Earnings Call Insights: Comstock Resources (CRK) Q2 2026
Management View
“We did see the return of production growth in the quarter. Production increased 16% over the first quarter of 2026… However, lower natural gas prices drove lower financial results in the quarter,” said (Chairman of the Board & CEO Miles Allison).
“On June 15, we completed our midstream equity placement by selling a 27% stake in Pinnacle Gas Services for $600 million, which we used to retire the Pinnacle's preferred equity and all of Pinnacle's outstanding debt,” said (CEO Allison). He added that the deal “strengthen[s] our balance sheet by reducing debt and simplifying PGS's capital structure.”
“We did report a $9 million profit for the quarter, or $0.03 per share,” said (President, CFO, Secretary & Director Roland Burns), and noted it included “a $1 million mark-to-market unrealized gain related to our hedge book.”
“Based on the successful results of our first big-hole long lateral drilled in the second quarter, we're now in the process of drilling our second and third big-hole laterals,” said (Chief Operating Officer Daniel Harrison), and added, “this fall, we will be deploying our first 10,000-PSI rig in the Western Haynesville.”
Outlook
“Our primary goal continues to be advancing our Western Haynesville,” said (CEO Allison), and added, “we expect to drill 22 wells and turn 21 wells to sales in 2026” in the Western Haynesville.
“We expect to drill 48 wells and turn 48 wells to sales in 2026” in the legacy Haynesville, said (CEO Allison), alongside “5 operated rigs drilling in the legacy Haynesville” and “4 operated rigs drilling in the Western Haynesville.”
On 2027 pacing, (CFO Burns) said, “we've definitely been disappointed with the gas prices… so we really will look at our '27 activity kind of as we get to late in the year,” adding the company would “want to see probably stronger prices, especially stronger prices that we could hedge into to support that activity into next year.”
Financial Results
“Our production in the second quarter averaged 1.2 Bcfe per day,” said (CFO Burns), adding “oil and gas sales after hedging were $332 million,” “EBITDAX came in at $245 million,” and “we generated $189 million of cash flows in the quarter.”
“In the second quarter, we were 63% hedged, which increased our realized gas price for the quarter to $2.93,” said (CFO Burns), after stating the realized gas price “averaged $2.54.”
“Our operating costs per Mcfe averaged $0.77 in the second quarter,” said (CFO Burns), and added, “our EBITDAX margin in the quarter improved to 74%.”
On spending and liquidity, (CFO Burns) said, “we spent a total of $390 million on development activities in the second quarter,” and added, “at the end of the second quarter, we have almost $1.2 billion of liquidity.”
Q&A
Derrick Whitfield, Texas Capital Securities: asked where Western Haynesville well cost/foot could trend with “big hole design and higher-spec rigs”; Daniel Harrison, COO: “on the drilling side, we definitely see the cost going down,” and said the Dolly Jones drilled at “$1,306 a foot,” while overall D&C cost could be “the same or a little bit cheaper.”
Charles Meade, Johnson Rice: asked what big-hole design could mean for “productivity”; Daniel Harrison, COO: said bigger pipe could mean “lower treating pressure… get a little bit better frac efficiency,” while Miles Allison, CEO: said it “should materially drive down costs… [and] enhance well productivity.”
Kevin MacCurdy, Pickering Energy Partners: asked if 2026 exit-rate comments still hold; Ronald Mills, VP Finance & IR: “we're still on track,” and added “both quarters should grow by a similar amount sequentially.”
Jacob Roberts, TPH: asked about 2027 growth vs. prices; Roland Burns, CFO: “to be determined,” and said activity decisions depend on “stronger prices… that we could hedge into.”
Noel Parks, Tuohy Brothers: asked about higher-temp motors; Daniel Harrison, COO: “in the next 2 or 3 months, we'll take delivery,” aiming to “eliminate 1 trip” and “eliminate 2 to 3 days.”
Carlos Escalante, Wolfe: asked which wells reflect the new larger-frac design; Daniel Harrison, COO: said the Q2 turned-to-sales wells were “the first batch of wells that we systemically went up to the larger proppant loading,” and added “initial results look really good.”
Sentiment Analysis
Analysts were slightly skeptical on cost trends, cadence, and proof of EUR uplift, pressing for specifics such as “where do you see cost trending” (Whitfield) and which wells are “a good proxy” for the “ultimate completion design” (Escalante).
Management’s tone was slightly positive on operations but cautious on commodity price sensitivity, including “we've definitely been disappointed with the gas prices” (CFO Burns) alongside operational confidence such as “we definitely see the cost going down” (COO Harrison).
Versus Q1’s heavier emphasis on patience and “cash burn and slow pace of resource delineation,” Q2 sounded more execution- and transaction-focused, anchored by the Pinnacle stake sale and near-term drilling/completions optimization.
Quarter-over-quarter comparison
Q2 introduced a completed financing/structure change: “selling a 27% stake in Pinnacle Gas Services for $600 million” (CEO Allison) and “Pinnacle is now debt-free” with “saving $40 million in fixed charges annually” (CEO Allison), versus Q1 describing that Pinnacle equity process as upcoming.
Q2 highlighted a rebound from Q1 weather-impacted volumes: “production increased 16% over the first quarter of 2026” (CEO Allison), while Q1 described “Lower production… driven by… significant winter weather.”
Q2 Q&A leaned into practical D&C design proof points (big-hole repeatability, proppant loading batches, motors/rig specs), while Q1 featured more debate on investor patience, cadence, and Western Haynesville variability.
Risks and Concerns
“Lower natural gas prices drove lower financial results,” said (CEO Allison), and management flagged sensitivity to hedgable forward pricing: “we definitely would want to see probably stronger prices… that we could hedge into” (CFO Burns).
On Western Haynesville execution risk, (COO Harrison) cited operational drivers behind higher drilling costs: “two of the wells encountering some steering difficulties… resulting in additional trips,” and said deeper wells mean “higher temperatures.”
Final Takeaway
Management framed Q2 around a return to production growth, a major midstream recapitalization (selling 27% of Pinnacle for $600 million and eliminating Pinnacle debt), and a tighter operational push in the Western Haynesville to lower drilling costs through big-hole laterals and higher-spec equipment, while keeping 2027 activity explicitly contingent on improved gas prices that can be hedged.
