Comstock Resources (CRK) Update - Oct 19
Posted: Mon Oct 19, 2020 10:15 am
My updated forecast/valuation model will be posted to the EPG website this afternoon.
Take a look at Comstock's October presentation and you will seed that they have significantly improved their liquidity and mix of debt. Today they have $900 million of undrawn liquidity under their revolving credit facility. Recent equity and debt offerings (slide 5) have paid down their revolver and pushed out senior debt with no senior debt maturities until 2025 (slide 14).
The Company's production will be down from Q2 to Q3, but ramp up sharply in Q4 and 2021.
> They choked back some wells to avoid selling gas at low prices in Q3; a wise move.
> They also delayed well completions until gas prices improved; another wise move.
> They will be completing ~15 high rate net wells to sales in Q4 that should push production to over 1.4 BCFE per day by year-end; up from ~1.135 BCFE per day in Q3.
Comstock is generating free cash flow from operations (FCF) now and they should generate FCF from operations of $350 to $500 for the 18 months 7/1/2020 to 12/31/2021 based on current NYMEX strip pricing and the assumption that they add two more operated drilling rigs in 2021. Year 2020 FCF should be approximately $100 million.
My valuation increases by $1.50 to $12.00 per share, primarily due to increasing natural gas prices.
Take a look at Comstock's October presentation and you will seed that they have significantly improved their liquidity and mix of debt. Today they have $900 million of undrawn liquidity under their revolving credit facility. Recent equity and debt offerings (slide 5) have paid down their revolver and pushed out senior debt with no senior debt maturities until 2025 (slide 14).
The Company's production will be down from Q2 to Q3, but ramp up sharply in Q4 and 2021.
> They choked back some wells to avoid selling gas at low prices in Q3; a wise move.
> They also delayed well completions until gas prices improved; another wise move.
> They will be completing ~15 high rate net wells to sales in Q4 that should push production to over 1.4 BCFE per day by year-end; up from ~1.135 BCFE per day in Q3.
Comstock is generating free cash flow from operations (FCF) now and they should generate FCF from operations of $350 to $500 for the 18 months 7/1/2020 to 12/31/2021 based on current NYMEX strip pricing and the assumption that they add two more operated drilling rigs in 2021. Year 2020 FCF should be approximately $100 million.
My valuation increases by $1.50 to $12.00 per share, primarily due to increasing natural gas prices.