Comstock Resources (CRK) Update - Sept 18

[dan_s]

CRK closed at $8.65 on Sept 17. First Call's price target is $9.03. My valuation increases by $2.75 to $21.00, based on more realistic ngas prices and I've increase the multiple used to value it from 4.0 to 4.5.

(Bloomberg on 9/17) -- Northern Oil and Gas is in the lead to buy a stake in Comstock Resources’ Bakken assets in North Dakota, Reuters reports, citing three unidentified sources familiar with the matter.
* Northern Oil has bid about $170m for non-operated working interest in the assets
* Northern and Comstock declined to comment to Reuters

CRK does not have any near-term debt issues and they are now on pace to generate over $400 million of FCF from operations in 2021. FCF + the proceeds from the Bakken sale could pay off their $244 million of 7.5% Senior Notes due in 2025. After that, the next due date on their Senior Notes is 2029.

After the Bakken sale, the Company will be a pure play on the Haynesville Dry Gas play in Louisiana where they have over 1,900 high value development drilling locations at $3.50 gas price.

[uberCOAT]

Wonder what is taking so long on this asset sale. I though the it was supposed to close bids early September. Hope to hear some new before the next earnings call on 11/2.

[uberCOAT]

I guess I should have waiting until this morning However, I was expecting them to use the proceeds to pay down the debt.

https://investors.comstockresources.com ... ale-assets

[Fraser921]

>$154 million in cash, subject to adjustment and customary closing conditions. The properties being sold include non-operated interests in over 400 producing wells (65.9 net) with recent production of greater than 4,500 net barrels of oil equivalent per day (approximately 65% oil). The sale is expected to close in the fourth quarter and will have an effective date of October 1, 2021.

yuck

More one time non cash losses

Comstock expects to recognize a pre-tax loss of $130-$140

With the hedge loss I expect, q3 will have a negative book equity, WOW