Core Insights - Comstock Resources (CRK) has enhanced its liquidity through divestitures amounting to $445 million, indicating a strategic move to strengthen its financial position [2] - The company continues to invest significantly in the Western Haynesville region, suggesting a commitment to growth in this area despite the need for improved capital management [2] Company Overview - Comstock Resources is actively engaged in divesting assets to improve liquidity, which is crucial for its operational flexibility [2] - The company is focusing on the energy sector, particularly in the Western Haynesville, which may present both opportunities and challenges in capital allocation [2]

Group 1 - Comstock Resources (CRK) has enhanced its liquidity through $445 million in recent divestitures [2] - The company continues to invest heavily in the Western Haynesville region [2] - There is a belief that Comstock Resources needs to significantly improve its capital management [2]

Group 1 - The article emphasizes the importance of considering stocks like Comstock Resources when they are out of favor, as the downside risk is likely fully priced in [2] - The oil and gas industry is characterized as a boom-bust, cyclical sector, requiring patience and experience for successful investment [2] - The investing group Oil & Gas Value Research focuses on under-followed oil companies and midstream companies that present compelling investment opportunities [2] Group 2 - The analysis includes a comprehensive breakdown of companies' balance sheets, competitive positions, and development prospects [1] - Members of Oil & Gas Value Research receive early access to analyses and insights that are not available on the free site [1]

Revenue and Sales Performance - Natural gas and oil sales for Q3 2025 were $308.6 million, an increase of $55.0 million (22%) compared to Q3 2024's $253.6 million, primarily due to higher natural gas prices [96]. - Average realized natural gas price increased by 45% to $2.75 per Mcf in Q3 2025 from $1.90 per Mcf in Q3 2024 [96]. - For the nine months ended September 30, 2025, natural gas and oil sales reached $1.06 billion, up $302.4 million (40%) from $759.2 million in the same period of 2024 [98]. - Gas services revenue increased by $90.4 million (178%) to $141.3 million in Q3 2025 from $50.8 million in Q3 2024 [99]. Production and Operational Metrics - Natural gas production for Q3 2025 decreased by 16% to 111.8 Bcf compared to 133.1 Bcf in Q3 2024 [96]. - Production and ad valorem taxes decreased by $1.4 million (11%) to $11.2 million in Q3 2025 due to lower production levels [100]. - Gathering and transportation costs fell by $14.0 million (26%) to $40.0 million in Q3 2025 compared to $54.0 million in Q3 2024 [101]. Expenses and Financial Performance - General and administrative expenses rose to $11.5 million in Q3 2025, up from $9.9 million in Q3 2024, driven by higher employee compensation [106]. - Interest expense increased to $56.7 million in Q3 2025 from $54.5 million in Q3 2024, primarily due to increased borrowings [108]. - For the quarter ended September 30, 2025, the company reported net income of $118.1 million, or $0.40 per diluted share, compared to a net loss of $25.7 million, or $0.09 per share, for the same quarter in 2024 [112]. - Income from operations for the first nine months of 2025 was $265.8 million, a significant increase from a loss of $61.3 million in the same period of 2024 [112]. - Cash provided by operating activities increased by $322.1 million (91%) to $675.4 million in the first nine months of 2025, driven primarily by higher natural gas prices [115]. Capital and Liquidity - The company had $939.2 million in liquidity as of September 30, 2025, consisting of $920 million in unused borrowing capacity and $19.2 million in cash [123]. - Capital expenditures for the first nine months of 2025 totaled $978.4 million, compared to $788.5 million in the same period of 2024 [122]. - The company plans to spend an additional $250 million to $350 million in the remaining three months of 2025 on drilling, completion, and infrastructure activities [122]. - As of September 30, 2025, the company had $580.0 million outstanding under its bank credit facility, with total commitments of $1.5 billion [126]. Debt and Financial Instruments - As of September 30, 2025, the company had approximately $3.2 billion in long-term debt, with $965.0 million at a fixed rate of 5.875% and $1.62 billion at a fixed rate of 6.75% [137]. - The company has natural gas price swaps hedging approximately 50.1 Bcf of 2025 production at an average price of $3.48 per MMBtu [134]. - The company entered into an agreement to sell certain producing wells and undeveloped leasehold acreage in East Texas for $430 million, expected to close in Q4 2025 [129].

Financial Data and Key Metrics Changes - Natural gas and oil sales increased to $335 million, a 10% rise from Q3 2024 [6][11] - Adjusted EBITDA for the quarter was $249 million, with adjusted net income reported at $28 million or $0.09 per diluted share, compared to a loss in the same period in 2024 [7][11] - Operating cash flow generated was $190 million, equating to $0.65 per diluted share [7][11] Business Line Data and Key Metrics Changes - Production averaged 1.22 BCFE per day in Q3 2025, with a total of 36 wells turned to sales in the first nine months of the year [11][14] - Three new Western Haynesville wells were brought online, increasing the total to eight wells for 2025, with an average initial production rate of 32 million cubic feet per day [7][25] - In the legacy Haynesville, 28 wells were turned to sales with an average initial production rate of 25 million cubic feet per day [7][24] Market Data and Key Metrics Changes - The quarterly NYMEX settlement gas price averaged $3.07, while the average Henry Hub spot price was $3.03 [12] - Realized gas price during Q3 averaged $2.75, reflecting a $0.32 basis differential compared to the NYMEX settlement price [12] Company Strategy and Development Direction - The company is focusing on expanding its operations in the Western Haynesville to meet growing natural gas demand driven by LNG exports and AI data center power needs [4][32] - A divestiture of non-strategic assets is underway to improve the balance sheet, with proceeds aimed at retiring long-term debt [6][10] - The company plans to drill 19 wells and turn 13 wells to sales in the Western Haynesville in 2025, while also maintaining production in the legacy Haynesville [31][32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future of natural gas, citing record LNG exports and the increasing demand for power generation [4][5] - The company anticipates continued improvements in drilling efficiencies and cost reductions in both the Western and legacy Haynesville areas [32] - Liquidity is strong, totaling over $900 million, which will be enhanced by the upcoming Shelby Trough divestiture [32] Other Important Information - The company has a total of 1,055,386 gross and 797,440 net acres in the Haynesville Bossier Shale, with significant resource potential identified [16] - The average lateral length of drilled wells has increased, with a focus on longer laterals to enhance production efficiency [20][23] Q&A Session Summary Question: Broader question around 2026 capital efficiency - Management indicated that efficiency gains in the legacy Haynesville are nearing their peak, while improvements in the Western Haynesville are still being realized [34][35] Question: Perspective on gas competition along the Gulf Coast - Management highlighted the advantage of owning midstream assets in the Western Haynesville, allowing for direct sales to end users and establishing reliable supply relationships [37][38] Question: Characterization of the Shelby Trough sale - Management described the sale as a win-win, allowing for debt reduction while maintaining a strong inventory position in the Western Haynesville [40][42] Question: Assumptions regarding Western Haynesville inventory - Management acknowledged conservative assumptions in inventory estimates, with ongoing efforts to optimize well spacing and unitization [44][45] Question: Optimization of acreage around 10,000-foot laterals - Management noted that geological structures and ownership issues currently limit the ability to optimize the entire position for longer laterals [46][48] Question: Update on Marquette Gas Treating Plant expansion - Management confirmed that the expansion to 1.3 Bcf/d was part of the original plan, with long lead times for equipment manufacturing [50][51] Question: Potential collaboration with Aethon - Management mentioned ongoing acreage swaps with Aethon to facilitate longer laterals, indicating a collaborative approach to enhance production [58][59]

Financial Performance - Natural gas and oil sales, including realized hedging gains, reached $335 million in Q3 2025[7] - Operating cash flow was $190 million, equivalent to $0.65 per diluted share[7] - Adjusted EBITDAX for Q3 2025 stood at $249 million[7] - Adjusted net income was $28 million, or $0.09 per diluted share, for the third quarter[7] Asset Divestitures - The company divested non-strategic Cotton Valley wells in East Texas and North Louisiana, generating net proceeds of $15 million[7,10] - An agreement was made to sell Shelby Trough assets in East Texas for $430 million in cash[7,10] Drilling and Production - Three Western Haynesville wells were brought online in Q3 2025, featuring an average lateral length of 8,566 feet and an average initial production rate of 32 MMcf per day[7] - In 2025, 28 wells were turned to sales in the Legacy Haynesville area, with an average lateral length of 11,919 feet and a per-well initial production rate of 25 MMcf per day[7,43] Capitalization and Liquidity - As of September 30, 2025, the company's total debt was $3169 million, with common equity at $2618 million[25] - The company maintains strong financial liquidity, exceeding $900 million, which is expected to increase following the Shelby Trough divestiture in December 2025[65]

Financial Performance - Comstock reported natural gas and oil sales of $335.0 million for Q3 2025, including realized hedging gains of $26.4 million[5]. - Operating cash flow for Q3 2025 was $190.4 million, translating to $0.65 per diluted share[6]. - Adjusted net income for Q3 2025 was $27.9 million, or $0.09 per diluted share, excluding a pre-tax unrealized gain on hedging contracts[5]. - Adjusted EBITDAX for Q3 2025 was $249 million[6]. - For the nine months ended September 30, 2025, total natural gas and oil sales reached $1.08 billion, including realized hedging losses of $22.7 million[9]. - Comstock's net income for the nine months ended September 30, 2025, was $133.4 million, or $0.45 per diluted share[9]. - Adjusted net income for the three months ended September 30, 2025, was $27,904,000, a significant recovery from a loss of $48,509,000 in the same period of 2024[30]. Production and Operations - The company turned 28 wells to sales in 2025 in its Legacy Haynesville area, with an average initial production rate of 25 MMcf per day[6]. - The company drilled 17 operated horizontal Haynesville/Bossier shale wells in Q3 2025, with an average lateral length of 11,692 feet[12]. - Natural gas production decreased by 16% year-over-year to 111,770 MMcf for the three months ended September 30, 2025, compared to 133,116 MMcf in 2024[27]. - Total natural gas and oil sales including hedging increased by 9.8% to $334,968,000 for the three months ended September 30, 2025, compared to $305,034,000 in 2024[27]. - Average natural gas price per Mcf rose to $2.75 for the three months ended September 30, 2025, up from $1.90 in 2024, reflecting a 44.7% increase[27]. - Gas services revenue surged to $141,265,000 for the three months ended September 30, 2025, compared to $50,847,000 in 2024, indicating a substantial growth[27]. Costs and Expenditures - Comstock's production cost per Mcfe in Q3 2025 averaged $0.77, with an unhedged operating margin of 72%[7]. - Free cash deficit from operations for the three months ended September 30, 2025, was $73,672,000, compared to a deficit of $44,125,000 in 2024[34]. - Total exploration and development capital expenditures increased to $267,110,000 for the three months ended September 30, 2025, from $184,392,000 in 2024, representing a 45% increase[34]. - Total production costs decreased to $85,843,000 for the three months ended September 30, 2025, down from $101,864,000 in 2024, reflecting a 15.7% reduction[27]. - Unhedged operating margin improved to 72% for the three months ended September 30, 2025, compared to 60% in 2024[27]. Balance Sheet and Assets - Total current assets increased to $268,853 million in September 2025 from $284,034 million in December 2024, reflecting a decrease of approximately 5.4%[37]. - Long-term debt rose to $3,126,015 million in September 2025, up from $2,952,090 million in December 2024, indicating an increase of about 5.9%[37]. - Total liabilities increased to $4,223,183 million in September 2025 compared to $4,048,553 million in December 2024, representing a growth of approximately 4.3%[37]. - Stockholders' equity attributable to Comstock grew to $2,360,264 million in September 2025, up from $2,241,023 million in December 2024, marking an increase of about 5.3%[37]. - Cash and cash equivalents significantly increased to $19,215 million in September 2025 from $6,799 million in December 2024, showing a growth of approximately 183.5%[37]. - Accounts payable rose to $455,282 million in September 2025, compared to $421,814 million in December 2024, reflecting an increase of about 7.9%[37]. - Accumulated earnings increased to $843,311 million in September 2025 from $728,619 million in December 2024, indicating a growth of approximately 15.7%[37]. - Total stockholders' equity reached $2,617,810 million in September 2025, up from $2,333,544 million in December 2024, representing an increase of about 12.2%[37]. - Other current assets decreased to $68,552 million in September 2025 from $97,524 million in December 2024, reflecting a decline of approximately 29.7%[37]. - Derivative financial instruments increased to $8,140 million in September 2025 from $4,865 million in December 2024, indicating a growth of about 67.5%[37].

Core Insights - Comstock Resources reported strong financial results for Q3 2025, driven by higher natural gas prices, with total natural gas and oil sales reaching $335 million, including realized hedging gains of $26.4 million [3][9] - The company achieved an operating cash flow of $190.4 million and a net income of $118.1 million, translating to $0.40 per diluted share [3][9] - Adjusted net income for the quarter was $27.9 million, or $0.09 per diluted share, after excluding certain items [3][9] Financial Performance - For Q3 2025, Comstock realized an average price of $2.99 per Mcf after hedging for its natural gas production of 112 Bcf [3][4] - The production cost per Mcfe averaged $0.77, with an unhedged operating margin of 72% and a hedged operating margin of 74% [4][7] - For the nine months ended September 30, 2025, total natural gas and oil sales amounted to $1.08 billion, with an operating cash flow of $639 million and a net income of $133.4 million [6][7] Production and Drilling Activities - Comstock turned 28 wells to sales in 2025, with an average lateral length of 11,919 feet and an initial production rate of 25 MMcf per day [9][10] - In Q3 2025, the company drilled 17 operated horizontal Haynesville/Bossier shale wells, achieving an average lateral length of 11,692 feet [10] - The company divested non-strategic Cotton Valley wells for net proceeds of $15 million and entered into an agreement to sell Shelby Trough assets for $430 million [9][14] Divestitures - On September 2, 2025, Comstock sold its legacy Cotton Valley wells for net proceeds of $15.2 million, which included interests in 883 wells [13] - The agreement to divest Shelby Trough properties includes interests in 155 producing wells and approximately 36,000 net acres, with expected proceeds to reduce long-term debt [14] Operational Metrics - The average natural gas price for Q3 2025 was $2.75 per Mcf, compared to $1.90 in Q3 2024, reflecting a significant year-over-year increase [24] - Total production for Q3 2025 was 111,837 MMcfe, down from 133,198 MMcfe in Q3 2024 [24] - The company reported a total of 111,770 MMcf of natural gas production for Q3 2025, compared to 133,116 MMcf in the same period last year [24]

Core Insights - The third-quarter earnings season is underway, with energy companies like Comstock Resources Inc., Williams, and Marathon Petroleum Corp. expected to report better-than-expected earnings due to a favorable energy business environment in the September quarter [1] Oil & Gas Pricing Analysis - Average WTI spot prices for July, August, and September were $68.39, $64.86, and $63.96 per barrel, respectively, indicating a healthier pricing environment compared to the previous quarter [2] - Year-over-year, the pricing environment was less favorable, with average prices in July, August, and September 2024 at $81.80, $76.68, and $70.24 per barrel, respectively [3] - Natural gas prices in the September quarter of 2025 were higher than in the same period of 2024, with Henry Hub average prices at $3.20, $2.91, and $2.97 per million Btu [4] Stock Selection Strategy - Identifying stocks with potential for better-than-expected earnings is challenging, but a combination of positive Earnings ESP and Zacks Rank can help [5] - Stocks with this combination have a 70% chance of delivering an earnings surprise [6] Company-Specific Insights - Comstock Resources, a leading natural gas producer, is expected to benefit from favorable commodity pricing, with an Earnings ESP of +2.86% and a Zacks Rank of 3, scheduled to report on Nov. 3 [8] - Williams, known for its midstream operations, is anticipated to benefit from stable cash flows and higher natural gas prices, with an Earnings ESP of +0.56% and a Zacks Rank of 3, also reporting on Nov. 3 [9] - Marathon Petroleum, a leading refiner, is likely to gain from lower year-over-year oil prices, with an Earnings ESP of +8.68% and a Zacks Rank of 3, set to report on Nov. 4 [10]

Core Viewpoint - Comstock Resources (CRK) is positioned well to potentially beat earnings estimates in its upcoming quarterly report, supported by a strong history of exceeding expectations [1]. Earnings Performance - Comstock has a solid track record of surpassing earnings estimates, with an average surprise of 28.47% over the last two quarters [2]. - In the last reported quarter, Comstock achieved earnings of $0.13 per share, exceeding the Zacks Consensus Estimate of $0.09 per share, resulting in a surprise of 44.44% [3]. - For the previous quarter, the company was expected to report earnings of $0.16 per share but delivered $0.18 per share, yielding a surprise of 12.50% [3]. Earnings Estimates and Predictions - Recent estimates for Comstock have been trending upward, indicating positive sentiment among analysts [6]. - The Zacks Earnings ESP (Expected Surprise Prediction) for Comstock is currently positive, suggesting a strong likelihood of an earnings beat [6][9]. - Stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have a nearly 70% chance of producing a positive surprise [7]. Earnings ESP Details - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions [8]. - Comstock's current Earnings ESP stands at +3.17%, indicating increased analyst optimism regarding its near-term earnings potential [9]. - The next earnings report for Comstock is anticipated to be released on November 3, 2025 [9].