Comstock Resources (CRK) Valuation Update - Jan 26

[dan_s]

My updated forecast/valuation model for CRK has been posted to the EPG website.

I have lowered my valuation by $9 to $24 per share.
> Realized natural gas prices have been lowered to $3.00/mcf in 1H 2023 and $3.50/mcf for 2H 2023 and 2024.
> 2023 is now broken out by quarter and it shows my preliminary forecast for 2024.
> Note that CRK does report natural gas and NGLs on a combined basis.
> I have also lowered my valuation multiple to 4.5 X annualized operating cash flow per share.
> With operating cash flow over $1.2 billion in 2023 and 2024, Comstock should remain free cash flow positive.
> KEY STAT is operating cash flow per share on row 50, which you can compare to TipRanks' CFPS forecasts on row 51

I do not believe natural gas prices will average under $4.00 for 2023. The FEB23 and MAR23 NYMEX contracts are down because the utilities believe they have enough gas in storage to make it through the winter. The storage report for the week ending January 27th is likely to be below the 5-year average of 187 Bcf, but the next two weeks now look to be much colder so larger draws are expected. The week ending Feb 3 is now looking to me like a 200+ Bcf draw, which compares to the 5-year average draw for that week of 141 Bcf.
Watch Forecast here: https://weather.com/news/weather/video/ ... is-weekend

Once we get to Q2 the traders will start looking at LNG exports and storage levels. Refilling storage before the next winter will be difficult if LNG exports stay near maximum capacity. LNG prices in Europe and Asia will stay near $20/MMBtu or higher. Putin in not pulling out of Ukraine anytime soon.

The upstream gassers will adjust their drilling programs to balance the U.S. gas market.

Remember this: Two of the Top Ten largest weekly draws were in February, 2021:
> Week ending 2-12-2021 was a draw of 237 Bcf
> Week ending 2-19-2021 was a draw of 338 Bcf < and next week's weather forecast now looks a lot like Winter Storm Uri to me.
"Winter ain't over until it is over."

[Fraser921]

Included in the 600 index

[Fraser921]

https://investors.comstockresources.com ... rowth-2022

Misleading as it assumes 6 ng now 2.50