Comstock Agrees to $1.65 Billion SOCAR Asset Sale
Third-quarter production reached 122.4 Bcfe as natural gas and oil sales including hedging gains totaled $359.3 million.
Comstock Resources (CRK), an independent natural gas producer focused on the Haynesville shale in North Louisiana and East Texas, produced 122.4 billion cubic feet equivalent in the third quarter of 2026, up 9% from the year-earlier quarter and 8% from the second quarter, after second-quarter output of 113.1 Bcfe had risen 16% from the first quarter.
The company said growth in production drove the quarter’s financial results. Natural gas and oil sales, including realized hedging gains of $39.5 million, were $359.3 million. Cash flows from operating activities were $180.2 million, and operating cash flow before changes in working capital was $208.0 million, or $0.71 a share.
Comstock realized $2.61 a Mcfe before hedging and $2.94 a Mcfe after hedging. Production cost averaged $0.80 a Mcfe, versus $0.77 a Mcfe in the second quarter. The unhedged operating margin was 69% and the hedged operating margin 73%.
Net income available to the company was $22.3 million, or $0.08 a diluted share, versus $8.8 million, or $0.03 a diluted share, in the second quarter. That third-quarter figure included a pre-tax $35.1 million unrealized gain on hedging contracts held for price risk management from the change in future natural gas prices since the second quarter. Excluding that item and exploration expense, adjusted net income available to the company was $5.9 million, or $0.02 a diluted share. Adjusted EBITDAX was $266 million.
Comstock drilled 21 (13.9 net) operated horizontal Haynesville/Bossier shale wells in the quarter, with an average lateral length of 10,967 feet, and turned 23 (20.4 net) operated wells to sales. Sixteen Legacy Haynesville wells averaged a 10,812-foot lateral and 25 MMcf a day of initial production, with six of those wells horseshoe completions. Six Western Haynesville wells averaged a 9,829-foot lateral and 33 MMcf a day.
Gas services revenue fell to $64.5 million from $141.3 million in the year-ago quarter. Gas services margin was $5.1 million, versus a $0.4 million loss a year earlier.
On November 4, 2026, Comstock entered a definitive purchase and sale agreement with the State Oil Company of the Republic of Azerbaijan to sell non-operated working interests in 20% of Comstock’s interest in its Legacy Haynesville upstream assets, 15% of Comstock’s interest in its Western Haynesville upstream assets and 15% of its interest in Pinnacle Gas Services LLC for an aggregate cash purchase price of $1.65 billion, subject to customary purchase price adjustments. SOCAR’s interest in the Western Haynesville upstream assets will reduce to 7.5% after five years and after SOCAR has achieved a 15% return on investment in those assets. The effective date is July 1, 2026, and the company said the deal is expected to close by year end, subject to customary conditions, including any required governmental approvals.
The company also said a $450 million Haynesville shale drilling venture with Jerry Jones is expected to generate free cash flow in the fourth quarter to further strengthen the balance sheet.
On the same day as the SOCAR agreement, Comstock amended its bank credit facility to extend maturity to November 15, 2028. Upon closing of the SOCAR transaction and retiring debt with the proceeds, the maturity will extend further to November 15, 2031. After closing, aggregate commitments under the facility will remain $1.5 billion, with borrowings subject to a borrowing base initially set at $1.6 billion.
Long-term debt stood at $3.36 billion at September 30, 2026. Cash and cash equivalents were $18.6 million.
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