Comstock Resources (CRK) Q2 2024 earnings summary

Executive summary

• Q2 2024 results were significantly impacted by weak natural gas prices, resulting in a net loss despite a 4% production increase and steady operational results from the Haynesville shale drilling program.

• Net loss for Q2 2024 was $123.2 million ($0.43/share), with adjusted net loss at $58 million ($0.20/share), compared to net income in Q2 2023.

• Western Haynesville acreage expanded, with exploratory play progressing and additional wells expected online in late 2024 or early 2025.

• Enhanced liquidity through $400 million in new senior notes and $100.5 million equity investment from the majority shareholder.

• Ended Q2 with $1.2 billion liquidity, including $1.175 billion unused borrowing capacity and $19.3 million in cash.

Financial highlights

• Q2 2024 oil and gas sales (including hedging) were $278 million, down from $285 million in Q2 2023, despite a 4% production increase.

• Adjusted EBITDAX was $167 million; operating cash flow for Q2 was $118 million ($0.41/share).

• Adjusted net loss for Q2 2024 was $58 million ($0.20/share); net loss was $123.2 million ($0.43/share), including an $85.8 million unrealized hedging loss.

• First half 2024 sales were $614 million, down 9% year-over-year; adjusted net loss of $67 million ($0.24/share).

• Realized gas price averaged $1.65/Mcf in Q2, improved to $2.12/Mcf with hedging (28% hedged).

Outlook and guidance

• 2024 CapEx expected to be down 33%-41% from 2023; Q3 D&C CapEx guidance is $135-$185 million, full-year $750-$850 million.

• Targeting 50% hedge coverage for 2025-2026 production at $3.50+.

• Q4 2024 production expected to be down ~10% year-over-year due to earlier rig reductions; production to increase in early 2025 as new Western Haynesville wells come online.

• No plans to extend the current frac holiday into Q4 unless market conditions change.

• Management believes current liquidity is sufficient for foreseeable needs, but may seek additional capital if assumptions change.