Comstock Resources (CRK) Update - Feb 18
Posted: Tue Feb 18, 2020 11:28 am
I have updated my forecast/valuation model for CRK and posted it to the EPG website.
CRK is almost a pure "gasser" with ~98% of their production being natural gas and NGLs.
It is trading at $6.09 today.
HIghlights:
> This company is controlled by Jerry Jones, owner of the Dallas Cowboys. He has very deep pockets.
> Jerry merged his company into CRK two years ago and he helped CRK acquire Covey Park in a deal that closed on July 16, 2019. It more than doubled CRK's production.
> Comstock's production will be up ~175% year-over-year in 2019 and up another ~62% in 2020, primarily because of the Covey Park acquisition.
> Organic growth s/b 6% to 8% and they have over 2,000 Tier One drilling locations in the Haynesville.
> As I pointed out in my Saturday podcast, the long-term outlook for natural gas prices looks a lot better than the short-term outlook.
> The NYMEX strip for HH gas averages $2.42 for Oct 2020 to Mar 2021
> Key for CRK: More than 50% of their 2020 production is hedged at a weighted average of $2.70 and NGL prices are improving. < This locks in quarterly profits for CRK.
> At 9-30-2019 CRK's net asset value of just their P1 reserves was $6.53/share.
> The two most recent analysts' reports submitted to Reuters (First Call) show price targets of $8.00 and $9.00 for CRK.
There is definitely no "love" for the gassers these days, but CRK, GDP and GPOR all are oversold unless you think natural gas prices will stay depressed forever.
CRK is almost a pure "gasser" with ~98% of their production being natural gas and NGLs.
It is trading at $6.09 today.
HIghlights:
> This company is controlled by Jerry Jones, owner of the Dallas Cowboys. He has very deep pockets.
> Jerry merged his company into CRK two years ago and he helped CRK acquire Covey Park in a deal that closed on July 16, 2019. It more than doubled CRK's production.
> Comstock's production will be up ~175% year-over-year in 2019 and up another ~62% in 2020, primarily because of the Covey Park acquisition.
> Organic growth s/b 6% to 8% and they have over 2,000 Tier One drilling locations in the Haynesville.
> As I pointed out in my Saturday podcast, the long-term outlook for natural gas prices looks a lot better than the short-term outlook.
> The NYMEX strip for HH gas averages $2.42 for Oct 2020 to Mar 2021
> Key for CRK: More than 50% of their 2020 production is hedged at a weighted average of $2.70 and NGL prices are improving. < This locks in quarterly profits for CRK.
> At 9-30-2019 CRK's net asset value of just their P1 reserves was $6.53/share.
> The two most recent analysts' reports submitted to Reuters (First Call) show price targets of $8.00 and $9.00 for CRK.
There is definitely no "love" for the gassers these days, but CRK, GDP and GPOR all are oversold unless you think natural gas prices will stay depressed forever.