Comstock Resources(US:CRK)2024-02-14 20:11Financial Data and Key Metrics Changes - The company generated cash flow from operations of $207 million or $0.75 per share, with adjusted EBITDAX at $244 million for the fourth quarter [8][10] - Adjusted net income was $28 million or $0.10 per share for the fourth quarter, compared to $12 million in the third quarter of 2023 and $288 million in the fourth quarter of 2022 [18] - Oil and gas sales totaled $354 million in the fourth quarter, a decline of 37% from the same period in 2022, despite higher production levels [10][15] - The average realized gas price during the fourth quarter was $2.48, reflecting a $0.40 differential to the settlement price [20] Business Line Data and Key Metrics Changes - The company drilled 14 successful operated horizontal wells in the fourth quarter, with an average lateral length of 8,994 feet [8] - In 2023, the company drilled a total of 67 wells, with an average initial production (IP) rate of 25 million cubic feet per day per well [22] - The average lateral length of wells turned to sales in 2023 was 10,820 feet, an increase of 8% from 2022 [58] Market Data and Key Metrics Changes - The company added 23,000 net acres to its Western Haynesville acreage position in the fourth quarter, increasing the total to over 250,000 net acres [16][33] - The SEC-approved reserves decreased by 26% in 2023 to 4.9 Tcfe due to low gas prices used in the determination [51] Company Strategy and Development Direction - The company is focused on preserving its balance sheet in the current low gas price environment and plans to fund its drilling program within operating cash flow [34] - The company has formed a midstream joint venture to fund the build-out of midstream assets in Western Haynesville, which will not burden its operating cash flow [42][33] - The company aims to benefit from the long-term growth in natural gas demand, particularly with the expected increase in LNG exports [12][86] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by low natural gas prices and emphasized the need for decisive actions to weather volatility [12] - The company is optimistic about the long-term demand for natural gas and is positioning itself to benefit from this growth [14][86] - Management indicated that they are actively managing drilling activity levels in response to the current market conditions [63] Other Important Information - The company ended the quarter with $580 million in borrowings under its credit facility, totaling $2.7 billion in debt [24] - The company expects to run five rigs for the rest of 2024 and maintain one to two frac crews [32] Q&A Session Summary Question: What is the average gas price that underpins your spending within cash flow view? - Management indicated that they are monitoring service costs and may drop another rig to reduce capital expenditures if necessary [70] Question: Can you speak to the gains you're experiencing in operational efficiency in the Western Haynesville? - Management noted that they are gaining ground in operational efficiency and expect breakeven costs to improve over time [71] Question: What is the plan for completion crews for the remainder of the year? - Management confirmed that they plan to run between one and two completion crews for the remainder of the year [76] Question: How do you view the current leverage ratio covenant risk? - Management does not foresee reaching the leverage ratio covenant risk and will continue to monitor spending levels [113] Question: What is the expected net well count for the year in terms of wells drilled and turned to sales? - The company plans to drill 46 gross wells and turn to sales 44 gross wells for the year [115]