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Gunvor, a large firm that trades energy and commodities, is reportedly in talks to buy natural gas assets in the Haynesville shale for over 1 billion dollars. The deal would involve buying property from Silver Hill Energy Partners as Gunvor looks to build its own business for producing and selling American gas.
This is a good sign for Comstock because it shows that big global players are still willing to pay high prices for land in this region. Comstock owns a massive amount of drilling rights in the Haynesville. When other companies pay a lot for nearby assets, it helps confirm the value of the land Comstock already holds.
Source: Reuters
Morgan Stanley kept its rating at Equal Weight, which means they think the stock will perform about as well as the rest of the market. They lowered their target price to $15 from $16. Earlier in the month, Mizuho Securities also lowered its target to $19, though that remains well above the current price of about $14.
Source: Morgan Stanley
Comstock reported a profit of 3 cents per share, which was better than the roughly 2 cents analysts expected. While revenue of 350 million dollars was lower than the 420 million dollars predicted, the real story for long-term owners is the progress in the Western Haynesville. This is a new, deeper area the company is betting on for future growth.
Production rose 16 percent compared to the first quarter. The company brought five new wells into production in the Western Haynesville, and they are producing a healthy average of 33 million cubic feet of gas per day. Comstock also raised 600 million dollars by selling a minority stake in its pipeline business, Pinnacle Gas Services. It used that cash to pay off debt, which helps clean up its balance sheet while it continues this expensive drilling campaign.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Management has a long record of setting conservative targets and clearing them by a few cents. This makes their forecasts reliable, though a recent revenue miss suggests they are still vulnerable to swings in gas prices.
| Expectation | |
|---|---|
| EPS | $0.06 |
| Revenue | $447M |
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