Core Insights - Comstock Resources (CRK) is planning to increase its spending in 2026 to rebuild production after reporting a $220 million free cash flow deficit from operations in 2025 [1] Group 1: Company Overview - Comstock Resources is focusing on aggressive spending plans to enhance production capabilities in the upcoming year [1] Group 2: Financial Performance - The company reported a significant free cash flow deficit of $220 million for the year 2025, indicating financial challenges that necessitate increased investment [1] Group 3: Analyst Background - Aaron Chow, known as Elephant Analytics, has over 15 years of analytical experience and is recognized as a top-rated analyst on TipRanks, contributing insights into the energy sector [1]

Core Viewpoint - Comstock Resources, Inc. (NYSE:CRK) has experienced a significant decline in share price due to falling natural gas prices, which have reached a four-month low [1][3]. Company Overview - Comstock Resources, Inc. is a prominent independent natural gas producer, primarily focused on the development of the Haynesville shale located in North Louisiana and East Texas [2]. Industry Context - The recent drop in natural gas prices is attributed to several factors, including milder weather reducing heating demand, increased production levels, and lower-than-average storage withdrawals [3]. - As of February, the average natural gas output in the Lower 48 states has risen to 108.7 billion cubic feet per day (bcfd), an increase from 106.3 bcfd in the previous month [4]. - The US Energy Information Administration reported a withdrawal of 144 billion cubic feet (bcf) for the week ending February 13, which is slightly below the five-year average and significantly lower than the 182 bcf withdrawal from the same week last year [4].

Production and Reserves - Comstock Resources reported a significant increase in natural gas production, achieving a total of 20.5 billion cubic feet (Bcf) for the quarter, representing a 15% increase year-over-year [7]. - Comstock's total proved reserves are estimated at 1.2 trillion cubic feet equivalent (Tcfe), with a reserve replacement ratio of 150% for the last year [7]. - The company plans to drill 25 new wells in the next fiscal year, aiming to enhance production capacity and operational efficiency [7]. - Comstock's management provided guidance for the next quarter, projecting production levels to reach 22 Bcf, representing a 7% increase from the current quarter [7]. Financial Performance - The company reported a net income of $30 million for the last quarter, a significant increase from $10 million in the same quarter last year, indicating strong financial performance [7]. - The average realized price for natural gas was $3.50 per thousand cubic feet (Mcf), reflecting a 10% increase compared to the previous quarter [7]. - Comstock's operating costs decreased by 5% to $1.80 per Mcf, contributing to improved profit margins [7]. Capital Expenditures and Investments - The company anticipates capital expenditures of approximately $150 million for the upcoming fiscal year, focusing on drilling and completion activities [7]. - Comstock has invested in advanced drilling technologies, which are expected to reduce finding and development costs by 20% [7]. Strategic Focus and Growth Opportunities - The company is exploring potential acquisitions to expand its asset base and increase market share in the natural gas sector [7]. - Future acquisitions are a strategic focus, with the company emphasizing the importance of successfully identifying and integrating these opportunities [17]. - The company is committed to discovering or acquiring additional reserves to support long-term growth [17]. - The company is assessing exploration and development opportunities to enhance its business strategy and operational objectives [17]. Risk Management and Operational Considerations - Risks include price volatility and supply-demand dynamics for natural gas and oil, which could impact future production rates and costs [17]. - Future financial results are expected to be influenced by cash flow and liquidity, with operating costs including lease operating expenses and administrative costs being closely monitored [17]. - Changes in regulatory requirements and general economic conditions are being monitored as potential impacts on operations [17]. - Retaining key members of senior management and employees is critical for maintaining operational effectiveness and strategic direction [17]. Technology and Innovation - The company utilizes advanced technologies such as 3-D seismic for detecting hydrocarbon accumulations, enhancing exploration efforts [52]. - The company aims to effectively market its natural gas and oil while managing the availability of rigs, equipment, and personnel [17].

Key Takeaways Natural gas tumbled from above $7 to near $3 per MMBtu, a roughly 60% drop in weeks.Storage sits 6% below the five-year average after a string of big weekly draws.EIA sees $4.31 avg price in 2026 as production climbs toward 110 Bcf per day.Natural gas prices have fallen sharply from their early-year levels, leaving investors wondering whether this is a buying opportunity or a warning sign. After climbing to three-year highs in January, futures have dropped to nearly half that level.At this tim ...

Core Viewpoint - Comstock Resources is actively working to reduce costs in the Western Haynesville region, which may have surprised the market despite being anticipated [2] Group 1: Company Analysis - Comstock Resources has proposed solid strategies to decrease operational costs in the Western Haynesville area [2] - The company has added three rigs to enhance its operational capacity [2] Group 2: Industry Insights - The oil and gas industry is characterized by boom-bust cycles, requiring patience and experience for successful investment [2] - The focus is on identifying undervalued and under-followed oil companies, as well as out-of-favor midstream companies that present compelling investment opportunities [2]

Core Viewpoint - Comstock Resources is actively working to reduce costs in the Western Haynesville region, which may have surprised the market despite being anticipated [2] Group 1: Company Analysis - Comstock Resources has proposed solid strategies to decrease operational costs in the Western Haynesville area [2] - The company has added three rigs to enhance its operational capacity [2] Group 2: Industry Insights - The oil and gas industry is characterized by boom-bust cycles, requiring patience and experience for successful investment [2] - The focus is on identifying undervalued and under-followed oil companies, as well as out-of-favor midstream companies that present compelling investment opportunities [2]

Core Insights - Comstock Resources, Inc. (CRK) reported fourth-quarter 2025 adjusted earnings of 16 cents per share, exceeding the Zacks Consensus Estimate of 11 cents, with revenues of $789.8 million surpassing the estimate of $467.9 million and increasing from $366.5 million year-over-year [1][10] Group 1: Operational Performance - Total production averaged 111,257 million cubic feet equivalent (MMcfe), down from 124,185 MMcfe in the same quarter last year, with natural gas production declining to 111,239 million cubic feet (MMcf) from 124,128 MMcf [2] Group 2: Price Realization - Average natural gas price realization (before hedging) was $3.29 per thousand cubic feet (Mcf), up from $2.32 per Mcf in the prior-year quarter, while total price realization (before hedging) averaged $3.30 per thousand cubic feet equivalent (Mcfe), compared to $2.32 per Mcfe in the fourth quarter of 2024 [3] Group 3: Costs & Expenses - Total production costs were 77 cents per Mcfe, an increase from 72 cents per Mcfe a year ago, with lease operating expenses remaining flat at 25 cents, and gathering and transportation expenses rising to 38 cents from 36 cents per Mcfe [4] - Total operating expenses for the quarter were $409.8 million, higher than $368.4 million reported a year ago, with gas services expenses increasing to $131.1 million from $72.6 million in the fourth quarter of 2024 [5] Group 4: Financial Position - As of December 31, 2025, Comstock Resources reported long-term debt of $2.8 billion and cash and cash equivalents of $23.9 million [6] - Total exploration and development capital expenditures in the fourth quarter amounted to $269.8 million, with operating cash flow at $222.3 million [7] Group 5: Outlook - Comstock Resources anticipates total production in the first quarter of 2026 to be between 1,075-1,150 million cubic feet equivalent per day (MMcfe/d), with capital spending projected at $275 million-$325 million, lease operating expenses expected between 25 cents and 29 cents per Mcfe, gathering and transportation expenses projected at 34 cents to 40 cents per Mcfe, and production and other taxes anticipated between 18 cents and 22 cents per Mcfe for the first quarter of 2026 [8]

Financial Data and Key Metrics Changes - In Q4 2025, natural gas and oil sales increased to $365 million, reflecting an 8% growth compared to Q4 2024 [6] - Operating cash flow for the quarter was $222 million, or $0.75 per share, with adjusted EBITDAX at $277 million [7] - For the full year 2025, production averaged 1.2 Bcfe per day, a 14% decrease from 2024, but oil and gas sales rose by 15% to $1.4 billion due to improved natural gas prices [10][11] - Adjusted net income for 2025 was $160 million, or $0.54 per diluted share, compared to a net loss in 2024 [11] Business Line Data and Key Metrics Changes - The 2025 drilling program replaced 229% of production with 1 Tcfe of drilling-related proved reserve additions, achieving a finding cost of $1.02 per Mcfe [5] - In Q4 2025, four new Western Haynesville wells were brought online, increasing the total to 12 wells for the year, with an average initial production rate of 29 million cu ft per day [7][26] - The average lateral length for wells in the Legacy Haynesville was 11,738 ft, with an average initial production rate of 25 million cu ft per day [25] Market Data and Key Metrics Changes - The average NYMEX settlement price for natural gas in Q4 was $3.55, with the average Henry Hub spot price at $3.69, approximately 4% higher [11] - Realized gas price during Q4 averaged $3.29, reflecting a basis differential compared to the NYMEX settlement price [12] Company Strategy and Development Direction - The company plans to focus on building out its assets in the Western Haynesville to benefit from long-term growth in natural gas demand driven by LNG exports and data center power needs [37] - In 2026, the company expects to drill 19 wells and turn 24 wells to sales in the Western Haynesville, while also drilling 47 wells in the Legacy Haynesville [37] - The company aims to maintain the lowest producing cost structure in the industry and create additional drilling efficiencies [38] Management's Comments on Operating Environment and Future Outlook - Management noted the volatility in gas prices and the impact of weather on supply and demand dynamics, indicating flexibility in capital spending based on market conditions [50] - The company anticipates a growth in natural gas demand of about 3 Bcf annually through 2030, driven by LNG facilities and data centers [53] - Management expressed confidence in the potential of the Western Haynesville, estimating recoverable reserves could reach 99 TCF [39] Other Important Information - The company completed $445 million in divestitures in 2025, which improved its balance sheet and allowed for debt reduction [5] - The company has a liquidity of $1.3 billion, bolstered by successful property sales [38] Q&A Session Summary Question: Guidance and capital spending flexibility - Management acknowledged the volatility in gas prices and confirmed the ability to adjust capital spending based on market conditions [50][52] Question: Scaling of the NextEra JV - Management indicated that the initial 2 GW capacity could scale to 8 GW based on demand, emphasizing the strategic location and infrastructure advantages [59] Question: Interest in Pinnacle Gas Services equity sell-down - Management confirmed plans to recapitalize Pinnacle Gas Services and eliminate preferred equity through common equity sales, aiming for completion by May [64][68] Question: Performance of specific wells - Management explained that the underperformance of the Brown Trueheart well was due to water production during flowback, affecting initial production rates [75] Question: M&A activity in the Haynesville - Management discussed the competitive landscape in M&A and the implications of recent transactions on their strategy, indicating a focus on maintaining business as usual while evaluating opportunities [76]

Financial Data and Key Metrics Changes - In Q4 2025, natural gas and oil sales increased to $365 million, an 8% growth compared to Q4 2024, despite lower production [6][9] - The company generated $222 million of operating cash flow, or $0.75 per share, with adjusted EBITDAX of $277 million and adjusted net income of $46 million, or $0.16 per share [7][10] - For the full year 2025, production averaged 1.2 Bcfe per day, a 14% decrease from 2024, but oil and gas sales rose by 15% to $1.4 billion due to improved natural gas prices [10][11] Business Line Data and Key Metrics Changes - The 2025 drilling program replaced 229% of production with 1 TCFE of drilling-related proved reserve additions, achieving a finding cost of $1.02 per MCFE [5][16] - In Q4 2025, the company turned 4 new Western Haynesville wells online, increasing the total to 12 wells for the year, with an average initial production rate of 29 million cubic feet per day [7][27] - The average lateral length of wells in the Legacy Haynesville was 11,738 feet, with an average initial production rate of 25 million cubic feet per day [26] Market Data and Key Metrics Changes - The average NYMEX settlement price for natural gas in Q4 was $3.55, with the average Henry Hub spot price at $3.69, reflecting a 4% increase [11][12] - Realized gas prices during Q4 averaged $3.29, with a basis differential of $0.26 compared to the NYMEX settlement price [12] Company Strategy and Development Direction - The company plans to focus on building out its assets in the Western Haynesville to benefit from long-term growth in natural gas demand driven by LNG exports and data center power needs [37][39] - A partnership with NextEra for a data center project aims to support hyperscaler development with an initial capacity of 2 gigawatts, potentially expanding to 8 gigawatts [5][38] - The company aims to maintain the lowest producing cost structure in the industry while striving for additional drilling efficiencies [39][42] Management's Comments on Operating Environment and Future Outlook - Management noted the volatility in gas prices and the impact of weather on supply and demand dynamics, indicating flexibility in capital spending based on market conditions [51][54] - The company expects natural gas demand to grow by approximately 3 Bcf annually through 2030, driven by LNG facilities and data centers [54][56] Other Important Information - The company completed $445 million in divestitures in 2025, improving its balance sheet and reducing debt [5][6] - Total shareholder return over the last two years was 162%, the highest among public E&P companies [6] Q&A Session Summary Question: Guidance and Capital Spending Flexibility - Analyst inquired about the capital budget's alignment with gas price expectations and the potential for adjusting capital spending based on market conditions [47] - Management confirmed the ability to flex drilling budgets and emphasized the importance of investing in production growth while maintaining flexibility [51][53] Question: NextEra Partnership and Data Center Project - Analyst asked about the scaling of the NextEra partnership from 2 GW to 8 GW and the advantages of selling to NextEra [57] - Management highlighted the strategic location and infrastructure advantages, indicating strong demand for the project [60] Question: Pinnacle Gas Services Recapitalization - Analyst questioned the recapitalization plan for Pinnacle Gas Services and its implications for funding and midstream ambitions [63] - Management outlined plans to eliminate preferred equity and establish a new credit facility to support growth [65][69]

Financial Data and Key Metrics Changes - In Q4 2025, natural gas and oil sales increased to $365 million, an 8% rise compared to Q4 2024, despite lower production [5][9] - The company generated $222 million of operating cash flow, or $0.75 per share, with adjusted EBITDAX of $277 million and adjusted net income of $46 million, or $0.16 per share [6][10] - For the full year 2025, production averaged 1.2 Bcfe per day, a 14% decrease from 2024, but oil and gas sales rose by 15% to $1.4 billion due to improved natural gas prices [10][11] Business Line Data and Key Metrics Changes - In 2025, the company drilled 52 successful operated Haynesville Bossier wells with an average initial production (IP) rate of 27 million cubic feet per day [3][4] - The company turned 12 new Western Haynesville wells to sales in 2025, with an average lateral length of 8,399 feet and an average IP rate of 29 million cubic feet per day [6][26] - In the Legacy Haynesville, 35 wells were turned to sales in 2025, with an average lateral length of 11,738 feet and an average IP rate of 25 million cubic feet per day [25][26] Market Data and Key Metrics Changes - The average NYMEX settlement price for natural gas in Q4 was $3.55, while the average Henry Hub spot price was $3.69, approximately 4% higher than the NYMEX price [11][12] - The company sold 27% of its gas in the spot market during the quarter, with a realized gas price of $3.29, reflecting a basis differential compared to the NYMEX settlement price [12] Company Strategy and Development Direction - The company plans to focus on building out its assets in the Western Haynesville to benefit from long-term growth in natural gas demand driven by LNG exports and data center power needs [37][39] - A partnership with NextEra for a data center project aims to support hyperscaler development with an initial capacity of 2 gigawatts, potentially expanding to 8 gigawatts [4][38] - The company aims to maintain the lowest producing cost structure in the industry while enhancing drilling efficiencies to reduce costs further in 2026 [38][42] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the volatility in gas prices and indicated flexibility in capital spending based on market conditions [50][51] - The company expects to see a growth in natural gas demand of about 3 Bcf annually through 2030, driven by LNG facilities and data centers [53][55] - Management expressed confidence in the potential of the Western Haynesville, estimating recoverable reserves could reach 99 TCF [39][40] Other Important Information - The company completed $445 million in divestitures in 2025, improving its balance sheet and reducing debt [4][5] - The total shareholder return over the last two years was 162%, the highest among public E&P companies [5] Q&A Session Summary Question: Guidance and Capital Spending Flexibility - Management confirmed that the capital budget was prepared in a more constructive gas environment and emphasized the ability to adjust capital spending based on gas prices [47][50] Question: NextEra Partnership and Data Center Project - Management discussed the potential scaling of the data center project from 2 GW to 8 GW, highlighting the demand for such infrastructure in Texas [56][58] Question: Pinnacle Gas Services Recapitalization - Management outlined plans to recapitalize Pinnacle Gas Services, including eliminating preferred equity and establishing a new credit facility [61][62]