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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For The Quarter Ended June 30, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission File No. 001-32494
 BOIS dARC ENERGY, INC.
  NEVADA
(State or other jurisdiction of
incorporation or organization)
    
    20-1268553
(I.R.S. Employer
Identification Number)
 600 Travis Street, Suite 5200, Houston, Texas 77002
 (713) 228-0438
  þ o
  o þ o
  o þ




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##### 



BOIS dARC ENERGY, INC.
 QUARTERLY REPORT
 For The Quarter Ended June 30, 2006
 INDEX
 PagePART I. Financial InformationItem 1. Financial Statements (Unaudited):Consolidated Balance Sheets 
June 30, 2006 and December 31, 2005
    
    
    4Consolidated Statements of Operations 
Three Months and Six Months Ended June 30, 2006 and 2005
    
    
    5Consolidated Statement of Stockholders Equity 
Six Months ended June 30, 2006
    
    
    6Consolidated Statements of Cash Flows 
Six Months Ended June 30, 2006 and 2005
    
    
    7Notes to Consolidated Financial Statements
    
    
    8Independent Accountants Review Report
    
    
    15Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    16Item 3. Quantitative and Qualitative Disclosure About Market Risks
    
    
    20Item 4. Controls and Procedures
    
    
    21PART II. Other InformationItem 4. Submission of Matters to a Vote of Security Holders
    
    
    22Item 6. Exhibits
    
    
    22Awareness Letter of Ernst & Young LLPSection 302 Certification of the CEOSection 302 Certification of the CFOCertification of the CEO Pursuant to Section 906Certification of the CFO Pursuant to Section 906Awareness Letter of Ernst & Young LLPSection 302 Certification of the CEOSection 302 Certification of the CFOSection 906 Certification of the CEOSection 906 Certification of the CFO
  2




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PART I  FINANCIAL INFORMATION
 
 ITEM 1: FINANCIAL STATEMENTS (UNAUDITED)
 INTRODUCTORY NOTE
  3




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BOIS dARC ENERGY, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (Unaudited)
 June
30,
    
    
    December 31,2006
    
    
    2005(In thousands)ASSETSCash and Cash Equivalents
    
    $
    7,360
    
    
    $
    12,043Accounts Receivable:Oil and gas sales
    
    
    21,242
    
    
    
    25,520Joint interest operations
    
    
    8,170
    
    
    
    8,364Prepaid Expenses
    
    
    14,680
    
    
    
    4,245Total current assets
    
    
    51,452
    
    
    
    50,172Oil and Gas Properties:Proved properties
    
    
    301,384
    
    
    
    299,947Unevaluated properties
    
    
    12,664
    
    
    
    13,533Wells and related equipment and facilities
    
    
    727,761
    
    
    
    620,778Accumulated depreciation, depletion and amortization
    
    
    (302,839
    )
    
    
    (274,434
    )Net oil and gas properties
    
    
    738,970
    
    
    
    659,824Other Property and Equipment, net of accumulated depreciation of $1,057 and
$875 as of June 30, 2006 and December 31, 2005, respectively
    
    
    2,194
    
    
    
    2,107Other Assets
    
    
    703
    
    
    
    799$
    793,319
    
    
    $
    712,902LIABILITIES AND STOCKHOLDERS EQUITYShort-term Debt
    
    $
    9,750
    
    
    $
    Accounts Payable
    
    
    41,136
    
    
    
    48,005Accrued Expenses
    
    
    22,312
    
    
    
    18,401Total current liabilities
    
    
    73,198
    
    
    
    66,406Long-Term Debt
    
    
    90,000
    
    
    
    69,000Deferred Income Taxes Payable
    
    
    138,344
    
    
    
    123,256Reserve for Future Abandonment Costs
    
    
    37,988
    
    
    
    35,034Total liabilities
    
    
    339,530
    
    
    
    293,696Commitments and ContingenciesStockholders Equity:Common stock  $0.01 par, 100,000,000 shares authorized, 64,170,000 and
64,155,000outstanding at June 30, 2006 and December 31, 2005,
respectively
    
    
    642
    
    
    
    642Additional paid-in capital
    
    
    458,007
    
    
    
    454,988Retained earnings (deficit)
    
    
    (4,860
    )
    
    
    (36,424
    )Total stockholders equity
    
    
    453,789
    
    
    
    419,206$
    793,319
    
    
    $
    712,902
  4




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BOIS dARC ENERGY, INC.
 
 CONSOLIDATED STATEMENT OF OPERATIONS
 (Unaudited)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(In thousands, except per share amounts)Oil and gas sales
    
    $
    59,607
    
    
    $
    48,685
    
    
    $
    121,440
    
    
    $
    92,161Operating expenses:Oil and gas operating
    
    
    11,821
    
    
    
    8,273
    
    
    
    24,261
    
    
    
    15,980Exploration
    
    
    3,718
    
    
    
    4,554
    
    
    
    8,249
    
    
    
    7,690Depreciation, depletion and amortization
    
    
    16,495
    
    
    
    12,785
    
    
    
    30,888
    
    
    
    24,606Impairment
    
    
    846
    
    
    
    
    
    
    
    846
    
    
    
    Loss on disposal of assets
    
    
    
    
    
    
    89
    
    
    
    
    
    
    
    89General and administrative, net
    
    
    2,641
    
    
    
    2,360
    
    
    
    5,882
    
    
    
    4,387Total operating expenses
    
    
    35,521
    
    
    
    28,061
    
    
    
    70,126
    
    
    
    52,752Income from operations
    
    
    24,086
    
    
    
    20,624
    
    
    
    51,314
    
    
    
    39,409Other income (expenses):Interest income
    
    
    57
    
    
    
    50
    
    
    
    126
    
    
    
    95Other income
    
    
    327
    
    
    
    
    
    
    
    327
    
    
    
    Interest expense
    
    
    (1,569
    )
    
    
    (981
    )
    
    
    (2,646
    )
    
    
    (2,749
    )Total other expenses
    
    
    (1,185
    )
    
    
    (931
    )
    
    
    (2,193
    )
    
    
    (2,654
    )Income before income taxes
    
    
    22,901
    
    
    
    19,693
    
    
    
    49,121
    
    
    
    36,755Provision for income taxes
    
    
    (8,118
    )
    
    
    (112,134
    )
    
    
    (17,557
    )
    
    
    (112,134
    )Net income (loss)
    
    $
    14,783
    
    
    $
    (92,441
    )
    
    $
    31,564
    
    
    $
    (75,379
    )Net income (loss) per share (unit):Basic
    
    $
    0.24
    
    
    $
    (1.62
    )
    
    $
    0.51
    
    
    $
    (1.41
    )Diluted
    
    $
    0.23
    
    
    $
    (1.62
    )
    
    $
    0.49
    
    
    $
    (1.41
    )Weighted average common and common stock
equivalent shares (units) outstanding:Basic
    
    
    62,429
    
    
    
    57,118
    
    
    
    62,429
    
    
    
    53,315Diluted
    
    
    64,515
    
    
    
    57,118
    
    
    
    64,472
    
    
    
    53,315Pro forma computation related to conversion to
a corporation for income tax purposes:Income before income taxes
    
    
    
    
    
    $
    19,693
    
    
    
    
    
    
    $
    36,755Pro forma provision for income taxes
    
    
    
    
    
    
    (7,152
    )
    
    
    
    
    
    
    (13,386
    )Pro forma net income
    
    
    
    
    
    $
    12,541
    
    
    
    
    
    
    $
    23,369Pro forma earnings per share (unit):Basic
    
    
    
    
    
    $
    0.22
    
    
    
    
    
    
    $
    0.44Diluted
    
    
    
    
    
    $
    0.21
    
    
    
    
    
    
    $
    0.42Weighted average common and common stock
equivalent shares (units) outstanding:Basic
    
    
    
    
    
    
    57,118
    
    
    
    
    
    
    
    53,315Diluted
    
    
    
    
    
    
    58,857
    
    
    
    
    
    
    
    54,997
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BOIS dARC ENERGY, INC.
 
 CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 For the Six Months Ended June 30, 2006
(Unaudited)
 Additional
    
    
    RetainedCommon
    
    
    Paid-in
    
    
    EarningsStock
    
    
    Capital
    
    
    (Deficit)
    
    
    Total(In thousands)Balance at
December 31, 2005
    
    $
    642
    
    
    $
    454,988
    
    
    $
    (36,424
    )
    
    $
    419,206Stock-based compensation
    
    
    
    
    
    
    3,019
    
    
    
    
    
    
    
    3,019Net income
    
    
    
    
    
    
    
    
    
    
    31,564
    
    
    
    31,564Balance at June 30, 2006
    
    $
    642
    
    
    $
    458,007
    
    
    $
    (4,860
    )
    
    $
    453,789
  6




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BOIS dARC ENERGY, INC.
 
 CONSOLIDATED STATEMENT OF CASH FLOWS
 (Unaudited)
 Six Months EndedJune 30,2006
    
    
    2005(In thousands)CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    31,564
    
    
    $
    (75,379
    )Adjustments to reconcile net income (loss) to net cash provided
by operating activities:Deferred income taxes
    
    
    15,088
    
    
    
    110,954Dry holes and leasehold impairments
    
    
    6,554
    
    
    
    Depreciation, depletion and amortization
    
    
    30,888
    
    
    
    24,606Impairments
    
    
    846
    
    
    
    Stock-based compensation
    
    
    3,019
    
    
    
    2,745Amortization of loan costs
    
    
    108
    
    
    
    6Loss on disposal of assets
    
    
    
    
    
    
    89(Increase) decrease in accounts receivable
    
    
    4,472
    
    
    
    (17,194
    )Increase in prepaid expenses
    
    
    (685
    )
    
    
    (2,191
    )Increase (decrease) in accounts payable and accrued expenses
    
    
    (7,827
    )
    
    
    21,294Net cash provided by operating activities
    
    
    84,027
    
    
    
    64,930CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (109,610
    )
    
    
    (68,502
    )Proceeds from sale of assets
    
    
    
    
    
    
    160Net cash used for investing activities
    
    
    (109,610
    )
    
    
    (68,342
    )CASH FLOWS FROM FINANCING ACTIVITIES:Borrowings from Comstock Resources
    
    
    
    
    
    
    16,000Repayment to Comstock Resources
    
    
    
    
    
    
    (164,066
    )Borrowings under bank credit facility
    
    
    56,000
    
    
    
    11,000Principal payments on bank credit facility
    
    
    (35,000
    )
    
    
    Proceeds from issuance of common stock
    
    
    
    
    
    
    145,080Stock and debt issuance costs
    
    
    (100
    )
    
    
    (2,103
    )Redemption of Class A units
    
    
    
    
    
    
    (10
    )Net cash provided by financing activities
    
    
    20,900
    
    
    
    5,901Net increase (decrease) in cash and cash equivalents
    
    
    (4,683
    )
    
    
    2,489Cash and cash equivalents, beginning of period
    
    
    12,043
    
    
    
    2,416Cash and cash equivalents at end of period
    
    $
    7,360
    
    
    $
    4,905
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BOIS dARC ENERGY, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2006

(Unaudited)
 (1) ORGANIZATION 
  (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
 Basis of Presentation
    Reclassifications
  General and Administrative Expenses
  8




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BOIS dARC ENERGY, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Stock-Based Compensation
   Stock options.
 WeightedWeighted
    
    AverageAverage
    
    RemainingExercise
    
    Contractual
    
    IntrinsicShares
    
    Price
    
    Term
    
    Value(In thousands)Options Outstanding
    
    
    3,351,000
    
    
    $
    7.57
    
    
    
    8.2
    
    
    $
    29,840Options Exercisable
    
    
    589,500
    
    
    $
    6.33
    
    
    
    7.8
    
    
    $
    5,975
 9




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BOIS dARC ENERGY, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Restricted stock.
 Income Taxes
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(In thousands)Current
    
    $
    1,281
    
    
    $
    1,180
    
    
    $
    2,469
    
    
    $
    1,180Deferred
    
    
    6,837
    
    
    
    110,954
    
    
    
    15,088
    
    
    
    110,954Provision for Income Taxes
    
    $
    8,118
    
    
    $
    112,134
    
    
    $
    17,557
    
    
    $
    112,134
 Pro Forma Income Tax Information
  10




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BOIS dARC ENERGY, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2005
    
    
    2005(In thousands)Income before income taxes
    
    $
    19,693
    
    
    $
    36,755Effective pro forma income tax rate
    
    
    36
    %
    
    
    36
    %Pro forma income tax expense
    
    $
    7,152
    
    
    $
    13,386
 Earnings Per Share (Unit)
  Three Months Ended June 30,2006
    
    
    2005Per
    
    
    
    
    
    
    
    
    
    
    PerIncome
    
    
    Shares
    
    
    Share
    
    
    Income
    
    
    Shares
    
    
    Share(In thousands, except per share amounts)Basic Earnings (Loss) Per Share:Net Income (Loss)
    
    $
    14,783
    
    
    
    62,429
    
    
    $
    0.24
    
    
    $
    (92,441
    )
    
    
    57,118
    
    
    $
    (1.62
    )Diluted Earnings (Loss) Per Share:Net Income (Loss)
    
    $
    14,783
    
    
    
    62,429
    
    
    
    
    
    
    $
    (92,441
    )
    
    
    57,118Effect of Dilutive Securities:Stock Grants and Options
    
    
    
    
    
    
    2,086
    
    
    
    
    
    
    
    
    
    
    
    
    (1)Net Income (Loss) Available to
Common Stockholders
With Assumed Conversions
    
    $
    14,783
    
    
    
    64,515
    
    
    $
    0.23
    
    
    $
    (92,441
    )
    
    
    57,118
    (1)
    
    $
    (1.62
    )(1)
 Six Months Ended June 30,2006
    
    
    2005Per
    
    
    
    
    
    
    
    
    
    
    PerIncome
    
    
    Shares
    
    
    Share
    
    
    Income
    
    
    Shares
    
    
    Share(In thousands, except per share amounts)Basic Earnings (Loss) Per Share:Net Income (Loss)
    
    $
    31,564
    
    
    
    62,429
    
    
    $
    0.51
    
    
    $
    (75,379
    )
    
    
    53,315
    
    
    $
    (1.41
    )Diluted Earnings (Loss) Per Share:Net
Income (Loss)
    
    $
    31,564
    
    
    
    62,429
    
    
    
    
    
    
    $
    (75,379
    )
    
    
    53,315Effect of Dilutive Securities:Stock Grants and Options
    
    
    
    
    
    
    2,043
    
    
    
    
    
    
    
    
    
    
    
    
    (1)Net
Income (Loss) Available to Common Stockholders
With Assumed Conversions
    
    $
    31,564
    
    
    
    64,472
    
    
    $
    0.49
    
    
    $
    (75,379
    )
    
    
    53,315
    (1)
    
    $
    (1.41
    )(1)
 
 (1)
    
    The effect of stock grants and options of 1,739 and 1,682 shares for the three and six months ended June 30, 2005,
respectively, would have been antidilutive to the net loss. 11




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BOIS dARC ENERGY, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (continued)
 Statements of Cash Flows
  Asset Retirement Obligations
  Six monthsEnded June 30,2006
    
    
    2005($ in thousands)Future abandonment liability  beginning of period
    
    $
    35,034
    
    
    $
    28,253Accretion expense
    
    
    1,102
    
    
    
    906New wells drilled
    
    
    1,852
    
    
    
    1,839Liabilities settled
    
    
    
    
    
    
    (423
    )Future abandonment liability  end of period
    
    $
    37,988
    
    
    $
    30,575
 (3) LONG-TERM DEBT 
   12




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BOIS dARC ENERGY, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (continued)
 (4) PAYABLE TO COMSTOCK RESOURCES 
  (5) STOCKHOLDERS EQUITY 
   (6) COMMITMENTS AND CONTINGENCIES 
  13




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BOIS dARC ENERGY, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (continued)
 (7) RELATED PARTY TRANSACTIONS 
   14




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INDEPENDENT ACCOUNTANTS REVIEW REPORT
     /s/ Ernst & Young LLP
 
 15




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ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Comparability of Results
  Results of Operations
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2006
    
    2005
    
    2006
    
    2005($ in thousands, except per unit amounts)Revenues:Oil and gas sales
    
    $
    59,607
    
    
    $
    48,685
    
    
    $
    121,440
    
    
    $
    92,161Expenses:Oil and gas operating(1)
    
    $
    11,821
    
    
    $
    8,273
    
    
    $
    24,261
    
    
    $
    15,980Exploration
    
    $
    3,718
    
    
    $
    4,554
    
    
    $
    8,249
    
    
    $
    7,690Depreciation, depletion and amortization
    
    $
    16,495
    
    
    $
    12,785
    
    
    $
    30,888
    
    
    $
    24,606Net Production Data:Oil (Mbbls)
    
    
    345
    
    
    
    361
    
    
    
    663
    
    
    
    711Natural gas (Mmcf)
    
    
    5,218
    
    
    
    4,362
    
    
    
    10,282
    
    
    
    8,413Natural gas equivalent (Mmcfe)
    
    
    7,290
    
    
    
    6,527
    
    
    
    14,259
    
    
    
    12,682Average Sales Price:Oil ($/Bbl)
    
    $
    69.31
    
    
    $
    49.63
    
    
    $
    65.31
    
    
    $
    48.65Natural gas ($/Mcf)
    
    $
    6.84
    
    
    $
    7.05
    
    
    $
    7.60
    
    
    $
    6.84Average equivalent price ($/Mcfe)
    
    $
    8.18
    
    
    $
    7.46
    
    
    $
    8.52
    
    
    $
    7.27Expenses ($  per Mcfe):Oil and gas operating(1)
    
    $
    1.62
    
    
    $
    1.27
    
    
    $
    1.70
    
    
    $
    1.26Depreciation, depletion and amortization(2)
    
    $
    2.25
    
    
    $
    1.94
    
    
    $
    2.15
    
    
    $
    1.93
 
 (1)
    
    Includes lease operating costs and production and ad valorem taxes.(2)
    
    Represents depreciation, depletion and amortization of oil and gas properties only.  16




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Revenues -
 Oil and gas sales.
  Costs and Expenses -
 Oil and gas operating expenses.
 Exploration expense.
 Depreciation, depletion and amortization. .
 17




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General and administrative expenses.
 Interest expense.
 Income taxes
 Net income.
 18




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Liquidity and Capital Resources
    Six Months EndedJune 30,2006
    
    
    2005(In thousands)Oil and gas exploration and development:Leasehold costs
    
    $
    3,023
    
    
    $
    4,203Development drilling
    
    
    21,836
    
    
    
    32,600Exploratory drilling
    
    
    64,791
    
    
    
    14,919Other development
    
    
    24,648
    
    
    
    18,637114,298
    
    
    
    70,359Other
    
    
    181
    
    
    
    1,035$
    114,479
    
    
    $
    71,394
    19




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Critical Accounting Policies
   Accounting for Uncertainty in Income Taxesan Interpretation of FASB Statement 109
 
 ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ON MARKET RISKS
 Oil and Natural Gas Prices.
 20




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Interest Rates.
 
 ITEM 4: CONTROLS AND PROCEDURES
   21




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PART II  OTHER INFORMATION
 
 ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 (a)
    
    Our annual meeting of stockholders was held in Houston, Texas at 10:00 a.m.,
local time, on June 2, 2006.(b)
    
    Proxies for the meeting were solicited pursuant to Regulation 14 under the
Securities Exchange Act of 1934, as amended. There was no solicitation in opposition
to the nominees listed in the proxy statement for election as Class A directors and
such nominees were elected.(c)
    
    Out of a total 64,170,000 shares of our common stock outstanding and entitled to
vote, 59,620,336 shares were present at the meeting in person or by proxy, representing
approximately 92.9% of the outstanding shares. Matters voted upon at the meeting were
as follows:
 (i)
    
    Three Class A directors were reelected to our board of directors. The vote
tabulation was as follows:
 Nominee
    
    For
    
    WithheldJohn L. Duvieilh
    
    57,827,928
    
    1,792,408David K. Lockett
    
    59,464,500
    
    155,836David W. Sledge
    
    59,464,500
    
    155,836
 Our other directors whose term of office as a director continued after the meeting
are as follows:
 Class B Directors
    
    Class C DirectorsGary W. Blackie
    
    M. Jay AllisonRoland O. Burns
    
    Wayne L. LauferD. Michael Harris
    
    Cecil E. Martin
 (ii)
    
    The appointment of Ernst & Young LLP as our independent registered
public accounting firm for 2006 was ratified by a vote of 59,603,923 shares for,
13,987 shares against and 2,426 shares abstaining.
 
 ITEM 6: EXHIBITS
 Exhibit No.15.1*
    
    Awareness Letter of Ernst & Young LLP31.1*
    
    Section 302 Certification of the Chief Executive Officer.31.2*
    
    Section 302 Certification of the Chief Financial Officer.32.1*
    
    Certification for the Chief Executive Officer as required by Section 906 of the Sarbanes-Oxley Act of 2002.32.2*
    
    Certification for the Chief Financial Officer as required by Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith 22




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##### Table of Contents



SIGNATURES
  BOIS dARC ENERGY, INC.Date: August 7, 2006
    
    /s/ WAYNE L. LAUFERWayne L. Laufer, Chief Executive Officer(Principal Executive Officer)Date: August 7, 2006
    
    /s/ ROLAND O. BURNSRoland O. Burns, Senior Vice President,Chief Financial Officer, Secretary, and Treasurer(Principal Financial and Accounting Officer)
 23