Core Points - Comstock Resources, Inc. plans to release its third quarter 2025 results on November 3, 2025, after market close [1] - A conference call to discuss the results will be held on November 4, 2025, at 10:00 a.m. CT [1] - The company is a leading independent natural gas producer focused on the Haynesville Shale development in North Louisiana and East Texas [4] Conference Call Details - Interested parties must register to participate in the conference call via a provided link [2] - The conference call will be available in listen-only mode through a specific website URL [3] - A replay of the conference call will be accessible for twelve months starting at 1:00 p.m. CT on November 4, 2025 [3] Company Information - Comstock Resources operates primarily in the natural gas sector, emphasizing the Haynesville Shale region [4] - Financial results presentations will be available on the company's website [4]

I analyze oil and gas companies like Comstock Resources and related companies in my service, Oil & Gas Value Research, where I look for undervalued names in the oil and gas space. I break down everything you need to know about these companies -- the balance sheet, competitive position and development prospects. This article is an example of what I do. But for Oil & Gas Value Research members, they get it first and they get analysis on some companies that is not published on the free site. Interested? Sign u ...

Group 1 - The article discusses the analysis of oil and gas companies, specifically Comstock Resources, focusing on identifying undervalued companies in the sector [1] - It highlights the cyclical nature of the oil and gas industry, emphasizing the importance of patience and experience for investors [2] - The article mentions a significant pullback in Comstock Resources' stock after reaching a recent high, indicating market volatility [2] Group 2 - The analysis includes a breakdown of the companies' balance sheets, competitive positions, and development prospects [1] - The article suggests that members of the Oil & Gas Value Research service receive exclusive insights and analyses not available to the general public [1]

Group 1 - Comstock Resources (NYSE: CRK) has lowered its production guidance for 2025 by approximately 6% while maintaining its capital expenditure budget unchanged [2] - This adjustment in production guidance could lead to a projected cash burn of close to $150 million for the full year [2] Group 2 - The article mentions the expertise of Aaron Chow, who has over 15 years of analytical experience and is recognized as a top-rated analyst on TipRanks [3] - Aaron Chow co-founded a mobile gaming company that was acquired by PENN Entertainment and has designed in-game economic models for mobile apps with over 30 million combined installs [3]

Group 1 - Comstock Resources (CRK) has recently provided positive news for investors, although there are concerns that may have impacted its stock price performance [2] - The company is influenced by a controlling shareholder, Jerry Jones, which may affect its strategic decisions and market perception [2] - The oil and gas industry is characterized as a boom-bust, cyclical sector, requiring patience and experience for successful investment [2] Group 2 - The analysis of oil and gas companies focuses on identifying undervalued entities within the sector, examining balance sheets, competitive positions, and development prospects [1]

[PART I. Financial Information](index=4&type=section&id=PART%20I.%20Financial%20Information) This section provides unaudited consolidated financial statements, management's discussion and analysis, and disclosures on market risks and controls [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes [Consolidated Balance Sheets](index=6&type=page&id=Consolidated%20Balance%20Sheets) The Consolidated Balance Sheets show the company's financial position, with notable increases in cash, property and equipment, and total liabilities, alongside an overall increase in total stockholders' equity | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------- | | Cash and cash equivalents | $25,859 | $6,799 | | Total current assets | $268,979 | $284,034 | | Net property and equipment | $6,002,010 | $5,688,389 | | Total liabilities | $4,259,996 | $4,048,553 | | Total stockholders' equity | $2,434,867 | $2,333,544 | [Consolidated Statements of Operations](index=8&type=page&id=Consolidated%20Statements%20of%20Operations) The company reported a significant increase in total revenues for both the three and six months ended June 30, 2025, primarily driven by higher natural gas sales and gas services, leading to net income Revenues (Three Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :------------------------ | :------------------ | :------------------ | :--------- | | Natural gas sales | $339,225 | $216,527 | +56.6% | | Oil sales | $741 | $1,074 | -31.0% | | Total natural gas and oil sales | $339,966 | $217,601 | +56.2% | | Gas services | $130,296 | $29,229 | +345.1% | | Total revenues | $470,262 | $246,830 | +90.5% | Net Income (Loss) and EPS (Three Months Ended June 30) | Metric | 2025 (in thousands, except per share) | 2024 (in thousands, except per share) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | | Net income (loss) | $130,728 | $(123,249) | | Net income (loss) available to the Company | $124,842 | $(126,310) | | Basic EPS | $0.45 | $(0.43) | | Diluted EPS | $0.44 | $(0.43) | Net Income (Loss) and EPS (Six Months Ended June 30) | Metric | 2025 (in thousands, except per share) | 2024 (in thousands, except per share) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | | Net income (loss) | $15,335 | $(137,723) | | Net income (loss) available to the Company | $3,564 | $(142,631) | | Basic EPS | $0.05 | $(0.49) | | Diluted EPS | $0.05 | $(0.49) | [Consolidated Statements of Stockholders' Equity](index=10&type=page&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) The Consolidated Statements of Stockholders' Equity show an increase in total stockholders' equity from January 1, 2025, to June 30, 2025, primarily driven by net income and noncontrolling interests - Total stockholders' equity increased from **$2.334 billion** at January 1, 2025, to **$2.435 billion** at June 30, 2025[19](index=19&type=chunk) - Noncontrolling interest significantly increased from **$92.521 million** at January 1, 2025, to **$191.292 million** at June 30, 2025, largely due to contributions[19](index=19&type=chunk) - Accumulated earnings increased from **$607.341 million** at March 31, 2025, to **$732.183 million** at June 30, 2025, reflecting net income[19](index=19&type=chunk) [Consolidated Statements of Cash Flows](index=12&type=page&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities more than doubled for the six months ended June 30, 2025, compared to the prior year, primarily due to higher natural gas prices Cash Flows (Six Months Ended June 30) | Activity | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | | Net cash provided by operating activities | $522,310 | $255,114 | +104.7% | | Net cash used for investing activities | $(639,267) | $(575,724) | +11.0% | | Net cash provided by financing activities | $136,017 | $323,211 | -57.9% | | Net increase in cash and cash equivalents | $19,060 | $2,601 | +632.8% | | Cash and cash equivalents, end of period | $25,859 | $19,270 | +34.2% | - Operating cash flow increased primarily due to **higher natural gas prices**[113](index=113&type=chunk) - Capital expenditures increased to **$639.267 million** in 2025 from **$575.724 million** in 2024[22](index=22&type=chunk)[117](index=117&type=chunk) [Notes to Consolidated Financial Statements](index=14&type=page&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of the company's accounting policies, financial instrument valuations, debt structure, commitments, and other significant financial disclosures [Summary of Significant Accounting Policies](index=14&type=page&id=Summary%20of%20Significant%20Accounting%20Policies) This section outlines the company's basis of presentation, including the consolidation of Pinnacle Gas Services, the successful efforts method for natural gas and oil properties, and accounting for goodwill and right-of-use lease assets - Comstock consolidates Pinnacle Gas Services (PGS), a joint venture, as the primary beneficiary, with PGS assets not usable by Comstock for general corporate purposes totaling **$243.2 million** as of June 30, 2025[27](index=27&type=chunk) - The Company follows the successful efforts method for natural gas and oil properties, capitalizing costs for acquired leases and developmental wells, while expensing exploratory well costs if unsuccessful[29](index=29&type=chunk) - Capitalized exploratory well costs increased to **$151.973 million** at June 30, 2025, from **$69.800 million** at June 30, 2024[31](index=31&type=chunk) - Goodwill remained at **$335.9 million** as of June 30, 2025, with no impairment indicators identified[35](index=35&type=chunk) - Right-of-use lease assets totaled **$87.8 million** as of June 30, 2025, related to corporate office, equipment, vehicles, and drilling rigs[36](index=36&type=chunk) [Accrued Costs](index=19&type=page&id=Accrued%20Costs) Accrued costs increased to $151.798 million at June 30, 2025, from $146.173 million at December 31, 2024, primarily driven by a significant rise in accrued income and other taxes Accrued Costs (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Accrued interest payable | $63,404 | $64,041 | | Accrued drilling costs | $31,918 | $34,493 | | Accrued transportation costs | $28,597 | $28,031 | | Accrued income and other taxes | $16,378 | $1,350 | | Accrued employee compensation | $5,319 | $14,076 | | Accrued lease operating expenses | $3,693 | $2,630 | | Other | $2,489 | $1,552 | | **Total Accrued Costs** | **$151,798** | **$146,173** | [Reserve for Future Abandonment Costs](index=19&type=page&id=Reserve%20for%20Future%20Abandonment%20Costs) The reserve for future abandonment costs increased to $35.008 million at June 30, 2025, from $33.996 million at the beginning of the period, primarily due to accretion expense and new wells placed on production Changes in Reserve for Future Abandonment Costs (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :-------------------------------------- | :--- | :--- | | Reserve for future abandonment costs at beginning of period | $33,996 | $30,773 | | New wells placed on production | $51 | $87 | | Liabilities settled | $(34) | $(31) | | Accretion expense | $995 | $880 | | Reserve for future abandonment costs at end of period | $35,008 | $31,709 | [Derivative Financial Instruments and Hedging Activities](index=19&type=page&id=Derivative%20Financial%20Instruments%20and%20Hedging%20Activities) Comstock utilizes natural gas price swaps and collar contracts for risk management, recognizing a significant gain in Q2 2025 due to declining future natural gas prices, but a net loss for H1 2025 Natural Gas Price Derivative Instruments (June 30, 2025) | Contract Type | Future Production Period | Volume (MMBtu) | Average Price per MMBtu | | :-------------------------- | :----------------------- | :--------------- | :---------------------- | | Natural Gas Price Swap Contracts | Six Months Ending Dec 31, 2025 | 100,280,000 | $3.48 | | | Year Ending Dec 31, 2026 | 116,800,000 | $3.51 | | Natural Gas Price Collar Contracts | Six Months Ending Dec 31, 2025 | 27,600,000 | Ceiling: $3.80, Floor: $3.50 | | | Year Ending Dec 31, 2026 | 167,900,000 | Ceiling: $4.35, Floor: $3.50 | - Gain from derivative financial instruments: **$235.847 million** for Q2 2025 (vs. **$(25.252) million** in Q2 2024)[51](index=51&type=chunk) - Loss from derivative financial instruments: **$(94.492) million** for H1 2025 (vs. **$14.055 million** in H1 2024)[51](index=51&type=chunk) [Stock-Based Compensation](index=20&type=page&id=Stock-Based%20Compensation) The company recognized increased stock-based compensation expense for both the three and six months ended June 30, 2025, related to grants of restricted stock and performance stock units - Stock-based compensation expense: **$5.5 million** (Q2 2025) vs **$4.1 million** (Q2 2024), and **$10.0 million** (H1 2025) vs **$7.5 million** (H1 2024)[52](index=52&type=chunk) - Unvested restricted stock outstanding: **1,979,667 shares** with **$21.3 million** unrecognized compensation cost as of June 30, 2025[53](index=53&type=chunk) - PSUs outstanding: **1,603,916 units** with **$24.6 million** unrecognized compensation cost as of June 30, 2025[55](index=55&type=chunk) [Segment Reporting](index=22&type=page&id=Segment%20Reporting) Comstock operates as a single business segment focused on the exploration and production of North American natural gas and oil, primarily in the Haynesville and Bossier shale - Operates in one business segment: exploration and production of North American natural gas and oil (Haynesville and Bossier shale)[56](index=56&type=chunk) - Consolidated net income is the primary measure of segment profit or loss[56](index=56&type=chunk) [Revenue Recognition](index=22&type=page&id=Revenue%20Recognition) Revenues from natural gas and oil sales are recognized upon transfer of produced volumes, while gas services revenues are recognized upon service completion or delivery - Natural gas and oil revenues recognized upon transfer of produced volumes to customers[57](index=57&type=chunk) - Gas services revenues include sales of purchased natural gas for resale and gathering/treating fees, recognized upon service completion or delivery[58](index=58&type=chunk) - Accounts receivable from purchasers: **$140.5 million** (June 30, 2025) vs **$145.4 million** (Dec 31, 2024)[61](index=61&type=chunk) [Credit Losses](index=23&type=page&id=Credit%20Losses) Comstock has not experienced significant credit losses historically and believes all receivables are fully collectible, thus no allowance for doubtful accounts has been recorded - No significant credit losses have been experienced in the past[63](index=63&type=chunk) - No allowance for doubtful accounts has been recorded for the six months ended June 30, 2025, and 2024[63](index=63&type=chunk) [Income Taxes](index=23&type=page&id=Income%20Taxes) The company's effective tax rate for Q2 2025 was 52.0%, significantly impacted by mark-to-market changes in derivative financial instruments, and the impact of the OBBBA is being evaluated Effective Tax Rate | Period | 2025 | 2024 | | :----------------------- | :----- | :----- | | Three Months Ended June 30 | 52.0% | 27.2% | | Six Months Ended June 30 | (13.2)% | 28.3% | - Significant variance in the effective tax rate from the statutory rate primarily due to the impact of mark-to-market changes in the Company's derivative financial instruments[66](index=66&type=chunk) - The One Big Beautiful Bill Act (OBBBA), signed in July 2025, is expected to provide benefits (increased interest expense deductions and bonus depreciation), but its impact is still being evaluated[70](index=70&type=chunk) [Fair Value Measurements](index=25&type=page&id=Fair%20Value%20Measurements) The company measures certain financial assets and liabilities at fair value using a three-level hierarchy, classifying commodity-based derivatives as Level 2 and fixed-rate senior notes as Level 1 Fair Values of Financial Instruments (June 30, 2025) | Instrument | Carrying Value (in thousands) | Fair Value (in thousands) | Level | | :-------------------------- | :---------------------------- | :------------------------ | :---- | | Commodity-based derivatives (Asset) | $275 | $275 | Level 2 | | Commodity-based derivatives (Liability) | $161,926 | $161,926 | Level 2 | | Bank credit facility | $475,000 | $475,000 | N/A (floating rate) | | 6.75% senior notes due 2029 | $1,605,711 | $1,616,820 | Level 1 | | 5.875% senior notes due 2030 | $965,000 | $936,050 | Level 1 | [Earnings Per Share](index=25&type=page&id=Earnings%20Per%20Share) Unvested restricted stock and performance stock units are included in the computation of basic and diluted earnings per share, with the company reporting positive EPS for Q2 and H1 2025 - Unvested restricted stock: **2,342 thousand shares** (Q2 2025) and **2,330 thousand shares** (H1 2025) included in EPS calculations[78](index=78&type=chunk) - Weighted average PSUs: **1,411 thousand units** (Q2 2025) and **1,351 thousand units** (H1 2025) for diluted EPS[79](index=79&type=chunk) Basic and Diluted EPS | Period | Basic EPS (2025) | Basic EPS (2024) | Diluted EPS (2025) | Diluted EPS (2024) | | :----------------------- | :--------------- | :--------------- | :----------------- | :----------------- | | Three Months Ended June 30 | $0.45 | $(0.43) | $0.44 | $(0.43) | | Six Months Ended June 30 | $0.05 | $(0.49) | $0.05 | $(0.49) | [Supplementary Information with Respect to the Consolidated Statements of Cash Flows](index=28&type=page&id=Supplementary%20Information%20with%20Respect%20to%20the%20Consolidated%20Statements%20of%20Cash%20Flows) This section provides additional details on cash payments for interest and income taxes, and non-cash investing activities, noting increased interest payments and a shift to an income tax refund position Cash Payments (Six Months Ended June 30, in thousands) | Category | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Interest payments | $104,733 | $90,349 | | Income tax payments (refunds) | $(31,000) | $37 | | Liabilities assumed in exchange for right-of-use lease assets | $36,244 | $34,196 | [Recent Accounting Pronouncements](index=28&type=page&id=Recent%20Accounting%20Pronouncements) The company is evaluating the impact of new FASB ASUs on income tax disclosures and disaggregation of income statement expenses, neither of which is expected to materially impact reported results - ASU 2023-09, 'Improvements to Income Tax Disclosures,' effective after December 15, 2024, is not expected to materially impact reported results[82](index=82&type=chunk) - ASU 2024-03, 'Disaggregation of Income Statement Expenses,' effective after December 15, 2026, is still being evaluated for its impact on financial statement disclosures[83](index=83&type=chunk) [Long-Term Debt](index=28&type=page&id=Long-Term%20Debt) Comstock's long-term debt includes 6.75% Senior Notes due 2029, 5.875% Senior Notes due 2030, and a bank credit facility, with $475.0 million outstanding and compliance with all financial covenants Long-Term Debt Composition (June 30, 2025, in thousands) | Debt Type | Principal | | :-------------------------- | :---------- | | 6.75% Senior Notes due 2029 | $1,623,880 | | 5.875% Senior Notes due 2030 | $965,000 | | Bank Credit Facility | $475,000 | | **Total (excluding discount/costs)** | **$3,063,880** | - Bank credit facility: **$475.0 million** outstanding, **$1.5 billion** aggregate commitments, **$2.0 billion** borrowing base (redetermined April 29, 2025)[85](index=85&type=chunk)[121](index=121&type=chunk) - The company was in compliance with all financial covenants (leverage ratio < 3.75 to 1.0, adjusted current ratio >= 1.0 to 1.0) as of June 30, 2025[85](index=85&type=chunk)[123](index=123&type=chunk) [Commitments and Contingencies](index=30&type=page&id=Commitments%20and%20Contingencies) Comstock entered into agreements for two new drilling rigs, one capitalized as a right-of-use lease asset and another with a remaining commitment of $9.6 million, and is involved in routine litigation - New drilling rig agreements: one three-year term rig capitalized as a right-of-use lease asset, and one one-year term rig with a remaining commitment of **$9.6 million**[90](index=90&type=chunk) - Resolution of litigation is not expected to have a material effect on the company's financial position, results of operations, or cash flows[91](index=91&type=chunk)[135](index=135&type=chunk) [Related Party Transactions](index=30&type=page&id=Related%20Party%20Transactions) Comstock operates natural gas and oil properties for partnerships owned by its majority stockholder, providing services for a fee, with receivables from these partnerships at $3.3 million - Provides drilling, operating, and marketing services to partnerships owned by its majority stockholder[92](index=92&type=chunk) - Received **$260 thousand** for Q2 2025 and **$599 thousand** for H1 2025 for services, reducing general and administrative expenses[92](index=92&type=chunk) - Receivable from partnerships: **$3.3 million** at June 30, 2025, down from **$5.5 million** at December 31, 2024[93](index=93&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, liquidity, and capital resources, detailing the drivers behind changes in revenues, expenses, and cash flows [Results of Operations](index=31&type=page&id=Results%20of%20Operations) The company experienced significant increases in natural gas sales and gas services revenues for both the three and six months ended June 30, 2025, primarily due to higher natural gas prices [Revenues](index=31&type=page&id=Revenues) Natural gas and oil sales increased substantially due to higher realized natural gas prices, despite a decrease in production volumes, with gas service revenues also seeing significant growth - Natural gas and oil sales increased by **$122.4 million** (56%) to **$340.0 million** for Q2 2025 compared to Q2 2024[97](index=97&type=chunk) - Average realized natural gas price was **$3.02 per Mcf** for Q2 2025, an **83% increase** from **$1.65 per Mcf** in Q2 2024[97](index=97&type=chunk) - Natural gas production decreased by **14%** to **112.2 Bcf** for Q2 2025[97](index=97&type=chunk) - Gas service revenues increased by **$101.1 million** (346%) to **$130.3 million** for Q2 2025[100](index=100&type=chunk) [Costs and Expenses](index=32&type=page&id=Costs%20and%20Expenses) Production and ad valorem taxes, along with gathering and transportation costs, decreased due to lower production, while gas service expenses rose significantly with higher natural gas prices - Production and ad valorem taxes decreased by **$8.7 million** (45%) to **$10.6 million** for Q2 2025, due to lower Louisiana tax rates and reduced production[101](index=101&type=chunk) - Gathering and transportation costs decreased by **$7.6 million** (15%) to **$41.8 million** for Q2 2025, primarily due to lower production[102](index=102&type=chunk) - Lease operating expense was **$31.1 million** (**$0.28 per Mcfe**) for Q2 2025, comparable to Q2 2024, but the rate per Mcfe increased due to fixed costs and lower production[103](index=103&type=chunk) - Gas service expenses increased by **$95.2 million** (302%) to **$126.7 million** for Q2 2025, driven by higher natural gas prices for purchased gas[104](index=104&type=chunk) - Depreciation, depletion and amortization (DD&A) decreased by **$35.9 million** to **$158.4 million** for Q2 2025, due to lower natural gas production and higher estimated proved undeveloped reserves[105](index=105&type=chunk) - General and administrative expenses increased to **$12.3 million** for Q2 2025, primarily due to higher employee and stock-based compensation[106](index=106&type=chunk) [Derivative Financial Instruments](index=32&type=page&id=Derivative%20Financial%20Instruments) The company reported net gains of $235.8 million from derivative financial instruments in Q2 2025, a significant reversal from losses in Q2 2024, but net losses for the first six months of 2025 - Net gains related to derivative financial instruments were **$235.8 million** for Q2 2025, compared to net losses of **$25.3 million** for Q2 2024[107](index=107&type=chunk)[109](index=109&type=chunk) - Net losses on derivative financial instruments were **$94.5 million** for H1 2025, compared to net gains of **$14.1 million** for H1 2024[109](index=109&type=chunk) - Realized net gains from price risk management were **$4.3 million** for Q2 2025, down from **$60.6 million** for Q2 2024[109](index=109&type=chunk) [Interest Expense](index=34&type=page&id=Interest%20Expense) Interest expense increased to $55.2 million for Q2 2025 and $110.0 million for H1 2025, primarily due to the issuance of an additional $400.0 million principal amount of senior notes in Q2 2024 - Interest expense was **$55.2 million** for Q2 2025, up from **$51.9 million** for Q2 2024[110](index=110&type=chunk) - Interest expense was **$110.0 million** for H1 2025, up from **$101.5 million** for H1 2024[110](index=110&type=chunk) - The increase in interest expense was primarily due to the issuance of an additional **$400.0 million** principal amount of senior notes in Q2 2024[110](index=110&type=chunk) [Income Taxes](index=34&type=page&id=Income%20Taxes) The company recorded an income tax provision of $141.5 million for Q2 2025 and a benefit of $1.8 million for H1 2025, with effective tax rates varying significantly from the statutory rate - Income tax provision was **$141.5 million** for Q2 2025, compared to a benefit of **$46.1 million** for Q2 2024[111](index=111&type=chunk) - Income tax benefit was **$1.8 million** for H1 2025, compared to **$54.4 million** for H1 2024[111](index=111&type=chunk) - Effective tax rates were **52.0%** for Q2 2025 and **(13.2)%** for H1 2025, with significant variance from the **21% statutory rate**[111](index=111&type=chunk) [Net Income (Loss)](index=34&type=page&id=Net%20Income%20(Loss)) Comstock reported net income of $130.7 million ($0.44 diluted EPS) for Q2 2025, a significant improvement from a net loss in Q2 2024, primarily driven by derivative financial instrument gains - Net income was **$130.7 million** (**$0.44 diluted EPS**) for Q2 2025, compared to a net loss of **$123.2 million** (**$0.43 diluted EPS**) for Q2 2024[112](index=112&type=chunk) - Net income was **$15.3 million** (**$0.05 diluted EPS**) for H1 2025, compared to a net loss of **$137.7 million** (**$0.49 diluted EPS**) for H1 2024[112](index=112&type=chunk) [Cash Flows, Liquidity and Capital Resources](index=34&type=page&id=Cash%20Flows,%20Liquidity%20and%20Capital%20Resources) This section details the company's cash flow generation, liquidity position, capital expenditure plans, and debt management, noting significantly increased operating cash flows and strong liquidity [Cash Flows](index=34&type=page&id=Cash%20Flows) Net cash provided by operating activities increased significantly due to higher natural gas prices, with capital expenditures rising and financing activities including substantial noncontrolling interest contributions - Net cash provided by operating activities increased by **$267.2 million** (105%) to **$522.3 million** for H1 2025[113](index=113&type=chunk) - Capital expenditures increased to **$639.3 million** for H1 2025 from **$575.7 million** for H1 2024[117](index=117&type=chunk) - Contributions from noncontrolling interest totaled **$92.5 million** for H1 2025, primarily to fund the Western Haynesville midstream system build-out[116](index=116&type=chunk) - The company drilled **19 (17.5 net) wells** and completed **24 (20.3 net) Haynesville and Bossier shale operated wells** during H1 2025[117](index=117&type=chunk) [Liquidity and Capital Resources](index=36&type=page&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, Comstock had $1.05 billion in liquidity, comprising unused borrowing capacity and cash, expecting to fund future activities with operating cash flow and its bank credit facility - Total liquidity was **$1.05 billion** as of June 30, 2025, consisting of **$1.02 billion** unused borrowing capacity under the bank credit facility and **$25.9 million** cash[118](index=118&type=chunk) - Expected capital expenditures for the remaining six months of 2025 are **$550 million to $650 million** for drilling, completion, infrastructure, and other activities[117](index=117&type=chunk) - The bank credit facility has **$475.0 million** outstanding, **$1.5 billion** aggregate commitments, and a **$2.0 billion** borrowing base[121](index=121&type=chunk) - The company was in compliance with all bank credit facility covenants as of June 30, 2025[123](index=123&type=chunk) [Federal and State Taxation](index=38&type=page&id=Federal%20and%20State%20Taxation) Comstock holds significant U.S. federal and state net operating loss (NOL) carryforwards, but their utilization is limited due to a 2018 change of control, with a substantial portion expected to expire unused - U.S. federal net operating loss (NOL) carryforwards: **$743.0 million** at June 30, 2025[124](index=124&type=chunk) - State NOL carryforwards: **$1.8 billion** at June 30, 2025[124](index=124&type=chunk) - Estimated **$740.6 million** of federal and **$1.2 billion** of state NOL carryforwards are expected to expire unused due to change of control limitations[124](index=124&type=chunk) - Currently under examination by the United States Internal Revenue Service and the state of Louisiana[125](index=125&type=chunk) - Evaluating the impact of the One Big Beautiful Bill Act (OBBBA) on income tax disclosures and consolidated financial statements[126](index=126&type=chunk) [Item 3. Quantitative and Qualitative Disclosure About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) This section details the company's exposure to market risks, primarily from fluctuations in natural gas and oil prices and interest rates, and its use of derivative financial instruments to hedge these risks [Natural Gas and Oil Prices](index=38&type=page&id=Natural%20Gas%20and%20Oil%20Prices) Comstock's financial performance is highly sensitive to volatile natural gas and oil prices, which are influenced by global demand, supply, geopolitical events, and economic conditions, with hedging strategies in place - Financial condition, results of operations, and capital resources are highly dependent upon prevailing market prices of natural gas and oil, which are subject to wide fluctuations[127](index=127&type=chunk) - Hedged approximately **100.3 Bcf** of 2025 natural gas production at an average price of **$3.48 per MMBtu** and **116.8 Bcf** of 2026 production at **$3.51 per MMBtu** via natural gas price swaps[128](index=128&type=chunk) - Hedged approximately **27.6 Bcf** of 2025 natural gas production (average ceiling **$3.80**, average floor **$3.50**) and **167.9 Bcf** of 2026 production (average ceiling **$4.35**, average floor **$3.50**) via natural gas collars[128](index=128&type=chunk) - A **10% increase** in natural gas market price would decrease the fair value of derivatives by approximately **$119.2 million**; a **10% decrease** would increase fair value by approximately **$118.5 million**[129](index=129&type=chunk) [Interest Rates](index=39&type=page&id=Interest%20Rates) Comstock has approximately $3.1 billion in long-term debt, with a significant portion bearing fixed interest rates, but $475.0 million outstanding under its bank credit facility is subject to variable interest rates - Approximately **$3.1 billion** principal amount of long-term debt outstanding at June 30, 2025[131](index=131&type=chunk) - **$965.0 million** of long-term debt bears a fixed interest rate of **5.875%**, and **$1.62 billion** bears a fixed rate of **6.75%**[131](index=131&type=chunk) - **$475.0 million** outstanding under the bank credit facility is subject to variable interest rates tied to SOFR or the corporate base rate[131](index=131&type=chunk) - Any increase in variable interest rates would adversely impact the company's results of operations and cash flow[131](index=131&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO evaluated the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, concluding they were effective, with no material changes in internal controls - Disclosure controls and procedures were **effective** as of June 30, 2025, providing reasonable assurance for timely and accurate financial reporting[132](index=132&type=chunk) - No material changes in internal controls over financial reporting occurred during the three months ended June 30, 2025[132](index=132&type=chunk) [PART II. Other Information](index=40&type=section&id=PART%20II.%20Other%20Information) This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in certain litigation that arises in the normal course of its operations but does not anticipate any material effect on its financial position, results of operations, or cash flows - Involved in certain litigation that arises in the normal course of operations[135](index=135&type=chunk) - Resolution of these matters is not expected to have a material effect on the company's financial position, results of operations, or cash flows[135](index=135&type=chunk) [Item 1A. Risk Factors](index=40&type=page&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the Risk Factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[136](index=136&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report for the period - None[137](index=137&type=chunk) [Item 3. Defaults upon Senior Securities](index=40&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) There were no defaults upon senior securities to report for the period - None[138](index=138&type=chunk) [Item 4. Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[139](index=139&type=chunk) [Item 5. Other Information](index=40&type=section&id=Item%205.%20Other%20Information) During the three months ended June 30, 2025, none of the company's directors or officers adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" - No Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during the three months ended June 30, 2025[140](index=140&type=chunk) [Item 6. Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, incentive plans, and required certifications, along with Inline XBRL documents - Includes various corporate governance documents (Articles of Incorporation, Bylaws), incentive plans, and required certifications (Section 302, Section 906)[141](index=141&type=chunk) - Inline XBRL Instance Document, Taxonomy Extension Schema, and Cover Page Interactive Data File are filed herewith[141](index=141&type=chunk) [SIGNATURES](index=42&type=section&id=SIGNATURES) The report is duly signed on behalf of Comstock Resources, Inc. by M. Jay Allison, Chairman and Chief Executive Officer, and Roland O. Burns, President, Chief Financial Officer and Secretary - Signed by M. Jay Allison (Chairman and Chief Executive Officer) and Roland O. Burns (President, Chief Financial Officer and Secretary) on July 31, 2025[146](index=146&type=chunk)

Financial Data and Key Metrics Changes - In Q2 2025, the company reported oil and gas sales of $344 million, a 24% increase compared to the previous year despite a 14% decrease in production, averaging 1.23 Bcfe per day [9][10] - Adjusted net income for the quarter was $40 million, or $0.13 per diluted share, compared to a loss in Q2 2024 [10][11] - EBITDAX for the quarter was $260 million, with operating cash flow of $210 million [9][10] Business Line Data and Key Metrics Changes - The company turned 21 wells to sales in the first half of 2025, with an average initial production rate of 25 million cubic feet per day [7][10] - The average lateral length for wells turned to sales in the legacy Haynesville area was 11,803 feet, while the Western Haynesville wells had an average lateral length of 7,933 feet [24][22] - The company drilled 16 wells in the first half of 2025, with a total of 19 wells drilled so far this year [13][10] Market Data and Key Metrics Changes - The average NYMEX settlement price for Q2 2025 was $3.44, while the average Henry Hub spot price was $3.16 [11] - The realized gas price for the second quarter was $3.20, reflecting a $0.42 basis differential compared to the NYMEX settlement price [11] Company Strategy and Development Direction - The company is focused on building its asset base in the Western Haynesville, with plans to drill 19 net wells and turn 13 net wells to sales in 2025 [38] - A new gas treating plant has been put into operation, increasing treating capacity by 400 million cubic feet per day [5][39] - The company plans to divest certain non-core properties to accelerate deleveraging of its balance sheet [40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term growth in natural gas demand and the potential for LNG and industrial demand [8][40] - The company is adjusting its production strategy to optimize long-term value, focusing on disciplined drawdown of wells [74][76] - Management indicated that they are not considering issuing equity to fund growth, instead focusing on divesting non-core assets to improve the balance sheet [68][70] Other Important Information - The company has a total of 1,105,000 gross and 826,741 net acres prospective for commercial development in the Haynesville and Bossier Shales [16] - The average lateral length in the drilling inventory has increased to 9,686 feet, providing over 30 years of future drilling locations based on current activity levels [20][21] Q&A Session Summary Question: Insights on Western Haynesville step-out wells - Management discussed the positive confirmation of initial reservoir pressure and productivity from the Jennings well, which was drilled faster and cheaper than previous wells [44][47] Question: Implications of reduced well guidance for 2027 targets - Management clarified that the reduction in well guidance does not significantly impact the 2027 targets, as drilling speeds are improving [56][58] Question: Non-core asset sales strategy - Management emphasized that the focus is on selling non-core drilling inventory rather than production reserves, aiming to create value for the company [83][85] Question: Coring program objectives - The coring program aims to gather data for better understanding of the geology and to optimize completions, aligning with the company's long-term development strategy [87][88]

Financial Performance - Natural gas and oil sales were $344 million[6] - Operating cash flow was $210 million, or $0.71 per diluted share[6] - Adjusted EBITDAX for the quarter was $260 million[6] - Adjusted net income was $40 million, or $0.13 per diluted share[6] Operational Highlights - Five Western Haynesville wells were turned to sales in the second quarter with an average lateral length of 10,897 feet and an average per well initial production rate of 36 MMcf per day[6] - 21 wells were turned to sales to date in 2025 in the Legacy Haynesville area with an average lateral length of 11,803 feet and a per well initial production rate of 25 MMcf per day[6] - The company drilled and completed wells at an average cost of $2,647 per completed lateral foot in the Western Haynesville[6,57] Drilling Program - For the six months of 2025, the company drilled 19 gross wells (17.5 net) and turned 24 gross wells (20.3 net) to sales[16] - The average lateral length for operated wells turned to sales was 11,137 feet in the Haynesville and 11,684 feet in the Bossier[16] - The average initial production rate for operated wells turned to sales was 27 MMcf per day in the Haynesville and 26 MMcf per day in the Bossier[16] Capitalization and Liquidity - As of June 30, 2025, the company had $26 million in cash and cash equivalents[21] - The company's total debt was $3064 million, including $475 million outstanding on the revolving credit facility[21] - The company has strong financial liquidity of $10 billion[59]

Core Insights - Comstock Resources reported a revenue of $470.26 million for the quarter ended June 2025, marking a 90.5% increase year-over-year [1] - The company's EPS was $0.13, a significant improvement from -$0.20 in the same quarter last year, with an EPS surprise of +44.44% compared to the consensus estimate of $0.09 [1] - The reported revenue exceeded the Zacks Consensus Estimate of $415.32 million, resulting in a surprise of +13.23% [1] Financial Performance Metrics - Average natural gas price was $3.02, lower than the estimated $3.26, while the average price including hedging was $3.06 compared to an estimate of $3.23 [4] - Total production was 112,238.00 MMcfe, below the average estimate of 115,997.70 MMcfe [4] - Oil production totaled 13.00 MBBL, exceeding the average estimate of 9.06 MBBL [4] - Average oil price was $57.00, compared to the estimated $62.07 [4] - Revenues from oil sales were $0.74 million, below the estimated $0.87 million, representing a -31% change year-over-year [4] - Revenues from natural gas sales were $339.23 million, lower than the average estimate of $396.16 million [4] Stock Performance - Comstock shares have returned -16.8% over the past month, contrasting with the Zacks S&P 500 composite's +3.4% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Viewpoint - Comstock Resources reported quarterly earnings of $0.13 per share, exceeding the Zacks Consensus Estimate of $0.09 per share, and showing a significant improvement from a loss of $0.20 per share a year ago, indicating a positive earnings surprise of +44.44% [1] Financial Performance - The company achieved revenues of $470.26 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 13.23%, and showing a substantial increase from $246.83 million in the same quarter last year [2] - Over the last four quarters, Comstock has exceeded consensus EPS estimates three times and topped consensus revenue estimates two times [2] Stock Performance - Comstock shares have increased approximately 15.4% since the beginning of the year, outperforming the S&P 500's gain of 8.3% [3] Future Outlook - The company's earnings outlook is crucial for assessing future stock performance, with current consensus EPS estimates at $0.16 for the coming quarter and $0.56 for the current fiscal year, alongside revenues of $449.36 million and $1.81 billion respectively [7] - The estimate revisions trend for Comstock was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Oil and Gas - Exploration and Production - United States industry is currently ranked in the bottom 31% of over 250 Zacks industries, suggesting that the overall industry outlook may impact Comstock's stock performance [8]