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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) þ
    
    QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For The Quarter Ended March 31, 2005
 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)
    
    76-0560383
(I.R.S. Employer
Identification Number)
 600 Travis Street, Suite 5200, Houston, Texas 77002
(Address of principal executive offices) Telephone No.: (713) 228-0438 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 filing requirements for the past 90 days. o þ
 Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of
the Exchange Act). o þ
 The number of shares outstanding of the registrants common stock, par value $.01,
as of June 17, 2005 was 64,155,000.




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BOIS dARC ENERGY, INC. QUARTERLY REPORT For The Quarter Ended March 31, 2005 INDEX PagePART I. Financial InformationItem 1. Financial Statements (Unaudited):Consolidated Balance Sheets - March 31, 2005 and December 31, 2004
    
    
    3Consolidated and Combined Statements of Operations - Three Months ended March 31, 2005 and 2004
    
    
    4Consolidated Statement of Changes in Members Equity - Three Months ended March 31, 2005
    
    
    5Consolidated and Combined Statements of Cash Flows - Three Months ended March 31, 2005 and 2004
    
    
    6Notes to Consolidated and Combined Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosure About Market Risks
    
    
    20Item 4. Controls and Procedures
    
    
    21PART II. Other InformationItem 6. Exhibits and Reports on Form 8-K
    
    
    22Articles of IncorporationCredit AgreementSection 302 Certification of CEOSection 302 Certification of CFOSection 906 Certification of CEOSection 906 Certification of CFOForm of Stock OptionForm of Restricted Stock Grant
  1




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PART I - FINANCIAL INFORMATION 
 ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) INTRODUCTORY NOTE On May 10, 2005, Bois dArc Energy, LLC converted from a limited liability company to a corporation
and changed its name to Bois dArc Energy, Inc. All of the financial results reported in this Form
10-Q predate this conversion. In December 1997, Comstock Offshore LLC (Comstock Offshore), an indirect wholly owned subsidiary
of Comstock Resources, Inc. (Comstock), acquired from Bois dArc Resources and other
interest owners certain offshore oil and natural gas properties in the Gulf of Mexico. Bois dArc
Resources was a predecessor in interest to Bois dArc Resources, Ltd., an entity owned by two of
our executive officers, directors and stockholders, Gary W. Blackie and Wayne L. Laufer. In
connection with this acquisition, Comstock Offshore, Bois dArc Resources, Ltd. and Bois dArc
Offshore, Ltd., another entity owned by Messrs. Blackie and Laufer, established a joint venture to
explore for oil and natural gas in the Gulf of Mexico. The accompanying combined financial
statements for the three months ended March 31, 2004 present the
combined financial condition and combined results of
operations of Comstock Offshore and Bois dArc Resources, Ltd., Bois dArc Offshore, Ltd. and
certain participants in their exploration activities (collectively, the Bois d Arc Participants)
as they relate to the properties contributed to us and are referred
to in this report as the Combined Bois dArc Energy, LLC
Predecessors. Bois dArc Energy, LLC (Bois dArc Energy or the Company) was formed on July 16, 2004
(Inception) by Comstock Offshore and the Bois dArc Participants. The accompanying consolidated
financial statements of Bois dArc Energy, LLC present the
consolidated financial condition and consolidated results of
operations of the Company as of December 31, 2004 and March 31, 2005 and for the three months ended March 31, 2005 and are
referred to in this report as Bois dArc Energy, LLC. 2




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BOIS dARC ENERGY, LLC 
 CONSOLIDATED BALANCE SHEET Unaudited
 March 31,
    
    
    December 31,2005
    
    
    2004(In thousands)ASSETSCash and Cash Equivalents
    
    $
    3,949
    
    
    $
    2,416Accounts Receivable:Oil and gas sales
    
    
    13,443
    
    
    
    9,140Joint interest operations
    
    
    5,367
    
    
    
    5,558Prepaid Expenses
    
    
    1,566
    
    
    
    1,476Total current assets
    
    
    24,325
    
    
    
    18,590Oil and Gas Properties, using successful efforts accounting:Proved properties
    
    
    293,194
    
    
    
    291,227Unproved properties
    
    
    8,152
    
    
    
    8,566Wells and related equipment and facilities
    
    
    480,845
    
    
    
    444,403Accumulated depreciation, depletion and amortization
    
    
    (244,577
    )
    
    
    (233,243
    )Net oil and gas properties
    
    
    537,614
    
    
    
    510,953Other Property and Equipment, net of accumulated depreciation
of $1,484 and $1,436 at March 31, 2005 and December 31, 2004,
respectively
    
    
    743
    
    
    
    524Other Assets
    
    
    776
    
    
    
    516$
    563,458
    
    
    $
    530,583LIABILITIES AND EQUITYAccounts Payable
    
    $
    18,307
    
    
    $
    20,103Accrued Expenses
    
    
    15,113
    
    
    
    14,676Total current liabilities
    
    
    33,420
    
    
    
    34,779Payable to Parent Company
    
    
    164,096
    
    
    
    148,066Reserve for Future Abandonment Costs
    
    
    29,395
    
    
    
    28,253Commitments and ContingenciesMembers Equity:Class A Units, 10,000 units issued and outstanding
    
    
    10
    
    
    
    10Class B Units, 50,000,000 units issued and outstanding
    
    
    304,227
    
    
    
    304,227Retained earnings
    
    
    32,310
    
    
    
    15,248Total members equity
    
    
    336,547
    
    
    
    319,485$
    563,458
    
    
    $
    530,583
 The accompanying notes are an integral part of these statements. 3




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BOIS dARC ENERGY, LLC
BOIS dARC ENERGY, LLC PREDECESSORS 
 CONSOLIDATED STATEMENT OF OPERATIONS For the Three Months Ended March 31, 2005
 COMBINED STATEMENT OF OPERATIONS
 For the Three Months Ended March 31, 2004
 Unaudited
 (In thousands) CombinedBois dArcBois dArc
    
    
    Energy, LLCEnergy, LLC
    
    
    PredecessorsThree Months EndedMarch 31,2005
    
    
    2004Oil and gas sales
    
    $
    43,476
    
    
    $
    29,908Operating expenses:Oil and gas operating
    
    
    7,707
    
    
    
    7,667Exploration
    
    
    3,136
    
    
    
    2,433Depreciation, depletion and amortization
    
    
    11,821
    
    
    
    9,987General and administrative, net
    
    
    2,027
    
    
    
    667Total operating expenses
    
    
    24,691
    
    
    
    20,754Income from operations
    
    
    18,785
    
    
    
    9,154Other income (expense):Interest income
    
    
    45
    
    
    
    35Interest expense
    
    
    (1,768
    )
    
    
    (2,158
    )Total other income (expense)
    
    
    (1,723
    )
    
    
    (2,123
    )Net income
    
    $
    17,062
    
    
    $
    7,031
 The accompanying notes are an integral part of these statements. 4




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BOIS dARC ENERGY, LLC
BOIS dARC ENERGY, LLC PREDECESSORS 
 CONSOLIDATED STATEMENT OF CHANGES IN MEMBERS EQUITY For the Three Months Ended March 31, 2005
 Unaudited
 (In thousands) Class A
    
    
    Class B
    
    
    RetainedUnits
    
    
    Units
    
    
    Earnings
    
    
    TotalBalance at January 1, 2005
    
    $
    10
    
    
    $
    304,227
    
    
    $
    15,248
    
    
    $
    319,485Net income
    
    
    
    
    
    
    
    
    
    
    17,062
    
    
    
    17,062Balance at March 31, 2005
    
    $
    10
    
    
    $
    304,227
    
    
    $
    32,310
    
    
    $
    336,547
 The accompanying notes are an integral part of these statements. 5




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BOIS dARC ENERGY, LLC
BOIS dARC ENERGY, LLC PREDECESSORS 
 CONSOLIDATED STATEMENT OF CASH FLOWS For the Three Months Ended March 31, 2005
 COMBINED STATEMENT OF CASH FLOWS
 For the Three Months Ended March 31, 2004
 Unaudited
 (In thousands) CombinedBois dArcBois dArc
    
    
    Energy, LLCEnergy, LLC
    
    
    PredecessorsThree Months EndedMarch 31,2005
    
    
    2004CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    17,062
    
    
    $
    7,031Adjustments to reconcile net income to net cash provided by operating
activities:Dry holes and lease impairments
    
    
    
    
    
    
    1,802Depreciation, depletion and amortization
    
    
    11,821
    
    
    
    9,987Equity based compensation
    
    
    1,357
    
    
    
    (Increase) decrease in accounts receivable
    
    
    (4,112
    )
    
    
    60(Increase) decrease in prepaid expenses
    
    
    (90
    )
    
    
    373Increase (decrease) in accounts payable and accrued expenses
    
    
    (2,716
    )
    
    
    3,906Net cash provided by operating activities
    
    
    23,322
    
    
    
    23,159CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (37,819
    )
    
    
    (42,448
    )Net cash used for investing activities
    
    
    (37,819
    )
    
    
    (42,448
    )CASH FLOWS FROM FINANCING ACTIVITIES:Borrowings from parent company
    
    
    16,030
    
    
    
    16,153Principal payments on bank loan
    
    
    
    
    
    
    (778
    )Contributions by equity owners
    
    
    
    
    
    
    208Net cash provided by financing activities
    
    
    16,030
    
    
    
    15,583Net increase in cash and cash equivalents
    
    
    1,533
    
    
    
    (3,706
    )Cash and cash equivalents at Beginning of Period
    
    
    2,416
    
    
    
    22,019Cash and cash equivalents at End of Period
    
    $
    3,949
    
    
    $
    18,313
 The accompanying notes are an integral part of these statements. 6




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BOIS dARC ENERGY, LLC
BOIS dARC ENERGY, LLC PREDECESSORS 
 NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (1) Organization Bois dArc Energy, LLC (Bois dArc Energy or the Company) is engaged in the discovery and
production of oil and natural gas in the Gulf of Mexico. The Company was formed on July 16, 2004
(Inception) by Bois dArc Resources, Ltd., Bois dArc Offshore, Ltd. and certain participants in
their exploration activities (collectively, the Bois d Arc Participants) and Comstock Offshore,
LLC (Comstock Offshore), an indirect wholly-owned subsidiary of Comstock Resources, Inc.
(Comstock). In December 1997, Comstock Offshore acquired from a predecessor of Bois dArc Resources, Ltd.
and other interest owners certain offshore oil and natural gas properties in the Gulf of Mexico.
Subsequent to the acquisition, the predecessor to Bois dArc Resources, Ltd. was dissolved and Bois
dArc Resources, Ltd. and Bois dArc Offshore, Ltd. (collectively, Bois dArc) were created. In
connection with the December 1997 acquisition, Comstock Offshore and Bois dArc established a joint
exploration venture to explore for oil and natural gas in the Gulf of Mexico. Under the joint
exploration venture, Bois dArc was responsible for developing a budget for exploration activities
and for generating exploration prospects in the Gulf of Mexico utilizing 3-D seismic data and their
extensive geological expertise in the region. Comstock Offshore had to approve the budget and
would advance funds for the acquisition of 3-D seismic data and leases needed to conduct
exploration activities. Comstock Offshore was reimbursed for all advanced costs and was entitled
to a non-promoted working interest in each prospect generated. For each successful discovery well
drilled pursuant to the joint exploration venture, Comstock issued to the two principals of Bois
dArc warrants exercisable for the purchase of shares of Comstocks common stock. Successful wells
drilled under the exploration venture were operated by Bois dArc Offshore, Ltd. pursuant to a
joint operating agreement entered into by the parties participating in the prospect, including
Comstock Offshore and the Bois dArc Participants. Any future operation on the lease including
drilling additional wells on the acreage associated with the prospect was conducted under the joint
operating agreement and had to be approved by the participating parties. On July 16, 2004, Bois dArc Energy was formed to replace the joint exploration venture. Each
of the Bois dArc Participants and Comstock Offshore contributed to Bois dArc Energy substantially
all of their Gulf of Mexico related assets and assigned to the Company their related liabilities,
including certain debt, in exchange for equity interests in Bois
dArc Energy. Each contributors properties were evaluated
by the Companys independent petroleum consultants. Using these
evaluations, the equity
interests issued in exchange for the contributions were determined by
using the valuation of the
properties contributed by the particular contributor relative to the value of the properties contributed by all contributors.
Comstock Offshore contributed its interests in its Gulf of Mexico properties and assigned to Bois
dArc Energy $83.2 million of related debt in exchange for an approximately 59.9% ownership
interest in Bois dArc Energy. Each of the Bois dArc Participants contributed its interest in
commonly owned Gulf of Mexico properties as well as ownership of Bois dArc Offshore, Ltd., the
operator of the properties, and assigned in the aggregate $28.2 million of related liabilities in
exchange for an approximately 40.1% aggregate ownership interest. The Bois dArc Participants also
received $27.6 million in cash to equalize the amount that Comstock Offshores debt exceeded its
proportional share of the liabilities assigned. Bois dArc Energy also reimbursed Comstock
Offshore $12.7 million and Bois dArc $0.8 million for advances made under the joint exploration
venture for undrilled prospects. 7




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BOIS dARC ENERGY, LLC
BOIS dARC ENERGY, LLC PREDECESSORS NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS(continued) The following table presents the assets and liabilities of Comstock Offshore and the Bois
dArc Participants that were contributed to Bois dArc Energy: Contributed toBois dArcEnergy(In thousands)Cash
    
    $
    17,030Other current assets
    
    
    21,992Property and equipment, net
    
    
    482,697Total assets
    
    
    521,719Current liabilities and bank loan
    
    
    (66,788
    )Payable to parent company
    
    
    (83,177
    )Reserve for future abandonment
    
    
    (26,443
    )Total liabilities
    
    
    (176,408
    )Net assets
    
    
    345,311Cash distributed
    
    
    (41,084
    )Net contribution
    
    $
    304,227
 (2) Summary of Significant Accounting Policies Accounting policies used by Bois dArc Energy reflect oil and gas industry practices and
conform to accounting principles generally accepted in the United States of America. Basis of Presentation The accompanying financial statements reflect the combined operations of the Bois dArc Energy
Predecessors which commenced operations as a joint venture on December 9, 1997 with the formation
of Comstock Offshore, its acquisition of certain oil and natural gas properties from a predecessor
of Bois dArc and the establishment of the joint exploration venture. The Bois dArc Energy
Predecessors combined their respective Gulf of Mexico offshore properties into the Company, a newly
formed limited liability company. Comstock Offshore and Bois dArc Resources have conducted joint
exploration activities over the last six and one-half years and have interests in the same offshore
properties. The ownership in the Company was based on the relative values of the properties that
each entity contributed at the time of formation, approximately 59.9% by Comstock and 40.1% by the
Bois dArc Participants. The Companys operating agreement provided that the board was to be
composed of four persons, two of which were appointed by Comstock Offshore and two of which were
appointed by the Bois dArc Participants. A majority of the board of managers was required to take
any action of the board of managers (thereby requiring at least one of the managers appointed by
the other group to effect any decision), and all significant matters required unanimous consent of
the managers. Accordingly, the Company is jointly controlled and managed. There is an ongoing
interest of both companies in the partnership and a sharing of management. The substance of the formation of the Company was that these companies pooled their separate
interests in various properties for a single interest in an entity (the Company) that holds all of
their separate offshore properties. Management of the resulting joint venture is consistent with
that in place during the term of the joint exploration venture. The Company has continued to account for Comstock Offshore and
Bois dArc Resources as a joint venture and the net assets of the predecessors were recorded at
historical cost on the formation. The 8




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BOIS dARC ENERGY, LLC
BOIS dARC ENERGY, LLC PREDECESSORS NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS(continued) accompanying combined financial statements of the Bois dArc Energy Predecessors present the
financial condition and results of operations of Comstock Offshore and the Bois dArc Participants
as they relate to the properties contributed to the Company on a combined basis. In managements opinion, the accompanying unaudited consolidated and combined financial
statements contain all adjustments (consisting solely of normal recurring adjustments) necessary to
present fairly the financial position of the Company as of March 31, 2005 and the related results
of operations and cash flows of the Company and the Bois dArc Energy Predecessors for the three
months ended March 31, 2005 and 2004, respectively. The accompanying unaudited consolidated and combined 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 the Company believes that the disclosures made are adequate
to make the information presented not misleading. The results of operations for the three months ended March 31, 2005 are not necessarily an
indication of the results expected for the full year. Principles of Consolidation The consolidated financial statements include the accounts of Bois dArc Energy and its wholly
owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in
consolidation. The Company accounts for its undivided interest in properties using the
proportionate consolidation method, whereby its share of assets, liabilities, revenues and expenses
are included in its consolidated financial statements. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting period.
Actual amounts could differ from those estimates. Changes in the future estimated oil and natural
gas reserves or the estimated future cash flows attributable to the reserves that are utilized for
impairment analysis could have a significant impact on the future results of operations. Concentration of Credit Risk and Accounts Receivable Financial instruments that potentially subject the Company to a concentration of credit risk
consist principally of cash and cash equivalents, and accounts receivable. Bois dArc Energy
places its cash with high credit quality financial institutions. Substantially all of Bois dArc
Energys accounts receivable are due from either purchasers of oil and natural gas or participants
in oil and natural gas wells for which Bois dArc Energy serves as the operator. Generally,
operators of oil and natural gas wells have the right to offset future revenues
against unpaid charges related to operated wells. Oil and gas sales are generally unsecured.
The Companys credit losses consistently have been within managements expectations. Bois dArc
Energy has not had any credit losses in the past and believes its accounts receivable are fully
collectable. Accordingly, no allowance for doubtful accounts has been provided. 9




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BOIS dARC ENERGY, LLC
BOIS dARC ENERGY, LLC PREDECESSORS NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS(continued) Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable, other current assets
and accounts payable, accrued expenses and payable to parent company approximate fair value due to
the short maturity of these instruments. Property and Equipment Bois dArc Energy follows the successful efforts method of accounting for its oil and gas
properties. Acquisition costs for proved oil and gas properties, costs of drilling and equipping
productive wells and costs of unsuccessful development wells are capitalized and amortized on an
equivalent unit-of-production basis over the life of the remaining related oil and natural gas
reserves. Equivalent units are determined by converting oil to natural gas at the ratio of six
barrels of oil for one thousand cubic feet of natural gas. Wells sharing common production
platforms and facilities comprise the cost centers which are used for amortization purposes. The
estimated future costs of dismantlement, restoration and abandonment are included in the combined
balance sheets in the reserve for future abandonment costs and expensed as part of depreciation,
depletion and amortization expense. Costs incurred to acquire oil and gas leases are capitalized.
Unproved oil and natural 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 proved oil and natural gas properties and amortized on an equivalent
unit-of-production basis. Exploratory expenses, including geological and geophysical expenses and
delay rentals for unevaluated oil and natural gas properties, are charged to expense as incurred.
Exploratory drilling costs are initially capitalized as unproved property but charged to expense if
and when the well is determined not to have found proved oil and natural gas reserves. In
accordance with Statement of Financial Accounting Standards No. 19, exploratory drilling costs are
evaluated within a one-year period after the completion of drilling. In accordance with the Statement of Financial Accounting Standards No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets (SFAS 144), Bois dArc Energy assesses the need
for an impairment of the costs capitalized of its oil and gas properties on a property or cost
center basis. If an impairment is indicated based on undiscounted expected future cash flows, then
an impairment is recognized to the extent that net capitalized costs exceed discounted expected
future cash flows based on escalated prices. There was no indication of an impairment in three
months ended March 31, 2005 and 2004. Other property and equipment consists primarily of work
boats, computer equipment and furniture and fixtures, which are depreciated over estimated useful
lives ranging from three to ten years on a straight-line basis. Revenue Recognition and Gas Balancing Bois dArc Energy utilizes the sales method of accounting for natural gas revenues whereby
revenues are recognized based on the amount of gas sold to purchasers. The amount of gas sold may
differ from the amount to which the Company is entitled based on its revenue interests in the
properties. Bois dArc Energy did not have any significant imbalance positions at March 31, 2005
and 2004. General and Administrative Expense General and administrative expense was reduced by operating fee income of $0.8 million and
$1.0 million received by the Company for the three months ended March 31, 2005 and 2004,
respectively. The operating fee income is a reimbursement of the Companys general and 10




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BOIS dARC ENERGY, LLC
BOIS dARC ENERGY, LLC PREDECESSORS NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS(continued) administrative expense.
General and administrative expenses for the three months ended March 31, 2005 include $60,000 paid by Bois dArc Energy to
Comstock for accounting services under a service agreement. The operating fee income is a
reimbursement of the Companys general and administrative expense. As the parent of Comstock Offshore, Comstock provided certain general and administrative
services for Comstock Offshore. For the three months ended March 31, 2004, $0.9 million of
Comstocks general and administrative expenses were allocated to Comstock Offshore by Comstock
based on the percentage of sales of Comstock Offshore as compared to the consolidated sales of all
of Comstocks subsidiaries. Management of Comstock believes this allocation method is reasonable
and appropriate for attributing corporate overhead costs to the activities of its operating
subsidiaries. Management estimates that the allocated costs would have been similar if Comstock
Offshore had operated as an unaffiliated entity. Equity-based Compensation The Company follows the fair value based method prescribed in Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based Compensation (SFAS 123) in accounting
for equity-based compensation. Under the fair value based method, compensation cost is measured at
the grant date based on the fair value of the award and is recognized on a straight-line basis over
the award vesting period. Income Taxes The
Bois dArc Energy Predecessors are either individuals, partnerships or limited liability
companies that pass through their taxable income to their owners. Bois dArc Energy is a limited
liability company that passes through its taxable income to its unit owners. Accordingly, no
provision for federal or state corporate income taxes has been made in the accompanying
consolidated financial statements. Statements of Cash Flows For the purpose of the consolidated statements of cash flows, Bois dArc Energy considers all
highly liquid investments purchased with an original maturity of three months or less to be cash
equivalents. Cash paid for interest expense was $1,768,000 and $110,000 for the three months ended
March 31, 2005 and 2004, respectively. Asset Retirement Obligations Bois dArc Energys primary asset retirement obligations relate to future plugging and
abandonment expenses on its oil and gas properties and related facilities disposal. 11




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BOIS dARC ENERGY, LLC
BOIS dARC ENERGY, LLC PREDECESSORS NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS(continued) The following table summarizes the changes in Bois dArc Energys total estimated liability: Three Months EndedMarch 31,2005
    
    
    2004(In thousands)Future abandonment liability at beginning of period
    
    $
    28,253
    
    
    $
    24,876Accretion expense
    
    
    439
    
    
    
    381Liabilities assumed and new wells drilled
    
    
    921
    
    
    
    Liabilities settled
    
    
    (218
    )
    
    
    406Future abandonment liability at end of period
    
    $
    29,395
    
    
    $
    25,663
 (3) Bank Loan Bois dArc Resources, Ltd. entered into a loan agreement with a bank in January 2000. The
loan agreement provided for borrowings of up to $14.0 million, which was to be repaid in
twenty-four equal monthly installments beginning on April 1, 2004. Interest was payable monthly at
the banks prime rate plus 1/2%. The loan was refinanced on July 16, 2004, in connection with the
formation of Bois dArc Energy with borrowings under the credit facility provided to the Company by
Comstock. (4) Payable to Parent Company Comstock made advances to Comstock Offshore to fund Comstock Offshores acquisition,
development and exploration activities. There were no repayment terms established by Comstock for
its wholly-owned subsidiary. Interest expense has been included in the accompanying financial
statements on the advances made to Comstock Offshore based on Comstocks average interest costs
under its bank credit facility. The accompanying financial statements include interest expense of
$2.0 million for the three months ended March 31, 2004, related to the advances from Comstock to
Comstock Offshore. The payable to Comstock was refinanced in its entirety on the date of the
Companys formation by the contribution of $262.5 million to the equity of the Company and by $83.2
million in borrowings under the Companys $200.0 million credit facility provided by Comstock in
connection with its formation, which was to mature on April 1, 2006. Approximately $164.1 million
was outstanding on the line of credit as of March 31, 2005. Borrowings under the credit facility
bear interest at the Companys option at either LIBOR plus 2% or the base rate (which is the higher
of the prime rate or the federal funds rate) plus 0.75%. Interest expense of $1.8 million was
charged by Comstock under the credit facility during the three months ended March 31, 2005. (5) Members Equity As
of March 31, 2005, Bois dArc Energy had three classes of membership units - class A, class
B and class C units. Class A units represent an interest in the capital of the Company but no
interest in the profits of the Company and have voting rights. Class B units represent an interest
in the capital and profits of the Company and have no voting or other decision-making rights except
as required by applicable law. Class C units represent an interest only in the profits of the
Company and have no voting or other decision-making rights except as required by applicable law. 12




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BOIS dARC ENERGY, LLC
BOIS dARC ENERGY, LLC PREDECESSORS NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS(continued) (6) Long-term Incentive Plan On July 16, 2004, the unit holders approved the 2004 Long-term Incentive Plan (the Incentive
Plan) for management including officers, directors, employees and consultants. The Incentive Plan
authorizes the grant of non-qualified options to purchase Class B units and the grant of restricted
Class C units. The options under the Incentive Plan have contractual lives of ten years and become
exercisable after lapses in vesting periods ranging from one to five years from the grant date.
The Incentive Plan provides that awards in the aggregate cannot exceed 11% of the total outstanding
Class B units. The following table summarizes the options to purchase Class B units that have been awarded
under the Incentive Plan and were outstanding at March 31, 2005: Number of OptionsGranted and
    
    Weighted Average
    
    Number of OptionsExercise Price
    
    Outstanding
    
    Remaining Life
    
    Exercisable(years)$6.00
    
    
    2,800,000
    
    
    
    9.5
    
    
    (1)
 
 (1)
    
    The options vest over five years with service to the Company. Also under the Incentive Plan, certain officers, managerial employees and consultants
were granted a right to receive Class C units without cost to the recipient. The restrictions on
the Class C units lapse over a five year period. The Class C units are entitled to participate in
the appreciation of the Companys value and can convert to a maximum of one-half of a Class B unit.
As of March 31, 2005 restricted Class C unit awards were outstanding for 4,290,000 units. These
Class C units could convert to a maximum of 2,145,000 Class B units based on the future value of
the Company. The fair value of the Incentive Plan awards was initially determined by the Board of Managers
as $4.55 per option to acquire the Class B units and $3.40 per Class C unit. Equity-based
compensation expense of $1.4 million was recognized in the three months ended March 31, 2005 for
the Incentive Plan awards and is included in general and administrative expenses in the
accompanying consolidated statement of operations. (7) Commitments and Contingencies Guarantees of Comstock Debt In consideration for the $200.0 million credit facility provided by Comstock, Bois dArc
Energy and each of its subsidiaries agreed to become guarantors of
Comstocks 6 7/8% senior
notes due 2012, of which $175.0 million principal amount is outstanding. Bois dArc Energy was also a guarantor of and had
agreed to pledge substantially all of its assets with respect to Comstocks $400.0 million bank
credit facility. The bank credit facility is a four-year revolving credit commitment that matures
on February 25, 2008. At March 31, 2005, Comstock had $254.0 million outstanding under this credit
facility. Borrowings under the credit facility are limited to a borrowing base that was $300.0
million as of March 31, 2005. 13




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BOIS dARC ENERGY, LLC
BOIS dARC ENERGY, LLC PREDECESSORS NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS(continued) Contingencies From time to time, Bois dArc Energy is involved in certain litigation that arises in the
normal course of its operations. The Company does not believe the resolution of these matters will
have a material effect on the Companys financial position or results of operations. (8) Related Party Transactions An entity owned by the spouse of Wayne L. Laufer, one of the principals of Bois dArc,
provided accounting services to Bois dArc under a service agreement. Bois dArc paid this entity
$122,000 for accounting services for the three months ended March 31, 2004. In connection with the
formation of Bois dArc Energy, this agreement was terminated which resulted in a termination fee
of $1.2 million that is payable in monthly installments over a two year period that commenced in
October 2004. In addition, Bois dArc Energy also paid $49,000 to this entity for services
provided in three months ended March 31, 2005. Bois dArc Energy entered into a new service agreement with Comstock pursuant to which
Comstock provides accounting services for $240,000 annually beginning in July 2004. Bois dArc
Energy paid $60,000 to Comstock for accounting services provided in the three months ended March
31, 2005. (9) Subsequent Events On May 11, 2005, Bois dArc Energy completed an initial public offering of 13.5 million shares
of common stock at $13.00 per share to the public. The Company sold 12.0 million shares of common
stock and received net proceeds of $143.6 million and a selling stockholder sold 1.5 million
shares. On May 10, 2005, Bois dArc Energy, LLC converted from a limited
liability company to a corporation and changed its name to Bois dArc Energy, Inc. On May 11, 2005, the Company also entered into a new $175.0 million bank credit facility with
The Bank of Nova Scotia and several other banks. Borrowings under the new credit facility are
limited to a borrowing base that was initially set at $100.0 million and thereafter is redetermined
semi-annually based on the banks estimates of the future net cash flows of the Companys oil and
natural gas properties. The determination of the borrowing base will be at the sole discretion of
the administrative agent and the bank group. The credit facility will mature on May 11, 2009.
Borrowings under the new credit facility bear interest at the Companys option at either (1) LIBOR
plus a margin that varies from 1.25% to 2.0% depending upon the ratio of the amounts outstanding to
the borrowing base or (2) the base rate (which is the higher of the prime rate or the federal funds
rate) plus a margin that varies from 0% to 0.75% depending upon the ratio of the amounts
outstanding to the borrowing base. A commitment fee ranging from 0.375% to 0.50% (depending upon the ratio of the amounts
outstanding to the borrowing base) is payable on the unused borrowing base. Indebtedness under the
new credit facility is secured by substantially all of the Companys and its subsidiaries assets,
and all of the Companys subsidiaries are guarantors of the indebtedness. The credit facility
contains covenants that restrict the payment of cash dividends, borrowings, sales of assets, loans
to others, capital expenditures, investments, merger activity, hedging contracts, liens and certain
other transactions without the prior consent of the lenders and requires the Company to maintain a
ratio of current assets to current liabilities of at least one-to-one and a ratio of indebtedness to
earnings before interest, taxes, depreciation, depletion, and amortization, exploration and
impairment expense of no more than 2.5-to-one. Bois dArc Energy repaid the outstanding balance under the
credit facility provided by Comstock out of the net proceeds of the initial public offering and
borrowings under the new credit facility and was released as a guarantor of Comstocks debt. 14




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS This report contains forward-looking statements that involve risks and uncertainties that are
made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Actual results may differ materially from those anticipated in our forward-looking
statements due to many factors. Overview Our Business.We were formed in July 2004. We are a growing independent exploration company
engaged in the discovery and production of oil and natural gas in the outer continental shelf of
the Gulf of Mexico. As of December 31, 2004, we owned interests in 104 (68.9 net to us) producing
oil and natural gas wells in the federal and state waters of the Gulf of Mexico. We operate 82 of
the 104 producing wells. In managing our business, we are concerned primarily with maximizing
return on our stockholders equity. To accomplish this primary goal, we focus on profitably
increasing our oil and natural gas reserves. Our future growth will be driven primarily by exploration activities. We have 48 identified
exploration prospects in our inventory that are located on our leasehold acreage and supported by
3-D seismic. We believe that by adhering to our prospect selection methodology, we have realized
high historical exploration success rates. We believe that our inventory, including development
wells resulting from new discoveries, will provide us with opportunities to increase our reserves
over the next three to five years. Under our current drilling budget, we plan to drill
approximately 13 of these prospects in 2005. However, the actual number of prospects that we drill
over any defined time period will be determined based upon the number of rig days that we have
available under our contracts with drilling contractors and the amount of time it takes to drill
each prospect selected by our management and technical team. We use the successful efforts method
of accounting which allows only for the capitalization of costs associated with developing proven
oil and natural gas properties as well as exploration costs associated with successful exploration
activities. Accordingly, our exploration expense consists of costs we incur to acquire and
reprocess 3-D seismic data, impairments of our unevaluated leasehold where we were not successful
in discovering reserves and the costs of unsuccessful exploratory wells that we drill. We generally sell our oil and natural gas at current market prices at the point our platforms
connect to third party purchaser pipelines. We market our products several different ways
depending upon a number of factors, including the availability of purchasers for the product, the
availability and cost of pipelines near the related production platform, market prices, pipeline
constraints and operational flexibility. Accordingly, our revenues are heavily dependent upon the
prices of, and demand for, oil and natural gas. Oil and natural gas prices have historically been
volatile and are likely to remain volatile in the future. Our revenues for 2004 and 2005
benefitted from a general increase in oil and natural gas prices. We have not entered into oil and
natural gas hedging arrangements on any of our anticipated sales. However, we may in the future
enter into such arrangements in order to reduce our exposure to price risks. Such arrangements may
also limit our ability to benefit from increases in oil and natural gas prices. Our operating costs include the expense of operating our wells, platforms and other
infrastructure in the Gulf of Mexico and transporting our products to the point of sale. Our operating costs are
generally comprised of several components, including costs of field personnel, repair and
maintenance cost, production supplies, fuel used in operations, transportation cost, production
taxes, workover cost and ad valorem taxes for properties located in state waters. Like all oil and natural gas exploration and production companies, we face the challenge of
replacing our reserves. Oil and natural gas properties in the Gulf of Mexico typically deplete at
higher rates than do properties in other areas of the United States. Although in the past we have
offset the effect of sharply declining production rates from existing properties through successful
drilling efforts, there can be no assurance that we will be able to offset production declines or
maintain production at our current rates through additional discoveries. We intend to continue our
focus on adding reserves through drilling efforts, and our future growth will depend on our ability
to continue to add new reserves in excess of production. 15




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Our exploration and production activities are conducted in the Gulf of Mexico. Our
operations are significantly impacted by conditions in the Gulf of Mexico, such as adverse weather
conditions; the availability of equipment, facilities or services; delays and decreases in the
availability of capacity to transport, gather or process production; and changes in the regulatory
environment. We maintain insurance to mitigate the risk of damage to our production facilities that
could result from adverse weather conditions. Our operations and facilities are subject to extensive federal, state and local laws and
regulations relating to the exploration for, and the development, production and transportation of,
oil and natural gas, and operational safety. Future laws or regulations, any adverse changes in the
interpretation of existing laws and regulations or our failure to comply with existing legal
requirements may harm our business, results of operations and financial condition. Applicable
environmental regulations require us to remove our platforms after production has ceased, to plug
and abandon our wells and to remediate any environmental damage our operations may have caused. The
present value of the estimated future costs to plug and abandon our oil and gas wells and to
dismantle and remove our production facilities is included in our reserve for future abandonment
costs, which was $29.4 million as of March 31, 2005. Our Predecessors.In December 1997, Comstock Offshore, LLC, an indirect wholly-owned
subsidiary of Comstock, acquired from Bois dArc Resources and other interest owners certain
offshore oil and natural gas properties, including the properties we now own at Ship Shoal blocks
66, 67, 68 and 69 and South Pelto block 1. Bois dArc Resources was the predecessor to Bois dArc
Resources, Ltd., an entity owned by two of our executive officers, directors and stockholders, Gary
W. Blackie and Wayne L. Laufer. In connection with this acquisition, Comstock Offshore, Bois dArc
Resources, Ltd. and Bois dArc Offshore, Ltd., another entity owned by Messrs. Blackie and Laufer,
established a joint venture to explore for oil and natural gas in the Gulf of Mexico. Under the
joint exploration venture, Bois dArc was responsible for developing a budget for exploration
activities and for generating exploration prospects in the Gulf of Mexico utilizing 3-D seismic
data and their extensive geological expertise in the region. Comstock Offshore had to approve the
budget and would advance the funds for the acquisition of 3-D seismic data and leases needed to
conduct exploration activities. Comstock Offshore was reimbursed for all advanced costs and was
entitled to a non-promoted working interest in each prospect generated. For each successful
discovery well drilled pursuant to the joint exploration venture, Comstock issued to the two
principals of Bois dArc warrants exercisable for the purchase of shares of Comstocks common
stock. Successful wells drilled under the exploration venture were operated by Bois dArc
Offshore, Ltd. pursuant to a joint operating agreement entered into by the parties participating in
the prospect, including Comstock Offshore and the Bois dArc Participants. Any future operation on
the lease including drilling additional wells on the acreage associated with the prospect was
conducted under the joint operating agreement and had to be approved by the participating parties. Our Formation.In July 2004, Comstock, Bois dArc Resources, Ltd. and Messrs. Blackie and
Laufer formed our company to replace the joint exploration venture. Bois dArc Resources, Ltd.,
Bois dArc Offshore, Ltd., and the other entities owned by Messrs. Blackie and Laufer and who we
collectively refer to as Bois dArc, and certain participants in their exploration activities,
who we collectively refer to as the Bois dArc Participants, and Comstock Offshore contributed to
Bois dArc Energy, LLC substantially all of their Gulf of Mexico properties and assigned to Bois
dArc Energy, LLC their related liabilities, including certain debt, in exchange for equity interests in Bois dArc Energy, LLC. The equity interests issued in
exchange for the contributions were determined by using a valuation of the properties contributed
by the particular contributors conducted by our independent petroleum consultants, relative to the
value of the properties contributed by all contributors. Comstock Offshore contributed its Gulf of
Mexico properties and assigned $83.2 million of related debt in exchange for an approximately 59.9%
ownership interest. Each of the Bois dArc Participants contributed its interest in commonly owned
Gulf of Mexico properties and they assigned in the aggregate $28.2 million of related liabilities
in exchange for an approximately 40.1% aggregate ownership interest. The Bois dArc Participants
also received $27.6 million in cash to equalize the amount that Comstock Offshores debt exceeded
its proportional share of the liabilities assigned. We also reimbursed Comstock Offshore $12.7
million and Bois dArc $0.8 million for advances made under the joint exploration venture for
undrilled prospects. 16




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##### Table of Contents



Comparability of Results The combined financial statements for the three months ended March 31, 2004 and the discussion
below with respect to periods prior to July 16, 2004 are based on the financial condition and
results of operations of Comstock Offshore and the Bois dArc Participants as they relate to the
properties contributed to us on a combined basis. Our predecessors, the Bois dArc Participants and
Comstock Offshore, have operated as joint venture partners since 1997. Bois dArc Energy, LLC is a
continuation of this joint venture and formalizes the relationship of the predecessors. A majority
of the interests of our predecessors are in the same properties and the operations have been under
the combined management of the predecessors. As such, combined financial statements using
historical cost basis properly reflect the historical combined operations of Comstock Offshore and
the Bois dArc Participants. The general and administrative expenses included in our predecessors
combined financial statements reflect the general and administrative expenses of Bois dArc, a
privately-held company, and certain general and administrative expenses allocated to Comstock
Offshore by its parent, Comstock. As such, our future general and administrative expenses may be
significantly different than those of our predecessors. Results of Operations Our operating data for the three months ended March 31, 2005 and 2004 is summarized below: CombinedBois dArcBois dArc
    
    
    Energy, LLCEnergy, LLC
    
    
    PredecessorsThree Months Ended March 31,2005
    
    
    2004Revenues:Oil and gas sales
    
    $
    43,476
    
    
    $
    29,908Expenses:Oil and gas operating(1)
    
    $
    7,707
    
    
    $
    7,667Exploration
    
    $
    3,136
    
    
    $
    2,433Depreciation, depletion and
amortization
    
    $
    11,821
    
    
    $
    9,987Net Production Data:Oil (Mbbls)
    
    
    351
    
    
    
    355Natural gas (Mmcf)
    
    
    4,051
    
    
    
    2,857Natural gas equivalent (Mmcfe)
    
    
    6,154
    
    
    
    4,985Average Sales Price:Oil (Bbls)
    
    $
    47.63
    
    
    $
    35.04Natural gas (Mcf)
    
    $
    6.61
    
    
    $
    6.12Average equivalent price (per
Mcfe)
    
    $
    7.06
    
    
    $
    6.00Expenses ($  per Mcfe):Oil and gas operating(1)
    
    $
    1.25
    
    
    $
    1.54Depreciation, depletion and
amortization(2)
    
    $
    1.91
    
    
    $
    1.92
 
 (1)
    
    Includes lease operating costs and production and ad
valorem taxes.(2)
    
    Represents depreciation, depletion and amortization of
oil and gas properties only. 17




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Oil and gas sales.Our oil and gas sales increased $13.6 million, or 45%, in the first
quarter of 2005 to $43.5 million from $29.9 million in the first quarter of 2004. The increase in
sales was attributable to the 23% increase in our production combined with 18% higher oil and gas
prices that we realized in the first quarter of 2005. Our average realized gas price increased by
8% and our average realized oil price increased by 36% in the first three months of 2005 as
compared with the average prices we realized in the same period in 2004. In the first quarter of
2005, our natural gas production increased by 42% while our oil production decreased by 1%. The
increase in our gas production in the first quarter of 2005 as compared to the first quarter of
2004 is primarily related to production from new gas wells at Vermilion block 51 and South Marsh
Island block 220 and at Ship Shoal blocks 109 and 110. Production from new oil wells at South
Pelto blocks 22 and 25 and at South Timbalier block 30, Vermilion blocks 51, 87, 122 and South
Marsh Island block 220 offset most of the decline from our other oil properties in the first
quarter of 2005 as compared to first quarter of 2004. Oil and gas operating expenses.Our oil and gas operating expenses, including production
taxes, were $7.7 million for the three months ended March 31, 2005 as compared to $7.7 million for
the same period in 2004. Our operating expenses per equivalent Mcf produced decreased $0.29, or
19%, to $1.25 for the first quarter of 2005 from $1.54 for the first quarter of 2004. The decrease
is primarily due to the 23% increase in our production in 2005 and the fixed nature of our lifting
costs. Exploration expense.We incurred $3.1 million in exploration expense in the first three
months of 2005 which relates to the acquisition of 3-D seismic data. In the first three months of
2004, our exploration expense was $2.4 million, which related to the acquisition of 3-D seismic
data and the cost of one unsuccessful exploratory well. Depreciation, depletion and amortization.Our depreciation, depletion and amortization
expense increased $1.8 million, or 18%, to $11.8 million in the first quarter of 2005 from $10.0
million in the first quarter of 2004. The increase is primarily due to the 23% increase in our
production in 2005. Our depreciation, depletion and amortization expense per equivalent Mcf
produced decreased by $0.01 to $1.91 for the first quarter of 2005 as compared to $1.92 for the
first quarter of 2004. General and administrative expenses.Our general and administrative expenses, which are
reported net of operating fees that we receive, were $2.0 million for the three months ended March
31, 2005 as compared to $0.6 million for the three months ended March 31, 2004. The increase in
2005 relates primarily to $1.4 million in equity-based compensation expense included in our general
and administrative expenses for awards made to employees under our long-term incentive plan. Interest expense.Our interest expense for the three months ended March 31, 2005 was $1.8
million as compared to $2.2 million for the three months ended March 31, 2004. The decrease was
due to a decrease in our outstanding borrowings from Comstock offset partially by an increase in
our average interest rates. Average outstanding borrowings from
Comstock were $155.1 million
during the three months ended March 31, 2005 as compared to $318.3 million for the three months
ended March 31, 2004. The average interest rate on borrowings
from Comstock was 4.6% during in the
first quarter of 2005 as compared to 2.6% in the first quarter of 2004. Net income.We reported net income of $17.1 million for three months ended March 31, 2005 as
compared to $7.0 million for the three months ended March 31, 2004. The higher net income in 2005
was primarily due to an increase in our oil and gas sales in 2005
resulting from increased production and higher oil and gas prices
realized in this period. 18




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Liquidity and Capital Resources Funding for our activities has historically been provided by net cash flow from operating
activities or from borrowings. For the three months ended March 31, 2005 our primary sources of
funds were net cash flow from operating activities of $23.3 million and borrowings of $16.0 million
from Comstock. Our need for capital, in addition to funding our ongoing operations, primarily relates to our
exploration for oil and natural gas reserves, the development and acquisition of our oil and gas
properties and the repayment of our debt. For the three months ended March 31, 2005, we incurred
capital expenditures of $37.8 million for exploration, development and acquisition activities. Our capital expenditure activity is summarized in the following table: CombinedBois dArcBois dArc
    
    
    Energy, LLCEnergy, LLC
    
    
    PredecessorsThree Months Ended March 31,2005
    
    
    2004(In thousands)Acquisitions of proved oil and gas properties
    
    $
    
    
    
    $
    715Acquisitions of unproved oil and gas properties
    
    
    100
    
    
    
    952Exploration and development expenditures
    
    
    37,452
    
    
    
    40,781Other
    
    
    267
    
    
    
    $
    37,819
    
    
    $
    42,448
 The timing of most of our capital expenditures is discretionary because we have no
material long-term capital expenditure commitments. Consequently, we have a significant degree of
flexibility to adjust the level of our capital expenditures as circumstances warrant. We have
budgeted approximately $148.0 million for development and exploration projects in 2005. We expect
to use internally generated cash flow from operating activities to fund our development and
exploration activities. Our operating cash flow is highly dependent on oil and natural gas prices. Bois dArc Resources, Ltd. entered into a loan agreement with a bank in January 2000. The loan
agreement provided for borrowings of up to $14.0 million, which were to be repaid in twenty-four
equal monthly installments beginning on April 1, 2004. Interest was payable monthly at the banks
prime rate plus 0.5%. The loan was refinanced on July 16, 2004 in connection with our formation
with borrowings under the credit facility provided by Comstock. Until our formation, Comstock made advances to Comstock Offshore to fund Comstock Offshores
acquisition, development and exploration activities. Comstock charged interest on the advances to
Comstock Offshore based on Comstocks average interest costs under its bank credit facility. In
connection with our formation, we assumed $83.2 million of the amount payable by Comstock Offshore
to Comstock and the remaining balance payable of $262.5 million was accounted for as a contribution
to our equity. Comstock provided a revolving line of credit to us with a maximum outstanding amount of $200.0
million. Approximately $152.4 million of this revolver was used to repay the debt assigned to us
in our formation, including the $83.2 million payable to Comstock, $13.5 million of advances made
by Comstock Offshore and Bois dArc under the joint exploration venture and $55.7 million to
refinance the bank loan and other obligations of the Bois dArc Participants. Borrowings under
this credit facility bear interest at our option at either LIBOR plus 2% or the base rate (which is
the higher of the prime rate or the federal funds rate) plus 0.75%. The credit facility was to
mature on April 1, 2006. 19




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In consideration for the $200.0 million credit facility provided by Comstock, we became
a guarantor of Comstocks 6 7/8% senior notes due 2012, of which $175.0 million aggregate
principal amount is outstanding. We also became a guarantor of and have pledged or agreed to
pledge substantially all of our assets with respect to Comstocks $400.0 million bank credit
facility. Comstocks bank credit facility is a four-year revolving credit commitment that matures
on February 25, 2008. At March 31, 2005, Comstock had $254.0 million outstanding under this credit
facility. Borrowings under the credit facility are limited to a borrowing base that was $300.0
million as of March 31, 2005. On May 11, 2005 we completed an initial public offering of 13.5 million shares of common stock
at $13.00 per share to the public. We sold 12.0 million shares of common stock and received net
proceeds of $143.6 million and a selling stockholder sold 1.5 million shares. Prior to completing
the offering, we converted from a limited liability company to a corporation and changed our name
to Bois dArc Energy, Inc. We also entered into a new $175.0 million bank credit facility with The Bank of Nova Scotia
and several other banks. Borrowings under the new credit facility are limited to a borrowing base
that was initially set at $100.0 million and thereafter is redetermined semi-annually based on the
banks estimates of the future net cash flows of our oil and natural gas properties. The
determination of the borrowing base will be at the sole discretion of the administrative agent and
the bank group. The credit facility will mature on May 11, 2009. Borrowings under the new credit
facility bear interest at our option at either (1) LIBOR plus a margin that varies from 1.25% to
2.0% depending upon the ratio of the amounts outstanding to the borrowing base or (2) the base rate
(which is the higher of the prime rate or the federal funds rate) plus a margin that varies from 0%
to 0.75% depending upon the ratio of the amounts outstanding to the borrowing base. A commitment
fee ranging from 0.375% to 0.50% (depending upon the ratio of the amounts outstanding to the
borrowing base) is payable on the unused borrowing base. Indebtedness under the new credit
facility is secured by substantially all of our and our subsidiaries assets, and all of our
subsidiaries are guarantors of the indebtedness. The credit facility contains covenants that
restrict the payment of cash dividends, borrowings, sales of assets, loans to others, capital
expenditures, investments, merger activity, hedging contracts, liens and certain other transactions
without the prior consent of the lenders and requires us to maintain a ratio of current assets to
current liabilities of at least one-to-one and a ratio of indebtedness to earnings before interest, taxes,
depreciation, depletion, and amortization, exploration and impairment
expense of no more than 2.5-to-one. We
repaid the outstanding balance under the credit facility provided by Comstock out of the net
proceeds of the initial public offering and borrowings under our new credit facility and we were
released as a guarantor of Comstocks debt. We believe that our cash flow from operations and available borrowings under our new credit
facility will be sufficient to fund our operations and future growth as contemplated under our
current business plan. However, if our plans or assumptions change or if our assumptions prove to
be inaccurate, we may be required to seek additional capital. We cannot provide any assurance that
we will be able to obtain such capital, or if such capital is available, that we will be able to
obtain it on terms acceptable to us. 
 Item 3. Quantitative and Qualitative Disclosures on Market Risks Oil and Natural Gas Prices.Our financial condition, results of operations and capital
resources are highly dependent upon the prevailing market prices of oil and natural gas. These
commodity prices are subject to wide fluctuations and market uncertainties due to a variety of
factors that are beyond our control. Factors influencing oil and natural gas prices include the
level of global demand for crude oil, the foreign supply of oil and natural gas, the establishment
of and compliance with production quotas by oil exporting countries, weather conditions which
determine the demand for natural gas, the price and availability of alternative fuels and overall
economic conditions. It is impossible to predict future oil and natural gas prices with any degree
of certainty. Sustained weakness in oil and natural gas prices may adversely affect our financial
condition and results of operations, and may also reduce the amount of oil and natural gas reserves
that we can produce economically. Any reduction in our oil and natural gas reserves, including
reductions due to price fluctuations, can have an adverse affect on our ability to obtain capital
for our exploration and development activities. Similarly, any improvements in oil and natural gas
prices can have a favorable 20




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impact on our financial condition, results of operations and capital resources. Based on our oil and natural gas
production in the first three months ended March 31, 2005, a $1.00 change in the price per barrel
of oil would have resulted in a change in our cash flow for such period by approximately $0.4
million and a $1.00 change in the price per Mcf of natural gas would have changed our cash flow by
approximately $4.1 million. We have not entered into any hedging arrangements. Interest Rates.As of March 31, 2005, we had $164.1 million outstanding under our credit
facility provided to us by Comstock, which was subject to floating market rates of interest.
Borrowings under the credit facility bear interest at a fluctuating rate that is tied to LIBOR or
the corporate base rate (which is the higher of the prime rate or the federal funds rate), at our
option. Any increases in these interest rates could have an adverse impact on our results of
operations and cash flow. Based on borrowings outstanding at March 31, 2005, a 100 basis point
change in interest rates would change our interest expense for the
three months ended March 31, 2005 by approximately $0.4 million. 
 ITEM 4. CONTROLS AND PROCEDURES As of March 31, 2005, we carried out an evaluation, under the supervision and with the
participation of our chief executive officer and chief financial officer, of the effectiveness of
the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e)
under the Securities Exchange Act of 1934). Based on this evaluation, our chief executive officer
and chief financial officer concluded that our disclosure controls and procedures were effective as
of March 31, 2005 to provide reasonable assurance that information required to be disclosed by us
in the reports filed or submitted by us under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the SECs rules and forms,
and to provide reasonable assurance that information required to be disclosed by us is accumulated
and communicated to our management, including our chief executive officer and chief financial
officer, as appropriate, to allow timely decisions regarding required disclosure. 21




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##### Table of Contents



PART II - OTHER INFORMATION 
 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Exhibits3.1*
    
    Articles of Incorporation.10.1*
    
    Credit Agreement Dated as of May 11, 2005 among the Company and The Bank of
Nova Scotia, as Administrative Agent and Issuing Bank, Calyon New York Branch,
as Syndication Agent, Amsouth Bank as Documentation Agent and the other
lenders.31.1*
    
    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 2002.99.1*
    
    Form of Stock Option under the Long-term Incentive Plan.99.2*
    
    Form of Restricted Stock Grant under the Long-term Incentive Plan.
 
 *
    
    Filed herewith 
 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BOIS dARC ENERGY, INC.Date: June 20, 2005
    
    
    
    /s/ WAYNE L. LAUFERWayne L. Laufer, President and ChiefExecutive Officer (Principal Executive Officer)Date: June 20, 2005
    
    
    
    /s/ ROLAND O. BURNSRoland O. Burns, Senior Vice President,Chief Financial Officer, Secretary, and Treasurer(Principal Financial and Accounting Officer)
 22