Earnings call transcript Q1 2023

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Operator

Thank you for standing by, and welcome to Comstock Resources First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder today's call is being recorded.

I would now like to turn the conference over to your host Mr. CEO. and Chairman Allison, Jay Please go ahead.

Jay Allison

results and Perfect, to quarter everyone. operating like morning all thank XXXX of and first you, welcome Resources you I Comstock good to call. conference financial the

going presentation. a XXXX slide results. first and or call at You can find to quarterly a presentation website results view our the quarter you'll after during this by There downloading entitled www.comstockresources.com presentation

of Officer; Comstock. President I Harrison, With is, Relations. Executive am Jay Officer; our Financial Allison, Roland our Finance Operating and Chief Officer Chief Mills, VP Dan Chief our Burns, Ron and me and of Investor

of you'll our laws. X, presentation Slide please today over that in note meaning X discussions our Slide statements securities If and forward-looking flip will refer to include to the within

such believe correct. to be will the there could such and assurance be prove to we reasonable, expectations no be that expectations statements While

of the have of If read None I you'll to the them. understand concerns. want slip are all kind analyst I concerns. over new Slide We I've issues. published X, and the understand reports address to think been that

where at look yesterday, today, is you If it's down plus $X. oil

$X.XX. gas you is at it yesterday down If and look today so is, natural where

natural So, we're pressure we gas short-term. experiencing all the prices with know in low currently that

However, in the we're extremely outlook positive gas the future. on for natural

years the ahead gas growing recognize world. we Looking around several need for the natural

be is emerging trillion the supplier hundred world the to natural over built. significant growing Western of to today Around that including a our miles from several $X gas goal is Haynesville market Haynesville infrastructure is developing Our shale long-term LNG operations, being area. our

years worth new more five LNG in plants United the Over see billion operational. States, of than being $XXX the we next

accomplish we're to dollars contracts following of goal, LNG that XXXX. our year enter stewards Haynesville managing that discussions who a continuing result To we our XX in low by with play with time same continuing in delineate that to this should To gas price are major significant asset. be must end great long-term interest. X-rig environment program while effect Western currently great, We're in our to new wells shippers, at the the drilled run

Haynesville We first ago. made running our The very by our rigs continue up we that well our great three the materially wrap you've solid In to we plan couple leasing results weeks. We'll acreage down seven next in be where we started quarter, six traditional to years adding had noted. be to strides almost as also in now. to the of position to efforts X-rigs area

still we the inflation quarter some in cost, into has baked well abetting but the first several The see next that quarters.

on we continuing our on to balance Western that balance focused being position area, allowing create goals see. the the to very a in future in adjust last as weather which We'll year. short-term our the play. plan term We'll implementing upon delineate continue our our Haynesville very responsive rig we're focused prioritize market. our to cycle growth to while business completion LNG Comstock proactive results the in plan count monitor worked environment protect the us summary, hard to is sheet current to as We'll In achieve. term Haynesville practical traditional our from to based we're it strong reevaluate to our longer we've that the benefit we sheet, timing be to price longer as we're well weak strong the so We're maintaining to headwinds

some first X, we'll Slide to quarter highlights. include go you of If the

and $XXX flow gas million sales Adjusted the for per Our per was or diluted and production had X.X million, XX% increased equivalent gas $XXX $XXX share. cubic operating billion quarter day. We feet $X.XX to EBITDAX of were gas of million. oil

million, we share. prices $XX Our weather $X.XX natural that The the adjusted the the reflect results following net in financial gas winter, per or income had. quarter weaker warm first was for quarter the the

average to quarter, shales cubic Since of wells, rich net has per wells with last in XX of feet first lower of we an horizontal six the day. initial XX,XXX wells length associated Haynesville an operated County, or average drilled In connected lateral our rate These the XX production which production. liquid XX and include update, XX.X we've net feet. rates with or liquid wells area million had IP which Panola operated X.X Bossier

feet acreage is to rate produce in announced cubic active quarter also play, Western our Haynesville that additional our our We it successful the XX acquiring day, initial third Haynesville play. well, well at rate exploratory which at. had Western a We an and production Campbell per million had expect which we an

So turn over to I'll financial Roland? the it results. discuss to now Roland

Roland Burns

Slide our the Thanks, for quarter. reported results we Jay. covered On X, first quick summary a we of that financial

and compared gas Oil As X% XXXX. the Jay sales first quarter, quarter per in to as the offset hedging decreased said, as gains, our prices the XX% of production the Bcf growth quarter. by quarter to million had $XXX natural including lower we day in production increased in gas the to X.X first that

per XXXX. XXXX's decreased in $XXX the XX% adjusted net $XX came at flow first of to million first quarter. quarter million by cash million compared EBITDAX $X.XX the during the earnings XX% and of our in $XXX quarter, to Our share less income as We and first quarter generated we of for than reported $X.XX

X, natural a gas breakdown price of On quarter. our in realizations provide the Slide we

of NYMEX first price daily the averaged the price, than was the market Hub During the spot quarter, settlement substantially Henry higher which quarterly $X.XX. $X.XX in average

So be of tied spot and our the sold that contract prices during we sold gas to of our other nominated settlement index quarter, to the in XX% the price, daily XX% at gas we the market.

first for reference been NYMEX quarter estimated sales the would the So have $X.XX. in price our

due Ship during shutdown. Katy a normal prices bit the gas differential That to and our to $X.XX, us first to that differential $X.XX quarter LNG weaker reference than price of first persisted for the Houston the good quarter Our realized higher hub averaged Freeport during reflecting the price. due continued was – the Channel facility

differentials in of quarter, tightened seen Gulf we we've Texas along About late of indexes, price these Coast the our Freeport our Coast are XX% the currently selling Gulf to directly gas the XX% market startup tied up somewhat. LNG and With is gas the to shippers.

and also realization in the our by transportation quarter, profit hedged, realized million In which Haynesville we've price gas. another resell $X our and and first gas $X.XX, our $X.XX. to of improved third-party we're of XX% average been improved This some to generated price excess using about the buy gas

EBITDAX per we our margin. Mcfe X, Slide On detail operating our costs and

we're per production the costs having quarter, The our startup first than are Haynesville higher in area our averaged fixed lower cost to fourth quarter at operating Mcfe a primarily $X.XX volumes. $X.XX phase The rate. over related cost startup. Our increased a we're Western are unit being that spread

in to our production grows area. down come expect We as them that

Our quarter, same gathering during in we $X.XX the cost fourth our quarter. increased had and by taxes cost remain lifting our the the $X.XX, increased as production by

where Our quarter, XX% in XX% substantially after came we quarter prices. the stronger EBITDAX hedging gas the first margin fourth at in in had down had we the from

first and In in other we quarter. drilling activity our spending Slide recap and the X, our development

$XXX During spent activities, the million on drilling our quarter, including operated of development on spent we million total $XXX program. shale Haynesville/Bossier a

day. $XX We another the frac totaled offset XX includes in installing on an wells non-operated production protection, operated or wells had net development horizontal we activity, to also tubing, XX.X and million our which These spent per the another we operated interest XX.X net quarter, XX sales. Spending rate wells, other XX production $XX million turned quarter. wells. average to drilled first Haynesville/Bossier of wells feet workovers or billion and on cubic initial In

in we quarter credit first no and debt. outstanding with we X, of of our billion the under facility Slide electric the borrowing recap end with our $X.X ended sheet. $X with On In in April our bank $X.X commitments. At our reaffirmed XX base balance the group billion billion borrowings long-term the banks quarter,

ended Our $X.X of credit liquidity matures more financial in so with first revolving quarter we the than facility billion. XXXX,

it our turn to now to I’ll more over in operations discuss Dan details.

Dan Harrison

we X Slide drilling our breakdown buckets. the quarter split drilling end is four Bossier of A it into inventory you, thank and XXXX got Okay, is between Haynesville Roland. inventory. divided

up feet and medium feet. laterals our short Our feet, between X,XXX X,XXX X,XXX run laterals that to

category laterals. long Our to feet, our created XX,XXX recently feet laterals and feet extra-long our for XX,XXX from of X,XXX run laterals exceed that wells our

stands currently inventory interest on operated X,XXX net equates to X,XXX total gross which locations, average XX% at inventory. Our locations, the working a operated

average locations interest working inventory. we non-operated XX% Our on locations, in which represents have non-operated our XXX inventory a X,XXX net gross

bucket, we gross long to laterals, extend recap, range. operated Haynesville our operated Based have the XXX inventory, on operated locations. inventory our split acreage inventory we leverage laterals, the and have wells, targeting gross lateral XX% the locations And short to XXX where drilling foot the And and Bossier. XXX net modifier extra-long is laterals, in XX,XXX The XXX recent XX% XXX we our to continue of foot laterals. in to future medium recap laterals lateral the gross extra-long operated specifically our extra-long position XXX our to XX,XXX and possible our currently success and

our end of By This at slightly extending at X,XXX our up we stands the from is laterals, the feet. XXXX. our X,XXX in average lateral inventory length feet now had

with activity levels. a us In plan methane footprint addition Based level our gas locations. laterals intensity our help reduce to surface the longer runway XX-year inventory our greenhouse of to provides drilling the this and economic XXXX us uplift, reduce and future on

Slide as average On a drilled length, XX by we've year. outlines the chart, lateral this

the quarter that an in short wells of foot to benchmark to the lateral laterals long the than of the had we of feet. ranged long foot The wells lateral long. Five the during XX were the first the on two X,XXX foot long length beyond end. wells quarter than of XX coming lateral laterals greater were up we to XX,XXX XX turned turned average feet During a our individual with XX,XXX sales are X,XXX laterals. X,XXX on from feet XXX XX,XXX end sales We longer wells feet.

wells increase feet. foot XX stands Our sales last was to recently another our record which XX of successful quarter Texas wells length on #XH group feet be in This with current XX,XXX to XX the well a Included and the average of wells XX end. completed XX,XXX on XX,XXX formation XX,XXX feet. foot we Western on is well, well, plan in the third our and laterals year East approximately completed year-end year. will will Based that these beyond by extra-long the lateral If will to Campbell be we the to still laterals. [ph] schedule, XX,XXX acreage of is turn future long-lateral. XXXX well sales turned during acreage, our lateral long the fourth at Haynesville Bossier was our

Slide XX outlines activity. our new, a well new

million last call. well our sales had We of XX IP to this wells on the of million and really feet with XX an XX,XXX a again a have with was the turned group day good rate feet. We up with from XX feet new XX,XXX to wells laterals individual XX since ranging test tested ranged X,XXX average of time to individual rates day. The cubic a from average performance and feet lateral million length up day, the

in to a this The enhances Panola day, dry well in low we in in acreage our have gas wells lower wells natural rate IP ownership wells well. XX quarters, for XX% as activity completed which in those XX% this our turn our for that on six Included million versus on which the comparable our the the working interest quarters the to wells. at even a with were represents liquids, interest is to working six IP XX gas XX prior average produced Haynesville County, XX latest barrels barrels the acreage economics rich gas liquids

lateral Also well at plan We with quarter on Haynesville an flowing foot well included produce Campbell XX rate are our sales well our million XX,XXX rate. which well was was cubic to IP we today rate day with tested the same this in the the this to March. feet The currently a the in and and well a of long this at third turned #X Western completed was successful acreage. Bossier

the a have well and In fourth completing is that addition, we completion. well are acreage on currently our waiting fifth on

couple to of expect next both the these next turn of two to We wells months. sales within

two wells. we're Western on acreage Additionally, seventh its rigs our and drilling Haynesville our running sixth currently

to foot, were which sales Texas, the all XXXX for legacy lateral a greater the during D&C cost wells. increase fourth North the XX% covers which D&C Slide on XX quarter, benchmark the $X,XXX quarter our East long first XX over is XX per we our cost. through XX% the lateral than these benchmark our acreage quarter feet wells quarter averaged increase position. compared full wells, an our D&C first of In long X,XXX our wells cost turn to year our Louisiana core summarizes and

a this most and compared as a Our versus shorter quarter first drilled last, majority the of quarter sales quarter $XXX The at to we to drilling costs which early of is turned the with is the wells fourth drilling increase the quarter. a came cost foot, length in of quarter. lateral XX% attributable increase average third inflation the fourth along in to were

fourth Our completion used half at frac the of fraced completion to in natural is The only the increase Titan with fourth X% primary first first costs our fleet completions to fact natural which opposed Titan wells quarter came fleet. than that to gas the contributor quarter as in XX% was quarter. of our well quarter were more a our our the gas foot, first were $XXX costs a quarter higher compared during

As mentioned With to we've the gas of Titan being significant calls, to fuel that compared savings the previous capture on able diesel use fleet. conventional natural been the the fleet rigs. couple on activity fleet we our eight within To the next we are where the stand second are said, sum of levels, delivery up currently expecting we months. of Titan running through

of be rigs. to down these couple in of us weeks released to One seven a bring will

length Well, of This methane a improvement Slide gas We we our rate related turn emissions highlight improvement greenhouse XXXX, in into XX% On intensity by versus lateral reported lateral X% X.XXX%, a versus sales those we we is per of our BOE a of emission reported achieved of improvements to of sales increasing despite XXXX, improvement our kilograms production. equivalent XXXX. completed continued intensity a which gas X.XX turn and wells. to emissions. feet adjusting for XX% COX for is methane XX, greenhouse

sales turn Our XX% by greenhouse gas sales to methane our lateral emissions to foot improved improve lateral XX%. turned emissions per per while foot

gas aircraft and technology at imaging XXX% ability almost our us gas optical responsibly earned of sourced. is sites, the deployed We production our leak certify monitoring which to

natural Our COX five diesel natural eliminated gallons metric approximately gas-powered gas million frac equivalent. tons by of offsetting XX,XXX fleet approximately of utilizing

operating frac began in a natural reminder, first our gas-powered As fleet April.

contribution see So second our reflects of arriving numbers. to that date just reductions fleet by our in of the the quarter, XXXX our in we end nine gas-powered natural months field should continued second With emissions. the

eliminated utilizing approximately approximately on our X,XXX of rigs by offset natural newly of constructed drilling tons gas, approximately metric fuel equivalent. gallons dual equivalent. mitigating which facilities Our X.X installed COX metric million tons of diesel We X,XXX COX of instrument approximately production XX%

going call over now back I'm to to Jay. turn the

sum outlook. XXXX the up can You

Jay Allison

the stewards all the a to that Thank some by certified to environment. first produced but we create and we're be XXX% Dan you, of going which gas is again, sourced believe of we're company gas responsibly additional that tells be the natural may Haynesville/Bossier have standards, that, gas MiQ I value, you in the our future

Slide you for summarize you I'd Slide XXXX. to we XX, our would If direct outlook turn XX over where to

to two in I our mentioned. XXXX, Haynesville continue will the had which rig Western and delineate program with We play derisk

new primary managing up levels gas to Our objective prudently respond is same prove to time play. At our drilling we're year environment. this activity to the the price lower our

prices. next last to the to gas we continue order our couple releasing response pull Haynesville conference this it, the at footprint which on of natural discussed within be rigs our activity the we second in As legacy in two will experience to low weeks, we to the of calls

to changes are In at we looking addition to completions. additional rig our some count, evaluating delaying

lowest on, as created structure plan quarter. the do balance cost that current of gas lastly, drilling at continue substantially remain we financial had or our even we maintain than industry provides for producers. public are structure cost prices, returns year, than share. focused strong our other our acceptable If maintaining Ron on the dividend natural common the that last at liquidity as strong And sheet We end that the very reported gas retain leading the lower is more natural X.X quarterly of we'll billion to totaled to first which $XX.XX

I'll turn the rest for Ron to it for specific guidance over year. Ron? of now the

Ron Mills

we for XXXX. Jay. Thanks XX, Slide provided On financial guidance the

X.XXX to to with per prior commentary X.XX that day. similar from our guidance to year the quarter Bcf is guidance should that X.XXX quarter Second second of consistent a production of quarter. unchanged Full X.XXX the Bcfe of Bcf day be remains production the our initial first Bcfe year guidance for

plan do quarter, to turn between net sales second XX the we During and to XX wells.

As last XXXX to to experienced. mentioned average we of our had X.X% than offset an cost lateral which the our Dan feet, XX,XXX which help have mentioned, X% is about Jay inflation our continues of will some length wells, year, that longer

CapEx D&C is quarter at CapEx $X.XX D&C million Second that unchanged $XXX the remains $XXX billion million full year and to $XXX to range. billion

infrastructure our and for $XX spending year. second the full of budget to $XXX million quarter million continue during $XX of the terms and to In million other $XX million we to spending,

while the is full the and in unit $X.XX $X.XX addition what noted million $XX costs above, $XX be due year average increased when to our, to drilling In and in and to leasing anticipate our the the we this we spent now the GTC million to expected on leases. new both quarter our $X.XX leasing spend million we almost per second in year. on year expected between $XX first That activity. to to are quarter number on activity program the second LOE robust spending $X.XX now between quarter at and has full

Primarily the, in taxes. ad unchanged to the on taxes to and a impact gas prices between the of to $X.XX average in year. now expected $X.XX $X.XX and to the $X.XX for range. quarter Production production the $X.XX rate remains $X.XX are related DD&A lower valorem full to second

Our total to to expected cash $XX million and G&A $X still the year. million $XX is million $X in to the million for quarter

be per continues quarter. million $X the about While non-cash G&A to

interest in is to to $XXX expense the year. expected $XXX million Cash million the for million $XX million be to quarter second $XX and

XX%, effective XX% taxes the to related our tax and able of in now as While as prices to a to XXX% our our year, remains commodity primarily this to well XX% level. we rate reported the unchanged activity expect lower defer be to

company. to follow the turn Sally? now analysts who answer the questions back call over the operator We'll from to call

Operator

comes first Thank you. Instructions] of question Derrick [Operator Stifel. Our Whitfield of the from line

is line open. Your

Derrick Whitfield

all. Thanks and good morning,

Jay Allison

Good morning.

Roland Burns

morning. Good

Derrick Whitfield

that understand in toggle your challenge is price environment a the the capital me current second to X feedback half prices decision managing well questions, Understanding ask do what Before asking is with potential that XXXX. profile? in XX for program and could if completion deferral service my cost flex cash really production is I And let $X, wanted range? said, $X.XX a loop, you dependent reasonable we of and the to a parameters express if around to there place see that and some business the your does a I free that down in gas flow that

Jay Allison

mean, just of our Yes, kind I – I second in especially question. the gas something we kind flatten kind that's – of that we we weakness kind delaying year especially kind look you completions last stretching it of production, first of Derrick, continued which beyond if still is – that to the as is of yes, forecasted at at to the quarter. out. I good as quarter, compared would grow think think price see that saw that's a some in obviously, And year-over-year, have as can certainly

resume put again. when quickly place how we So and we it depends that on completions in

of production affecting the So really have this you'd be place affect that you're activity to pretty to most Otherwise, – year's going the early. next kind levels. of in put year, to going that's

Derrick Whitfield

view degree Terrific. between macro quarters that balance perhaps inflect likely banks you do your with with you will the entirely how understanding and term would it's your again based of that on scenario? Contango? And, separately, than not the the four on near that with control long and Roland, side. staying it's operating comfortable leverage likely you it the knowing following a much delicate What are priorities, think And within lower

Roland Burns

pay it such other great balance Well, last now liquidity has companies, created and year's by strong the kind sheet downs. debt of

mean, think to banks. still step have from for – prices – beyond I significant and kind the commitment I I a any create that them. that, we're borrowing the redetermined we yes, even So a current or we gas have base we was concern may all just nothing backwards mean, of the on two, go based we that but

So I plans. if any real of deterioration, that our even any sheet significant don't change don't balance we the see

of prices closer you've it's to weak really is ahead yes, what are you – to is next yes, into that XXX. Next the or next year, an range, So you going kind got it have look the as do back to gas year saying? environment futures get year

it's a really phenomenon. short-term So,

proactively. And so we continue manage to we'll and very recognize that it

have for year's quarter saw cost You get potentially but last in we're side to the kind we into low period, still this the from these the been we where expect structure see operating of mitigate to always – strength prices very industry. and low able lowest you to be profitable longer come stay prices longer cost the company do gas down created cost and structure And have gas the to high prices. has cost, start the back service the with we if high high and cost even of convergence back of prices, would a

lower cost is peers. peers, our than public our –our almost breakeven Mcf per gas gas $X.XX Our

lots the So that that help had of experience the strength obviously in that the in will doing handle times the And we're past. of be that things part now. we've company,

Jay Allison

– the of all favorable, And second our my think run ship the said, with gas of XXXX, I they And particularly structure. half pretty Roland as prices, be XXXX. – would look comment cost the we the for our initial

that maybe is our looking outlook we lower at We've extremely can looked gas on – commitment. natural into non-operated positive. how So properties

basis, basis, really look We weekly at hedging. also on almost on a daily a

but weekly, XXXX, collars at in look those. that, XX% we XXXX. December in We into look put hedges like half we added did any in we second that's XXXX. that of of the put haven't We We at

– you think that to we I that. know take at take do looks So as we a need stakeholder

We prices there's up run are be cost future. and to do dropped. kind some on of us the deflation They've think going in gas

a are But overrides bit within that XXX,XXX hundred you is that inflection all XX% the pain. are corridor, that building miles more where there what little the all export net So at are LNG of is point their the several acres where fact shippers Gulf our Haynesville of facilities.

So we maybe look at a new that Most these and companies to than we we've look at that's have in that. we don't. plan inventory. We've want had why issues the very and with business in little results be our transparent most. that of got We play, different

Some have option issues. And rival is – a don't. We your acquire you degradation of to them, most have to M&A. for of them

to do looking either. not are that We

what So book, they're different it sure is make supporting. know a little that playbook, it that coloring a those little and want to support different we

judgment and globally it's the good based think in for the based gas upon world upon need it's around natural I the future.

Derrick Whitfield

guys. really I three so thank more taking is we're that Thanks, and months outlook quite constructive, certainly the difficult solving the for to you questions. know for six And

Jay Allison

you, question. Thank great

Operator

you. moment, Thank please. One

Roberts comes line question of the [Tudor of TPHO & Holt Pickering next from Jacob Company]. Our

is line open. Your

Jacob Roberts

guys. morning Good

Jay Allison

morning. Good

Jacob Roberts

map done and an able the then when particular about been, provide Western guys scale thoughts I and how on to program perhaps be deals in you've hoping acreage was to Haynesville the process and size things maybe competitive the the it in might hear of market? has some of like to that more you leasing the

Jay Allison

on that upon the said on beginning. based We've we very drill very bit. started Well, the we the was ago. very what leasing – doing very moved three years onset and on And at it been We at performance. at we've there the we've off rigs cautious been off said and the beginning that

did the quarter. a can by is it second but put stellar. didn't tells there. been at It now look it because a which there. quarter Circle that at by we a tell looked us rig take to M a put us one And the rig tell fifth you fourth, performance, We've facility, little us all there. a tell to has of put quarter has that to second sporadic It So the been third, takeaway

the think well looks second strong. I really

of connected now, well, more. and we're third shales fifth just we're we're to waiting and as complete a IPed then The we drilling last two to month completing well it, only right well

till paid out we and XX/XXXX, at at to of it, cash debt think And of our So long-term cautious. Western the but then we at XXXX balance it's we debt footprints pristine. that dollars got that's not plays we that where for the took amount at all year, like you've you flow. due and I that's we and then hopes get mean, these X.XXX owned sheet X.XX that looked of tell debt. noticed money looked we had, the in and we I Haynesville. majority be And last for all And our of have down our that's great to you our we paid the

low we leased we'll the But And want the think keeping that expectations, see which leases make that very a to really price – leaseable cautiously that's we great we you progresses. think wells And right at that cost, should right I which quarterly. think we're year-end, and there we're for that now. drilling, we're what have have sure updated they the is looking, we looking is we'll but think be drilled. but I we And this by how that we're should, where

Jacob Roberts

going? those some on longer after and of been then Great. just Thank LNG the the prepared contracts I'm just guys is to we in back term if have And longer how Appreciate remarks what that. curious term are discussions could potential. the ideal circle perhaps those you. maybe structure you

Roland Burns

us markets price. of we ideal a and possible of Yes. long-term have the price Obviously certainty that have then one and the – certainty to have can market that structure gas – achieve at for highest is

that that that. think are I role to able be think And the a hopefully supplier. do And in a year. we we yes, in some plays Haynesville already expect things So to big Western big area I this that

I And other contracts. think are that commitments, the year want that to gas gas to free we we more the to from that XX up shippers some currently could demand. done continue have We driving producing tire of ourselves kind LNG we're as

Jay Allison

natural a – – it's gas fossil look we Well, is fuel. a precious

get If need you've that And that from if get it, that gas. really like LNG got all precious you're a they'd the you exporters, can $XXX the spending for you narratives Haynesville. to will billion tell you it

the Appalachia nor You're it not get majority Permian their opinion and to our really in going of the opinion. from in

the from it get Haynesville/Bossier, where get could it. you if So that's rather would you

commodity de-risk the do XXXX, who as do this can but precious try for Western predictable, with we need and the looking management term is inventory for that over our treat Haynesville capability we balance not the commitments, got the has business really for they that's because and they to XXXX, it that they're we So company. view with that's and need to longer doing decades, we're and what what deliver the sheet

Jacob Roberts

time, you Thank appreciate much. the very guys. I

Operator

One moment, please. you. Thank

next Our question the line comes Donnes from of Truist. of Bertrand

Your line is open.

Bertrand Donnes

guys. morning Good Hi.

as the just between You there quartile the little results, well. two too in the well and use Western below comparison? that of Was anything geologically to of a top added results – well different high but watermark it it's a bit the Or the Black is in it your KZ a Black Haynesville wells? still KZ a

Dan Harrison

Yes, this Hi. is Dan.

KZ We – we and a drawdown. of IPed Campbell length, not really we the the really well It's today. the M KZ had you're We're to, conservative chose We're foot. we Campbell lengths choke. We at We higher. well – but be Black longer Black IPed on this really IPed just just we X,XXX we the real on tested, XX lateral right, the under on low just equivalent Circle million So smaller lateral drawdown. the well, did, have a this trying certainly well managing to looks good. could lot Campbell got we –

a is we just We up the day at Campbell Circle between to and days just in for – We then and so well drawdown. And shut here And we M million – XX manage then it KZ And basically about it flow had offset this produce is flowing going rate. XX million this recently. flowing we're an and back want getting to Black – still frac to XX pace. XX the wells million. at at for XX the the just we're got

Bertrand Donnes

don't you on Haynesville? in I do this year you there? remaining you missed maybe And that Or what are the guys – many then Do I And outlined Western well? great. it. wells Okay, inventory yet? – have coming how are Have you how as many just thinking

Jay Allison

No, total nine just XX have to end by said drill Western probably that connected wells eight we've those year of shales. Haynesville and we'll or

that's we all So haven't that any right now. all inventory. premature And that given

Bertrand Donnes

Okay, that on shifting And up I the to the, gears just good. want on LNG sounds then follow comment.

kind pricing? You higher to the a risk. if international I you wasn't you the said but it a get premium, now, ship come want There's I'm And to sure two. just can guys, some the price sure, with you viewed were Hub trying how approaches get would possible. gas Henry price you do want whether to de-dock of you been two best, or channel you

answer. So, I that dissect just want to

Jay Allison

we're no evaluating Yes, still that.

look LNG XX%-plus of talking their if if we're the, the shippers supplier at being NYMEX. to you at think look to, business is a I at to tied you major least –

they capacity that's supply too. option international need NYMEX, you so they're going want to tied an markets, sell to if and if to And sell to have them, to we buy want their and have to that – in processing

the they versus other of being gas are could being the together those move that Gulf. and partner particular with tariffs one your gas partnerships explored high we of one, involving having all – are, kind to large midstream could to transport in explored. We're companies it's So also, the

all think the getting absolute other premium contract transport possibility sure main make with like on, markets, NYMEX want a gas it's certainly let's participating we're of low focused the that's the to the I kind a I other to too. explore Gulf, mean, indexes, if thing above. in then So, we're and we

Dan Harrison

again, a going you our that to that's the better you out future. is And sheet, we're is that's, we're advertising that that at time, de-risk we're it of to same And put an decades you to Campbell, produce some you at manage And number chance you the interesting it the for results that today, of doing have which prove if the you we're that that what going we'll going balance the give is, to have course, the number. and everybody stay quantity can needs. IP inventory same and try the over

in XX been it what times at three IP at. it this I've years the people most Over business, they produce

So little norm different it's a what here. we're doing

Jay Allison

Yes. now. strongest, the potential I would right say is probably the Campbell well,

it's, level it and the may so, And of highest at producing three. the be

number. of one just IPs kind a So day are

Dan Harrison

are reiterate, great They rates. Yes. flowing North And superbs, better wells the capable The I'll drawdowns than obviously in East our drawdowns you got just at the of see drawdown know looks much area. pressures. Louisiana core, we higher Texas,

value. So, for for we're managing maximum the longevity wells

Jay Allison

are We you we've the road the long there, de-risk wells it, to going to more don't many That's the footprint. it. don't Campbell though to asterisks know it's going time put out to a road the long And do take take, how this slow on it's why you this. taken to know do

Bertrand Donnes

just That's great what's what you And LNG all of about limit that? Thank or that that's term, commitment was guys. to part XX a I of you. got. the second then And year color scared the are

Roland Burns

I definitely No, we have done, not, years. mean, XX done we're

long-term want inventory a we that's we're life think I of given Haynesville that our think other partner, with. a over is have I like think advantage, the suppliers. contract so the think comfortable the that And we I that lot big I be to something And a potential and long extent

and gas more would continuing LNG flow users be that'll think, to think want a to, end those able whether have whether we'll, the capture, I be Coast be highest of So, our to the power users want of of trend being direct to type the chemical, I to get the lot to future, we and of price reliable or a capture him. or direct Gulf by long-term generators industrial possible to along supplier the connected other be

Dan Harrison

maneuver that, November. like I everybody his everybody kind he converted like Jerry into common preferred appreciation stockholder total would if Jones has global in major at and our make look a He a how of comment the billion family, today, we the longer you to he maneuvering attractive and view, to showing of $X.X term you we're way in that company be natural we're and able we're the for invested shippers. we're we're of think LNG gets dividend the equity how backstop, And because He else. else, gets a precious gas and taking is trying about

have look we the the, years. that's the different judgment make So to nuance good calls we months, have whether XX been have they've is and it. that two XX see the that you and we that last, at But also, why little months,

with reports conference when And But anybody time, I want all of everybody to, those. before think analyst the rid that try we got we pretty we're of we like we two been to that, they've good. last read changes make you. the we know call And and do need got had to rid we do rigs a

So advertise we'll – we we to one, that want make protect that sheet. are toggle sure to around the things we always balance

Operator

you. Thank please. One moment,

next line comes Meade of Charles the from of question Our Rice. Johnson

Your line open. is

Charles Meade

the Roland the to rest Comstock and there. team of Jay morning, Good and

Jay Allison

Charles. Hello,

Charles Meade

the Haynesville test to all opposed want Bossier I My deeper a two four guys part upcoming to ask be be more guess if the logs that for, wells. there you, higher any the would from Haynesville actually understanding section these upcoming wells I a my Haynesville the for alert could this what anything, looking particular section. pressure, lot any through and different just of are we different in looking going thoughts about your to of is And things you What vertical, us there? is And about test? is would the, whether be Jay, that drilling, cores the to as it's difficult might two are these should be about up of section, Western one wells. understanding question previous have

Dan Harrison

is your this I'll questions. answer Charles, try Dan, to Hey,

Bossier’s just we've know, are to temperatures the to well progress with be give the drilled of should So, time have late next we May, say in on three these completion the do the that, we pleased Bossier. and late We reason just waiting drilling that wells, ourselves, the short we you But we another was everything frac probably this July. late that's a are first a were chance month, but been wells as is at, now, simply, deeper, put made pretty into that was wells warmer. have well we've And drilled few wells. much been fracking Because have on one I obviously, producers. right so best early Haynesville. far have also much, sales starting Bossier as turning a We'll the that that's of is But trying success. looked period the

just just what be of to [ph], look So at are to targets the going we, to then need look TVDs at think we one – basically going the drilling? we be, and we Where are? at the we the we sticks We which where decide pursue. we're temperatures look we

We only rest that's the of south, geological So, want very for acreage down over target, Haynesville completion. reasons. the know, and superior of on the expect is kind the kind And the do a the been play. field from But far part where on we, to the our of based Campbell better Haynesville for Bossier southwest there's results end of the there. is, our you done play, all that's we is our that's the work primary of the Haynesville rock in drill

Jay Allison

competitive closer these The Pinnacle save gathering we're of we on costs. if advantage. the plant If they other mile and money XXXX thing, could line, Charles, in Remember the bought to Pinnacle drill going be the XXX drilled to we look lot a need at then there, then line. a to wells

but less. structure or go there, a competitive we some million wells to into that you advantage of we do own more which until XXX capacity probably line will drill we're next the our of have that it, don't cost you So the in has put going

cost the that about it. reserve mean, the the dollars think you us we're even that, Equip and don't would look structure. [ph] good you dollars we talk when But as producing where So, wells out and and call, five at about play I produced and far as we that a if for called very it still be Haynesville Western

Charles Meade

you, Jay. Thank for it me. all detail. That's That is helpful

Jay Allison

you. Charles, Thank appreciate

Operator

Thank moment you. please. One

of from One Capital Johnston next Security. the of Phillips Our question comes line

Your line is open.

Phillips Johnston

guys, you. Hey thank

play. into play wanted and I Just ask to that some levels, to of the around traditional on economics factors managing coming single your well follow activity your about Haynesville up are

NPV Does that as estimate flat order that to you the the current about sound to right break well up what last you guys? generate came even XXX ago, Just costs in time ran a with at even few flat. months curious at, I I is break roughly a price current gas analysis to

Jay Allison

What's Comstock. to that are mean about XX cost? than or talking you have Well we about, talking I if it we for bit lower a what you're depends we're makes difference. drilling? breakeven, cost – a low Because really what really XXX, getting – closer you're to area if to $X.XX, transportation lower on, the when it's, closer think transportation that a two I $X.XX it to think

rates it a back rounding thing. So, last error difference comes Yes, kind you'll with year it high in we and costs, areas high other crap gas we I the last lower $X.XX even I the in or But huge think, really was And on into now focus. that a think of because and prices higher in these cost that the the areas margins, up transportation one that's gas see, with drilled structure returns. transportation. to our year shift have price the have gathering back

areas can our of the lower transportation. back inventory on in in, We lean

it where stray, stuff lot So, of of level our large if the transportation. is our difference. the, a just parts be is now. current that out we much it to can it's the down closer other breakeven to, get And can price probably way in to Haynesville, very the footprint of we best monthly $X.XX But

is because cost. to Haynesville, a They're areas the bit of of deeper. drill certain it more expensive some EUR they're parts little it's of Some some

some And easier. are

of this that can think what get you you we lean I it's shift overall your yes, that very of So, in kind you of in, did hit to now go best like making improve, thing and I can to can kind kind top environment. now are one money your you in wells that's think XXXX, to players to,

Phillips Johnston

I'm I to breakeven that. Okay, trigger And helpful. of Thanks XX was guys for guessing significantly really lower, sort referring that price incremental that price low to. you be just it but sort might as great. as a just what rig guess an strip probably of drop seeing That of that move or of matter you not would were two, in terms

Jay Allison

Right.

yes, this you of are put And if we're reduced do obviously, activity. just going really of shift look in even wells easier and drilling then rig in not is we lot of like reality all the just the the or And prices. into we last to can going outlook, and summer, good this But participate we are that some keep, year's count we next that obviously in the do think really I your the and those half to at on drilling year the I lowest you inventory need that kind think, moving. to of extent don't projects, our like inventory. cost kind to did to gas the back the year and that again changes you the parts other year a going be have, is maybe a second of post how you're kind drill hold of strong until, areas prices words pulled of drill now cost, that's to low our big the

saver. are into come a we big Western which the single pad big, so does play? frankly those cost drilling, Haynesville, not And say, they're the wells, those is they're, how But

control referenced. if wells like and yes that. compete, low they cost especially wells, to on not, on Haynesville Pinnacle the the now But there, that you with are higher or Jay at the save well, them it cost right we be on overall we we So get term can System three a Zipper activity capability cost gathering the, transportation that top, believe the where first the on transportation will cost based look it we we when Frac all drill longer actually of and a the to the out that are, pad lot But system still the – our two system. more our of a to dedicated top wells because

Phillips Johnston

Great. Okay. Roland. Thanks

Roland Burns

you. Thank

Operator

One moment you. Thank please.

comes from Sachs. the Goldman question next Umang Choudhary Our of of line

line open. is Your

Umang Choudhary

questions. and Hi, good taking for thank my you morning

Roland Burns

Yes, sir.

Umang Choudhary

first My any on active on can conversations crude was provide you any question your operators or you're on Haynesville. which you the Haynesville color you based love reductions, basin? with in rig which the delevers expecting in incremental are, Would other

Roland Burns

Ron, rig count what's the right now?

Ron Mills

that's street rigs a inves to down about dropping. communicated upper three five from between six XX. we've count XXs that is to and companies XX, Southwestern. that be the peak would rig us the or The That's those according [ph] to Chesapeake in of And

larger number privates had I already You've go. the to have more the there's some reduced that and of think of rigs

at least think rigs, I between and three closer of rigs you'll So private XX, starting XX seeing when maybe to the point it's the you operators being about dropped area. some, XX end primary think operators in public up the

you private to dropping, cash that some type surprise me activity down directly removing fleet crews, of well, of related count are much it of I companies very about as from I go see that, the completion rigs reducing of know the potentially do of completion don't terms crew, are count out completion crew couple privates this given or that year. companies heard In a amount private the the at point later some a the, operators especially those have re talked frac drill activity, if flow. since would about are haven't or but the

Umang Choudhary

half you strip it's like markets natural and at probably we into guess in the inventory year? That's to heading way proximity as early acknowledging to too would and XXXX gas into really and helpful. kind look probably talk your back when today LNG holds your Thank and but I'm of you your that those outlook given this prices next the activity add to especially and look as assuming to deep you. about grow up I XXXX to on that of

Roland Burns

the really Well, we that, comfortable I be the predict super can future market think that even we're not or shows. gas thinking prices what with futures

this to guess to our think I the priority to is, that or to we productivity that, market. curve activity into rely on and is then that of the think that needed based real demand to growing delineate part over prove develop I which can way don't we, at most and continue on get, source I is important before trying up And trying that's new tight think play. this grasp that period real critical, time over is what So, our all that that can kind they we're think source of and of time and the new we

And so big that's what we see as the priority.

are is the areas that – then areas we to the just we're don't And we what – have that, that that develop Haynesville, any so inventory at toggling traditional our because, that's call the which those particular that's flow just go improve can economics, the like time. generate cash great company said keep inventory. We deep we parts of shape. to a different to in to, but the It's more kind to other

different, different balancing we're in So there market. kind there's two really that two of priorities this

Jay Allison

needs of the the be make and should United Well, to Moscow Japan, and States our fair and biggest our gas beneficiary natural export LNG Europe, by Because gas to of [indiscernible] as wherever we to said provide natural of Why? the it to invasion our we we earlier, share to capability, go. want Ukraine. sure abundant

Umang Choudhary

questions. That's taking helpful. Thank you so much for my

Operator

One you. Thank moment please.

next Our of Paul Citi. from comes question of the Diamond line

is open. line Your

Paul Diamond

Thanks Thank you. Hi. my taking morning. for call. Good

directs. would cost kind expect coming with the Just a new HX more the, know there. wanted tighten utilization of asset on I to touch online. base We bit

year. HX, versus of or saw last so you so running or included curious that guys Just like in how QX XX% kind through of XX% given in in QX

Roland Burns

second Yes, half.

almost as which I fleets, is the, measured us completion the, the conventional think the on as the the get there's the well. tracked much in, the, pretty largest we we've that's, of savings, diesel our a XX% it's consistent tighten part it of against it, cost, given cost

for such not about to it it around. And the supply just to that in it's location gas the so lower year XXXX, that And year abundant score, emissions have Haynesville an savings only next driver an about cost that a help be drilling us provides. in but we because excited we're ideal that, also and this is having real

seeing with a our you'll in first comes in the of, that, second cost. the So kind one, working by it's big see lower second one fourth we've at quarter, but that savings rigs for definitely I horizon happy positives And second been year of very a rates time question. whether completions with there the on in those we're, half, quarter. the we'll cost But there. think so they're the some the half see out lower in set swap drilling versus lot hopefully probably some second then to is sometime there's, well the that mostly you this are some lucky, too, on in were so start later earliest But,

Paul Diamond

Okay. the Understood. Yes clarity the for one on Thanks follow XX% quick we macro. just into LNG. and currently sell in up

term. level Just head be you where around would longer thought my want on of that kind to get ideal the

Roland Burns

Yes, probably closer to XX%.

industrial think want contract new is our on our realizations XX-year depend doing beat be, that a our maybe to we, now capacity highest users, but best market roll of of the, on XX, to and But we our potentially the we also portfolio. XX% it they're we as other price, are, when to that right see on. probably or add think and generators, of competitive working lot toward especially XX way probably over, our more so, plus extent I now to a we're that's lot area, that markets that power and seek other our that to is then some comes will lot would want all commitments gas off. our to that a new those like maximize of we'll And rates, yes, I

Paul Diamond

time. your for Thanks Understood.

Jay Allison

you. Thank

Operator

you. Thank moment One please.

Our of Mariani of Leo from Roth. comes next line question the

Your line is open.

Leo Mariani

just to Haynesville the follow I wanted Thanks. on here. Western briefly up

mean, of You mean can competitive guys terms us of a returns, it's with Eastern, bit? the though early of you is parameters twice maybe what the kind understanding EURs help wells? kind in are these there something or about I roughly seeing just days talked little maybe these the early on even you kind out my of I costs the they're on. kind twice of there, wells having Because

in on of point drill you on handle this early EURs trying time and the per at to sort think first we're what the know, wells. maybe couple are foot times You just

Dan Harrison

if we future wells so because will think savings the, the that Yes. to with said is they better. significant. is our mean, cost important development why the I of a such that's want is wells, will other big the I've to you'll traditional it That's because drill competitive costs because that EUR plan a, single twice of cost in kind frame that know yes, most in I good costly and think, development make yes cost, early be that's but them now of drilling part way what that, significantly order everybody's, so basically pad our I we you be cost the Haynesville, wells a the

getting that's cost. the for future will the and then of play. just of So the, perfecting this But completion other drilling also the be the part

a out position out but So generally, gate, the bad starting not we're in even of

Jay Allison

and that we the edge started of the successful unit. completing sales a from we're doing actually now, turned with cutting it been technology pretty That's when on We and wells we've drilling. to we've

unfolds kind it. on can this as a more be, you give through we then XXXX, XXXX, little So of clarity

Leo Mariani

Yes.

kind just kind out to quarter there, then And production so behind, second as first and second on little you've half. production sort ask cadence second quarter. wanted a of around Obviously and you've CapEx the the we of Okay. bit of move cadence guidance got got quarter flat into

moving those kind we of levels? kind We're in and and get on do trying from a plans your to and both dropping see see do handle CapEx of in like sequential assuming growth XQ kind of XQ don't XQ change we conversely, both XQ So parts? XQ,

Roland Burns

seven rigs we're course the Yes, the clearly, most quarter to first first the well for the Great. we of dropping since going and highest second down the of was quarter, had over nine to quarter CapEx. be

end probably then from you quarter. standpoint. our think third the the seven guidance, by CapEx will be count second of the rig quarter probably I cadence the about a your quarters pretty similar because The that's to production be we'll And have would second and fourth way down

about the some lot both in get guidance. the to, of the completions or if there's quarter quarters two a fourth timing you growth those related right, full think year third, flatter production of every is rigs impact we'll in that You're forward of sequential that, to on And going two to so that the production completions high Western Haynesville at and and pretty kind there, come with where, have rates of profile.

So your correct. were thoughts

Leo Mariani

out and Okay. CapEx second just pretty little though, just to fourth quarter of reduction? clarify kind bit where versus the third because activity similar, you but down think But the quarter of on shakes then quarter, a

Roland Burns

Yes.

Leo Mariani

in And question like actual you guidance point. around XXX see cash what cash guess on today? will helpful. we of see to of that's ballpark terms XXXX at took Any I If said, up, you total be of this Okay. a right. then Yes. just kind de next of based as Do in your roughly what fairly you is a No, just year, you look percentage minimus of, it taxes price cash down, call taxes future's year? the All in obviously at XXXX. taxes percentage significantly next taxes,

Roland Burns

Well, we're still evaluating that.

This to chance prices don't the to, to for next have year. price. gas gas just XXX way back you down go it with we're next that, clearly terms impacted of low XX% the deferral but year closer it down I price, know up. to such back and XX% going back gas there's to the that will go continue the, or goes goes year, I prices to gas But is deferred gas to will in revisit by want think that XX% get if the the down. just the as end pricing, year move conservatively it to to rate XX% then if all cash a if we that, a you up as the,

Leo Mariani

Thank you. Okay.

Jay Allison

Thank you, Leo.

Operator

call could conference Allison any does conclude turn Jay today. over the for back you. for to This to remarks. closing Thank the like I'd

Jay Allison

and valuable a giving time. of Sure. good each We be is going we to hour XX to us of that all We're know stewards. for, time an one you minutes commodity want thank your and

looks that and have future capital here. So we brought that, the

your So time. for you thank

Operator

conclude for you conference. you. Thank this Thank gentlemen, Ladies today's and participating. does all

Have You disconnect. may a now great day.

Comstock Resources (CRK) 3 May 232023 Q1 Earnings call transcript