Comstock Resources (CRK)

[dan_s]

Comstock Resources, Inc. (CRK): An updated Net Income & Cash Flow Forecast model has been posted under the Watch List Tab.

I have confirmed that Comstock will be completing 20 gross (14 net) high rate Eagle Ford wells in December. On December 31 their production should be near 200,000 mcfepd, including 9,000 - 9,500 bbls per day of crude oil. That is double the oil production they averaged in the first quarter.

I have increased my Fair Value Estimate to $29.25/share (compares to First Call's Price Target of $21.87).

Comstock has reported six straight quarters of losses from operations because they have a lot of natural gas production and a very high DD&A rate ($4.85/mcfe). They will report another operating loss in Q4, but they should swing to profits starting in Q1.

NOTE: A lot of the natural gas reserves they were forced to writedown at the end of 2013 (because of low gas prices) will be added back to proven reserves this year, lowering their DD&A rate. Plus they will be adding a lot of Eagle Ford reserves at year-end. This should significantly increase reported earnings in 2014.

Their cash flow per share is very strong ($5.68 in 2013 and $8.95 in 2014). They have a solid balance sheet, after selling their Permian Basin assets to Rosetta Resources (ROSE). [My forecast model for 2014 assumes $90/bbl for WTI and $3.50/mcf of Henry Hub gas.]

None of their natural gas is hedged and they currently produce ~135,000 mcfpd. They have 5,500 BOPD hedged at $96.31/bbl for 2014. My forecast production for 2014 is 126,000 mcfpd of natural gas + 14,000 BOPD of crude oil.

Before you invest, I recommend you study the companies new presentation, which is available on their website.

[dan_s]

Take a look at the NYMEX strip for Henry Hub gas. Every month in 2014 is now over $4.10/mcf. It has been awhile since I have seen nothing but $4 gas on the strip.

[bearcatbob]

http://seekingalpha.com/article/1902531 ... _1_1&ifp=0

CRK is starting to get some press. I saw something else yesterday as well.