Comstock Resources NYSE: CRK reported higher second-quarter production but lower financial results as natural gas prices declined, while advancing drilling activity and infrastructure development across its Western and Legacy Haynesville positions.
Second-quarter production averaged 1.2 billion cubic feet equivalent per day, up 16% from the first quarter and slightly above the year-earlier period. Natural gas and oil sales, including realized hedging gains, totaled $332 million, while operating cash flow excluding working-capital changes was $189 million, or $0.65 per share. Adjusted EBITDA was $245 million.
Chairman and Chief Executive Officer Jay Allison said the company’s drilling results in the Western Haynesville, Legacy Haynesville and Horseshoe developments are supporting future production and reserve growth. However, lower natural gas prices weighed on quarterly revenue and profitability.
Financial Results and Balance Sheet
President and Chief Financial Officer Roland Burns said Comstock recorded a non-GAAP profit of $0.03 per share in the quarter. The result included a $1 million unrealized mark-to-market gain associated with the company’s hedge book. Excluding that gain, seismic-related exploration expense in the Western Haynesville and other non-recurring items, Comstock reported adjusted net income of $8 million, or $0.03 per share.
For the first half of 2026, Comstock generated $670 million in oil and gas sales, $496 million in EBITDAX and $380 million in cash flow. Reported first-half profit was $116 million, or $0.40 per share, including an $84 million pre-tax unrealized hedge gain. Adjusted net income for the six-month period was $48 million, or $0.16 per share, Burns said.
The company’s weighted average NYMEX natural gas settlement price was $2.89 per million British thermal units during the second quarter. Comstock realized an unhedged gas price of $2.54 per Mcf, reflecting a $0.35 basis differential to the NYMEX settlement price. The company was 63% hedged during the quarter, which lifted its realized gas price to $2.93 per Mcf.
Operating costs averaged $0.77 per Mcfe, down $0.16 from the first quarter. Burns attributed the improvement largely to higher production volumes, lower lifting and general-and-administrative costs per unit, as well as lower gathering costs and taxes. The company’s EBITDAX margin improved to 74%.
At quarter-end, Comstock had $545 million outstanding under its upstream credit facility, which has a $2 billion borrowing base and a $1.5 billion elected commitment. The midstream credit facility had no outstanding borrowings following the company’s Pinnacle transaction. Comstock reported nearly $1.2 billion of liquidity and a last-12-month leverage ratio of three times.
Pinnacle Transaction
On June 15, Comstock completed the sale of a 27% non-controlling common equity interest in its Pinnacle Gas Services midstream subsidiary to funds managed by Sixth Street for $600 million. The proceeds were used to retire Pinnacle’s preferred equity and all outstanding debt.
The investment implied a $2.2 billion enterprise value for Pinnacle, according to Allison. Comstock retained a 73% controlling interest, with an implied value of $1.6 billion. After certain return hurdles are met, Comstock’s ownership would increase to 80.5%.
Allison said Pinnacle is now debt-free and will save about $40 million annually in fixed charges. Comstock also retained operational control and key decision-making authority over the system, which supports its growing Western Haynesville development program.
Drilling Activity and Well Results
Comstock spent $390 million on development during the second quarter and $734 million in the first half. During the six-month period, the company drilled 34 gross horizontal Haynesville and Bossier wells, or 30.9 net wells, and turned 29 gross operated wells to sales, or 24.4 net wells. Those wells had an average initial production rate of 30 million cubic feet per day.
The company turned 22 Legacy Haynesville wells to sales through the first half, with average lateral lengths of 12,052 feet and average initial production rates of 31 million cubic feet per day. Eight of those wells were Horseshoe wells.
In the Western Haynesville, Comstock turned 11 wells to sales with average lateral lengths of 10,331 feet and average initial production rates of 31 million cubic feet per day. The five Western Haynesville wells brought online since the company’s first-quarter update produced initial rates ranging from 30 million to 35 million cubic feet per day.
Chief Operating Officer Dan Harrison said Comstock has 41 producing Western Haynesville wells and 13 more wells in various stages of development. The company’s Western Haynesville position totals more than 545,000 net acres, while its overall Haynesville and Bossier footprint includes approximately 809,244 net acres.
Cost and Technology Initiatives
Comstock is testing drilling and completion changes intended to improve Western Haynesville economics. During the quarter, Western Haynesville drilling costs averaged $1,738 per lateral foot, up 13% from the prior quarter, due in part to steering difficulties on two wells. Completion costs averaged $1,609 per foot, up 5% sequentially.
Harrison said the company’s first “big hole” Western Haynesville lateral was drilled at a cost of $1,306 per lateral foot, 25% below the quarterly average. Comstock is drilling two additional big-hole laterals to assess whether the results can be repeated. The larger hole design is expected to improve steering, reduce downhole temperatures and potentially enable longer, more reliable drilling runs.
The company also plans to deploy its first 10,000-PSI rig in the Western Haynesville during the fall and expects to test higher-temperature-rated drilling motors in coming months. Harrison said Comstock is discussing the potential development of a 20,000-PSI frac spread with industry partners, an initiative he described as a potential 2027 event.
Comstock increased proppant loading on wells completed during the second quarter, while maintaining tighter cluster spacing and smaller frac stages introduced last year. Management said early flowing pressures on the higher-proppant wells have been encouraging, though additional production history will be needed to assess their ultimate recoveries.
2026 Outlook
Comstock plans to operate four rigs in the Western Haynesville and five rigs in the Legacy Haynesville. For 2026, it expects to drill 22 Western Haynesville wells and turn 21 to sales, while drilling and turning 48 Legacy Haynesville wells to sales.
During the question-and-answer session, Vice President of Finance and Investor Relations Ron Mills said Comstock remained on track for fourth-quarter production to return to levels seen during the first half of 2024. He said both the third and fourth quarters were expected to show similar sequential production growth based on the company’s guidance.
Management said 2027 activity will be evaluated later in the year and will depend in part on natural gas prices and the company’s ability to hedge at prices that support further development.
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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