Comstock Resources (CRK) Update - Feb 15

[dan_s]

The outlook for natural gas prices has improved significantly since my last hard look at Comstock. With several very large draws from storage now going to push U.S. natural gas in storage way below the 5-year average before the refill season begins, the risk of natural gas prices pulling back this summer is extremely small. I still have more than enough cushion in my forecast/valuation model to cover the risk anyway.

CRK closed at $5.41 on Friday, February 12

My valuation increases to $10.50, which compares to First Call's price target of $7.25.
Below are the 3 most recent analysts' price target changes. They all rated CRK a BUY on the dates shown below (all before the recent spike in gas prices).
Note that CRK has ~43% of this years natural gas hedged at $2.53. The percentage hedged is much lower than what AR, EQT and RRC have hedged, so more upside if the gas price holds.
Piper Sandler 2/8/2021 $6.50
Stifel 1/26/2021 $8.20
Mizuho Sec 1/11/21 $7.00

Comstock is close to a "pure gasser" because 98% of their production on a BOE basis is natural gas.