Comstock Resources Q2 2025 presentation: Revenue up 24% as gas prices offset lower output

Comstock Resources Inc (NYSE:CRK) presented its second quarter 2025 results on July 30, showing improved financial performance despite lower production volumes, primarily driven by stronger natural gas prices. The stock declined 1.94% in aftermarket trading to $19.13, continuing recent pressure that has seen shares fall 11.92% over the past week.

Quarterly Performance Highlights

Comstock reported natural gas and oil sales of $344 million for Q2 2025, representing a 24% increase from $278 million in the same period last year. This revenue growth came despite a 14% year-over-year decrease in production to 1,233 MMcfe/d from 1,439 MMcfe/d in Q2 2024.

The company’s adjusted EBITDAX reached $260 million, up significantly from $167 million in Q2 2024, while operating cash flow improved to $210 million ($0.71 per diluted share) compared to $118 million in the prior-year quarter. Comstock swung to an adjusted net income of $40 million ($0.13 per diluted share), reversing a $58 million loss in Q2 2024.

As shown in the following chart comparing Q2 2025 financial results to Q2 2024:

The improved financial performance extended to the first half of 2025, with six-month natural gas and oil sales reaching $749 million, up from $614 million in the comparable 2024 period. Six-month adjusted EBITDAX increased to $553 million from $396 million, and cash flow improved to $449 million from $300 million.

Natural Gas Price Environment

The primary driver behind Comstock’s revenue growth was a significant improvement in natural gas prices. The company’s realized price per Mcf increased to $3.02 in Q2 2025 from just $1.65 in Q2 2024, reflecting a broader recovery in natural gas markets. The NYMEX settlement month average rose to $3.44 from $1.89 year-over-year.

This price improvement helped Comstock achieve an EBITDAX margin of 80% in Q2 2025, continuing an upward trend in margins despite the company’s relatively fixed cost structure. Comstock maintains that it has the "industry’s lowest producing cost structure," which positions it well to benefit from natural gas price recoveries.

Operational Developments

Comstock’s operational focus remains centered on its Haynesville Shale assets, with particular emphasis on developing its Western Haynesville acreage. The company holds approximately 1.1 million gross acres (826,741 net acres) across both Western and Legacy Haynesville areas.

The following map illustrates Comstock’s extensive Haynesville Shale footprint:

In Q2 2025, the company turned five Western Haynesville wells to sales with an average lateral length of 10,897 feet and an impressive average initial production rate of 36 MMcf per day. Additionally, 21 Legacy Haynesville wells were completed with an average lateral length of 11,803 feet and initial production rates averaging 25 MMcf per day.

Comstock continues to improve its drilling efficiency, particularly in the Western Haynesville where drilling and completion costs have been reduced to $2,647 per completed lateral foot. The company is also increasing lateral lengths, with Legacy Haynesville wells reaching an average of 10,892 feet in Q2 2025 and a record length of 17,409 feet.

The following chart demonstrates the company’s progress in extending lateral well lengths:

Strategic Initiatives

A key innovation in Comstock’s drilling strategy is the implementation of "horseshoe" well designs, which convert four sectional laterals into two 2-mile lateral wells. This approach reduces drilling costs by approximately 35% compared to short laterals ($800 per lateral foot versus $1,240). The company completed its first horseshoe well, the Sebastian 11 #5, with a 9,382-foot lateral and an initial production rate of 31 MMcf per day.

Comstock is also pursuing strategic partnerships, notably collaborating with NextEra Energy to explore power generation assets near its Western Haynesville operations. This initiative aims to provide energy solutions to potential data center customers, potentially creating additional value from the company’s natural gas production.

CEO Jay Allison expressed strong confidence in the company’s direction during the earnings call, stating: "We have never been more positive about the Western Haynesville." He emphasized organic growth over acquisitions, noting: "We want to grow our inventory. We’re going to grow it organically, not with M&A."

Financial Position & Outlook

As of June 30, 2025, Comstock reported total debt of $3.06 billion against common equity of $2.44 billion, resulting in total capitalization of $5.50 billion. The company maintained a liquidity position of $1.05 billion, including cash and available credit facility capacity.

For the remainder of 2025, Comstock plans to focus primarily on building its Western Haynesville asset, with four operated rigs drilling to delineate the play. The company expects to drill 19 wells and turn 13 to sales in this region. In the Legacy Haynesville area, four operated rigs will work to rebuild production for 2026, with plans to drill and turn 32 wells to sales.

For Q3 2025, Comstock provided guidance for production of 1,200-1,300 MMcfe/d and drilling and completion costs of $250-300 million. Full-year 2025 guidance includes production of 1,225-1,325 MMcfe/d and drilling and completion costs of $1.0-1.1 billion.

Despite the improved quarterly performance, Comstock faces ongoing challenges, including declining production volumes and substantial debt obligations. The company reported negative free cash flow of $88.9 million for Q2 2025, highlighting the capital-intensive nature of its development program. Management indicated plans to divest certain non-core properties, which could help accelerate deleveraging efforts.

Allison emphasized financial discipline during the earnings call, stating: "We want to protect the balance sheet. That’s number one, number one, number one." This focus on financial stability will be crucial as the company navigates volatile natural gas markets while pursuing its ambitious development plans in the Haynesville Shale.

Full presentation:

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