Comstock Resources(US:CRK)2024-05-02 22:32Financial Data and Key Metrics Changes - Oil and gas sales, including hedging, were $336 million in the quarter, a decline of 14% from the first quarter of 2023 despite a 10% increase in production [48][53] - Cash flow from operations was $182 million or $0.65 per share, with adjusted EBITDAX at $230 million [48][53] - Adjusted net loss was $0.03 per share for the quarter, compared to income of $92 million in the first quarter of 2023 [53] Business Line Data and Key Metrics Changes - In the first quarter, the company drilled 16 successful operated Haynesville and Bossier Shale horizontal wells, with an average initial production (IP) rate of 27 million cubic feet per day [49][57] - The average lateral length of the wells drilled was 909,227 feet [49] - Four new Western Haynesville wells were turned to sales, each with IP rates of 35 million to 38 million cubic feet per day [50] Market Data and Key Metrics Changes - The quarterly NYMEX settlement price averaged $2.24, which was $0.17 lower than the average Henry Hub spot price of $2.41 [54] - Realized gas price during the first quarter averaged $2.06, reflecting a $0.18 differential to the settlement price [54] Company Strategy and Development Direction - The company aims to be a significant supplier to the growing LNG market, with a long-term goal to develop its Western Haynesville acreage [19][78] - The company has reduced its capital expenditures (CapEx) by 33% to 41% from the 2023 level due to the low-price environment [76] - The company is focused on maintaining strong financial liquidity, which totaled over $1.3 billion at the end of the first quarter [76] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the weak natural gas price environment and emphasized the importance of managing costs and liquidity [21][79] - The company is optimistic about the future demand for natural gas driven by LNG exports starting in the second half of next year [78] - Management expressed confidence in the resource potential of the Western Haynesville, noting improvements in well performance and EURs [26][27] Other Important Information - The company added 198,000 net acres to its Western Haynesville play, increasing its total acreage position to over 450,000 net acres [45][47] - The company has a strong hedge position, being 50% hedged for the fourth quarter of this year and about a third hedged for 2025 and 2026 [51] Q&A Session Summary Question: How does the capital efficiency of the Western Haynesville investment compare to the industry? - Management indicated that while the Western Haynesville is being developed at a higher cost, it also has significantly larger reserves, making it a long-term investment [89][90] Question: What is the activity required to hold the resource in light of recent leasing success? - Management stated that 95% of the newly acquired acreage is held by production, and there is no immediate need to increase drilling activity in the low-price environment [96]