COMSTOCK RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) During 2012, the Company’s estimated quantities of proved undeveloped natural gas reserves decreased by 460 Bcf from total proved undeveloped reserves as of December 31, 2011 due to downward revisions related to the lower natural gas price that was used to determine estimated reserve quantities at December 31, 2012. Substantially all of the Company’s proved undeveloped natural gas reserves related to undrilled natural gas wells at December 31, 2012 were not economic at the lower natural gas price at December 31, 2012. The decrease in proved undeveloped natural gas reserves in 2012 resulted in an increase to the Company’s per unit amortization rate for its proved oil and gas properties and, accordingly, increased depletion, depreciation and amortization expense during 2012 and 2013 as compared to previous periods. The proved oil and gas reserves utilized in the preparation of the financial statements were estimated by Lee Keeling and Associates, independent petroleum consultants, in accordance with guidelines established by the Securities and Exchange Commission and the Financial Accounting Standards Board, which require that reserve reports be prepared under existing economic and operating conditions with no provision for price and cost escalation except by contractual agreement. All of the Company’s reserves are located onshore in the continental United States of America. The following table sets forth the standardized measure of discounted future net cash flows relating to proved reserves at December 31, 2012 and 2013: The standardized measure of discounted future net cash flows at the end of 2012 and 2013 was determined based on the simple average of the first of month market prices for oil and natural gas for each year. Prices were $101.75 per barrel of oil and $2.58 per Mcf of natural gas for 2012 and $104.38 per barrel of oil and $3.37 per Mcf of natural gas for 2013. Prices used in determining quantities of oil and natural gas reserves and future cash inflows from oil and natural gas reserves represent prices received at the Company’s sales point. These prices have been adjusted from posted or index prices for both location and quality differences. Future development and production costs are computed by estimating the expenditures to be incurred in developing and producing proved oil and gas reserves at the end of the year, based on year end costs and assuming continuation of existing economic conditions. Future income tax expenses are computed by applying the appropriate statutory tax rates to the future pre-tax net cash flows relating to proved reserves, net of the tax basis of the properties involved. The future income tax expenses give effect to permanent differences and tax credits, but do not reflect the impact of future operations. 2012 2013 (Inthousands) Cash Flows Relating to Proved Reserves: Future Cash Flows ........................... $3,053,078 $ 3,817,982 Future Costs: ............................... Production ............................... (915,053) (1,307,923) Development and Abandonment .............. (544,084) (649,758) Future Income Taxes ......................... (372,813) (451,708) Future Net Cash Flows ....................... 1,221,128 1,408,593 10% Discount Factor ......................... (579,803) (601,376) Standardized Measure of Discounted Future Net Cash Flows ..................................... $ 641,325 $ 807,217 F-30