Comstock Resources (ticker: CRK), based in Frisco, Texas is in the business of acquisition, development, production and exploration for natural gas and oil with operations concentrated in Texas and Louisiana.
Comstock’s primary acreage blocks are in the Haynesville shale and the Eagle Ford shale, representing approximately 800 drilling locations.
Comstock’s 2018 drilling program will target ~30% growth within operating cash flow.
Comstock believes that the potential sale of its Eagle Ford assets should allow it to refinance its secured debt in early 2018. The company said that its liquidity of $150 million will be adequate to support the planned 2018 drilling program.
Production
Comstock produced 20.0 BCFE of natural gas and 229,000 barrels of oil (21.4 BCFE) in the third quarter of 2017. The company’s natural gas production in Q3 of 2016 averaged 217.3 MMcf per day. Comstock’s natural gas production in Q3 2017 increased 14% from Q2 2017. The growth in natural gas production is being driven by Comstock’s Haynesville shale drilling program, the company said.
Operating costs per Mcfe in the 3rd quarter have decreased by 34% and DD&A per Mcfe is down 35% in 2017.
Haynesville/Bossier Shale
- Comstock’s Haynesville Shale assets provide natural gas drilling with growth of ~40% in 2017.
- Comstock owns interests in 896 producing wells in 25 fields
- ~ 69,000 net acres with Lower Haynesville shale development potential
- ~ 51,000 net acres with Upper Haynesville (Bossier) shale development potential
- Horizontal Cotton Valley development potential
Oil production in the third quarter of 2017, which averaged 2,491 barrels of oil per day, declined by 28% from the 3,482 barrels per day produced in the third quarter of 2016. The decrease in oil production was the result of the lack of drilling in the company’s South Texas Eagle Ford shale properties.
The Eagle Ford Shale
In Comstock’s South Texas region it has proved oil and gas reserves of 9 million barrels of oil equivalent, which is 6% of its total reserves. It has 19,000 net acres prospective for Eagle Ford shale development primarily in McMullen and LaSalle counties, Texas where it has 189 producing wells and potential locations to drill an additional 336 wells. Oil production in the third quarter of 2017, which averaged 2,491 barrels of oil per day, declined by 28% from the 3,482 barrels per day produced in the third quarter of 2016. The decrease in oil production was the result of the lack of drilling in the company’s South Texas Eagle Ford shale properties, which the company said it could potentially sell.
Drilling Plans for 2018
Comstock said its preliminary drilling plans for 2018 include running three operated drilling rigs subject to natural gas prices and industry conditions. Two of the rigs will focus primarily on the properties being jointly developed with USG Properties Haynesville, LLC, with the third rig focused on Comstock’s legacy Haynesville shale properties in DeSoto Parish, Louisiana.
In total Comstock currently plans to drill 26 wells or 13.8 wells net to its interest in 2018.
The Company’s preliminary 2018 capital plan also includes two in-liner refracs of existing Haynesville shale wells. Total capital expenditures for 2018 are estimated at $170 million. The drilling budget will be adjusted upward or downward in response to natural gas prices as the program is intended to be funded by operating cash flow.
The company estimates 2018 natural gas production based on the current drilling plan could approximate 88 to 92 Bcf.
EnerCom Dallas Conference
Comstock Resources will present at the EnerCom Dallas oil and gas investment conference February 21-22, 2018 at the Tower Club in downtown Dallas. The conference is focused on bringing together publicly traded E&Ps and oilfield service companies with institutional investors.
Buyside professionals and oil and gas company executives may register for the event through the conference website.
