Comstock Resources (CRK) Update - Feb 1

[dan_s]

FRISCO, TX, Feb. 01, 2023 (GLOBE NEWSWIRE) -- Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) announced today that its proved natural gas and oil reserves as of December 31, 2022 were estimated at 6.7 trillion cubic feet equivalent ("Tcfe"), which represents a 9% increase from total proved natural gas and oil reserves of 6.1 Tcfe as of December 31, 2021.

The reserve estimates were determined under SEC guidelines and were audited by the Company's independent reserve engineering firm. The 6.7 Tcfe of proved reserves at December 31, 2022 were substantially all natural gas, 38% developed and 98% operated by Comstock. The present value, using a 10% discount rate, of the future net cash flows before income taxes of the proved reserves (the "PV-10 Value"), was approximately $15.5 billion, using the Company's average first of month 2022 prices of $6.03 per thousand cubic feet of natural gas and $91.21 per barrel of oil.

Using the SEC PV10 Value above, Comstock's PV10 Net Asset Value based on their 9/30/2022 balance sheet is approximately $44.67/share.
It is a simple calculation: PV10 of just the proved reserves (P1 only) + current assets - total debt) / fully diluted share count
In millions it is: (15,500 + 709 - 3,790) / 278 million shares = $44.67/share PV10 Net Asset Value

SEC pricing is the average of the last 12 months oil, gas and NGL prices, so the $6.03/mcf is high, but SEC guidlines for the definition of P1 reserves is very conservative. My current valuation of CRK is $26.50/share based on average realized gas prices of $3.75 in 2023 and $4.25 in 2024.
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My guess is that most if not all of the companies in the Sweet 16 and our Small-Cap Growth Portfolio will report PV10 Net Asset Valuations as of December 31, 2022 much higher than their current share prices.