of $ 6.05 .

As of June 30, 2021, Comstock had 1,305,368 shares of unvested restricted stock outstanding at a weighted average grant date fair value of $ 5.96 per share.

Total unrecognized compensation cost related to unvested restricted stock grants of $ 5.7 million as of June 30, 2021 is expected to be recognized over a period of 2.1 years.

On June 8, 2021, the Company granted 220,929 PSUs to its officers with a per unit value of $ 8.56 .

As of June 30, 2021, Comstock had 1,357,417 PSUs outstanding at a weighted average grant date fair value of $ 9.21 per unit.

The number of shares of common stock to be issued related to the PSUs is based on the Company's stock price performance as compared to its peers which could result in the issuance of anywhere from zero to 2,714,834 shares of common stock.

Total unrecognized compensation cost related to these grants of $ 5.0 million as of June 30, 2021 is expected to be recognized over a period of 2.0 years.

The Company recognized $ 1.8 million of stock-based compensation expense within general and administrative expenses related to awards of restricted stock and PSUs to its employees and directors during each of the three months ended September 30, 2021 and 2020, and $ 5.3 million and $ 4.7 million for the nine months ended September 30, 2021 and 2020, respectively.

As of September 30, 2021, Comstock had 952,971 shares of unvested restricted stock outstanding at a weighted average grant date fair value of $ 5.74 per share.

Total unrecognized compensation cost related to unvested restricted stock grants of $ 4.7 million as of September 30, 2021 is expected to be recognized over a period of 1.9 years.

As of September 30, 2021, Comstock had 1,049,910 PSUs outstanding at a weighted average grant date fair value of $ 8.11 per unit.

The number of shares of common stock to be issued related to the PSUs is based on the Company's stock price

performance as compared to its peers which could result in the issuance of anywhere from zero to 2,099,820 shares of common stock.

Total unrecognized compensation cost related to these grants of $ 4.2 million as of September 30, 2021 is expected to be recognized over a period of 1.8 years.

Revenue Recognition

12 unchanged sentences

The amount of oil or natural gas sold may differ from the amount to which the Company is entitled based on its revenue interests in the properties.

The Company did not have any significant imbalance positions at June 30, 2021.

The Company did not have any significant imbalance positions at September 30, 2021.

Sales of oil and natural gas generally occur at or near the wellhead.

When sales of oil and gas occur at locations other than the wellhead, the Company accounts for costs incurred to transport the production to the delivery point as gathering and transportation expenses.

The Company recognized accounts receivable of $ 144.4 million as of June 30, 2021 from customers for contracts where performance obligations have been satisfied and an unconditional right to consideration exists.

The Company recognized accounts receivable of $ 213.7 million as of September 30, 2021 from customers for contracts where performance obligations have been satisfied and an unconditional right to consideration exists.

Credit Losses

4 unchanged sentences

The Company has not had any significant credit losses in the past and believes its accounts receivable are fully collectible.

Accordingly, no allowance for doubtful accounts has been recorded for the six months ended June 30, 2021 and 2020.

Accordingly, no allowance for doubtful accounts has been recorded for the nine months ended September 30, 2021 and 2020.

Deferred income taxes are provided to reflect the future tax consequences or benefits of differences between the tax basis of assets and liabilities and their reported amounts in the financial statements using enacted tax rates.

1 unchanged sentence

The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those deferred income tax assets would be deductible.

The Company believes that after considering all the available objective evidence, historical and prospective, with greater weight given to historical evidence, management is not able to determine that it is more likely than not that all of its deferred tax assets

will be realized.

As a result, the Company established valuation allowances for its deferred tax assets and U.S.

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

1 unchanged sentence

Tax effect of:

Change in Louisiana tax law 43.1 — 8.3 —

Valuation allowance on deferred tax assets ( 58.3 ) 1.5 ( 13.3 ) 1.0

10.9 ( 0.8 ) ( 7.6 ) 5.2

State income taxes, net of federal benefit

2 unchanged sentences

( 0.9 ) ( 1.0 ) ( 0.3 ) ( 0.8 )

Change in Louisiana tax law ( 8.8 ) — 9.0 —

Effective tax rate ( 9.1 ) % 26.7 % 11.0 % 25.6 %

Effective June 30, 2021, the State of Louisiana enacted a new law, which provides that all NOL deductions claimed on any corporate income tax return filed on or after January 1, 2022 for NOLs relating to loss years on or after January 1, 2001 may be carried forward indefinitely, until such losses are fully recovered.

The restoration of future NOLs previously expected to lapse due to limitation rules now serve as a tax benefit to the Company, subject to other limitations.

The income tax provision for the three months ended September 30, 2021 is attributable to revisions to the estimated future utilization of federal and state net operating loss carryforwards resulting from the loss from derivative financial instruments that was recognized in the period.

The Company's federal income tax returns for the years subsequent to December 31, 2016 remain subject to examination.

9 unchanged sentences

Level 2 — Inputs used to measure fair value, other than quoted prices included in Level 1, are either directly or indirectly observable as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active.

includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument.

Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument.

Level 3 — Inputs used to measure fair value are unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment.

3 unchanged sentences

The following is a reconciliation of the beginning and ending balances for derivative instruments classified as Level 3 in the fair value hierarchy:

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

Balance at beginning of year $ ( 22,588 ) $ 4,351

Total gain (loss) included in earnings ( 30,262 ) 11,454

Total unrealized loss included in earnings (1)

( 113,018 ) ( 27,450 )

Settlements, net (1)

2 unchanged sentences

Balance at end of period $ ( 120,143 ) $ ( 56,242 )

_____________________________

(1) Unrealized gains and losses and net settlements are reported as part of loss from derivative financial instruments on the accompanying consolidated statements of operations.

Fair Values – Reported

The following presents the carrying amounts and the fair values of the Company's financial instruments as of June 30, 2021 and December 31, 2020:

June 30, 2021 December 31, 2020

The following presents the carrying amounts and the fair values of the Company's financial instruments as of September 30, 2021 and December 31, 2020:

September 30, 2021 December 31, 2020

Carrying Value Fair Value Carrying Value Fair Value

19 unchanged sentences

(2) The carrying value of our floating rate debt outstanding approximates fair value.

(3) The fair value of the Company's fixed rate debt was based on quoted prices as of June 30, 2021 and December 31, 2020, respectively, a Level 1 measurement.

(3) The fair value of the Company's fixed rate debt was based on quoted prices as of September 30, 2021 and December 31, 2020, respectively, a Level 1 measurement.

Earnings Per Share

Unvested restricted stock containing non-forfeitable rights to dividends are included in common stock outstanding and are considered to be participating securities and included in the computation of basic and diluted earnings per share pursuant to the two-class method.

At June 30, 2021 and December 31, 2020, 1,305,368 and 1,038,006 shares of restricted stock, respectively, are included in common stock outstanding as such shares have a non-forfeitable right to participate in any dividends that might be declared and have the right to vote on matters submitted to the Company's stockholders.

At September 30, 2021 and December 31, 2020, 952,971 and 1,038,006 shares of restricted stock, respectively, are included in common stock outstanding as such shares have a non-forfeitable right to participate in any dividends that might be declared and have the right to vote on matters submitted to the Company's stockholders.

Weighted average shares of unvested restricted stock outstanding were as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

2 unchanged sentences

None of the Company's participating securities participate in losses and as such are excluded from the computation of basic earnings per share during periods of net losses.

Basic and diluted per share amounts are the same for the three months and six months ended June 30, 2021 and 2020 due to the net losses in the periods.

Basic and diluted per share amounts are the same for the three months and nine months ended September 30, 2021 and 2020 due to the net losses in the periods.

Supplementary Information with Respect to the Consolidated Statements of Cash Flows

Cash payments made for interest and income taxes and other non-cash investing activities for the six months ended June 30, 2021 and 2020, respectively, were as follows:

Six Months Ended

Cash payments made for interest and income taxes and other non-cash investing activities for the nine months ended September 30, 2021 and 2020, respectively, were as follows:

Nine Months Ended

September 30,

(In thousands)

8 unchanged sentences

(2) LONG-TERM DEBT

At June 30, 2021, long-term debt was comprised of the following:

At September 30, 2021, long-term debt was comprised of the following:

(In thousands)

8 unchanged sentences

Debt issuance costs, net of amortization ( 40,094 )

As of June 30, 2021, the Company had $ 475.0 million outstanding under a bank credit facility with a $ 1.4 billion committed borrowing base which is re-determined on a semi-annual basis and upon the occurrence of certain other events and matures on July 16, 2024.

As of September 30, 2021, the Company had $ 425.0 million outstanding under a bank credit facility with a $ 1.4 billion committed borrowing base which is re-determined on a semi-annual basis and upon the occurrence of certain other events and matures on July 16, 2024.

Borrowings under the bank credit facility are secured by substantially all of the assets of the Company and its subsidiaries and bear interest at the Company's option, at either LIBOR plus 2.25 % to 3.25 % or a base rate plus 1.25 % to 2.25 %, in each case depending on the utilization of the borrowing base.

2 unchanged sentences

The only financial covenants are the maintenance of a leverage ratio of less than 4.0 to 1.0 and an adjusted current ratio of at least 1.0 to 1.0.

The Company was in compliance with the covenants as of June 30, 2021.

On March 4, 2021, the Company issued $ 1.25 billion principal amount of its 6.75 % senior notes due 2029 ("the 2029 Notes") in a private placement and received net proceeds after offering costs of $ 1.24 billion, which were used to repurchase a portion of the Company's 7.5 % senior notes due 2025 and 9.75 % senior notes due 2026 (the "2026 Notes") pursuant to a tender offer.

The Company was in compliance with the covenants as of September 30, 2021.

On March 4, 2021, the Company issued $ 1.25 billion principal amount of its 6.75 % senior notes due 2029 (the "2029 Notes") in a private placement and received net proceeds after offering costs of $ 1.24 billion, which were used to repurchase a portion of the Company's 7.5 % senior notes due 2025 (the "2025 Notes") and 9.75 % senior notes due 2026 (the "2026 Notes") pursuant to a tender offer.

The 2029 Notes mature on March 1, 2029 and accrue interest at a rate of 6.75 % per annum, payable semi-annually on March 1 and September 1 of each year.

Pursuant to the tender offer, Comstock repurchased $ 375.0 million principal amount of its 7.5 % senior notes due 2025 and $ 777.1 million principal amount of the 2026 Notes for an aggregate amount of $ 1.26 billion, which included premiums paid over face value of $ 97.9 million, accrued interest of $ 12.5 million and $ 1.1 million of costs related to the tender offer.

Pursuant to the tender offer, Comstock repurchased $ 375.0 million principal amount of the 2025 Notes and $ 777.1 million principal amount of the 2026 Notes for an aggregate amount of $ 1.26 billion, which included premiums paid over face value of $ 97.9 million, accrued interest of $ 12.5 million and $ 1.1 million of costs related to the tender offer.

On June 28, 2021, the Company issued $ 965.0 million principal amount of its 5.875 % senior notes due 2030 (the "2030 Notes") in a private placement and received net proceeds after offering costs of $ 949.5 million, which were used along with cash on hand to redeem all outstanding 2026 Notes.

1 unchanged sentence

On June 29, 2021, Comstock completed the redemption of all outstanding 2026 Notes for an aggregate amount of $ 978.6 million, which included premiums paid over face value of $ 74.0 million and accrued interest of $ 31.7 million.

As a result of the early retirement of the senior notes repurchased in the tender offer and the redemption of the 2026 Notes, the Company recognized a loss of $ 114.1 million and $ 352.6 million on early retirement of debt for the three months and six months ended June 30, 2021, respectively.

As a result of the early retirement of the senior notes repurchased in the tender offer and the redemption of the 2026 Notes, the Company recognized a loss of $ 352.6 million on early retirement of debt for the nine months ended September 30, 2021.

(3) PREFERRED STOCK

In connection with the acquisition of Covey Park Energy LLC, the Company issued 210,000 shares of Series A Convertible Preferred Stock with a face value of $ 210.0 million and a fair value of $ 200.0 million as part of the consideration for the acquisition and sold 175,000 shares of Series B Convertible Preferred Stock for $ 175.0 million to its majority stockholder.

In connection with the acquisition of Covey Park Energy LLC in 2019, the Company issued 210,000 shares of Series A Convertible Preferred Stock with a face value of $ 210.0 million and a fair value of $ 200.0 million as part of the consideration for the acquisition and sold 175,000 shares of Series B Convertible Preferred Stock for $ 175.0 million to its majority stockholder.

On May 19, 2020, the Company redeemed the 210,000 outstanding shares of the Series A Convertible Preferred Stock for an aggregate redemption price of $ 210.0 million plus accrued and unpaid dividends of approximately $ 2.9 million.

8 unchanged sentences

The Company records a loss contingency for these matters when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

The Company does not believe the resolution of these matters will have a material effect on the Company's financial position, results of operations or cash flows and no material amounts are accrued relative to these matters at June 30, 2021 or 2020.

(5) RELATED PARTY TRANSACTIONS

2 unchanged sentences

Comstock also provides natural gas marketing services to the partnership, including evaluating potential markets and providing hedging services, in return for a fee equal to $ 0.02 per Mcf for natural gas marketed.

The Company received $ 399 thousand and $ 810 thousand for the three and six months ended June 30, 2021, and $ 55 thousand and $ 379 thousand for the three and six months ended June 30, 2020, respectively, for drilling, operating and marketing services provided to the partnership.

In connection with our operation of the wells, the Company had a $ 17.8 million receivable from the partnership at June 30, 2021, which was collected in full in August 2021.

The Company received $ 353 thousand and $ 1.2 million for the three and nine months ended September 30, 2021, and $ 54 thousand and $ 433 thousand for the three and nine months ended September 30, 2020, respectively, for drilling, operating and marketing services provided to the partnership.

In connection with the operation of the wells, the Company had a $ 9.3 million receivable from the partnership at September 30, 2021, which is expected to be collected in full in November 2021.

The Company also had a $ 25.5 million receivable for the fair market value of oil and natural gas price hedging contracts that were entered into with the partnership.

(6) SUBSEQUENT EVENTS

On October 6, 2021, the Company entered into an agreement to sell certain wells producing from the Bakken shale for $ 154 million in cash, subject to adjustment and customary closing conditions.

The sale is expected to close in the fourth quarter of 2021 and has an effective date of October 1, 2021.

The Company expects to recognize a pre-tax loss between $ 150 million and $ 160 million on the divestiture.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements