April 30, 2025
Comstock Resources (NYSE: CRK) has released its Q1 2025 earnings, showcasing a confident return to growth, operational efficiency, and a focused expansion strategy in the Haynesville shale. With improving natural gas prices and a reinforced drilling program, the company is clearly positioning itself as a cost-efficient, technologically adept player in one of North America’s premier gas basins.

💰 Revenue and Sales Surge with Gas Price Recovery

Comstock reported $405 million in natural gas and oil sales (including hedging), driven by a strong recovery in natural gas prices:

Natural gas price (realized): $3.58/Mcf before hedging, $3.52/Mcf after
Total revenue: $512.9 million (up from $335.8M in Q1 2024)
The hedging program helped cushion volatility, but the rising strip prices still led to a $322 million unrealized loss, resulting in a net loss of $115.4 million. However, adjusted net income was $53.8 million.

🛢️ Production Holds Steady

Natural gas production: 115 Bcf
Oil production: 10 Mbbls
Total production volume: 115.1 Bcfe
While volumes were slightly down YoY due to timing of completions, the resumption of activity in late 2024 and high initial production rates from new wells promise stronger volumes ahead.

💸 Total Capital Expenditures and Investment Strategy

Comstock invested $308.5 million in Q1 2025:

Exploration & Development CapEx: $249.8M
Midstream CapEx: $48.7M
Free cash flow: Slight deficit of $9.7M, largely due to upfront development investments

The company reaffirmed its full-year budget of $1.0 to $1.1 billion to fund its Haynesville development plan and midstream infrastructure build-out.

🛠️ Drilling Program Revs Up

Wells drilled in Q1: 7 operated (6.9 net), average lateral length of 11,660 ft
Wells turned to sales: 11 operated (8.3 net) during Q1
Since February: 14 new wells turned to sales, average IP rate 25 MMcf/d

🛢️ Rig Count Increase

To accelerate growth:

Comstock is running 5 operated rigs and plans to increase to 7 rigs in 2025
4 rigs are now focused on the Western Haynesville, a rapidly emerging gas-rich area with strong early returns

🧠 Management Commentary: Disciplined, Opportunistic Growth

Management emphasized a few key points in their Q1 messaging:

Focus on cost-efficient growth, not volume at all costs
Strong well performance validates their acreage, especially in Western Haynesville
Hedging 50% of 2025/2026 volumes ensures cash flow stability while retaining upside

📈 Outlook: Scaling in Western Haynesville

Comstock sees the Western Haynesville as its next growth engine:

Freestone County success (e.g., Olajuwon Pickens #1 at 41 MMcf/d) demonstrates long step-out viability
Midstream expansion through its Pinnacle Gas Services JV (backed by Quantum) is expected to unlock more value and improve takeaway capacity

🔧 Drilling and Completion Efficiencies

Operational efficiency has been a bright spot:

Production cost per Mcfe: $0.83
- G&T: $0.37
- LOE: $0.30
- Taxes & G&A: $0.16
Operating margin: 77% unhedged, 76% hedged
This cost structure is one of the most competitive in the gas industry.

🧪 Innovative Completion Techniques: The “Horseshoe” Well

Comstock is piloting horseshoe well designs, where four shorter laterals are converted into two longer, more productive laterals:

Cost savings: ~23% per lateral foot
57% of short locations optimized, with 64 future horseshoe targets already identified

This approach reduces capital intensity while maximizing reservoir drainage—critical as the company seeks to extend drilling inventory and returns.

🧭 Final Take

Comstock Resources is proving that efficiency, discipline, and innovation are the keys to thriving in today’s natural gas landscape. With natural gas prices rebounding, a clear focus on the Haynesville’s top-tier rock, and proprietary completion strategies gaining traction, Comstock’s 2025 roadmap looks both resilient and opportunistic.