5300 Town and Country Blvd., Suite 500, Frisco, Texas 75034

(Address of principal executive offices)

Telephone No.: (972) 668-8800

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x☒    No  ¨☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  x☒    No  ¨☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large"large accelerated filer,” “accelerated filer”" "accelerated filer", "smaller reporting company" and “smaller reporting company”"emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ¨☐    No  x☒

The number of shares outstanding of the registrant’sregistrant's common stock, par value $0.50, as of August 1, 20167, 2017 was 12,504,562.15,478,775.

COMSTOCK RESOURCES, INC.

QUARTERLY REPORT

For the Quarter Ended June 30, 20162017

INDEX

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

COMSTOCK RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

The accompanying notes are an integral part of these statements.

COMSTOCK RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

The accompanying notes are an integral part of these statements.

COMSTOCK RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS’STOCKHOLDERS' DEFICIT

For the Six Months Ended June 30, 20162017

(Unaudited)

The accompanying notes are an integral part of these statements.

COMSTOCK RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

The accompanying notes are an integral part of these statements.

COMSTOCK RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 20162017

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES —

Basis of Presentation

In management’smanagement's opinion, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position of Comstock Resources, Inc. and subsidiaries (“Comstock”("Comstock" or the “Company”"Company") as of June 30, 2016,2017, the related results of operations for the three months and six months ended June 30, 20162017 and 2015,2016, and cash flows for the six months ended June 30, 20162017 and 2015.2016.  Net loss and comprehensive loss are the same in all periods presented.   All adjustments are of a normal recurring nature unless otherwise disclosed. Included in the operating results for the six months ended June 30, 2017 is an adjustment reducing interest expense by $2.9 million recorded in the first quarter of 2017 related to the amortization of the discount on long-term debt to correct the calculation of interest expense under the effective interest method.  This amount, which is being accounted for as correction of an accounting error, relates to the period from September 6, 2016 through December 31, 2016.  The Company believes the error is immaterial to the consolidated financial statements for the year ended December 31, 2016, the three months ended September 30, 2016 and the three months ended December 31, 2016.

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted pursuant to those rules and regulations, although Comstock believes that the disclosures made are adequate to make the information presented not misleading. These unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in Comstock’sComstock's Annual Report on Form 10-K for the year ended December 31, 2015 and its current report for Form 8-K dated August 1, 2016.

The results of operations for the three months and six months ended June 30, 20162017 are not necessarily an indication of the results expected for the full year.

These unaudited consolidated financial statements include the accounts of Comstock and its wholly-owned and controlled subsidiaries.

On July 19,29, 2016, the Company announcedeffected a one-for-five (1:5) reverse split of its issued and outstanding shares of common stock which became effective on July 29, 2016.stock. All amounts disclosed in these financial statements have been adjusted to give effect to the effect of this reverse stock split in all periods.

Property and Equipment

The Company follows the successful efforts method of accounting for its oil and gas properties. Costs incurred to acquire oil and gas leasehold are capitalized.

AtIn January 2017, the Company entered an agreement to jointly develop certain acreage prospective for the Haynesville shale in Louisiana and Texas with USG Properties Haynesville, LLC ("USG").  As of June 30, 2017, USG has acquired 6,382 net acres prospective for Haynesville shale development for the joint development program.  The Company operates wells drilled on USG's acreage and has the right to acquire a 25% working interest in the acreage by reimbursing USG for the attributable acreage costs of the wells being drilled.    Comstock received $80,000 for each well drilled as consideration for the Company's services managing the drilling program in addition to customary operating fees.  Comstock and USG plan to continue to acquire additional acreage for the joint development venture.

In January 2016, the Company reflecteddesignated certain of its natural gas properties located in South Texas as assets held for sale in the accompanying consolidated balance sheet. The Company engaged financial advisors in February 2016 to sell the properties. At June 30, 2016, these assets were reflected on the balance sheet at $42.5 million, representing their estimated net realizable value on a sale less costs to sell. The Company hasand recognized an impairment charge of $20.8 million duringin the six months ended June 30, 2016 to adjust the carrying value of these assets to their estimated net realizable value. The impairment, which is a Level 3 fair value measurement, was computed using a discounted cash flow valuation approach which is consistent with the Company’s methodology for determining impairmentssale of its proved oil and gas properties. The asset retirement obligation related to these properties of $3.4 million is includedwas completed in accrued liabilities at June 30,December 2016.

In June 30, 2015, Comstock entered into an agreement to sellJanuary 2016, the Company exchanged certain of its oil and gas properties locatedwith another operator in and near Burleson County, Texas to a third party. This sale closed on July 22, 2015 with an effective date of May 1, 2015 andnon-monetary exchange.  Under the exchange, the Company received net proceeds fromacreage in DeSoto Parish, Louisiana, prospective for the Haynesville shale, including four producing wells (3.5 net).  The Company exchanged acreage in Atascosa County, Texas, including seven producing wells (5.3 net) for the Haynesville shale properties.  The Company recognized a gain of $0.7 million on this transaction which is included in the loss on sale of $102.5 million inoil and gas properties for the third quartersix months ended June 30, 2016. The Company also sold certain other oil and gas properties during the first six months of 2015.2016 for total proceeds of $2.1 million. The Company recognized a loss of $1.6 million on this sale of $111.8 million in the three months and six months ended June 30, 2015 operating results.these divestitures. 

Results of operations for the properties that were sold or are being held for sale were as follows:

In January 2016, the Company exchanged certain oil and gas properties with another operator in a non-monetary exchange. Under the exchange, the Company received 3,637 net acres in DeSoto Parish, Louisiana, prospective for the Haynesville shale, including four producing wells (3.5 net). The Company exchanged 2,547 net acres in Atascosa County, Texas, including seven producing wells (5.3 net) for the Haynesville shale properties. The Company recognized a gain of $0.7 million on this transaction which is included in the net loss on sales and exchange of oil and gas properties for the six months ended June 30, 2016. The Company also sold certain oil and gas properties during the first six months of 2016 for total proceeds of $2.1 million. The Company recognized a loss of $1.6 million on these divestitures.

Unproved oil and gas properties are periodically assessed and any impairment in value is charged to exploration expense. The costs of unproved properties which are determined to be productive are transferred to oil and gas properties and amortized on an equivalent unit-of-production basis. The Company recognized an impairment chargesincluded in exploration expense of $23.0 million during the three months ended June 30, 2015 and $7.8 million and $63.5 million duringin the six months ended June 30, 2016 and 2015, respectively, related to certain leases that the Company currently does not plan to develop. Nowere expiring on certain of its unproved impairments were recognized during the three months ended June 30, 2016.oil and gas properties.    

The Company also assesses the need for an impairment of the capitalized costs for its proved oil and gas properties on a property basis.  Reductions to management’s oil and natural gas price outlooks in 2016 and 2015 resulted in indications of impairment of certain of the Company’s properties. Accordingly, the Company recognized additional impairments of its oil and gas properties of $1.7 million and $2.0$3.7 million for the three months ended June 30, 2016 and 2015, respectively, and $3.7 million and $2.4 million for the six months ended June 30, 2016, and 2015, respectively, to reduce the carrying value of thesecertain properties to their estimated fair value.

The Company determines the fair values of its oil and gas properties using a discounted cash flow model and proved and risk adjusted probable oil and natural gas reserves.  Undrilled acreage can also be valued based on sales transactions in comparable areas.  Significant Level 3 assumptions associated with the calculation of discounted future cash flows included in the cash flow model include management’smanagement's outlook for oil and natural gas prices, production costs, capital expenditures, and future production as well as estimated proved oil and gas reserves and risk-adjusted probable oil and natural gas reserves.  Management’sManagement's oil and natural gas price outlook is developed based on third-party longer-term price forecasts as of each measurement date.  The expected future net cash flows are discounted using an appropriate discount rate in determining a property’sproperty's fair value.

It is reasonably possible that the Company’sCompany's estimates of undiscounted future net cash flows attributable to its oil and gas properties may change in the future.  The primary factors that may affect estimates of future cash flows include future adjustments, both positive and negative, to proved and appropriate risk-adjusted probable oil and gas reserves, results of future drilling activities, future prices for oil and natural gas, and increases or decreases in production and capital costs.  As a result of these changes, or if in the future the Company does not have access to sufficient capital to develop any undrilled reserves used in its assessment, there may be further impairments in the carrying values of these or other properties.

Accrued LiabilitiesExpenses

Accrued liabilitiesexpenses at June 30, 20162017 and December 31, 20152016 consist of the following:

Reserve for Future Abandonment Costs

Comstock’sComstock's asset retirement obligations relate to future plugging and abandonment expenses on its oil and gas properties and related facilities disposal. The following table summarizes the changes in Comstock’sComstock's total estimated liability for such obligations during the six months ended June 30, 20162017 and 2015:2016:

Derivative Financial Instruments and Hedging Activities

Comstock periodically uses swaps, floors and collars to hedge oil and natural gas prices and interest rates. Swaps are settled monthly based on differences between the prices specified in the instruments and the settlement prices of futures contracts. Generally, when the applicable settlement price is less than the price specified in the contract, Comstock receives a settlement from the counterparty based on the difference multiplied by the volume or amounts hedged. Similarly, when the applicable settlement price exceeds the price specified in the contract, Comstock pays the counterparty based on the difference.  Comstock generally receives a settlement from the counterparty for floors when the applicable settlement price is less than the price specified in the contract, which is based on the difference multiplied by the volumes hedged. For collars, generally Comstock receives a settlement from the counterparty when the settlement price is below the floor and pays a settlement to the counterparty when the settlement price exceeds the cap. No settlement occurs when the settlement price falls between the floor and cap. All of the Company’sCompany's derivative financial instruments are used for risk management purposes and, by policy, none are held for trading or speculative purposes. Comstock minimizes credit risk to counterparties of its derivative financial instruments through formal credit policies, monitoring procedures, and diversification. All of Comstock’s derivative financial instruments are with parties that are lenders under 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’sCompany's derivative financial instruments involve payment or receipt of premiums.  The Company classifies the fair value amounts of derivative financial instruments as net current or noncurrent assets or liabilities, whichever the case may be, by commodity and counterparty.

As of June 30, 2016, the Company had no outstanding commodity derivatives. The Company had the following outstanding derivative financial instruments outstanding onused for oil and natural gas price risk management at June 30, 2015 that hedged production for the subsequent twelve month2017:

period. None of the Company’sCompany's derivative contracts were designated as cash flow hedges. The Company recognized cash settlements and changes in the fair value of its derivative financial instruments as a single component of other income (expenses). The Company recognized gains of $18,000$5.3 million and $18 thousand in the three months ended June 30, 2017 and 2016, respectively, and $13.2 million and $0.7 million in the six months ended June 30, 2017 and 2016, respectively, related to the change in fair value of its natural gas swap agreements during the three months and six months ended June 30, 2016, respectively. The Company recognized a gain of $0.6 million related to the change in fair value of its natural gas swap agreements during the three and six months ended June 30, 2015. Cash settlements on the Company’s natural gas derivative financial instruments were receipts of $1.1 million and $2.1 million for the three months and six months ended June 30, 2016, respectively. The Company had no cash settlements from derivative financial instruments in the first six months of 2015.agreements.     

Stock-Based Compensation

Comstock accounts for employee stock-based compensation under the fair value method. Compensation cost is measured at the grant date based on the fair value of the award and is recognized over the award vesting period. During the three months ended June 30, 2016 and 2015, theThe Company recognized $1.2$1.5 million and $2.1$1.2 million respectively, of stock-based compensation expense within general and administrative expenses related to awards of restricted stock and performance stock units ("PSUs") to its employees and directors.directors in the three months ended June 30, 2017 and 2016, respectively. For the six months ended June 30, 20162017 and 2015,2016, the Company recognized $2.5$2.8 million and $4.0$2.5 million, respectively, of stock-based compensation expense within general and administrative expenses.

During the six months ended June 30, 2016,2017, the Company granted 229,618500,002 shares of restricted stock with a grant date fair value of $1.3$5.6 million, or $5.45$11.11 per share, to its employees.employees and directors. The fair value of each restricted share on the date of grant was equal to its market price. As of June 30, 2016,2017, Comstock had 354,974688,998 shares of unvested restricted stock outstanding at a weighted average grant date fair value of $15.25$11.50 per share. Total unrecognized compensation cost related to unvested restricted stock grants of $4.4$6.5 million as of June 30, 20162017 is expected to be recognized over a period of 2.12.0 years.

During the six months ended June 30, 2016,2017, the Company granted 60,013 performance share units (“PSUs”)241,814 PSUs with a grant date fair value of $0.4$4.4 million, or $7.00$18.17 per unit, to its employees. As of June 30, 2016,2017, Comstock had 134,627313,248 PSUs outstanding at a weighted average grant date fair value of $22.09$17.12 per unit. The number of shares of common stock to be issued related to the PSUs is based on the Company’sCompany's stock price performance as compared to its peers which could result in the issuance of anywhere from zero to 269,253626,496 shares of common stock. Total unrecognized compensation cost related to these grants of $1.7$4.6 million as of June 30, 20162017 is expected to be recognized over a period of 1.72.4 years.

As of June 30, 2016, Comstock had outstanding options to purchase 11,730 shares of common stock at a weighted average exercise price of $166.10 per share. All of the stock options were exercisable and there were no unrecognized compensation costs related to the stock options as of June 30, 2016. No stock options were granted or exercised during the six months ended June 30, 2016.

Income Taxes

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. The deferred tax provision in the first three months and six months of 2017 related to adjustments to the valuation allowances on state net operating loss carryforwards.  The deferred income tax provision for the first three months and six months of 2016 related to an increase in the Company’sCompany's deferred income tax liability resulting from certain state tax law changes enacted during the period. In recording deferred income tax assets, the Company considers whether it is more likely than not that some portion or all of its deferred income tax assets will be realized in the future.  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 and, therefore, has recordedrealized.  As a result, the Company established valuation allowance of $17.9 million and $4.9 million againstallowances for its net federal deferred tax assets and U.S. federal and state deferred

tax assets (netnet operating loss carryforwards that are not expected to be utilized due to the uncertainty of generating taxable income prior to the expiration of the federal tax benefit), respectively, during the six months ended June 30, 2016. The Company will continue to assess the valuation allowance against deferred tax assets considering all available information obtained in future reportingcarryforward periods.

The following is an analysis of consolidated income tax expense (benefit):expense:

The difference between the Company’sCompany's effective tax rate and the 35% federal statutory rate is caused by valuation allowances on deferred taxes and state taxes. The impact of these items varies based upon the Company’sCompany's projected full year loss and the jurisdictions that are expected to generate the projected losses. The difference between the Company’s customaryfederal statutory rate of 35% and the effective tax rate on the lossincome (loss) before income taxes is due to the following:

The Company’sCompany's federal income tax returns for the years subsequent to December 31, 2011,2012, remain subject to examination. The Company’sCompany's income tax returns in major state income tax jurisdictions remain subject to examination for the year ended December 31, 2008 and for various periods subsequent to December 31, 2010. A state tax return in one state jurisdiction is currently under review. The Company has evaluated the preliminary findings in this jurisdiction and believes it is more likely than not that the ultimate resolution of these matters will not have a material effect on the Company’s financial statements.2011. The Company currently believes that all other significant filing positions are highly certain and that all of its other significant income tax positions and deductions would be sustained under audit or the final resolution would not have a material effect on the consolidated financial statements. Therefore, the Company has not established any significant reserves for uncertain tax positions.

Future use of the Company’sCompany's federal and state net operating loss carryforwards may be limited in the event that a cumulative change in the ownership of Comstock’sComstock's common stock by more than 50% occurs within a three-year period.  Such a change in ownership could result in a substantial portion of Comstock’sthe Company's net operating loss carryforwards being eliminated or becoming restricted, andrestricted. It is highly likely that a change in ownership that would result from the Company may need to recognize an additional valuation allowance reflectingfuture conversion of the restrictedCompany's convertible notes would result in limits on the future use of theseits net operating loss carryforwards in the period when such an ownership change occurred. In October 2015, the Company established a rights plan to deter ownership changes that would trigger this limitation.carryforwards.   

Fair Value Measurements

The Company holds or has held certain items that are required to be measured at fair value.  These include cash and cash equivalents held in bank accounts and derivative financial instruments in the form of oil and natural gas price swap agreements. Fair value is defined as the price that would be received to sell an asset or

paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A three-level hierarchy is followed for disclosure to show the extent and level of judgment used to estimate fair value measurements:

Level 1 — Inputs used to measure fair value are unadjusted quoted prices that are available in active markets for the identical assets or liabilities as of the reporting date.

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. 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. These values are generally determined using pricing models for which the assumptions utilize management’smanagement's estimates of market participant assumptions.

The Company’sCompany's valuation of cash and cash equivalents is a Level 1 measurement. The Company’sCompany's natural gas price swap agreements are not traded on a public exchange. Their value is determined utilizing a discounted cash flow model based on inputs that are readily available in public markets and, accordingly, the valuation of these swap agreements is categorized as a Level 2 measurement. There were no price swap agreements outstanding as of June 30, 2016.

As of June 30, 2016, the Company’sThe following table summarizes financial assets and liabilities accounted for at fair value consistedas of cash and cash equivalents of $67.4 million, a Level 1 measurement. June 30, 2017:

As of June 30, 2016,2017, the Company’sCompany's other financial instruments, comprised solely of its fixed rate debt, had a carrying value of $1.1 billion and a fair value of $730.2 million.$1.1 billion.  The fair market value of the Company’sCompany's fixed rate debt was based on quoted prices as of June 30, 2016,2017, a Level 2 measurement.

Earnings Per Share

Basic earnings per share is determined without the effect of any outstanding potentially dilutive stock options or PSUssecurities and diluted earnings per share is determined with the effect of any outstanding stock options and PSUssecurities that are potentially dilutive. Unvested share-based payment awards containing nonforfeitable rights to dividends are considered to be participatoryparticipating securities and are included in the computation of basic and diluted earnings per share pursuant to the two-class method. PSUs represent the right to receive a number of shares of the Company’sCompany's common stock that may range from zero to up to two times the number of PSUs granted on the award date based on the achievement of certain performance measures during a performance period. The number of potentially dilutive shares related to PSUs is based on the number of shares, if any, which would be issuable at the end of the respective period, assuming that date was the end of the contingency period. Common stock warrants represent the right to convert the warrants into common stock at an exercise price of $0.01 per share.  The treasury stock method is used to measure the dilutive effect of PSUs. outstanding PSUs and common stock warrants.  The shares that would be issuable upon exercise of the conversion rights contained in the Company's convertible debt for each period are based on the if-converted method for computing potentially dilutive shares of common stock that could be issued upon conversion.

Basic and diluted income (loss)loss per share for the three months and six months ended June 30, 20162017 and 20152016 were determined as follows: