CRK Reports Ho-Hum 4Q08 Results; Chops Budget;  Increases Focus On Haynesville.

• The 4Q Numbers:
  • Production: 164 MMcfepd (previously disclosed)
  • Revenues of $100.1 mm vs $107mm expected
  • EPS of $0.22 vs $0.31 expected
  • CFPS of $1.77 vs $1.55 expected
• Budget: Falling. On January 5th, CRK announced a budget of $450 mm with the vast majority ($399 mm) focused on  East Texas and North West Louisiana (including 43 planned horizontal Haynesville Shale wells). Last night’s budget has fallen to $366mm with 31.4 net wells planned for the H.S. out of a total of 41 planned company wide. This is down from 2008 drilling levels of 136 wells.
• Operational Update:
  • Haynesville: 2 wells to date, IP of 9 and 14 MMcfepd, decent, not world class
  • 8 more wells in progress (could have results from several of these in the next month).
  • 70,000 net acres in the H.S.
• Guidance: 62 to 67 Bcfe or 7 to 15% growth on 2008 on an apples to apples basis.
• Nutshell: 4Q results were light on the top line due to lower than expected prices. Company going forward looks quite a bit different with a smaller budget, highly focused on the Haynesville, bears watching.

Conference Call Follow Up Thoughts:

• Well attended, hour and forty minute conference call

• Focus on transitioning from Cotton Valley to higher return Haynesville Shale drilling. They will focus on getting acreage into held by production status. They won’t be getting into defining appropriate spacing this year. They could grow faster but why bother at these gas prices.