Comstock Resources(US:CRK)2022-08-02 20:58Financial Data and Key Metrics Changes - In Q2 2022, the company generated $190 million of operating free cash flow, a 586% increase year-over-year [12] - EBITDAX for the quarter was $515 million, up 105% from the previous year [8] - Operating cash flow increased by 133% to $458 million, or $1.65 per diluted share [8] - Revenues after hedging reached $604 million, an 86% increase compared to last year [8] - Adjusted net income for the quarter was $274 million, or $1 per diluted share, a 454% increase from Q2 2021 [11] Business Line Data and Key Metrics Changes - Production increased by 1% to 1.4 billion cubic feet equivalent per day on a pro forma basis [10] - The company reported 14 net operated wells with an average initial production rate of 26 million cubic feet per day [9] - The average lateral length for wells drilled in Q2 was 9,612 feet, with some exceeding 11,000 feet [20] Market Data and Key Metrics Changes - The average NYMEX settlement price for natural gas was $7.17, while the average Henry Hub spot price was $7.39 [13] - The realized price during the quarter averaged $6.93, reflecting a $0.28 differential [14] - The company was 54% hedged, which reduced the realized price to $4.85 [14] Company Strategy and Development Direction - The company plans to generate significantly more than the targeted $500 million of free cash flow, potentially approaching $1 billion [27] - There are plans to add two operated rigs to the Haynesville drilling program by year-end, driving additional production growth in 2023 [27] - The company aims to reinstate its shareholder dividend during Q4 2022 [27] Management's Comments on Operating Environment and Future Outlook - Management highlighted the strong financial results driven by improved natural gas prices [13] - The company expects to see a step-up in production in Q4 2022, with around 19 wells coming online [40] - Management noted that supply chain issues have caused longer drill times, impacting production timelines [40] Other Important Information - The company completed a bolt-on acquisition for $36 million, which included 60,000 net acres and a 145-mile high-pressure pipeline [9] - The company achieved certification for its natural gas production under the MiQ standard for methane emissions measurement [9] Q&A Session Summary Question: Timing for the second TITAN fleet and additional rigs - Management confirmed that the second TITAN fleet is expected to be in service in Q1 2023, with two additional rigs coming online soon [35][36] Question: Details on the Circle M well and future locations - Management explained that the Circle M well was chosen to test Bossier shale potential, with ongoing evaluations for future drilling locations [37] Question: Production outlook and completions cadence - Management indicated expectations for increased completions in Q4, with around 19 wells planned [40] Question: Recent Perryville differentials and market conditions - Management attributed the weakness in Perryville differentials to transportation tightness and maintenance, expecting improvements in October [41][42] Question: Tenure and contracts for new rigs - Management stated that current contracts for rigs are either well-to-well or six-month contracts, with rates significantly higher than a year and a half ago [49] Question: Potential new LNG contracts - Management is actively engaging with major LNG exporters and aims to position itself as a key supplier [51] Question: Acquisition of pipeline infrastructure - Management emphasized the strategic value of the acquired pipeline infrastructure in supporting future LNG demand [71][72] Question: Shut-in quantities and maintenance - Management reported a typical shut-in activity of around 4%, with no significant long-duration shut-ins expected [82]