Comstock Resources Q1 Earnings Call Highlights
Comstock Resources (NYSE:CRK) reported lower first-quarter 2026 results as production declined from the prior-year period, with management citing significant winter weather impacts and the timing of new wells brought online late in the quarter.
Chairman and Chief Executive Officer Jay Allison said first-quarter natural gas and oil sales totaled $339 million, while operating cash flow was $192 million, or $0.66 per share. Adjusted EBITDAX was $251 million, and adjusted net income was $44 million, or $0.15 per share.
President and Chief Financial Officer Roland Burns said production averaged 1.1 Bcfe per day during the quarter. Comstock reported net income of $107 million, or $0.38 per share, but Burns noted that the figure included a pre-tax $83 million mark-to-market unrealized gain related to the company’s hedge book. Excluding that gain, exploration expense tied to seismic activity in the Western Haynesville and other non-recurring items, adjusted net income was $44 million.
Winter Weather and Pricing Weighed on the Quarter
Management said lower production was a key factor in the weaker financial results compared with the first quarter of 2025. Burns said winter weather affected output and delayed field activity, including completions and rig moves, particularly in Louisiana.
Comstock’s realized gas price averaged $4.27 per Mcf before hedges, reflecting a $0.69 basis differential to the NYMEX settlement price. Burns said regional hub disconnects from NYMEX were a major driver of wider differentials, and the company also had to purchase higher-priced gas to make up for production shut in during the winter storm event.
The company was 72% hedged during the quarter, which reduced its realized price to $3.45 per Mcf. Third-party gas sales improved overall price realizations by $0.05 to $3.50 per Mcf, Burns said.
Operating costs averaged $0.93 per Mcfe, up $0.16 from the fourth quarter. Burns attributed part of the increase to lower production volumes, noting that many field costs are fixed. Lifting costs and general and administrative expenses each rose $0.04 per Mcfe, while production and ad valorem taxes increased due to higher gas prices. Gathering costs were also higher, primarily because of prior-period adjustments. Comstock’s EBITDAX margin was 73%.
Drilling Results Point to Higher Production Later in 2026
Allison said Comstock had “very strong drilling results” in the quarter that should help production recover for the remainder of the year. Since its prior update, the company brought six new Western Haynesville wells online with an average initial production rate of 29 million cubic feet per day per well. In the legacy Haynesville, Comstock turned 10 wells to sales with an average lateral length of 12,312 feet and an average initial production rate of 31 million cubic feet per day.
Chief Operating Officer Dan Harrison said Comstock spent $343 million on its drilling program in the quarter. The company drilled 17 gross wells, or 15.3 net wells, including 11 Haynesville wells and six Bossier wells. It turned 13 wells to sales, or 11.7 net wells, with an average initial production rate of 31 million cubic feet per day.
Harrison said Comstock now has 1,074,868 gross acres and 806,980 net acres prospective for commercial development of the Haynesville and Bossier shales. That includes more than 540,000 net acres in the Western Haynesville and 266,570 net acres in the legacy Haynesville area.
In the legacy Haynesville, Harrison said the company has 955 gross operated locations and 740 net operated locations. In the Western Haynesville, the company estimates 3,331 gross locations and 2,546 net locations, though he noted that many Western Haynesville acres have not yet been unitized.
Western Haynesville Development Remains a Focus
Allison emphasized that Comstock’s strategy over the past five years has centered on building a large Western Haynesville position. He said the company has leased or acquired drilling rights on 728,000 gross acres across roughly 30,000 leases during that period.
Allison said investors have raised concerns about cash burn and the pace of resource delineation, but he framed the company’s deliberate approach as necessary to avoid value destruction. He said Comstock is trying not to repeat mistakes made in the legacy Haynesville in 2008 through 2010, when operators drilled too quickly in response to expiring leases.
“The rocks are established. They cannot move,” Allison said. “What we have to do as a company is we have to make those rocks valuable.”
Management said Comstock currently runs nine rigs, with five in the legacy Haynesville and four in the Western Haynesville. Allison said that rig count is expected to remain static based on the company’s current view, though Burns said Comstock is evaluating when to move one legacy Haynesville rig to the Western Haynesville.
Harrison said the company is continuing to test drilling and completion improvements, including rotary steerable systems, higher-pressure rig upgrades, higher-temperature motors and larger-hole lateral designs. He said the larger-hole design used on a recent Western Haynesville well performed better than expected and could help lower costs and improve predictability if repeated successfully.
Power Generation Hub Could Become Major Gas Customer
Allison highlighted the March 19 announcement that the U.S. Department of Commerce selected Comstock’s Western Haynesville site to host a 5.2-gigawatt natural gas-fired power generation hub in Anderson County, Texas.
The project is part of Japan’s $550 billion investment commitment in the United States under the U.S.-Japan trade deal, according to Allison. He said the U.S. and Japan would own the project, while NextEra Energy Resources will develop, build and operate it.
Allison said the facility is expected to benefit from abundant natural gas supply and transmission infrastructure in the area. He said Comstock will provide natural gas supply for the facility, which could reach nearly 1 billion cubic feet per day by 2031.
During the question-and-answer session, Burns said NextEra has stated that the gas will come from Comstock, while Allison declined to comment on commercial pricing terms. Allison said Comstock does not own the surface and is not responsible for building the facility, but its role is to provide the gas supply.
Balance Sheet and Midstream Plans
Comstock ended the quarter with $350 million outstanding under its upstream credit facility. The company’s upstream borrowing base is $2 billion, with an elected commitment of $1.5 billion. Burns said Comstock had nearly $1.3 billion in liquidity at quarter-end, and its last-12-month leverage ratio was 2.9 times.
In March, Comstock entered into a new $150 million midstream credit facility for Pinnacle Gas Services. At the end of March, the facility had $47 million outstanding. Burns said the midstream credit structure is separate from the upstream credit structure and has no recourse between the two.
Burns said Comstock is running a process to raise equity in Pinnacle, with the goal of bringing in a common equity partner and potentially redeeming preferred units held by Quantum. Allison said the company believes it is nearing the end of that process.
Allison closed the call by saying Comstock is positioned for demand growth tied to LNG, power generation and data centers, while continuing to focus on protecting the balance sheet, building out Pinnacle and optimizing Western Haynesville drilling and completions.
About Comstock Resources (NYSE:CRK)
Comstock Resources, Inc is an independent energy company engaged in the acquisition, exploration, development and production of oil and natural gas properties in the United States. The company focuses on generating long-term value through the efficient development of unconventional resource plays and conventional prospects. Its activities encompass drilling, completion and production operations, as well as the marketing of natural gas, natural gas liquids and crude oil.
Comstock holds a core position in the Haynesville Shale of Northwest Louisiana, one of the most active natural gas plays in North America, and has built a complementary portfolio in the Delaware Basin of West Texas.
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