Energy Prospectus

https://www.bbc.com/news/business-60871 ... the%20year.

The US and the EU have announced a major deal on liquified natural gas, in an attempt to reduce Europe's reliance on Russian energy.

The agreement will see the US provide the EU with at least 15 billion additional cubic metres of the fuel - known as LNG - by the end of the year.

Dan, I view this as very bullish. Aside from the market pricing benefit (keeping exports high at current or exceeding capacity), how does dry gas producers like CRK for example benefit?

CRK and all of the other gassers (AR, CTRA, EQT, RRC and SBOW) will benefit from the increased demand for U.S. natural gas.

Near-term: HH natural gas prices are now likely to remain over $5.00/MMBtu all year because
1. U.S. gas in under-ground storage facilities will be more than 300 Bcf (maybe as high as 400 Bcf) below the 5-year average by mid-April.
2. La Nina is likely to extend draws from storage a week or two than normal. La Nina winters start late and end late due to the jet stream position.
3. If LNG demand remains high, which is now certain, the Q2 seasonal dip in demand will be "shallow", keeping storage below the 5-year average all summer.
4. If storage is still significantly below the 5-year average in September, we should see a bidding war between the utilities for physical supply. Remember that NYMEX futures went over $6.00 in early Q4 2021 because storage level was low.

Specific to CRK
Comstock is the largest producer of Haynesville natural gas. At a HH gas price over $5/MMBtu, Comstock's Tier One Haynesville wells payout in less than 6 month.
EIA 3/24: "Gross natural gas withdrawals in the Haynesville region in Louisiana and Texas grew by 1.4 Bcf/d in 2021 to 13.2 Bcf/d, or 12% of total U.S. natural gas withdrawals in 2021. As natural gas prices remain elevated, drilling in the Haynesville remains economical, even though it requires relatively deeper and more expensive wells. The higher development costs are offset by the region’s higher well productivity and its proximity to the Gulf Coast, where natural gas demand has been growing rapidly from liquefied natural gas export terminals and industrial facilities."
"According to Baker Hughes, for the week ending Tuesday, March 15, the natural gas rig count increased by 2 to 137 rigs. The Haynesville and the Permian each added one rig; one rig was added in an unspecified location; and the Marcellus dropped one rig. The Haynesville now accounts for 47% of all active gas-directed rigs. The number of oil-directed rigs decreased by 3 to 524 rigs. The Ardmore Woodford gained one rig, and one rig was lost in each of the following: the Eagle Ford, the Permian, the Williston, and an unspecified location. The total rig count now stands at 663, the highest level since April 3, 2020, and 252 rigs more than last year at this time."

Read more about the U.S. natural gas market here: https://www.eia.gov/naturalgas/weekly/

My valuation of CRK of $22.00/share is only 4X annualized operating cash flow per share for 2021-2023.

If $5.00/MMBtu is the new normal for U.S. natural gas it will be a Major Paradigm Shift for the Wall Street Gang, which should result in "multiple expansion" for all of the "gassers". Due to the Haynesville's location close to Henry Hub, Louisiana and several large LNG export facilities it should draw a lot more attention from money managers.

If natural gas averages $5/MMBtu in 2022 & 2023 AND CRK's valuation multiple goes to 5X, my valuation at year-end will be over $32/share.

As I have posted here many times, there was a perception among the analysts that cover CRK that it had a debt problem. IT DOES NOT HAVE A DEBT PROBLEM NOW. Big stock price moves come from "Paradigm Shifts".

Trading Economics before the markets opened:
"US natural gas futures held close to a near 6-month high of $5.4 per million British thermal units on Friday, following news of a US-EU agreement to wean off the bloc’s dependence on Russian natural gas. The deal secures an additional volume of at least 15 billion cubic meters of LNG to Europe this year, with the long-term goal of ensuring 50 bcm per year of additional US LNG until 2030. The number of US LNG tankers sailing to Europe reached a record 164 in January and February, as exports topped a record 14 billion cubic feet for the third time in a week, as the US is already producing LNG near full capacity. Domestically, late winter weather is giving a final boost to heating demand, with satellite data indicating colder temperatures until at least April 1st. On a weekly basis, the contract is expected to show a more than 10% jump, the steepest since the week ending March 4th."

Thanks Dan