Energy Prospectus

7.71 as expected

winter NG @ 2.08 doesn't cut it

I will be taking a hard look at the four gassers in the Sweet 16 tomorrow. Comstock Resources (CRK) has the most exposure to natural gas prices because over 99% of its revenues come from dry gas and NGL sales. Plus, they don't produce many NGLs.

Comstock will still be profitable if HH natural gas averages $2.50 for 2024 and operating cash flow positive if HH gas averages $2.00 for 2024 because the Company has very low cash expenses including G&A and interest expense per mcfe of production (~$1.16/mcfe in Q3). They also have ~23% of their 2024 natural gas hedged at $3.55 this year.

In 2023 Comstock's average realized natural gas price was ~$2.63/mcfe and they generated $800 million of operating cash flow. The Company's balance sheet is in good shape and they have no near-term debt issues. They may decide to suspend dividend payments this year. They should also cut their drilling program way back until natural gas prices improve.

I may decide to take AR and CRK out of the Sweet 16.
EOG can move back to the Sweet 16 and TALO deserves a promotion from the Small-Cap Growth Portfolio because they will be closing a big acquisition in March that will push production over 100,000 Boepd. EOG and TALO are heavily weighted to oil.

Natural gas in storage is now back within the 5-year average and I do expect natural gas prices to move over $2.50 this year once we get past the imbalance in the futures market. Another shot of cold weather from a Polar Vortex would really help.

I like Ar over CRK due to the liquids for AR. I think CRK might have more downside based on the reasons you stated. After they get thru the earnings announcement and producers respond to cutting back rigs maybe a good bottom will set in. I think CRK is committed to drilling contracts for 3 years so they mine as well keep drilling. Their "good hedges" soften the blow

Frasier - it's hard to call the low buy both AR and CRK have to be close. Might be time to start scaling in.

Too early… i think crk falls more when analysts wake up after next earnings call.
If they cut the dividend. It’s going to 5. Then JJ buys the whole thing on the carnage.
The need 3.75 or more to break even

ANOTHER NEW LOW!

Could a 6 handle be in the cards?

NG continues to be weak, 2 front months below 2.

This is very very bad for crk

Another new low achieved 7.39. Heading for a 6 handle! Perma bulls are bailing. Are you?

In the past 6 months

SBOW down 29%
CRK down 40%

I'm looking at the current situation as a potential buying or rebalancing opportunity.

With the forecast the next few weeks looking colder, and additional LNG capacity coming online later this year and early next, I feel waiting too long could be costly. Also, with a switch from El Nino to La Nina likely this summer, gas demand for air conditioning could be quite high. The current unusually warm trend in the US seems likely to continue even if we get a La Nina.

It seems like a good time to ease into these two stocks.
I doubt Jerry Jones is selling.

Kevin

Jerry Jones is likely writing a check from petty cash to buy the minority shares. Just waiting for shares to bottom. I Don't think gassers are going to be a buy until after the November election. Biden has done everything he can to speak green new deal while crashing fossil fuel prices to buy votes. He is looking the other way so Iranian, Venezuela, and Russian oil can flow to China to keep prices down before election.

I agree with Chuck. Hard to call the exact bottom.

But, I want to see how management wiggles thru the next call. Any respectable analyst should question them why they are continue to drill and piss away every dollar that's coming in. They are borrowing money ie incurring debt to pay the dividend. I think the dividend is at risk.
I think the answer is they cant get out. They signed a 3 year drilling commitment

The deal they announced last qtr. without any details is a tell. Bottom line it's off balance sheet financing. And the other person on that deal isnt going to do it for a 10 % return. i think 15 % is more appropriate so in essence CRK is paying someone 15% to keep the build out commitment off their books.

JJ is chomping at the bit to buy out minority holders at 5 bucks

Yes colder weather is coming in back half of February but it's nothing extraordinary. It's supposed to be cold in February. According to Celsius we have +200 plus surplus. There is no way in hell that goes away, And that's after a polar outbreak a few weeks ago

Finally, operating cash flow does not equal profit. From that they have to fund cap ex and pay interest and taxes.

I feel better about sbow as they have oil in the mix. I want 80 plus

Ive been selling down even the oily names. Still own some canadians to my chagrin

PS did you see that post, the value of NVIDA is worth more than 15 oily names combined

KGardnier, I never aid JJ is selling. I think he tries to buy the whole thing if it gets cheap enough. The fact that he hasn't means he doesnt think its cheap enoiugh

MGT works for him anyways, and the rest are bagholders

I wonder if JJ is pushing (telling) mgmt to eliminate the dividend... which will add to pressure on the stock and maybe reach his buy number ?. Will be an interesting results release for sure.

That would do it for sure!

CRK HIT 7.30 TODAY, ANOTHER NEW LOW.

Just 30 cents from a 6 handle!. How low will she go?

If the dividend is cut it will be 5

Thanks for the perspective Fraser.

And yes I did see the Nvidia vs Oil market cap news.

And may I have another...

Today 7.28