Comstock Resources Earnings Call Highlights Cash, Flexibility

Comstock Resources ((CRK)) has held its Q4 earnings call. Read on for the main highlights of the call.

Comstock Resources’ latest earnings call struck a cautiously optimistic tone, as management balanced strong cash generation, reserve growth, and strategic deals against a planned production decline and short‑term cost and timing headwinds. Executives stressed financial flexibility and cost‑reduction initiatives, arguing the company is well positioned for a constructive gas market despite near‑term noise.

Strong cash generation and profitability

Comstock reported Q4 oil and gas sales of about $365 million, driving operating cash flow of $222 million or $0.75 per share alongside adjusted EBITDAX of $277 million. Adjusted net income reached $46 million, or $0.16 per share, and for full‑year 2025 sales climbed 15% to $1.40 billion with EBITDAX of $1.10 billion and cash flow of $861 million underscoring robust profitability.

Asset sales transform balance sheet

The company closed roughly $445 million of divestitures in the second half, led by the Shelby Trough sale that generated $417 million in net proceeds and a pretax gain near $292 million. Management used the cash to pay down debt, trimming revolver borrowings to $260 million, boosting liquidity to nearly $1.3 billion, and improving leverage to 2.6 times over the last twelve months.

Reserves grow with low finding costs

Drilling in 2025 added about 1.1 Tcfe of proved reserves, replacing 229% of the year’s production and demonstrating the depth of the Haynesville and Bossier inventory. Total proved reserves rose to roughly 7.2 Tcfe on a NYMEX‑adjusted basis and grew about 8% excluding asset sales, with an attractive all‑in finding cost of just $1.02 per Mcfe.

Haynesville drilling and well performance

Comstock drilled 52 gross operated Haynesville and Bossier wells in 2025, posting an impressive average initial production rate of 27 MMcf per day across the program. In the legacy Haynesville, 35 wells with nearly 11,800‑foot laterals averaged around 25 MMcf per day, while 12 Western Haynesville wells with shorter laterals still averaged robust IPs near 29 MMcf per day.

Lower drill‑and‑complete costs vs. prior year

Despite some fourth‑quarter noise, full‑year 2025 drill‑and‑complete costs averaged $1,347 per foot, about 11% below the 2024 average of $1,510 per foot. Management highlighted efficiency measures including an extra frac fleet, rotary‑steerable tool trials, insulated drill pipe, and upgraded rigs and frac spreads as key drivers of structural cost improvements.

High operating efficiency and margins

Operating costs in Q4 averaged $0.77 per Mcfe, supporting a hefty 77% EBITDAX margin that improved three percentage points from the prior quarter. Modest reductions in lifting costs and production and ad valorem taxes helped preserve margins, underlining the company’s ability to generate strong cash returns even in a choppy gas price environment.

Data center and midstream growth platform

Comstock unveiled a notable partnership with NextEra to develop a Western Haynesville data center project with an initial behind‑the‑meter generation capacity of 2 gigawatts, expandable to 8 gigawatts over time. The company also plans a recapitalization of Pinnacle Gas Services through a new credit facility and equity sale to fuel midstream expansion that will support Western Haynesville development.

Top‑tier shareholder returns

Management emphasized that Comstock has delivered the highest total shareholder return among public E&P peers over the last two years at 162%, roughly double the second‑best performer. This outsized equity performance reflects the market’s favorable view of the company’s capital discipline, asset quality, and leverage improvement strategy.

Production decline and cadence in 2025

Average production in 2025 and Q4 held around 1.2 Bcfe per day, representing a 14% year‑over‑year decline from 2024 as the company rebalanced its program after asset sales. Executives signaled that volumes should dip further in early first‑quarter 2026 before stabilizing and then returning to growth later in the year as more wells are turned to sales.

Q4 cost uptick and slower drilling pace

Fourth‑quarter benchmark long‑lateral drilling costs climbed to $681 per foot, up 22% sequentially, while completion costs rose to $721 per foot as the mix shifted to shorter laterals, extra casing in gas storage wells, and three complex horseshoe wells. Western Haynesville drilling costs averaged $1,489 per foot and drilling pace slowed modestly in both Western and legacy areas, underscoring the need for continued efficiency gains.

Water‑related well underperformance

Some Western Haynesville pads delivered mixed results as high early water production limited initial gas rates on certain wells and created water‑handling challenges. Management cited a two‑well pad where one well reached about 30 MMcf per day while the offset only managed roughly 22 MMcf per day, attributing the variance to elevated water volumes affecting peak throughput.

One‑time items cloud reported results

Reported earnings included several special items, notably a $29 million impairment on nonoperated Eagle Ford acreage that does not affect the core Haynesville story. Results also reflected a sizable pretax gain from asset sales and mark‑to‑market hedge gains, prompting management to emphasize adjusted net income of $46 million in Q4 to better showcase underlying operations.

Gas price volatility and hedging effects

During Q4, Comstock realized roughly $3.29 per Mcf on its gas despite a NYMEX average of $3.55 and Henry Hub spot of $3.69, as basis differentials and hedging pulled prices down to about $3.27. With about 57% of volumes hedged in the quarter and management expecting volatile 2026 gas prices, the company reiterated its willingness to flex capital spending if the market weakens.

Weather‑driven timing disruptions

Management cautioned that winter storms and completion delays in early 2026 pushed some activity out of the first quarter and possibly into the second, creating a “noisy” start to the year. The timing of completions and well turn‑ins could cause short‑term swings in production, though executives framed these issues as temporary rather than structural.

Guidance and outlook for 2026

For 2026, Comstock plans to run nine rigs split between four in the Western Haynesville and five in the legacy area, drilling about 66 wells and turning roughly 72 to sales with growth in production and EBITDAX tilted to the back half of the year. With about $1.3 billion of liquidity, modest revolver borrowings, improving leverage, and the ability to quickly idle up to four rigs, the company aims to commercialize its NextEra data center project, recapitalize Pinnacle, upgrade rigs and frac fleets, cut drilling times by around two weeks and costs by about $300 per foot, while keeping capital plans flexible to gas prices.

Comstock’s earnings call painted the picture of a gas producer using strong cash flows and asset sales to fortify its balance sheet while investing in efficiency and new demand‑linked ventures like data centers and midstream. Although production is set to dip and near‑term costs and timing remain choppy, management’s focus on flexibility and structural cost reductions underpins a generally constructive long‑term narrative for investors.