Comstock Resources outlines 2,559 net Western Haynesville drilling locations amid major asset divestitures and cost improvements

Nov. 04, 2025 Comstock Resources, Inc. (CRK) Stock  AI-Generated Earnings Calls Insights

Management View

• CEO Miles Allison highlighted the company’s ongoing strategic transition to focus on the Western Haynesville, citing “bold moves to create the Western extension of the Haynesville Shale” and describing interest in natural gas as unprecedented due to LNG exports and AI/data center demand. Allison stated, “I don't believe we have ever seen a brighter future for natural gas.”
• Allison announced the divestiture of legacy Haynesville assets, with proceeds to retire long-term debt, and described an efficient quarter in legacy Haynesville drilling, noting an industry-leading cost of $1,229 per lateral foot.
• The company turned 3 new Western Haynesville wells online, totaling 8 for 2025, with an average lateral length of 8,566 feet and an initial production rate of 32 million cubic feet per day per well.
• In September, Comstock divested its nonstrategic Cotton Valley wells for $15.2 million and agreed to sell Shelby Trough assets for $430 million, with the latter expected to close in December.
• CFO Roland Burns reported, “Production in the third quarter averaged 1.22 Bcfe a day, and our oil and gas sales in the quarter increased 10% from the third quarter of last year to $335 million.” Burns also noted an adjusted net income of $28 million for the third quarter or $0.09 per diluted share compared to a loss in the same period in 2024.
• COO Daniel Harrison detailed the company’s drilling efficiencies, reporting significant cost reductions and longer average lateral lengths in both legacy and Western Haynesville.

Outlook

• CEO Allison stated, “In 2025, we remain primarily focused on building our great asset in Western Haynesville that will position us to benefit from the longer-term growth in natural gas demand.”
• The company expects to drill 19 wells and turn 13 wells to sales in the Western Haynesville in 2025, while drilling 33 wells and turning 35 to sales in legacy Haynesville.
• Management emphasized continued cost control and efficiency gains: “We continue to have the industry's lowest producing cost structure and expect drilling efficiencies to continue to work toward driving down drilling and completion costs in 2025 in both the Western and legacy Haynesville areas.”
• Proceeds from asset sales are expected to further enhance liquidity, with over $900 million projected following the Shelby Trough sale closure.

Financial Results

• Oil and gas sales for Q3 2025 were $335 million; operating cash flow was $190 million or $0.65 per diluted share; adjusted EBITDAX was $249 million; and adjusted net income was $28 million or $0.09 per diluted share.
• Realized gas price averaged $2.75, with a 57% hedged position raising the realized gas price to $2.99.
• Operating cost per Mcfe averaged $0.77 in the quarter, down $0.03 from last quarter, while EBITDAX margin remained at 74%.
• Development spending totaled $267 million in Q3; year-to-date spending reached $785 million.
• The company reported $580 million of borrowings outstanding and $239 million of liquidity at quarter end, with an improved leverage ratio of 3x.

Q&A

• Derrick Whitfield, Texas Capital Securities: Asked about capital efficiency gains for 2026 given higher activity and operational improvements. COO Harrison responded that the efficiency gains in legacy Haynesville are “up at the top of the curve,” while in Western Haynesville, “we've made a lot of improvements we've made to date. We still got some -- a few other things... going to help us out... in 2026.”
• Whitfield also asked about gas-on-gas competition and supply advantage. CEO Allison noted, “owning our own midstream in the Western Haynesville is going to be really a huge asset for us in the future as we're able... to sell to end users and become a very reliable supplier.”
• Charles Meade, Johnson Rice: Inquired about the Shelby Trough sale and remaining divestiture potential. CEO Allison described it as a “total win-win for everybody,” adding, “we needed to pay down the debt on our balance sheet.”
• Kalei Akamine, BofA Securities: Asked about optimizing lateral lengths in Western Haynesville and midstream capacity utilization. COO Harrison explained that land ownership and geologic structures currently limit longer laterals, but there is room to optimize over time.
• Carlos Escalante, Wolfe Research: Raised questions on the potential expansion of the core Western Haynesville and M&A activity. COO Harrison and CEO Allison described ongoing efforts to confirm inventory and optimize well performance, with active assessment of new acreage.

Sentiment Analysis

• Analyst questions were constructive and focused on operational optimization, capital efficiency, asset sales, and long-term inventory, with a neutral to slightly positive tone.
• Management maintained a confident and optimistic tone throughout, emphasizing strategic moves and future positioning, with phrases such as “never seen a brighter future for natural gas” and “we are really excited.”
• Compared to the previous quarter, analysts appeared more focused on operational execution and the implications of asset sales, while management maintained or increased its confidence.

Quarter-over-Quarter Comparison

• The current quarter saw the announcement and execution of significant asset sales, notably the Shelby Trough divestiture for $430 million, as well as the first public disclosure of Western Haynesville drilling inventory (2,559 net locations).
• Financial results were lower than the prior quarter, with reduced sales, cash flow, and net income, but operating costs per Mcfe improved and leverage metrics strengthened.
• Strategic focus shifted more explicitly to Western Haynesville, with resource allocation and operational updates reflecting this pivot.
• Analysts in both quarters maintained a focus on inventory, drilling efficiency, and capital allocation, but interest in asset sales and their impact on balance sheet and liquidity was more pronounced in Q3.
• Management’s tone remained highly confident, highlighting ongoing efficiencies and asset monetization.

Risks and Concerns

• Management identified the need to optimize drilling and completion efficiencies, particularly in the Western Haynesville.
• There is ongoing uncertainty regarding the pace of unitization and ability to consistently drill longer laterals due to land and geologic factors.
• Asset divestitures are being used to improve the balance sheet, but the market for noncore assets and future proceeds remains a variable.
• Analyst questions noted the potential for cost variability depending on drilling location and depth, as well as the importance of managing capital efficiency amid shifting activity levels.

Final Takeaway

Comstock Resources management emphasized the company’s strategic realignment to prioritize the Western Haynesville, supported by significant asset divestitures and a robust drilling inventory totaling over 2,500 net locations in the region. Operational efficiencies, industry-leading cost controls, and strengthened liquidity position the company to capitalize on rising natural gas demand, particularly from LNG exports and data centers. Management remains confident in further optimizing drilling performance and expanding its midstream capabilities, while asset sales are expected to further improve the financial foundation in the coming quarters.