Comstock Resources Inc (CRK) Q3 2024 Earnings Call Highlights: Strategic Positioning Amidst ...

In This Article:

  • Revenue: $305 million in oil and gas sales for Q3 2024, including hedging.

  • Cash Flow from Operations: $152 million or $0.52 per share for Q3 2024.

  • Adjusted EBITDAX: $202 million for Q3 2024.

  • Adjusted Net Loss: $0.17 per share for Q3 2024.

  • Production: Averaged 1.4 Bcfe per day, a 2% increase from Q3 2023.

  • Realized Gas Price: $1.90 per Mcf before hedging in Q3 2024.

  • Operating Cost per Mcfe: $0.77 in Q3 2024, a $0.07 improvement from Q2 2024.

  • EBITDAX Margin: Improved to 67% in Q3 2024 from 61% in Q2 2024.

  • Development Spending: $184 million on development activities in Q3 2024.

  • Total Debt: $3 billion, with $415 million under the credit facility.

  • Liquidity: $1.1 billion at the end of Q3 2024.

  • Drilling Inventory: 1,607 gross operated locations, providing over 30 years of future drilling.

  • Average Lateral Length: 12,580 feet for wells turned to sales in Q3 2024.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Comstock Resources Inc (NYSE:CRK) has secured 450,000 net acres in the Western Haynesville, positioning itself strategically close to the LNG demand corridor.

  • The company has successfully reduced well costs in the Western Haynesville, with the 13th well completed at approximately $2,814 per lateral foot.

  • Production in the third quarter averaged 1.4 Bcfe per day, a 2% increase from the same period in 2023.

  • Comstock Resources Inc (NYSE:CRK) has a strong liquidity position with $1.1 billion at the end of the third quarter.

  • The company has converted 57% of its short Haynesville locations to 64 future Horseshoe locations, improving economic performance metrics significantly.

Negative Points

  • Comstock Resources Inc (NYSE:CRK) reported an adjusted net loss of $49 million for the third quarter, or $0.17 per share.

  • The company's financial results were heavily impacted by continued weak natural gas prices, with an average realized gas price of $1.90 for the quarter.

  • Oil and gas sales declined by 3% to $305 million in the third quarter due to low natural gas prices.

  • Higher depreciation, depletion, and amortization rates contributed to the financial loss, driven by a decrease in proved undeveloped reserves.

  • The company anticipates a 10% decrease in fourth-quarter production compared to the same period in 2023, due to reduced drilling activity.

Q & A Highlights

Q: Can you discuss the motivations behind the planned outspend for Q4 and how you plan to manage the balance sheet in 2025? A: Roland Burns, President and CFO, explained that the original plan was based on stronger prices, which would cover the expenditures. The higher expenditure level is due to quicker drilling days in Western Haynesville, causing completion work to be mostly in the quarter. The goal for 2025 is to balance capital investment with cash flow from operations, aided by a higher hedge level to mitigate gas price risks.

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