Dan,
I've read your write-ups and commentary on Comstock, where it looks like they have stability in their long term financing but not much cash.
Your forecast shows that they have plenty of cash flow this year, and my question is when would you project Comstock be able to pay a dividend?
Comstock
Re: Comstock
Not a dividend player
NG sold for 5 bucks this week, they are getting in the 2's. If the CEO was a football coach, he'd be fired.
NG sold for 5 bucks this week, they are getting in the 2's. If the CEO was a football coach, he'd be fired.
Re: Comstock
They are Targeting leverage of < 1.5x before initiating a dividend program. So, the dividend may not occur until late 2022 or 2023.
Re: Comstock
How is Comstock getting in the 2's with half their production unhedged at the other half with collars up to the $4 range?Fraser921 wrote:Not a dividend player
NG sold for 5 bucks this week, they are getting in the 2's. If the CEO was a football coach, he'd be fired.
Re: Comstock
I didn't say they are getting 2's on every molecule. They are getting in the 2's for a significant amount and because of that they won't be paying a dividend anytime soon.
Q4 560/day @ 2.53 = 1,417
407/day @ 3.05 = 1,241
------------------------------
Hedged volumes 967 = 2.75 2,658 day
Unhedged 1337 less 967 = 370 370/1337 = 25 % So q 4 is 75 % hedged and 75 % is hedged at 2.75.
That sucks, They left 2.00 on the table for 967 per day for the whole qtr. That's almost 175 m. That's money forgone. If they had it, they could pay a dividend
Yes, the hedges drop to 50 % in 2022 , so cash flows will improve, but a dividend isn't going to happen anytime soon
Q4 560/day @ 2.53 = 1,417
407/day @ 3.05 = 1,241
------------------------------
Hedged volumes 967 = 2.75 2,658 day
Unhedged 1337 less 967 = 370 370/1337 = 25 % So q 4 is 75 % hedged and 75 % is hedged at 2.75.
That sucks, They left 2.00 on the table for 967 per day for the whole qtr. That's almost 175 m. That's money forgone. If they had it, they could pay a dividend
Yes, the hedges drop to 50 % in 2022 , so cash flows will improve, but a dividend isn't going to happen anytime soon
Re: Comstock
That's 2021 - over and done with.
We are in 2022 which will be better.
Dividend per Management will occur once they get leverage down...as stated that will not happen until late 2022 or most likely 2023. Once the leverage drops the price will appreciate, and I believe rapidly.
We are in 2022 which will be better.
Dividend per Management will occur once they get leverage down...as stated that will not happen until late 2022 or most likely 2023. Once the leverage drops the price will appreciate, and I believe rapidly.
Re: Comstock
Comstock's hedges for 2022 are much better. They should also be able to sell some gas into spot markets at much higher prices.
2022 Hedges
> ~23% hedged with Swaps at $2.67
> ~27% hedged with Collars that have $2.62 floors and $3.91 ceilings
> ~50% is unhedged and they can get premium spot market prices on some of it
Add this all up and their realized ngas price should be approximately $3.50/mcf in 2022 (compared to $2.84/mcf in 2021).
Per my forecast, operating cash flow should increase from $928 million in 2021 to $1,225 million in 2022.
My guess at their Capex budget for 2022 is $650, so they will have lots of free cash flow.
Cash on the balance sheet is not important because they have so much free cash flow and they got a large chuck of cash on the Bakken asset sale in November. Zero near-term debt problems.
Always keep in mind that hedges work both ways. In 2020, Comstock collected $134.5 million cash on their hedges. This is a business that has significant "commodity price risk". Hedging programs are smart and designed to stabilize cash flow. Had they been unhedged in 2020, this company might not be here today.
2022 Hedges
> ~23% hedged with Swaps at $2.67
> ~27% hedged with Collars that have $2.62 floors and $3.91 ceilings
> ~50% is unhedged and they can get premium spot market prices on some of it
Add this all up and their realized ngas price should be approximately $3.50/mcf in 2022 (compared to $2.84/mcf in 2021).
Per my forecast, operating cash flow should increase from $928 million in 2021 to $1,225 million in 2022.
My guess at their Capex budget for 2022 is $650, so they will have lots of free cash flow.
Cash on the balance sheet is not important because they have so much free cash flow and they got a large chuck of cash on the Bakken asset sale in November. Zero near-term debt problems.
Always keep in mind that hedges work both ways. In 2020, Comstock collected $134.5 million cash on their hedges. This is a business that has significant "commodity price risk". Hedging programs are smart and designed to stabilize cash flow. Had they been unhedged in 2020, this company might not be here today.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Comstock
The original question was when will they pay dividends. I don't think it happens in 2022
On hedges, I don't have a problem with hedges, a put is a hedge, leaving 100 % upside. I have a problem with giving up on the upside.
And yes, 50 % hedge in 2022 is better than 75 % hedged in 2021, but look at it. They hedged half their NG in 2022 at 2.65 ish Feb NG just closed at 6.26. That's a huge screw up imho. These guys are the experts pre-selling at 2.62 makes sense???
On hedges, I don't have a problem with hedges, a put is a hedge, leaving 100 % upside. I have a problem with giving up on the upside.
And yes, 50 % hedge in 2022 is better than 75 % hedged in 2021, but look at it. They hedged half their NG in 2022 at 2.65 ish Feb NG just closed at 6.26. That's a huge screw up imho. These guys are the experts pre-selling at 2.62 makes sense???
Re: Comstock
Only 23% is hedged with Swaps in 2022. They will get the ceiling price on the collars.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group