Comstock Energy Q3 2024 Earnings Call Summary

Management Comments

• Historical and Forecast Natural Gas Production Levels

  • Production averaged 1.4 Bcfe/day in Q3 2024, a 2% increase from Q3 2023.

  • Expected Q4 2024 production between 1,325-1,375 MMcf/day, reflecting a planned reduction from prior activity adjustments.

• Production Curtailments

  • “Given lower completion activity...we had only eight operated wells turned to sales.”

  • Lower natural gas prices influenced decisions to reduce rig and frac crew activities.

• TIL and DUC Wells

  • Eight TIL wells averaged 21 MMcf/day; one Horseshoe Haynesville well achieved 31 MMcf/day.

  • Planned additional wells in Western Haynesville expected online by late 2024 or early 2025.

• Hedging Strategy and Break-Even Costs

  • 28% hedged in Q3 2024, improving realized prices from $1.90 to $2.28 per Mcfe.

  • 50% production hedge planned for Q4 2024 and 40% coverage targeted for 2025 to manage price risks.

• Rig and Frac Crew Numbers

  • Operating five rigs and two frac crews, with one crew re-added in September after a 70-day break.

• New Pipeline Builds and LNG Projects

  • Pinnacle Gas Services’ Marquee plant to increase capacity by 400 MMcf/day by Q2 2025.

  • Emphasis on aligning infrastructure expansion with production capabilities in Western Haynesville.

• Market Conditions

  • Natural gas demand supported by rising LNG needs and AI-driven power demand.

  • Future market balance anticipated, leveraging reduced rig counts to offset production and support prices.

Q&A Section

• Natural Gas Production and Forecast

  • 50% hedge target for 2025 to stabilize revenue amidst price fluctuations.

  • Quote: “Our goal for 2025 is to balance capital investment with cash flow and maintain a higher hedge level.”

• Curtailments and Rig Management

  • Faster drilling increased completion schedules, with flexibility in rig count adjustments based on pricing.

  • Anticipated production declines as fewer private operators sustain current activity levels.

• Western Haynesville Development

  • Recent Horseshoe well achieved a record low drilling cost per foot, promoting additional Horseshoe wells.

  • Expansion in lateral length; planned infrastructure supports near-term production scale.

• Infrastructure and Pipeline Expansion

  • Marquee gas plant to support increased output without constraining production growth.

  • Offload capacity agreements in place to manage pipeline demand.

• Market Outlook

  • Quote: “Low rig counts today may lead to a stronger gas price recovery if LNG demand grows as expected in late 2025.”

  • Industry adjustments anticipated for 2025 as LNG and seasonal heating demands potentially support price stability.

Key Numbers and Dates

• Production:

  • Q3 2024: 1.4 Bcfe/day

  • Q4 2024 Forecast: 1,325-1,375 MMcf/day

• Wells:

  • Eight TIL wells in Q3, six more in Western Haynesville by early 2025

  • Initial production: Average 21 MMcf/day; peak at 31 MMcf/day

• Hedging:

  • Q3 2024: 28% hedged; Q4 2024: 50% hedged; 2025 target: 40%

• Infrastructure:

  • Marquee gas plant capacity expansion to 400 MMcf/day by Q2 2025