Comstock Resources, Inc. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Western Haynesville Development: Footprint grew to nearly 525,000 net acres. Drilled 29 wells, 24 producing. New gas treating plant increased treating capacity by 400 million cubic feet per day. Turned 5 new wells to sales in Q2, with some showing excellent initial production rates.
• Legacy Haynesville Operations: 4 rigs working to stabilize production. Drilled 21 wells to sales in Legacy Haynesville in 2025 with average IP rate of 25 million cubic feet per day.
• Midstream Buildout: New gas treating plant in Western Haynesville started operations, doubling gas treating capacity.
• Horseshoe Wells: Utilizing horseshoe lateral concept in Legacy Haynesville, with 149 locations in inventory. Plan to drill 9 horseshoe wells in 2025 and 10 in 2026.
• Noncore Asset Sales: Intend to divest certain noncore properties to accelerate deleveraging of balance sheet.

Segment Performance

• Legacy Haynesville: Production averaged 1.26 Bcfe per day in the first half of 2025, 15% lower than the same period in 2024. Oil and gas sales in the first half were $749 million. EBITDAX in the first half was $553 million, and adjusted net income was $94 million or $0.32 per diluted share.
• Western Haynesville: Footprint is nearly 525,000 net acres. Drilled 29 wells, 24 currently producing. Turned 5 new wells to sales in Q2 2025. Production in Q2 averaged 1.23 Bcfe per day, oil and gas sales in Q2 were $344 million. EBITDAX for Q2 was $260 million, operating cash flow was $210 million or $0.71 per diluted share. Adjusted net income for Q2 was $40 million or $0.13 per share.

Guidance

• Western Haynesville: Expect to drill 19 or 18.9 net wells and turn 13 net wells to sales in 2025. Continue building midstream assets.
• Legacy Haynesville: Expect to drill 32 or 24 net wells and turn 32 or 26.8 net wells to sales in 2025.
• 2026 Outlook: Bullish on 2026, with flexibility to adjust activity based on market conditions, especially in core areas with well-to-well rig contracts.

Risks

• Drilling Challenges: Some wells in Legacy Haynesville experienced drilling difficulties due to highly over-pressured zones.
• Midstream Delays: Potential delays in connecting wells to midstream infrastructure.
• Market Volatility: Uncertainties in natural gas price fluctuations and market demand for gas.

Question and Answer

• Q: On Western Haynesville step-out well, key takeaways and learnings? **A: Dan Harrison mentioned the Jennings well was shallower, faster, and cheaper to drill, with varying depths, temperatures, and costs across the acreage.
• Q: Impact of Western Haynesville TILs reduction? **A: Daniel S. Harrison stated it's not a big delay, with drilling speeds improving and some midstream issues, but overall not pushing wells back significantly.
• Q: Noncore sales sizing and value metrics? **A: Roland O. Burns said they're focused on selling noncore inventory not to be developed soon to add NPV, with interest from new market players in drilling locations.
• Q: Horseshoe well program strategy? **A: Miles Jay Allison said they're encouraged by horseshoe wells, with no issues drilling or completing, and they see them as similar to straight wells with better type curve areas.
• Q: Choke management in Western Haynesville? **A: Daniel S. Harrison said they're testing restricted choke management, expecting better EURs with conservative drawdowns, with timeline for data to dial in on optimal approach being 1-2 years.