From Paul Sankey
-Comstock’s YE23 debt of $2.7 billion exceeds the company’s SEC proved reserve value of $2.5 billion – meaning at SEC pricing and 1P reserves only, Comstock’s equity value is less than $0/share.
“Ceo said ;continually evaluate our activity level as we plan to fund our drilling program within operating cash flow if possible.”
If possible? Of course it is possible. Just drop rigs. That is not the plan, not even close. They have not capitulated. “Suspending” the dividend, effective immediately is a start. The end is when the rig count gets down to 0 or 1.
In the fourth quarter of 2023, Comstock generated $207mm cash from operations and spent $314mm – with NYMEX at $2.88/MMBTU. NYMEX gas is at $1.66/MMBTU today.
Yet, CEO Jay Allison sought to assuage analysts during the 4Q call by reassuring them that “we’re going to continue to manage this just like we’ve managed it for a while.”
That, as we have noted in several prior notes, is precisely the problem. Until Comstock, as the weakest of the gas E&Ps, caves into the oversupply problems for which it is partly responsible, we see little reason to get excited about gas in general or CRK in particular this year.