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    CRK
    Earnings call· Jun 2026(Q2 FY26)

    COMSTOCK RESOURCES Q2 FY26 earnings call CRK

    Jul 30, 2026 Source

    Executive summary

    Comstock Resources Q2 FY26 — Production Growth Returns, Strategic Midstream Divestment

    Comstock Resources saw a return to production growth in Q2 FY26, driven by strong well performance in both Legacy and Western Haynesville. The company executed a significant midstream equity placement, validating its Western Haynesville acreage and strengthening its balance sheet. Management continues to focus on optimizing drilling and completion efficiencies in the Western Haynesville, with new technologies being tested to drive down costs and enhance well productivity, while also preparing for future natural gas demand from LNG and data centers.

    Highlights

    5

    • Production increased 16% quarter-over-quarter to 1.2 BCFE per day.

    • Strategic divestment of a 27% non-controlling equity interest in Pinnacle Gas Service for $600 million, strengthening the balance sheet.

    • Pinnacle Gas Service is now debt-free, saving $40 million in fixed charges annually.

    • Strong financial liquidity of almost $1.2 billion at quarter-end.

    • EBITDAX reached $245 million for the quarter, with an improved EBITDAX margin of 74%.

    Concerns

    3

    • Lower natural gas prices drove lower financial results, with realized gas price averaging $2.54 per MCF.

    • Western Hainesville drilling costs increased 13% quarter-over-quarter to $1,738 per foot due to steering difficulties.

    • Western Hainesville completion costs increased 5% quarter-over-quarter to $1,609 per foot due to higher proppant loading and single well pads.

    Guidance & targets

    9
    CategoryTargetConfidence
    Production cadence
    Return to peak levels experienced in early 2024
    high materiality
    High
    Sequential production growth
    Similar sequential growth
    medium materiality
    High
    Western Hainesville wells drilled
    22 wells
    medium materiality
    High
    Western Hainesville wells turned to sales
    21 wells
    medium materiality
    High
    Legacy Hainesville wells drilled
    48 wells
    medium materiality
    High
    Legacy Hainesville wells turned to sales
    48 wells
    medium materiality
    High
    Horseshoe wells drilled
    16 wells
    low materiality
    High
    Horseshoe wells turned to sales
    17 wells
    low materiality
    High
    20,000 pound frac fleet deployment
    2027 event
    medium materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Legacy Hainesville
    The Legacy Hainesville area continues to be a key contributor, with 5 rigs running and significant drilling inventory. Efficiency improvements are noted in drilling speed, and horseshoe wells are performing well, contributing to strong IPs.
    Gross operated locations: 926Net locations: 717Average working interest: 77%Locations with lateral surpassing 10,000 feet: 449 (nearly 50%)Average lateral length in inventory: 10,153 feetInventory split: 51% Hainesville, 49% BossierHorseshoe locations: 113 grossRigs running: 5Wells drilled to TD in Q2: 13Average lateral length drilled in Q2: 11,457 feetWells turned to sales in 2026 YTD: 22Average lateral length for wells turned to sales: 12,052 feetAverage IP for wells turned to sales: 31 MMcf/dayDrilling days to TD for long lateral wells in Q2: 24 daysFeet drilled per day for long lateral wells in Q2: 1,017 feetDrilling cost per foot in Q2: $710Completion cost per foot in Q2: $680
    		————
    Western Hainesville
    The Western Hainesville is a strategic growth area with substantial net acreage and drilling inventory. The company is actively delineating the play with 4 rigs, focusing on optimizing D&C costs and productivity, including testing 'big hole' laterals.
    Net acres: 545,000Gross operated locations: 3,277Net locations: 2,528Average working interest: 77%Locations with lateral surpassing 10,000 feet: 1,321 (40%)Locations with lateral surpassing 8,500 feet: 61%Average lateral length in inventory: 8,875 feetInventory split: 2/3 Bossier, 1/3 HainesvilleRigs running: 4Wells currently producing: 41Wells in various stages of development: 13Wells drilled to TD in Q2: 4Average lateral length drilled in Q2: 10,281 feetWells drilled to TD total: 50Wells turned to sales in 2026 YTD: 11Average lateral length for wells turned to sales: 10,331 feetAverage IP for wells turned to sales: 31 MMcf/dayDrilling days for wells drilled to TD in Q2: 59 daysFeet drilled per day in Q2: 469 feetDrilling cost per foot in Q2: $1,738Completion cost per foot in Q2: $1,609
    		————

    Operational metrics

    56
    Production volume
    1.2 BCFE/dayup 16% from Q1 FY26, up 1% from Q2 FY25
    Q2 FY26

    Average daily production for the quarter.

    Production volume
    1.2 BCF/day
    H1 FY26

    Average daily production for the first half of the year.

    Natural gas and oil sales (including realized hedging gains)
    $332M
    Q2 FY26

    Reflects lower natural gas prices experienced in the quarter.

    Natural gas and oil sales (including realized hedging gains)
    $670M
    H1 FY26

    Total sales for the first six months of the year.

    Operating cash flow per share (excluding working capital changes)
    $0.65
    Q2 FY26

    Operating cash flow per share for the quarter.

    Adjusted EBITDOX
    $245M
    Q2 FY26

    Adjusted EBITDOX for the quarter.

    Adjusted EBITDOX
    $496M
    H1 FY26

    Adjusted EBITDOX for the first six months of the year.

    Adjusted net income
    $8M
    Q2 FY26

    Adjusted for mark-to-market gain, expiration expense, and other non-recurring items.

    Adjusted EPS
    $0.03
    Q2 FY26

    Adjusted for mark-to-market gain, expiration expense, and other non-recurring items.

    Adjusted net income
    $48M
    H1 FY26

    Adjusted for mark-to-market gain, expiration expense, and other non-recurring items.

    Adjusted EPS
    $0.16
    H1 FY26

    Adjusted for mark-to-market gain, expiration expense, and other non-recurring items.

    Mark-to-market unrealized gain on hedge book
    $1M
    Q2 FY26

    Included in reported net income.

    Mark-to-market unrealized gain on hedge book
    $84M
    H1 FY26

    Included in reported net income for the first six months.

    Realized gas price
    $2.54
    Q2 FY26

    Average realized gas price before hedging.

    Realized gas price (after hedging)
    $2.93
    Q2 FY26

    Realized gas price after accounting for hedging.

    Unit operating costs
    $0.77improved 16 cents from Q1 FY26
    Q2 FY26

    Unit operating costs returned to normal levels.

    Lifting costs
    down 4 cents
    Q2 FY26

    Improvement due to higher production level.

    G&A costs
    down 3 cents
    Q2 FY26

    Improvement due to higher production level.

    Production and ad valorem taxes
    down 4 cents
    Q2 FY26

    Due to lower gas prices and prior divestitures.

    Gathering costs
    down 5 cents
    Q2 FY26

    Due to higher production level and utilizing more firm transportation.

    EBITDAX margin
    74%
    Q2 FY26

    Improved EBITDAX margin for the quarter.

    Development activities spending
    $390M
    Q2 FY26

    Total spending on drilling and other development activities.

    Development activities spending
    $734M
    H1 FY26

    Total spending on drilling and other development activities for the first half of the year.

    Net horizontal Hainesville wells drilled
    19.4
    H1 FY26

    Net wells drilled in the Hainesville formation.

    Net Bossier wells drilled
    11.5
    H1 FY26

    Net wells drilled in the Bossier formation.

    Total net wells drilled
    30.9
    H1 FY26

    Total net wells drilled in the first half of the year.

    Net operated wells turned to sales
    24.4
    H1 FY26

    Net operated wells turned to sales with average initial production rate.

    Borrowings outstanding under upstream credit facility
    $545M
    Q2 FY26

    Amount outstanding at the end of the quarter.

    Upstream borrowing base
    $2B
    Q2 FY26

    Total borrowing base for the upstream facility.

    Upstream credit facility commitment
    $1.5B
    Q2 FY26

    Electric commitment under the upstream facility.

    Midstream credit facility borrowings outstanding
    zero
    Q2 FY26

    No borrowings outstanding following the Pinnacle transaction.

    Leverage ratio (last 12 months)
    3.0x
    Q2 FY26

    Average leverage ratio for the last 12 months.

    Liquidity
    $1.2B
    Q2 FY26

    Total liquidity at the end of the second quarter.

    Total gross acres
    1,078,228
    Q2 FY26

    Overall acreage footprint in the Hainesville-Boser shell.

    Total net acres
    809,244
    Q2 FY26

    Overall acreage footprint in the Hainesville-Boser shell.

    Western Hainesville net acres
    545,000
    Q2 FY26

    Net acreage in the Western Hainesville footprint.

    Legacy Hainesville net acres
    264,000
    Q2 FY26

    Net acreage in the Legacy Hainesville area.

    Horseshoe wells drilled to total depth
    19
    Q2 FY26

    Total horseshoe wells drilled to date.

    Horseshoe wells turned to sales
    11
    Q2 FY26

    Total horseshoe wells turned to sales with average IP.

    Legacy Hainesville wells drilled to TD in Q2
    13
    Q2 FY26

    Wells drilled to total depth in Legacy Hainesville during Q2.

    Western Hainesville wells drilled to TD in Q2
    4
    Q2 FY26

    Wells drilled to total depth in Western Hainesville during Q2.

    Longest lateral drilled in Legacy Hainesville
    17,409
    to date

    Longest lateral drilled in the Legacy area to date.

    Longest lateral drilled in Western Hainesville
    14,783
    to date

    Longest lateral drilled in the Western Hainesville to date.

    Western Hainesville wells drilled to TD with laterals exceeding 10,000 feet
    21
    to date

    Out of 50 wells drilled to TD in Western Hainesville.

    Legacy Hainesville long lateral wells drilled to TD in Q2
    13
    Q2 FY26

    Benchmark long lateral wells (>8,500 feet) drilled to total depth.

    Legacy Hainesville long lateral wells feet drilled per day
    1,01710% increase versus Q1 FY26
    Q2 FY26

    Drilling efficiency for benchmark long lateral wells.

    Western Hainesville wells drilled to TD through Q2
    48
    Q2 FY26

    Total wells drilled to total depth through the end of Q2.

    Western Hainesville average drilling days for wells drilled to TD in Q2
    59
    Q2 FY26

    Average drilling days for the four wells drilled to TD during the quarter.

    Western Hainesville feet drilled per day
    4692% lower than Q1 FY26
    Q2 FY26

    Drilling speed in Western Hainesville.

    Legacy Hainesville drilling cost per foot
    $7101% increase compared to Q1 FY26
    Q2 FY26

    Average drilling cost for benchmark long lateral wells.

    Legacy Hainesville completion cost per foot
    $6804% increase compared to Q1 FY26
    Q2 FY26

    Average completion cost for benchmark long lateral wells.

    Western Hainesville drilling cost per foot
    $1,73813% increase compared to Q1 FY26
    Q2 FY26

    Average drilling cost for wells drilled to TD in Western Hainesville.

    Western Hainesville 'big hole' lateral drilling cost per foot
    $1,30625% lower than quarter average
    Q2 FY26

    Cost for the first 'big hole' record long lateral well (Dolly Jones).

    Western Hainesville completion cost per foot
    $1,6095% increase compared to Q1 FY26
    Q2 FY26

    Average completion cost for wells turned to sales in Western Hainesville.

    Proppant loading increase
    25% or 50% larger
    Q2 FY26

    Increase in proppant loading for wells completed in Q2.

    10,000 PSI rig deployment
    1
    Fall 2026

    First 10,000 PSI rig to be deployed in Western Hainesville.

    Industry KPIs

    5
    MetricValueDetails
    D c efficiency rig activity1,017feet/day
    Realized price differential$2.54USD/MCF
    Basin level production volume1.2BCFE/day
    Cost of supply unit cash cost$0.77USD/MCFE
    FCF shareholder distributions—

    Deals & partnerships

    1
    Sixth StreetSale of minority equity interest in midstream subsidiary Pinnacle Gas Service$600M

    Sixth Street invested $600 million in Pinnacle Gas Service to acquire a 27% non-controlling common equity interest. Transaction completed on June 15, 2026. Comstock maintains operational control and key decision-making.

    Risks & headwinds

    3
    Lower natural gas pricesQ2 FY26, ongoing

    Realized gas price averaged $2.54/MCF in Q2 FY26, leading to lower financial results.

    Mitigation: 63% hedged in Q2 FY26, increasing realized price to $2.93/MCF; monitoring 2027 activity based on price outlook and hedging opportunities.

    Western Hainesville drilling cost increasesQ2 FY26

    Drilling costs increased 13% QoQ to $1,738/ft in Q2 FY26.

    Mitigation: Attributed to steering difficulties; mitigated by successful 'big hole' lateral trial at $1,306/ft, deployment of 10,000 PSI rig, and testing higher temp rated drilling motors.

    Western Hainesville completion cost increasesQ2 FY26

    Completion costs increased 5% QoQ to $1,609/ft in Q2 FY26.

    Mitigation: Attributed to higher proppant loading, lower average lateral length, and higher percentage of single well pads; company is focused on optimizing completion design for higher EURs.

    What to watch in Q3 FY26

    5

    Western Hainesville 'big hole' lateral repeatability

    next quarter
    CurrentFirst well (Dolly Jones) drilled at $1,306/ft, 25% lower than Q2 average.
    TargetConfirmation of repeatable cost savings and performance on second and third wells.

    Why it matters

    Successful repeatability of the 'big hole' design is crucial for driving down D&C costs and improving efficiency in the Western Hainesville, impacting overall project economics.

    But the first well, the Dolly Jones, I mean, at $1,306 a foot, that's a good bit cheaper than any other well we've drilled at a similar TVD. Obviously, the deeper TVDs, that well had about a $16,400. foot TDD average and it's by far the cheapest well of anything, any well we have that's 16,000 foot or deeper. So we didn't even really have the motors that we use on the first well were not the exact. or the motors we wanted, we kind of used some stuff that was more off the shelf because obviously, We hadn't done any big hole work in the western high school, so they didn't have anything really fitted for us exactly for that first well we drilled. So, you know, we're hoping we'll have a little better performance there, because we've had time now to kind of dial in and get something fitted a little bit better for these second, third wells that we're drawing.

    Q&A highlights

    5

    What are the expected well cost per foot trends with the implementation of big hole design, higher spec rigs, higher temp rated drilling motors, and higher PSI frac spreads in the Western Hainesville?

    Drilling costs are expected to decrease significantly due to the big hole lateral design, with the first well achieving $1,306/ft. Completion costs will increase due to larger fracs, but overall D&C costs are expected to remain similar or slightly cheaper due to drilling cost reductions. The big hole design also offers intangible benefits like better steering and predictability.

    “So, completion side you know we're pretty darn efficient really on the completion side just You know, we had a couple of wells. Last quarter, we left a couple of motors in the hole, but we've gone to drilling out all of our wells. Basically, we've quit running motors on our drill outs. We basically just, you know, we do everything with stick pipe in the western Hainesville, 7 units of stick pipe, And now we don't run motors anymore. We just basically put a bit on the end of the pipe and we go to the bottom, and that eliminates a ton of risk.”

    asked by Derek Whitfield · answered by Daniel Harrison

    2 min read5 chapters

    Detailed Narrative

    01

    Western Hainesville Development and Strategic Partnership

    Comstock continues to prioritize the advancement of its Western Hainesville acreage, which has grown to over 545,000 net acres. The company completed a significant transaction by selling a 27% non-controlling equity interest in its midstream subsidiary, Pinnacle Gas Service, to Sixth Street for $600 million. This deal validated the value of the Western Hainesville, strengthened the balance sheet by retiring Pinnacle's debt, and positioned the asset to service growing natural gas demand along the Gulf Coast and the Texas Power Generation Hub.

    02

    Drilling and Completion Optimization Efforts

    The company is actively pursuing drilling and completion optimization in the Western Hainesville. This includes the successful trial of a 'big hole' lateral design, which achieved a drilling cost of $1,306 per lateral foot for one well, significantly lower than the quarter's average. Management is also deploying new technologies such as higher temperature-rated drilling motors and a 10,000 PSI rig to improve drilling speeds and reduce costs. On the completion side, the company has increased proppant loading by 25-50% on Q2 wells, expecting higher Estimated Ultimate Recoveries (EURs).

    03

    Production Growth and Operational Efficiency

    Comstock reported a 16% sequential increase in production to 1.2 BCFE per day in Q2 FY26. This growth was supported by 22 Legacy Hainesville wells and 11 Western Hainesville wells turned to sales, each with an average initial production rate of 31 MMcf/day. Unit operating costs improved to 77 cents per MCFE, a 16-cent reduction from Q1, driven by higher production levels and lower lifting, G&A, and gathering costs, contributing to a 74% EBITDAX margin.

    04

    Capital Structure and Liquidity

    The Pinnacle Gas Service transaction significantly improved Comstock's capital structure, making Pinnacle debt-free and saving $40 million in annual fixed charges. Comstock retains a 73% controlling interest in Pinnacle, with potential to increase to 80.5%. The company ended the quarter with a last twelve months leverage ratio of 3.0x and robust liquidity of nearly $1.2 billion, providing financial flexibility for ongoing development activities.

    05

    Future Outlook and Market Demand

    Comstock anticipates continued production growth, with Q4 FY26 expected to return to early 2024 peak levels. The company plans to drill 22 wells and turn 21 to sales in the Western Hainesville, and 48 wells turned to sales in the Legacy Hainesville for the full year 2026. Management is closely monitoring natural gas prices for 2027 activity planning, emphasizing the long-term demand drivers from LNG exports and the emerging hyperscaler data center market, particularly in the Texas Power Generation Hub.

    AI-generated summary of the company’s earnings call. Not investment advice.