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 (CRK, Financial) 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 (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 (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.
Q: When can we expect a more comprehensive update on the Western Haynesville in 2025?
A: Daniel Harrison, COO, stated that more information will be provided early next year. The recent well was the fastest drilled to TD, showing significant improvement. The company is working on further reducing costs and plans to provide updates as more wells are completed and analyzed.
Q: What is the geographical spread of the 64 Horseshoe locations in the Haynesville?
A: Daniel Harrison, COO, noted that the locations are spread evenly across the basin, covering various type curve areas. The results from the Sebastian well were promising, and the company is optimistic about the repeatability of these results across their acreage.
Q: How are you handling potential faulting issues in the Western Haynesville?
A: Daniel Harrison, COO, mentioned that they have 3D seismic data over almost the entire acreage, providing a clear mapping of faults. This data helps in planning well layouts and mitigating any potential issues during drilling.
Q: What is the outlook for M&A in the Haynesville, and do you see opportunities for bolt-on acquisitions?
A: Roland Burns, President and CFO, indicated that they are focused on opportunities in the Western Haynesville, particularly acquiring deep rights from companies divesting older vertical wells. They expect private operators to consolidate over time, especially as gas prices improve.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
