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Comstock Resources (CRK) Q3 Earnings call transcript Oct 31, 2024

AInvestFriday, Nov 1, 2024 2:10 am ET
1min read

The third quarter of 2024 has been a pivotal period for Comstock Resources, a leading player in the natural gas sector. The company's earnings call, led by CEO Jay Allison, offered insights into its financial performance and strategic moves amidst a challenging market environment. Let's delve into the key takeaways from the call.

Confident Outlook Amidst Challenges

Despite the persistent low natural gas prices, Comstock Resources has managed to maintain a steady operational pace. The company's CEO, Jay Allison, expressed optimism about the future, citing potential demand growth for natural gas in the context of the shift towards renewable energy and the increasing need for back-up power. This positive outlook was reinforced by the company's strategic investments in the Western Haynesville play, which has the potential to add decades of drilling inventory and position Comstock as a key player in the LNG demand corridor.

Navigating the Impact of Low Prices

The call underscored the challenges posed by low natural gas prices, with the average realized gas price before hedging coming in at $1.90 for the quarter. Despite this, Comstock Resources has shown resilience, managing to generate cash flow from operations of $152 million and adjusted EBITDAX of $202 million. The company has also taken proactive steps to mitigate the impact of low prices, such as reducing its rig count and frac fleet, and increasing its hedge position.

Strategic Focus on Cost Reduction and Innovation

Comstock Resources has been focusing on cost reduction and operational efficiency, which was evident in the successful drilling of the horseshoe Haynesville well. This innovative drilling technique, which involves drilling a well in a horseshoe shape to maximize lateral length and reduce costs, has shown promising results, with the first horseshoe well achieving an initial IP rate of 31 million cubic feet per day. The company plans to continue exploring this technology, with 6 additional horseshoe wells expected to come online by the end of the year.

A Strong Financial Position for the Future

Comstock Resources concluded the call on a positive note, highlighting its strong financial position and strategic investments. The company has secured a $2 billion borrowing base from its bank group, and its majority shareholder, Jerry Jones, has injected additional funds into the company. These moves underscore the confidence of key stakeholders in Comstock's future prospects, as the company positions itself for the anticipated growth in natural gas demand.

In conclusion, Comstock Resources' Q3 2024 earnings call provided a comprehensive overview of the company's financial performance and strategic direction in the face of a volatile natural gas market. With a focus on cost reduction, innovation, and strategic investments, Comstock is well-positioned to navigate the challenges of the current environment and capitalize on the opportunities ahead.

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