Contradictions Uncovered: Comstock Resources' Q4 2024 Earnings Call Reveals Divergent Views on Drilling Costs, M&A Strategy, and Well Spacing

These are the key contradictions discussed in Comstock Resources' latest 2024 Q4 earnings call, specifically including: Drilling Cost Trends and Efficiency Improvements, M&A Activity and Strategy, drilling cost reduction expectations, and pad sizes and well spacing:



Western Haynesville Footprint and Drilling Activity:
- Comstock Resources more than doubled its acreage position in the Western Haynesville, reaching 518,000 net acres.
- The company plans to drill 20 wells in the new play in 2025, focusing on 2-well pad drilling.
- This expansion is driven by the successful initial wells in the area and the company's strategy to position itself for future demand.

Financial Performance and Cost Control:
- Comstock reported revenue of $336 million for the fourth quarter, with a 5% decline in sales due to lower production levels.
- The company reduced leverage significantly, aiming for an improvement in natural gas prices.
- The reduction in drilling and completion costs, down 33% for drilling and 28% for completions, is attributed to improved drilling efficiency in the Western Haynesville.

Midstream Infrastructure and Partnership:
- Comstock partnered with Quantum Capital Solutions to fund the expansion of midstream assets in the Western Haynesville.
- The partnership contributed to building 246 miles of pipelines and expanding treating capacity.
- This collaboration supports the growing production from the area and ensures the company maintains control over its midstream infrastructure.

Production and Drilling Strategy:
- Comstock produced an average of 1.35 Bcfe per day in Q4, reflecting a 12% decline from the previous year due to rig reductions.
- The company plans to increase production by drilling 26 wells in the legacy Haynesville and 19.9 in the Western Haynesville in 2025.
- This strategic drilling aims to balance production needs and midstream infrastructure, with a focus on maintaining financial liquidity.