Crispr Therapeutics shares tumble after significant earnings miss
Introduction & Market Context
Comstock Resources, Inc. (NYSE:CRK) released its second quarter 2025 results on July 30, showing significant financial improvements driven primarily by higher natural gas prices, despite continued year-over-year production declines. The company’s stock closed at $21.03 on the day of the announcement, near its 52-week high of $31.17, reflecting investor confidence in the company’s strategic direction.
The natural gas producer has been strategically positioning itself to capitalize on improved market conditions, with natural gas prices in Q2 2025 averaging $3.44 per Mcf on NYMEX, compared to just $1.89 in the same period last year. This favorable pricing environment has allowed Comstock to deliver stronger financial results despite producing less gas.
Quarterly Performance Highlights
Comstock reported substantial year-over-year improvements across all key financial metrics for the second quarter of 2025, primarily driven by the strengthening natural gas price environment.
As shown in the following chart comparing Q2 2025 to Q2 2024 financial results:
Natural gas and oil sales increased to $344 million, up 24% from $278 million in Q2 2024, despite a 14% decrease in production from 1,439 MMcfe/d to 1,233 MMcfe/d. Adjusted EBITDAX rose significantly to $260 million, representing a 56% increase from $167 million in the prior-year period. Operating cash flow nearly doubled to $210 million ($0.71 per diluted share) from $118 million in Q2 2024.
The company also returned to profitability with adjusted net income of $40 million ($0.13 per diluted share), compared to a loss of $58 million in the same quarter last year.
The six-month results showed similar positive trends:
For the first half of 2025, natural gas and oil sales reached $749 million, up 22% from $614 million in the first half of 2024. Adjusted EBITDAX for the six-month period was $553 million, a 40% increase from $396 million in the prior year. Operating cash flow improved to $449 million from $300 million, while adjusted net income reached $94 million, compared to a loss of $67 million in the first half of 2024.
The improved financial performance was largely attributable to higher realized natural gas prices, which averaged $3.02 per Mcf in Q2 2025 compared to $1.65 in Q2 2024:
Operational Achievements
Comstock continues to focus on operational efficiency and development of its extensive Haynesville Shale acreage, which spans 1,105,650 gross acres (826,741 net acres) across Texas and Louisiana:
In the Western Haynesville area, which the company views as a key growth driver, Comstock turned five wells to sales during Q2 with impressive results. These wells had an average lateral length of 10,897 feet and an average initial production rate of 36 MMcf per day, significantly higher than the company’s Legacy Haynesville wells.
In the Legacy Haynesville area, the company turned 21 wells to sales with an average lateral length of 11,803 feet and an average initial production rate of 25 MMcf per day:
Comstock has been making significant progress in extending lateral lengths, which improves well economics:
The company has also been successful in reducing drilling and completion costs. In the Western Haynesville area, the five wells turned to sales in Q2 were drilled and completed at a total cost of $2,647 per completed lateral foot, representing a significant efficiency improvement.
Financial Position and Capitalization
As of June 30, 2025, Comstock maintained a solid financial position with $26 million in cash and cash equivalents and total debt of $3,064 million. The company’s net debt to LTM EBITDAX ratio stood at 3.0x, with available liquidity of $1,051 million.
Comstock has a $1.5 billion secured revolving credit facility with a $2 billion borrowing base and a maturity date of November 15, 2027. The company is subject to financial covenants, including a leverage ratio requirement that steps down from 4.0x to 3.5x by Q3 2025.
Despite the improved financial performance, the company reported a free cash deficit from operations of $79 million for Q2 2025, though this represented an improvement from the $104 million deficit in Q2 2024. This deficit reflects the company’s continued high capital expenditures as it develops its Western Haynesville assets.
Strategic Initiatives and Outlook
Looking ahead, Comstock outlined several strategic initiatives and provided guidance for the remainder of 2025:
The company is primarily focused on developing its Western Haynesville assets, which it believes will position it to benefit from long-term growth in natural gas demand. Comstock is operating four rigs in the Western Haynesville area to continue delineating the play, with plans to drill 19 wells and turn 13 wells to sales in 2025.
In the Legacy Haynesville area, the company is also operating four rigs to build back production for 2026, with plans to drill 32 wells and turn 32 wells to sales in 2025.
Comstock plans to divest certain non-core properties during 2025 to accelerate deleveraging its balance sheet. The company is also working with NextEra Energy (NYSE:NEE) to explore the development of power generation assets near its growing Western Haynesville area to provide reliable energy solutions to potential data center customers.
For Q3 2025, Comstock expects production to range between 1,200 and 1,300 MMcfe/d, with full-year 2025 production guidance of 1,225 to 1,325 MMcfe/d. Capital expenditures for drilling and completion are projected to be $250-$300 million in Q3 and $1,000-$1,100 million for the full year.
The company has also secured natural gas hedges for 2025 and 2026 to provide price stability, with 545 swaps at $3.48 and 150 collars at $3.50 x $3.80 for each quarter of 2025.
As natural gas demand continues to grow, particularly for power generation and LNG exports, Comstock appears well-positioned with its extensive Haynesville acreage and operational improvements to capitalize on favorable market conditions, despite the challenges of managing its debt load and funding its ambitious development program.
Full presentation:
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