Comstock Resources Fourth Quarter 2025 Earnings Call - Western Haynesville buildout and recapitalization to drive leverage down

Conference Operator: day, and thank you for standing by. Welcome to the fourth quarter 2025 Comstock Resources Inc earnings conference call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Jay Allison, Chairman and CEO. Please go ahead.

Jay Allison, Chairman and CEO, Comstock Resources: Thanks for the introduction, and I want to thank everybody for joining the call. It’s always a highlight to report on what happened in the prior year and then kind of give you a visual for what we think tomorrow may look like, and today is that day. So welcome to the Comstock Resources fourth quarter 2025 financial and operating results conference call. You can view a slide presentation during or after this call by going to our website at www.comstockresources.com and downloading the quarterly results presentation. There you’ll find a presentation entitled Fourth Quarter 2025 Results. I am Jay Allison, Chief Executive Officer of Comstock. With me is Roland Burns, our President and Chief Financial Officer, Dan Harrison, our Chief Operating Officer, and Ron Mills, our VP of Finance and Investor Relations.

Please refer to slide two in our presentation to note our discussions today will include forward-looking statements within the meaning of securities laws. While we believe the expectations in such statements to be reasonable, there can be no assurance that such expectations will prove to be correct. If you’ll turn to slide three, we highlight our major 2025 accomplishments. We added three operated rigs to our operated program, with an additional rig coming in early 2026 to drive production growth in 2026 and 2027. The additional production, combined with an improved 2026 gas price outlook, will substantially drive down the balance sheet leverage. In 2025, we drilled 52 or 44.2 net successful operated Haynesville Bossier wells, with an average IP rate of 27 million cubic feet per day.

The 2025 drilling program replaced 229% of our 2025 production, with 1 TCFE of drilling-related proved reserve additions, achieving an overall finding cost of $1.02 per MCFE. We announced we were partnering with NextEra on a data center project in the Western Haynesville. NextEra plans to build new behind the meter power generation to support hyperscaler data center development with an initial capacity of 2 gigawatts, with potential expansion up to 8 gigawatts. In the third and fourth quarters, we completed $445 million of divestitures, which improved our balance sheet. We completed the sale of the legacy Cotton Valley assets in September and the sale of the Shelby Trough assets in December. We recognized a pre-tax gain of $292 million on the divestitures.

The assets sold consisted of 1,084 producing wells, with only 17 billion cubic feet per day of net production. The sales proceeds were used to reduce debt and improve our leverage position. Over the last two years, Comstock has the highest total shareholder return of any public E&P company at 162%, almost twice the second highest company’s total shareholder return. For the last two years, Comstock was number one in total shareholder return, along, among its public natural gas producers. On slide 4, we summarize the highlights of the fourth quarter. Higher natural gas prices in the fourth quarter drove the improved financial results in the quarter compared to the fourth quarter of 2024. Our natural gas and oil sales grew to $365 million.

We generated $222 million of operating cash flow, or $0.75 per share. Adjusted EBITDAX for the quarter was $277 million, and we reported adjusted net income of $46 million, or $0.16 per share. During the fourth quarter, we put 4 new Western Haynesville wells online, increasing the number of wells turned to sales in 2025 in the Western Haynesville to 12 wells. These four wells had an average lateral length of 8,399 feet and an average per well initial production rate of 29 million cubic feet per day. In our legacy Haynesville, we turned 35 wells to sales in 2025, with an average lateral length of 11,738 feet and a per well initial production rate of 25 million cubic feet per day.

In December, we closed on the sale of our Shelby Trough assets in East Texas for total net proceeds of $417 million in net proceeds after selling expenses. We used the proceeds from the asset sale to reduce borrowings under our revolver. Roland will provide some more details on financial results that we reported today. Roland?

Conference Operator: Thanks, Jay.

Roland Burns, President and CFO, Comstock Resources: ... Slide five, we cover the fourth quarter financial results. Our production in the fourth quarter averaged 1.2 Bcfe per day, and our oil and gas sales in the quarter increased 8% to $364 million in the fourth quarter this year, despite the lower production number. EBITDAX for the quarter was $277 million, and we generated $222 million of cash flow in the fourth quarter. We reported a $281 million profit for the quarter, or $0.97 per share. Included in that number were some unusual items, including the pretax gain on the asset sales of $294 million, a $37 million mark-to-market unrealized gain on our hedge positions, and a $29 million impairment on our, non-operated Eagle Ford Shale acreage.

Excluding these items and exploration expense and the related income tax related to these items, we reported adjusted net income of $46 million for the quarter or $0.16 per diluted share, the same as the adjusted net income in last year’s fourth quarter. Slide 6 is the financial results for the full year 2025. For the full year in 2025, our production averaged 1.2 Bcfe per day, which is 14% lower than production in 2024. But the improved natural gas prices we had in 2025 increased our oil and gas sales by 15% to $1.4 billion in compared to 2024. EBITDAX for 2025 totaled $1.1 billion, and we generated $861 million of cash flow last year.

For the year, we reported a $396 million profit or $1.43 per share. That also includes the the unusual items, including a pretax gain of $292 million on the 2025 property sales, a $62 million mark-to-market unrealized gain on the hedges, and that $29 million impairment. Excluding these items and exploration expense and related income taxes, we reported adjusted net income of $160 million for 2025 or $0.54 per diluted share, compared to a net loss in 2024. On slide 7, we break down our natural gas price realizations. The quarterly NYMEX settlement price in the quarter averaged $3.55 in the fourth quarter. The average Henry Hub spot price in the quarter averaged $3.69, approximately 4% above the NYMEX settlement price.

27% of our gas was sold in the spot market in the quarter, so the appropriate NYMEX reference price for our production would have been $3.58. Our realized gas price during the fourth quarter averaged $3.29, reflecting a $0.26 basis differential compared to the NYMEX settlement price, and a $0.29 differential compared to that reference price for the quarter. Also, in the fourth quarter, we were 57% hedged, which decreased our realized price to $3.27. Slide 8, we detail our operating costs per Mcfe and our EBITDAX margin. Our operating cost per Mcfe averaged $0.77 in the fourth quarter, pretty much unchanged from the rate we had in the third quarter. Our EBITDAX margin was 77% in the fourth quarter, up 3% from the third quarter.

In the quarter, our lifting cost improved by $0.01 in the quarter, and our production and ad valorem taxes also decreased by $0.03 in the quarter. That was all set by increases in both our gathering cost and cash G&A costs, which both increased by $0.02 in the quarter. Slide 9, we recap our spending on drilling and other development activity. You know, in 2025, we spent a total of $270 million on development activities just in the fourth quarter and $1.055 billion for the entire year in 2025. Last year, we drilled 36 or 29.6 net horizontal Haynesville Shale wells and another 16 or 14.6 net Bossier Shale wells for a total of 52 wells.

We turned 47 of those wells to sales or 40.3 net wells, and we had an average overall IP rate of 27 million cubic feet per day. Slide 10, we recap our capitalization at the end of the fourth quarter. We ended the quarter with $260 million of borrowings outstanding under our credit facility after using the proceeds from the Shelby Trough sale to pay down the revolver. Our borrowing base is currently at $2 billion under the credit facility and our, with an elected commitment of $1.5 billion. Our last twelve months leverage ratio has improved to 2.6 times and should continue to improve throughout 2026, given the growth we expect in EBITDAX. At the end of the fourth quarter, we had almost $1.3 billion of liquidity.

Slide eleven, we recap our approved reserves at the end of 2025, which came in at 7.2 TcFE, based on reserves determined using year-end NYMEX market prices, adjusted for our differentials. Approved reserves determined using year-end NYMEX prices were slightly higher than approved reserves determined under the SEC rules, and those reserves were 7 TcFE at year-end. We were able to grow our reserves 8% in 2025, excluding the impact of the Cotton Valley and Shelby Trough asset sales, which totaled 419 BcFE. 2025 drilling additions of 1.1 Tcf replaced 229% of our 2025 production of 450 BcFE. We spent $1,055 million on our drilling program in 2025, giving us the total overall finding cost of $1.02 in 2025.

In addition to the proved reserves that we reported, we also have 1.9 TCFE of proved undeveloped reserves, which are not included in our proved reserves, only because they’re not expected to be drilled within the five-year rule as prescribed by SEC rules. We also have another 2.5 TCFE of 2P, or probable reserves, and an additional 7.7 TCFE of 3P, or possible reserves, for a total of 19.3 TCFE of reserves on a P3 basis. This does not include a substantial amount of the reserve potential for much of our Western Haynesville acreage, where we have only included 5.4 TCFE related to the Western Haynesville in our P3 reserve estimates. I’ll now turn it over to Dan to discuss the drilling results we’ve had.

Dan Harrison, Chief Operating Officer, Comstock Resources: Okay, yeah. Thanks, Roland. On slide twelve, this is an overview of just our latest acreage footprint, you know, for both the Haynesville and Bossier Shales in East Texas and North Louisiana. We have 1,069,991 gross, and 802,769 net acres that are prospective for commercial development of the Haynesville and Bossier Shales. If you look on the left, is our Western Haynesville acreage footprint, which we’ve now grown to over 535,000 net acres. On the right is our 267,289 net acres in our Legacy Haynesville area. We have 30 wells currently producing on our Western Haynesville acreage, which is relatively undeveloped compared to our legacy Haynesville.

With the higher pay thickness and the pressures we encounter in the Western Haynesville, we’ll expect the Western Haynesville will yield significantly more resource potential per section than the legacy Haynesville. Slide 13 is our updated drilling inventory in our legacy Haynesville area at the end of 2025. Our total operated inventory in the legacy Haynesville now consists of 1,009 gross locations and 785 net locations, and this equates to an average working interest of 78%. On the non-operated inventory in the legacy Haynesville, we have 839 gross locations and 101 net locations, which comes out to a 12% average working interest.

The drilling inventory is split into four buckets, comprised of short laterals, which are less than 5,000, the medium laterals between 5,000 and 8,500 feet, the long laterals between 8,500 and 10,000 feet, and our extra-long laterals for everything over 10,000 feet. In our gross operated inventory in the legacy Haynesville today, we have 34 short laterals, 145 medium laterals, 397 long laterals, and 433 of the extra-long laterals. The gross operated inventory is evenly split, with 50% in the Haynesville and 50% in the Bossier. So this sets up over 80% of our gross operated inventory in the legacy Haynesville with laterals greater than 8,500 feet.

Our legacy Haynesville inventory also includes 115 gross horseshoe locations, with close to a 50/50 split between the Haynesville and the Bossier. The average length in our inventory has now climbed up to 10,077 feet, which is up 116 feet from the end of the third quarter. The inventory provides us with decades of future drilling locations based on our current activity levels. Over on Slide 14, we show our estimated drilling inventory in the Western Haynesville. Our Western Haynesville inventory consists of 3,343 gross locations and 2,561 net locations, equating to a working interest of approximately 77%.

The number of net locations is estimated, since most of our Western Haynesville acreage has not yet been unitized. Our Western Haynesville inventory is more weighted to the Bossier formation. We got nearly two-thirds of our inventory in the Bossier, and one-third of the inventory is in the Haynesville. With the same as our legacy Haynesville inventory, our Western Haynesville inventory is also divided into the four separate bucket lengths, with our short laterals less than 5,000 feet, our medium laterals between 5,000 and 8,500 feet, the long laterals between 8,500 and 10,000, and our extra long laterals over 10,000. So in our Western Haynesville gross operated inventory, we don’t have any current short laterals. We have 1,326 medium laterals.

We have 653 of the long laterals and 1,364 extra-long laterals. Approximately 60% of this gross operated inventory has laterals over 8,500 feet. Now, on Slide 15 is a chart that outlines our average lateral length drilled based on the wells that have been drilled to total depth. The average lateral lengths are shown separately for both our Legacy Haynesville and our Western Haynesville areas. In the fourth quarter, we drilled 12 wells to total depth in the Legacy Haynesville area, and these wells had an average lateral length of 11,381 feet. The individual lengths ranged from 9,304 feet up to 15,700 feet. Our record long lateral in the Legacy Haynesville area still stands at 17,409 feet.

In the fourth quarter, we also drilled four wells to total depth in the Western Haynesville, and these wells had an average lateral length of 9,944 feet. The individual lengths on these wells range from 9,355 feet up to 11,249 feet. Our longest lateral drilled to date in the Western Haynesville is 12,763 feet. To date, in the Western Haynesville, we have drilled 39 wells to total depth. This includes 16 wells with laterals over 10,000 feet and six wells with laterals over 12,000 feet. Slide 16 outlines the 35 wells that we’ve turned to sales on our Legacy Haynesville acreage in 2025. This includes seven wells since our last earnings call.

The average lateral length was 11,738 feet, and the individual laterals ranged from a low of 4,968 feet, up to a high of 17,409 feet. The individual IP rates on these wells range from 16 million cubic feet per day up to 37 million cubic feet per day, and our average IP was 25 million cubic feet per day. Five of our nine rigs currently drilling are drilling on our Legacy Haynesville acreage. Slide 17 outlines the 12 wells that we turned to sales on our Western Haynesville acreage in 2025. Since we last reported earnings, we’ve had four additional wells that have been turned to sales.

These four wells had an average lateral length of 8,399 feet and an average initial production rate of 29 million cubic feet per day. Four of our 9 rigs currently drilling are drilling on the Western Haynesville acreage. On slide 18, this highlights the average drilling days and average footage drilled per day in the Legacy Haynesville area. This is for our benchmark long lateral wells, which are greater than 8,500 feet long. In the fourth quarter, we drilled 12 of these benchmark long lateral wells to total depth in the Legacy Haynesville area, and we averaged 27 days to total depth. In the fourth quarter, we averaged 893 feet drilled per day on our Legacy Haynesville acreage, which this represents an 11% decrease versus the third quarter of 2025.

The primary reason for the lower drilling rate in the fourth quarter is that we had 5 of our 12 wells we drilled were located inside the Vistano Gas Storage Field, and all 5 of these wells, you know, it necessitates running an additional intermediate casing string on those wells. We also drilled 3 horseshoe wells in the fourth quarter, and that naturally lowers our average drilling rate compared to our normal straight laterals. Slide 19 highlights our drilling progress in the Western Haynesville. During the fourth quarter, we drilled 4 wells to total depth. This gives us a total of 39 wells drilled to total depth through the end of the year. We averaged 54 days to TD for the 4 wells drilled during the quarter. This is an increase of 2 days compared to the third quarter.

This is also reflected in the drilling speed of 499 feet per day during the fourth quarter, which is 3% lower than the third quarter. Aside from any drilling issues we have, the drilling performance in the Western Haynesville quarter to quarter is mainly affected by our vertical depths, temperatures, and our lateral lengths. So where the wells are being drilled has a big impact on our drilling performance quarter to quarter. This batch of wells drilled in the fourth quarter were nearly a 1,000 foot deeper vertically and hotter than the wells drilled in the third quarter, while the average lateral lengths were similar. Our fastest well drilled to date in the Western Haynesville still stands at 37 days, and that well was drilled with a 12,045 foot lateral.

On slide 20 is a summary of our D&C costs through the fourth quarter for our benchmark long lateral wells located on our Legacy Haynesville acreage. The costs reflect all of our Legacy area wells, again, that have the laterals greater than 8,500 feet long. Our drilling costs are based on when the wells reach TD. The completion costs are based on when the wells are turned to sales. During the fourth quarter, we drilled 12 of these benchmark long lateral wells to total depth. The fourth quarter drilling cost averaged $681 a foot. This is a 22% increase compared to the third quarter.

The increase in the fourth quarter is the result of a shorter average lateral length and for the same reasons mentioned on the efficiency slide, where we had 5 wells within the Vistano Gas Storage Field with an additional intermediate casing string. We also drilled the 3 Horseshoe wells in the fourth quarter. During the fourth quarter, we also turned 5 of these benchmark long lateral wells to sales in the Legacy Haynesville. The fourth quarter completion cost came in at $721 a foot. This is a 7.5% increase compared to the third quarter. The higher completion costs in the fourth quarter is due to a combination of slightly lower frack efficiency, coupled with we had a higher average drill out cost in the fourth quarter.

Overall, in 2025, we achieved a total drill and complete cost of $1,347 per foot, which is one of the lowest in the basin. This was 11% lower than our average cost of $1,510 per foot in 2024. Last month, we added an additional Frack Fleet, and we’re now running three full-time Frack Fleets in the Legacy Haynesville. This additional Frack Fleet will be working full-time in our Legacy Haynesville area, along with the increase in the rig activity for that area. On the subject of performance initiatives, in 2025, we began running trials with the Rotary Steerable drilling assembly in our Legacy Haynesville area. We’ve made great progress to date.

As this technology becomes further refined for the high-temperature environment in the Haynesville Shale, we fully expect this technology to play a much larger role in our future drilling program and make a significant impact on further drilling cost reductions. Slide 21 is a summary of our D&C costs through the fourth quarter for all wells drilled in the Western Haynesville. During the fourth quarter, we drilled 4 wells to total depth, with an average lateral length of 9,944 feet. The fourth quarter drilling cost averaged $1,489 a foot. This represents a 7.5% increase compared to the third quarter. Our drilling cost was driven slightly higher in the fourth quarter as a result of the wells being slightly deeper and hotter than the wells drilled in the third quarter.

During the fourth quarter, we also turned 4 wells to sales on our Western Haynesville acreage. It had an average lateral length of 8,399 feet. The fourth quarter completion cost averaged $1,542 a foot. This is a 5% decrease compared to the third quarter. The lower completion cost was the result of us being able to obtain lower frack pricing, along with we had lower horsepower usage in the fourth quarter. In addition to the earlier cost initiatives we have enacted in the Western Haynesville, including the use of the insulated drill pipe, we are undertaking additional measures to further reduce our cost.

We recently arranged to have one of our existing Western Haynesville rigs upgraded to a 10,000 PSI pressure rating, and that will be available to us by late summer. With this upgrade, we’ll be able to increase our drilling speeds in both the vertical and horizontal hole sections, significantly reducing our cost. Also, following up on the successful trial runs of the Rotary Steerable drilling system in our Legacy Haynesville area, we will be rolling out this system for trials in our Western Haynesville area in the near future. We believe the application of this technology to the hot hole environment of the Western Haynesville, along with Insulated Drill Pipe, will lead to additional time savings and cost reductions.

On the completion side, we’re also investing to upgrade one of our existing frack fleets to a 20,000 PSI rating, along with the frack stacks, which will lead to improved frack stimulations as well as making it easier for us to execute larger and more aggressive stimulation treatments. All of these initiatives together are going to lead to a substantially lower cost structure for future wells, while enhancing the well performance. And by substantially lower, we believe we’ll be able to cut drill times by two weeks and reduce our drilling costs by another $300 a foot, on top of our earlier cost reductions we’ve made to date. With that said, I will now turn the call back over to Jay.

Jay Allison, Chairman and CEO, Comstock Resources: Thank you, Dan, and Roland, thank you. If you would, please refer to slide 22, where we will summarize our outlook for 2026. In 2026, we will continue to be focused on building out our great asset in the Western Haynesville that will position Comstock to benefit from the longer-term growth in natural gas demand, driven by LNG exports and build-out of power for data centers. We have four operated rigs drilling in the Western Haynesville to continue to delineate the new play. We expect to drill 19 wells and turn 24 wells to sales in 2026. We plan to have five operated rigs drilling in Legacy Haynesville to support production growth in 2026 and 2027. We expect to drill 47 wells and turn 48 wells to sales in 2026.

One of those rigs may move to the Western Haynesville later this year. We expect to commercialize our Western Haynesville data center project in 2026, where we have partnered with NextEra, which is the nation’s largest developer of power. We’re also working to recapitalize our Western Haynesville midstream company, which is Pinnacle Gas Services. In 2026, we plan to put in a new bank credit facility and redeem the preferred units held by our partner to be funded by selling equity in Pinnacle. We continue to have the industry’s lowest producing cost structure and are striving to create additional drilling efficiencies to drive down our drilling and completion costs in 2026 in both the Western and Legacy Haynesville areas. And lastly, we continue to have strong financial liquidity of $1.3 billion, which was recently built up by our successful 2025 property sales.

In 2020, we started leasing in the Western Haynesville. Today, after several acquisitions and direct leasing with over 100 landmen, we now own 20,000 leases covering 535,000 net acres in our Western Haynesville. The Legacy Haynesville play was discovered in 2008. It covers approximately 4 million acres and has produced about 48.5 TCF from 7,600 wells. We estimate the remaining recoverable reserves in the Legacy Haynesville to be 75 TCF. Net to our working interest, we have about 14 TCF of reserves in our Legacy Haynesville properties. The Western Haynesville play, that we drilled our first well and turned to sales in 2022, covers approximately 800,000 acres and has produced 300 BCF from only 36 wells. We estimated recoverable reserves in the Western Haynesville could reach 99 TCF.

Comstock would have almost 50 TCF net to the working interest we own in the play. As Dan Harrison said earlier, we have drilled 39 wells to date in the Western Haynesville and have turned 30 of those to sales. In 2025, we turned 1 Western Haynesville well to sales every month, along with 3 Legacy Haynesville wells every month. This year, our activity level will increase as we expect to turn 2 Western Haynesville wells per month and turn 4 Legacy Haynesville wells per month to sales in 2026. Our Pinnacle Gas Services midstream company we own is also a success, which services our new play. We’re excited about the progress we’re making, reducing well costs in the Western Haynesville, which has been achieved by using thermal or insulated drill pipe, new purpose-built rigs, and new hot hold MWD tools.

Also, drilling more wells on two well pads and optimizing casing designs have contributed to improving our well costs. New initiatives to improving costs we are implementing in 2026, including applying rotary steerable drilling assembly technology, that we’re having great results in with our Legacy Haynesville Horseshoe wells that we are currently drilling. We have learned from the development of Legacy Haynesville play that started in 2008, how this new Western Haynesville play should be developed to maximize its future value. We believe the Western Haynesville Basin is needed to supply the natural gas for growing industrial demand, LNG demand, as well as to generate power for data centers. Thank you for your time today. The next slides provide guidance for 2026, which Ron can discuss with you directly if you have questions.

For the rest of the call, we’ll take questions from analysts who follow the company. I’ll turn it back over.

Conference Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. In the interest of time, we ask that you please limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster. Our first question comes from Derrick Whitfield with Texas Capital. Your line is open.

Derrick Whitfield, Analyst, Texas Capital: Good morning, guys, and thanks for your time.

Jay Allison, Chairman and CEO, Comstock Resources: Thank you.

Derrick Whitfield, Analyst, Texas Capital: Maybe to start with guidance, ’cause that seems to be the focal point for investors. Is it fair to say that the budget was put together in a slightly more constructive gas environment, and when it comes time to spend the capital, if the price isn’t there, the capital won’t be there either? And maybe just to build onto that guidance question, if we assume the capital program as outlined, I suspect the exit rate will be higher than what we anticipate today, given that Legacy Haynesville has faster cycle times, and there’s likely some friction from 1Q that will bleed into Q2 as well. So maybe if you could offer any color on cadence of production, that would be helpful as well.

Roland Burns, President and CFO, Comstock Resources: Yeah, sure, Derek. You know, it’s been of course, gas prices have been all over the board, you know, since Thanksgiving, and then, you know, had a huge rally there. Then you had a, you know, fairly warm, you know, second half of December, first half of January, then you had a cold second half of January. And so it’s been, you know, we’ve actually had two great index prices for January and February gas, you know, that are extraordinary. But, but obviously, gas prices have been everywhere, and that’s not unexpected. We expected this to be a very volatile year for gas prices, given the given the new demand that’s coming on and, you know, the...

the difficulty in trying to match, you know, supply to demand. And so weather has played a major role in, in whether, you know, gas is considered, you know, undersupplied or oversupplied, and probably will continue to play that role, you know, throughout the year. And obviously, we have, you know, we did want to get enough frack equipment and drilling rigs, you know, that we could execute a good program for 2026 in place and then running well. You know, we always run the equipment in the Legacy Haynesville before moving it to the Western Haynesville. So we put that in place, you know, for this year.

But obviously, if gas prices, you know, disappoint, you know, we, we have as many as four rigs that we could, with short notice, you know, take out of action, and the same thing with the frack crews. So always have the ability to flex our drilling budget based on how things come out. But I think overall, you know, given we did sell a lot of properties, you know, to finish out last year, you know, sold some production, you know, we do want to invest back in the properties, build the production levels up, and we think that’s the best way to achieve the leverage goals we have, will be really generate some higher EBITDA. A lot of that, yeah, will be more directed toward the second half of the year.

Obviously, fairly noisy, you know, first month or so of this year, given the disruptions in January. So, and then some of that completion activity got pushed a little bit, you know, as we took down our frack crews during most of the winter storm. But generally, you know, I think we have a very exciting year planned for 2026, we think.

Jay Allison, Chairman and CEO, Comstock Resources: Well, Derek, it’s very flexible. You know, if we want to get rid of one, two, or three of our our drilling rigs, we could, on notice, give them probably 45-day notice. It’s very, very flexible. We’ve got quality drilling contractors. We’ve got a quality group of fracking companies. And as Dan has said, I think we’re going to get better and better and better on our drilling completion times in the Western Haynesville. In 2025, you know, as the year went along, we, we ended up with the four rigs in the Western Haynesville. So if you look at 2026, I think it’ll be a lot more predictable what the outcome can be, and particularly, a lot of these wells will be drilled on two well pads, and I think these costs are going to go down.

And what we do focus on is, you need to have 3%, 4%, 5%, you know, growth every year, and we were -14% last year. So we come in a little bit of negative in first and second quarter of 2026, but then we make that up in the third and fourth quarter. And if you do look at this natural gas demand, we, you know, we believe, on a yearly basis, demand’s going to grow about 3 Bcf every year between now through 2030. And that’s just based upon LNG facilities and data centers that are being built. That just has nothing to do with FIDs.

So we want to lean into that, and the way to lean into that is if we have sold an asset and we didn’t give up a lot of production, or we gave up a little bit, and we paid down our borrowing base, our credit facility, we do have a little bit more flexibility to lean into 2026 earlier. And that is what we’re doing. I look at these all these E&P companies, they really are searching for tomorrow’s drilling inventory. And, you know, you’re really asking the question is, what do your-- what’s your tomorrow look like? Well, most of these are looking for tomorrow’s drilling inventory. You know, they’re searching across the globe. Look at the Wall Street Journal yesterday. They’re across the globe.

So if you really are a pure natural gas company in the U.S., and you want, you want to be near where the majority of the demand for LNG is located, as well as where these investments for AI data centers are being made. And, Derek, that’s exactly where we are. So we’re just trying to manage this potential 50 TCFE of upside in a Western Haynesville, you know, in the decades to come, to bring that to fruition, to show everybody what we are trying to do. Our tomorrow, we’re looking at today, and we’re just trying to de-risk it and deliver it.

Roland Burns, President and CFO, Comstock Resources: Great, Jay, and I’ll, I’ll maybe lean in just there on, on kind of the tomorrow, particularly with AI demand along the Gulf Coast. With respect to NextEra, do you have a view on how the JV will scale from the 2 GW you hope to commercialize in 2026 to the 8 GW it could be? And, and how should we think about the price and/or cost advantage of selling to NextEra versus traditional marketing?

Jay Allison, Chairman and CEO, Comstock Resources: Well, yeah, my... I think my comment without, you know, without getting into gray area is, if you listen to what most of the hyperscalers would tell you, I think they would like to be in Texas if they could. I think regulatory-wise, it’s good to be in Texas. Now, you always, you have to be in an area where there’s people to hire. You know, if you build 8 GW, you might be building a city of 20,000 people, so you got to have location, but you have to have water.

If you want water, if you look where we are, you know, we’re 100 miles from Dallas, 100 miles from Houston, so you and you got to have a you, you have to have an airport where you can get in and out, in and out. So what all we’ve done is we said we have untapped, what we call the basin. You know, we I think we control a new basin, not some acreage in the legacy area, but we control a basin. It’s how we look at it. That’s how we’re developing it and we’re developing it based upon how the legacy was developed, and some of that value was not captured because of what was happening during 2008, 2009, 2010, 2011.

So as we look at that, and we look at NextEra, and NextEra, we’ve been partners with for 10 years, they come in and say, "We do think you have a really great place, and we want to collaborate with you." And I think we were taking those next steps, hand-in-hand with them, or we wouldn’t be discussing it. But you start out with 2 GW, and then, they said at their analyst meeting that they would like to ratchet up to 8 GW if that’s where the demand is. I think the demand will be there, and I think we can provide them everything they need, particularly because we do own our midstream. Most of these companies don’t own their midstream. That’s why they have to deal with midstream companies that have, you know, upstream companies’ gas.

So we’re trying to capture both of it.

Conference Operator: Thank you. Our next question comes from Kaway Akamai with Bank of America. Your line is open.

Kaway Akamai, Analyst, Bank of America: Hey, good morning, guys. Jay, Roland, Dan, thank you so much for taking my question. Maybe this first question is for Roland. This question is on Pinnacle Gas Services. In your remarks, you mentioned addressing in the preferred equity at that entity. Wondering how we should think about the cost of doing that, and if you plan to backfill the funding with bank debt, how should we think about the size of that facility and whether it’s sufficient to execute on the scope of your midstream ambitions?

Roland Burns, President and CFO, Comstock Resources: Yeah, that’s a good question. Yeah, we have, yeah, we’ve kind of put in place a plan to kind of recapitalize Pinnacle now that it’s ready to make the next step, as it’s got, you know, a really great future ahead of it, starting to generate, you know, much more significant EBITDAX, which probably people aren’t really expecting because, you know, just hasn’t had it in the past. But it’s ready to move on from a, you know, the development capital that our partners put in, and they’ve given us an opportunity to redeem them. And so that’s the, that’s the plan we put in place, including a new credit facility.

We also have an initiative here that we’re going to sell just common equity in the midstream company, and that’s how we plan to eliminate the preferred equity that has a dividend that’s pretty expensive. And so now that cash flow that before was mainly going out of the company, you know, to our partner, you know, will be able to be available to fund its CapEx and also have its own low-cost credit facility now that it is, you know, it has the credit metrics to deserve that. So we expect a lot of that. Hopefully, our goal is to have a lot of that in place, you know, by May of this year.

Kaway Akamai, Analyst, Bank of America: Rowland-

Jay Allison, Chairman and CEO, Comstock Resources: I’ll tell you, this is a positive move for our midstream. In other words, it was birthed. You know, we had 145 miles of high-pressure line. We had the Bethel plant, and then as it progressed, we added Marquez. And then now it’s progressed where we have a giant foothold in the Western Haynesville, and we want the Pinnacle system to mature as we add rigs and production. And remember, some of this gas will go to serve the data center demand, much less the LNG that we service right now.

Kaway Akamai, Analyst, Bank of America: Thank you for that, guys. Just to follow that up, have you already fielded interest on the potential equity sell down? And then can you kind of talk about the timing rationale for the Marquez expansion? Is that being motivated by the NextEra Data Center project timing, in which case utilization of that plant doesn’t increase until the data center project is online?

Roland Burns, President and CFO, Comstock Resources: Yeah, with the Marquez plant, which is being. Yeah, we think it, it’s, you know, next train will be operational sometime this summer. Again, you, you know, as a, you know, as a, a midstream provider, you got to have these assets up, available before the production’s there. Otherwise, you know, it’s holding up things. So also, with the other, potential operators in the area, you know, we thought it was a great, a great opportunity for us to have ample treating, so then we can really also pick up third-party business for Pinnacle, as, as now we have several operators in the area and want to be positioned, you know, to, you know, to continue to, to capture that market.

So, a lot of that, that capital for midstream company all has to come way ahead of when you actually get your revenue, and then you have a long period of, you know, collecting fees after that. And so by this summer, about the time we kind of probably finish the recapitalization, kind of a lot of our heavy CapEx will be behind us and, yeah, and, I think you’ll see the, the entity well positioned to, you know, fund itself and still keep a low leverage profile, you know, with its own credit facility.

Jay Allison, Chairman and CEO, Comstock Resources: I think the audience that will look at the Pinnacle system as an equity investor. I think what they’ll do is, you know, they’ll dig a little deeper into what we are showing in the Western Haynesville, and I think the more they dig, the more they like, is our opinion. So we’ll find out.

Conference Operator: Thank you. Our next question comes from Carlos Escalante with Wolfe Research. Your line is open.

Carlos Escalante, Analyst, Wolfe Research: Hey, good morning, guys. Good morning. Thank you for having me on today. This one is perhaps for Dan. Dan, might be a little bit unfair because you had a tremendous program for the Western Haynesville throughout the year. But if I may cherry-pick one of your latest wells, the Brown Trueheart, BB, that well looks like it at the IP rate basis slightly underperformed the broader group. And now I think it’s normal for you to assume that you’ll have a laggard on any given program for the year. But it is in close proximity to another well that had underperformed in the past, the Miles well.

So, just wondering if you can perhaps provide your perspective on anything that you might be seeing on the rock quality or perhaps any kind of water handling issues, something that, you know, maybe qualifies this specific area where these two wells are, which is, I suppose, closer to the heart of your position on the basin.

Dan Harrison, Chief Operating Officer, Comstock Resources: Yeah. So the Brown True Heart well was that’s if you look on the acreage map, it is the furthest one that we’ve as we’ve kind of fanned out and drilled more to the northeast, it’s kind of on that, not the far northeast end, where the Allonge one, but, you know, the farthest northeast of that trend of wells we’ve drilled. It was a two-well pad. We drilled the well up dip and down dip. This well was drilled up dip, and actually, we drilled four wells kind of right there in that same spot, two two-well pads. And just because of the geology, you know, if you’re drilling south, you’re going down dip, and if you’re drilling north, you’re going up dip.

So this well, I think it’s, it basically is just because the well was making a lot of water during flowback. And, when we see wells that make a lot of water during flowback, it’s more difficult just to get a good IP rate, even though the wells are still, you know, really good. And that’s what happened on this well. The down dip well, just right there off the same pad, you know, we IP’d it at, 30 million a day, and this one was 22. And the only difference between the two wells was this one was making more water during the flowback period.

Carlos Escalante, Analyst, Wolfe Research: Thank you. That’s, that’s very helpful. And then my follow-up, this one’s for you, Jay and, and Roland. The M&A market in the Haynesville last year was, was pretty hot, and you saw deals that implied pretty high dollars per location across the board, and that was with lower quality acreage. I think that I can say that objectively speaking. So I wonder what your views are on, on, on the recent trend coming into the year on M&A activity. And when you see the second-largest operator taken out, do you and the team feel compelled to keep business as usual, or does it prompt you to feel compelled to participate on it?

Jay Allison, Chairman and CEO, Comstock Resources: You know, I think, Carlos, I think we’re—this is me. And again, this goes back to five and a half years. This goes back to probably July of 2020, when we first looked at the Western Haynesville. I believe we’re sitting on some of the most valuable gas in the world. And the reason I believe that is where the LNG facilities are being built and have been built and are being built, and that, you know, the U.S. is the largest exporter of our gas in the world. It’s only going to get bigger and bigger and bigger. As you know, I mean, the Cheniere, et cetera, et cetera, they’re all adding, the Venture Global are adding, the data centers are adding.

So I think to answer your question, our business plan is to show what our Western Haynesville might be. And the way we do that is we talk about, you know, Rotary Steerable innovations. We talk about hot hole tools. We talk about the different rigs to drill the wells. We talk about efficiency. The holy grail for an upstream company, which is M&As or upstream, it’s your quality drilling locations, and I think we have that, not only in our core, but our core, you wouldn’t buy that, but you would buy that, the Western Haynesville area, because I don’t know of any company our size or even remotely our size, that has a, you know, 2,561 locations that are almost all of that’s undedicated.

So our goal, and, you know, Jerry Jones is the master plan behind this, that’s let us think out of the box and act out of the box. It is to make sure our balance sheet is strong, make sure our liquidity is strong, make sure that we report to you every 90 days, all the good and the bad. And if we needed to add a rig, which I think that’s the only negative truly in the call, is we added a rig that’s $150 million-$70 million, as we use per rig per year. But that is to what? It, it’s to continue to shore up our legacy, and then add to the Western Haynesville performance.

You know, we’re not looking for inventory. They are looking for inventory. We’re looking to develop what we own now, and we’ve got a great amount of gas. So that and always, you know, you always want to be the beauty queen. It’s like the Olympics, you know, we don’t want a silver or a bronze medal. That’d be great to be up there. That’d be great. But if you’re gonna go out there, you’re gonna go for the gold. You know, Lindsey Vonn was five inches away from maybe having a gold or where she was, but she was dead aimed to get the gold because she won it a dozen times. That’s exactly what we hope you know that we’ve been doing for decade after decade at Comstock. We’ve never deviated from who we are.

We’ve kept our same name, we’ve kept true, and the Jerry Jones of the world came in and said, "I’m behind you. I want to go with you. Let’s develop this." And you know what? We’ll see where the value comes. We’ll see where it comes from.

Carlos Escalante, Analyst, Wolfe Research: Thank you. Our next question comes from Charles Meade with Johnson Rice. Your line is open.

Charles Meade, Analyst, Johnson Rice: ... Good morning, Jay, Roland, and Dan, and to the rest of the Comstock team there. Dan, in response to the earlier question about the Brown Two Heart BB, I wanted to ask one more question based on your response there. Can you tell whether the water you’re producing there is that completion water, or is that formation water? And it could it be related to the azimuth of that well, and whether you’re toe up versus toe down? Is there any, you know, what’s your thought process there?

Dan Harrison, Chief Operating Officer, Comstock Resources: Well, that’s a really good question. You know, I don’t think anytime these-- you know, we’ve had several wells in the core, you know, that will make high water in the very beginning. And when we do make high water in the beginning, it’s just hard to get a good IP rate until that water comes off. But, I don’t know of any really shale well that I can remember that we’ve made formation water. There is no formation water. It’s all load water coming back, you know, from what you’ve fracked.

There have not on the Brown True Heart, but, you know, in other areas in the past, you know, there’s been discussions where when we’ve had high water about did the frack orientation change along the wellbore, instead of, instead of being perpendicular to the, you know, to the lateral from the toe to the heel, you know, due to some regional local stresses, you know, maybe those fracks turned more closer to being parallel with the wellbore than being perpendicular. And that will definitely lead to a well that makes more water. Now, that’s possible on the Brown True Heart. We don’t think that’s what’s happening on the Brown True Heart. I think this is probably the second well. We’ve only had a few wells that have drilled up dip.

This well was drilled up dip, and we, you know, it could be that, or it could be a geometry thing. Just, you know, how much they make on flowback when you drill uphill versus drilling downhill. Like I said, this was a two-well pad. We had the downhill, the down dip well IP’d at, you know, over 30 million a day, and this one, you know, we IP’d it at 22 million a day, while it was making a lot higher water rate. We could have got-

Jay Allison, Chairman and CEO, Comstock Resources: Got-

Dan Harrison, Chief Operating Officer, Comstock Resources: We could have got a higher IP rate than that, but we’d have been pulling a lot more water, too, and obviously, that’s not good for the well.

Jay Allison, Chairman and CEO, Comstock Resources: Well, and you fight gravity. You drill up dip, and you’re 1,000 foot shorter than the Brown True Heart W number one. You’re 1,000 foot shorter, you’re up dip, and you fight gravity. Water was gonna flow down. So we IP’d the Brown True Heart at 22, and the other one at 32.

Dan Harrison, Chief Operating Officer, Comstock Resources: You know, all these wells where we have an instance where the water’s high up front, it’ll. What happens is, it comes down over time, but it’s after you’ve IP’d the well and, you know, you’re off a flowback. The water eventually dries up and, you know, it comes down, and you still end up, you know, with a similar EUR that you got on the other wells that are down dip.

Charles Meade, Analyst, Johnson Rice: Right. That’s all really interesting color, and thank you for that. Jay, I want to go back and ask a bigger picture question about the 1.1 Tcf that you added with your drilling program this year. That’s a big number. I guess we’ll get some more detail when we see your K, but I wonder if you could just maybe give us a little preview and tell us, you know, how much of that is, you know, PDP adds, how much of it was PUDs, and, you know, I think three-quarters of your wells in 2025 were legacy, a quarter were Western Haynesville. But what’s the ratio of those reserve adds, whether legacy versus Western Haynesville?

Roland Burns, President and CFO, Comstock Resources: Yeah, I don’t know if we have all those exact stats for you, Ron. Probably have to work on that for you. But basically, you know, there was definitely some a good growth in the PDP reserves. But you also had, you know, kind of a situational change here. You know, you’re looking at-- you’re coming off of, you know, we’ve added additional drilling rigs. So basically, in the next 5 years, we’ve got, you know, more ability to have proved undeveloped reserves in our reserve report. Also, we sold, you know, some inventory, which got to be replaced by new projects.

There’s still a lot of reserves that could easily be proved undeveloped reserves that we could put on the books, except for we just cannot develop those in a five-year period, which is that arbitrary SEC rule. So a lot of it’s just extensions, you know, of course, obviously, with. You know, we’re able to book in the Western Haynesville as we had some new wells, so we can have offsets to those. So it’s a combination of all those things, I think, that got back to a normal growing kind of drilling program going forward versus a contracting program that you had, you know, last year, the last couple of years, where we were pulling in activity because of low gas prices.

Jay Allison, Chairman and CEO, Comstock Resources: Remember, in 2024, our finding costs were $1. In 2025, they were $1.02. Went up $0.02, but I think there were probably better adds this year than in 2024.

Roland Burns, President and CFO, Comstock Resources: Those numbers that we provided were all on the using the NYMEX reserves, because they were fairly comparable in price between the end of last year, the end of this year. That, that isn’t, that isn’t reserves that got put back on the books because of, you know, improvement in gas prices. That you would see in our SEC reserves, which had tremendous amount of additions, because a lot of reserves left, you know, left the SEC case, came back. Those are true. Yeah, that number, the 1.1 Tcf, is true additions that are, that are related to drilling activity, not to, you know, prices moving around.

Conference Operator: Thank you. Our next question comes from Phu Pham with Roth Capital Partners. Your line is open.

Leo Mariani, Analyst, Roth Capital Partners: Yeah, hi. Yes, you got Leo Mariani here from Roth. Wanted to just touch base a little bit more on the Pinnacle deal here. So wanted to just kind of get a sense from you folks. It looks like you’re trying to replace, you know, Quantum, you know, as a capital, you know, partner here. Can you basically just give us a little bit more color on where you are in the process? Has that just kind of recently started? I heard you earlier talk about trying to get something accomplished, you know, this summer.

Does that mean that in the near term, Quantum’s not going to be completing, or sort of contributing any capital for the next several months, and you guys need to kind of find that new partner before seeing some of that capital get kind of offset? Just a little bit more color on that would be great.

Roland Burns, President and CFO, Comstock Resources: Yeah, that would just... We just have an opportunity to replace Quantum, and we’re going to do that, yeah, with the-- And we just started this process, so we can’t give you a lot of details yet because it just started. And, yeah, but, but it’s a, it’s an opportunity to replace the preferred kind of, capital structure that, that Pinnacle has now with a common capital structure, so much more equity-like, and then allow the cash flow to be used, you know, at Pinnacle, you know, and not have a, you know, have the large kind of preferred distribution going out. So business as usual until all that happens. I think the credit facility, though, we will be putting in soon.

You know, that was the natural part of the business plan of Pinnacle, was to have that, and it was provided for originally, but we were waiting till it grew up and had the credit stats, you know, to deserve that, which it has now, and that. We’ll probably have that in place first, and then hopefully complete an equity sale to allow us to do the full redemption, you know, this summer.

Leo Mariani, Analyst, Roth Capital Partners: Okay. No, that’s helpful. And then just with respect to Pinnacle, I presume there’s probably no debt on that entity, you know, right now, at the moment. And then just additionally, do you expect Pinnacle to be, you know, free cash flow positive? Maybe that’s, you know, next year or something like that. Can you just give us any color in terms of where it is in its kind of life cycle from a cash flow perspective?

Roland Burns, President and CFO, Comstock Resources: Sure. I think it becomes really free cash flow positive in the second half of this year. The first half is kind of this last, you know, putting in the treating plants is a really large capital expenditures that it’s had. So, you know, as we get to that, with Marquez Train Two coming in, we’ll have a, you know, over a Bcf a day of treating capacity. So we’ll be well positioned to where, you know, we’ll only be, you know, just spending money on well connections. So that’s really when it becomes much more cash flow positive. Also, you know, the credit facility will be more than adequate, we think, with its cash flow to fund its capital in the future.

So, you know, the need for the capital infusions like Quantum made last year, you know, shouldn’t be there. And so it’s just, because it’s made those before it had a revenue stream, now it has one.

Conference Operator: Thank you. Our next question comes from Kevin McCurdy with Pickering Energy Partners. Your line is open.

Kevin McCurdy, Analyst, Pickering Energy Partners: Hey, great. Thank you for taking my question. I wanted to ask you about the production trajectory throughout the year. I know you won’t have any turning lines in the first quarter, but you know, with less downtime, you know, do you expect second quarter to kind of resemble more where you ended the year? And you know, do you care to put out kind of an exit rate for production, you know, assuming that you run the non-rigs this year?

Roland Burns, President and CFO, Comstock Resources: What? Well, we put out the guidance that we like to put out, you know, so we don’t really... Yeah, exit rates are so, yeah, they’re interesting, but they’re also so dependent on timing that, you know, a well could come online, you know, a week later and be in, you know, January versus December. So given that, you know, our capital program, big wells, you know, and they come on in usually groups of two to three, so, you know, the timing of their production is really critical to one day’s production. So yeah, I think generally.

Charles Meade, Analyst, Johnson Rice2: I think what I would add to that is, you know, we’ll see quite significant growth over the course of the year, just based on our well completion schedule. We only have 5 wells turning to sales here in the first quarter. That means over the remainder of the year, we have 65+ wells coming online. Those are pretty evenly spread between the quarters, with a little bit more in the second quarter than in the third. That would point towards a strong kind of fourth quarter rate. Historically, what we had said on the 8-rig program, that we could, by the fourth quarter, get back to kind of the first half of 2024 type levels.

With the ninth rig, you know, I think that remains intact, if not a little bit higher. Remember, adding a rig now, we’re not going to really start to see any impact from that until very late in the year, sometime in the fourth quarter. And so, you know, that the addition of that rig is really going to have a much greater impact on the production profile in 2027 than it will this year. It’s just the capital lag versus production.

Kevin McCurdy, Analyst, Pickering Energy Partners: Thank you. I appreciate that. I think that helps. As a follow-up, I wanted to ask on lateral lengths in the Western Haynesville. It looks like they were a little lower this quarter, and that might have affected the per-foot costs. Do you have any color on what the lateral lengths will look like going forward in 2026? And have you guys kind of decided on what the long-term goal should be for lateral lengths in that play?

Dan Harrison, Chief Operating Officer, Comstock Resources: Well, I will say the long-term goal is obviously to be longer. You know, a lot of our sticks are controlled by the geology, and you’re dead on. When we have an average short lateral length on any one quarter, it definitely leads to a higher cost. And we’ve got, you know, like I said, we’ve got six that we’ve drilled over 12,000-foot long, but we also have, you know, we’ve got several that are, you know, on the short end. I think the shortest one’s about 7,800 foot that we’ve done to date. But we do have here in the very near future, we’re gonna be drilling towards our first—no targeting, our first 15,000-foot lateral. And we have, we think we’re gonna be successful there.

So I think the upside is definitely gonna be longer than where we’ve been, if you look backwards on the average lateral length. So, you know, as long as the geology, we’re in areas where we don’t have to stop short due to a fault, you know, or something that’s of that nature, we will definitely be longer in the future. I think the rotary steerable, you know, that we’ve gotten, that’s been working good for us in the core that we’re gonna deploy down here, and the 10K rig upgrade, you know, we got just the one rig we’re upgrading right now. Those things are gonna definitely help us get longer on the laterals.

Conference Operator: Thank you. Our next question comes from Jacob Roberts with TPH & Co. Your line is open.

Jacob Roberts, Analyst, TPH & Co: Good morning.

Dan Harrison, Chief Operating Officer, Comstock Resources: Morning.

Jacob Roberts, Analyst, TPH & Co: I don’t wanna belabor the point, and I appreciate the color on the Brown True Heart, but just taking a step back and looking at slide 17 compared to the equivalent in last year’s Q4 deck, the lateral adjusted IP rate on average has moderately come down year-on-year. So I’m just wondering if you could talk a little bit about this dynamic, and then maybe if you could remind us what EUR you’re expecting or underwriting across the Western Haynesville at the moment.

Dan Harrison, Chief Operating Officer, Comstock Resources: So as far as, you know, we have made an effort to, you know, basically control our drawdowns a lot more than we did in the very beginning. We’re not looking... You know, all these wells can be IP’d at what we want them to be IP’d at. We’ve, we like to get them up to about, you know, a 30-35 million a day range and IP them there, but all of these wells are capable of IP’ing at over 40 million a day if we want to, but we don’t want to pull the wells that hard. So I wouldn’t read a lot into that, you know, just the, just the IP rate on a, you know, length adjusted basis, because I think that’s part of, you know, what you’re seeing there, is just how we’re flowing the wells back.

But, you know, I think as we fan out across the acreage, you know, we’re gonna be drilling more wells, this year, up on the northeast end by the Alligator one. And, you know, I think, all the offset wells to that one up there will resemble that well, which had, you know, a good IP, could have been a lot better IP. But, so I think that’s gonna ebb and flow. I wouldn’t read a lot into that as far as any kind of a trend.

Jay Allison, Chairman and CEO, Comstock Resources: Well, another question that I think you should ask is, what are we seeing from our cores, and where are our cores? Dan, you know, can follow up with that, too.

Dan Harrison, Chief Operating Officer, Comstock Resources: Yeah, so we’ve taken. We’ve cored. We’ve drilled four pilot holes to date. We’ve cored three of those. All of the cores look great. I mean, no surprises to the downside on any of the core work that we’ve done. It fully supports the resource estimates that we’ve had, you know, in place. We are, you know, taking the learnings from the cores along with the logs and trying to get a little bit better at where we want to target putting the laterals. You know, that obviously makes a big difference on, you know, how good the wells are gonna be, where they’re landed. In the very beginning, we, you know, talked on several of the calls. We had a laser focus to get costs down. We did.

You know, we used the insulated drill pipe. We just, you know, we got our motor runs a little more efficient, a little bit longer. But we were also, you know, not trying to keep the laterals exactly maybe where we wanted them. We let them wander just a little bit, just, you know, to keep our drilling speeds up. And as we look back on some of these, we probably need to, you know, put a little bit more emphasis on, you know, keeping the laterals landed kind of closer to where we want them and not, you know, forsake, you know, that maybe to drill a lot faster. So that’s just day-to-day, that’s just a balance for us, you know, where we want the well to be and how fast we’re trying to drill the well.

Kevin McCurdy, Analyst, Pickering Energy Partners: The cores tell us now really where we should land these laterals, so we didn’t have that data before.

Dan Harrison, Chief Operating Officer, Comstock Resources: That’s right. And we got, you know, we’ve got one core. We just cored a well up on the northeast end of the field by the Alligator 1, that we’re—the rig’s on now, and our other two cores are back down towards the other end, where, you know, the bulk of all the wells have been drilled.

Jacob Roberts, Analyst, TPH & Co: I appreciate that. Jay, I appreciate the free question. Maybe staying on the productivity side of things, looking at the state data on the legacy side of the basin, and I know there’s various factors that might have impacted production or production reporting last year, but it looks like there’s a step down in productivity in 2025 vintages. At a high level, could you comment on your views around the Louisiana productivity per foot in 2025, and maybe where you see that heading in 2026 and 2027?

Dan Harrison, Chief Operating Officer, Comstock Resources: ... I think in the core, you know, I think if you just look across the entire area up there, all operators, I mean, there’s obviously been some, you know, small amount of degradation as the basin’s been filled in. I mean, there’s been obviously thousands and thousands of wells drilled. You know, everybody drills their, where they think their best areas and their best wells are first, and, you know, then they kinda start kinda working down their inventory mix from there. Plus, you know, as the gas prices pick up, I think you see more people starting to drill in, maybe some of, even some of the lower type curve areas, you know, at the higher pricing, those, when those become a lot more economic.

I think we will see. On our side, I think we’ll see maybe, you know, maybe a little bit movement back in the other direction now that we’re drilling a lot more of these Horseshoe wells, because a lot of the Horseshoe wells, you know, were from a lot of our stranded short laterals were in our better type curve areas. So, you know, once we kinda went the Horseshoe route, and they’ve been looking great for us, we’ve drilled, we’ve got 10 of those TD to date, going really good. And the, you know, performance on those has been better just ’cause they’re in the better type curve areas. So like I said, it’s been a natural degradation, I think, just for the whole basin, basin-wide, on how the laterals are drilled.

You know, I’d say, you know, next year, you know, flat kinda to this past year, where we are.

Jay Allison, Chairman and CEO, Comstock Resources: Well, if you can add a rig and drill, you know, 115 gross Horseshoe wells, 50/50 Haynesville Bossier, which you— You know, we’ll drill 16, I think, this year. But let’s say you use that rig and you say, "Well, I’m just gonna drill Horseshoe wells." Remember, like Dan said, those are 2, 2.1 Bs per thousand. Those are really, really good locations, except they were shorter laterals. So now all of a sudden, you kind of jumpstart that, and you bring it to the front with a rig, and it makes economic sense to do that. So that’s one reason we, you know, we found a rig and added it earlier on.

Conference Operator: Thank you. Our next question comes from Paul Diamond with Citi. Your line is open.

Paul Diamond, Analyst, Citi: Thank you. Good morning, all. Thanks for taking the call. Just wanted to touch base on, you guys talked a lot about the delineation over the last few years between Western Haynesville and the core, and then some of the non-core asset sales. I guess, is there anything on the horizon that would kind of shift more of the legacy core into that, I guess, non-core category in which you’d be potentially looking to monetize? Or were these the deals towards the end of last year, more one-offs?

Roland Burns, President and CFO, Comstock Resources: Yeah, we don’t have any current plans to divest any properties. But, you know, we obviously react to, you know, people coming to us or react to activity in the areas, though, but there’s no planned divestitures for 2026.

Jay Allison, Chairman and CEO, Comstock Resources: Yeah, we, we look at that, and Shelby was kinda dangling out there, and we had, you know, we had inbound calls, and we looked to see where we might drill that, and then, if we could monetize it, you know, what we would do with the dollars. Particularly, we would have never sold that had we not been adding inventory in the Western Haynesville. But that also proves that we, we trust what we’re de-risking in the Western Haynesville.

Paul Diamond, Analyst, Citi: Understood. Appreciate the clarity. And then, let’s talk a bit about the, you know, other improvements in, you know, the capital spending, whether it’s rotary steer, steering, high pressure apparatus, or other type of efficiency rates. Can you talk a bit about in the Western Haynesville, how you see that deployment timing shaking out? Is this relatively linear through 2026, or is it back half into 2027 type weighted? When do you expect some of those, if tangible cost savings to flow through?

Dan Harrison, Chief Operating Officer, Comstock Resources: Yeah, that’s a good question. So, you know, all the operators in the core, I’d just say, really, this Rotary Steerable started—you know, the vendors have been putting R&D dollars into the Rotary Steerable systems for the Haynesville. They’re used extensively in all the other basins because they’re lower temperature, not really in the Western Haynesville till, say, the last half of 2025. We’ve had probably 10 runs to date with that system, so far, and that, you know, really made good progress. The vendors, you know, they’re tweaking their tools. And, as far as deploying it to the Western Haynesville, I’m gonna say, you know, sometime here within the next 3 months, we’ll be making our first run in the Western Haynesville.

We’re gonna make, we do plan to make several runs in the Western Haynesville over this year. As far as the full cost savings, I think we’ll get, you know, pretty immediate cost savings when we get our-- that first 10K rig in place late this summer. The rotary steerable, I think, will be more, a little bit more of a gradual increase as far as the realized savings on that system. But, you know, hopefully, this, I think this, this two weeks, by this time next year, you know, we can be achieving this two weeks reduction in drill times from where we’re at today on average. So I mean, we’ve got, like I said, the vendors are super interested. They’re putting a lot of money in the R&D for these tools.

All the operators are trying to, you know, they’re running the tools in the core. So, you know, we’ve looked at all the numbers and, you know, it’s very doable in the Western Haynesville. And I think once we, you know, see some success early on in the Western Haynesville, we’ll be pushing to get the temperature rating on that tool even higher. And I think, you know, that may be maybe deeper into next year as far as having a, you know, say, a 392-degree rated rotary steerable tool. But, you know, like I said, if we just can repeat-

Jay Allison, Chairman and CEO, Comstock Resources: ... in the first half of our Western Haynesville laterals, with what we’ve seen in the core, we’re going to definitely cut off a lot of days.

Conference Operator: Thank you. Our final question comes from Phillips Johnson with Capital One. Your line is open.

Charles Meade, Analyst, Johnson Rice0: Hey, thanks for the time. Just a couple of follow-up questions about the year-end reserve report. First, what is the average EUR per thousand foot assumed by Lee Keeling in the Western Haynesville? And then can you maybe talk about how that compares to the legacy Haynesville?

Jay Allison, Chairman and CEO, Comstock Resources: Yeah, I’m not sure why you referenced Lee Keeling. Our reserves are audited by Netherland, Sewell, Leo.

Charles Meade, Analyst, Johnson Rice0: Yeah. Phillips.

Jay Allison, Chairman and CEO, Comstock Resources: I mean, Phillips. Yeah. So the Western Haynesville, basically, I think, the overall average reserve EURs are probably they do range from anywhere from, you know, 3-4 Bs per 1,000 foot of lateral, kind of a range. I think that only the ones that really have a long performance have that really higher one. But I think, you know, generally, you know, 3.5 is a good average, you know, for the Western Haynesville, so.

Charles Meade, Analyst, Johnson Rice0: Okay, sounds good. Yeah. Sorry about that. I forgot it was Netherland, Sewell. Just one more on the reserve report. What’s sort of the implied next 12-month PDP decline rate in your report? And how does that maybe compare to the decline rate in your year-end 2024 report?

Charles Meade, Analyst, Johnson Rice2: It’s actually come down a little bit. It’s from forty percent; it’s down, like, 1%-2%. Part of that’s a function of... was expected to start to come down as we have a greater percentage of our production in the Western Haynesville, and we’re starting to see that. It’s just a small piece of the overall reserve, so it’ll-- that first-year PDP decline will improve over time, not all at once.

Conference Operator: Thank you. This concludes the question and answer session. I would now like to turn it back to Jay Allison for closing remarks.

Jay Allison, Chairman and CEO, Comstock Resources: Yeah, yeah, the only thing I would tell you is that I think there is concern about U.S. shale maturity. I think there is a little bit of spirit about wildcatting now, because you’ve got to have inventory. And if you, you know, if you, if you just look at these numbers, and the legacy Haynesville, which is 4 million acres, has produced 48.5 Tcf from 7,600 wells, and we think Comstock is exposed to 50 Tcf, well, that’s, that’s more than’s been produced from the legacy Haynesville. That’s why when you ask Dan the question about, are the service companies trying to figure out how we can drill and complete these wells quicker, faster, cost savings? Absolutely, yes.

Yeah, because they have a lot of work built in for decades if they can do that, and they’re spending their own money doing it. So, they not only believe what we’re doing, we believe what we’re doing. And, the 1000 penetrations that we have from north, south, east, west, that triggered this whole play, shows that we probably have a great belief, and it’s accurate. So, that we’re thankful and we’re fortunate that we captured that footprint, and I think that goes back to toggling. You know, as I visit with Jerry, we, he still toggles stuff. You, do you have X amount of landmen leasing acreage? You toggle it. What do we do in the Western Haynesville? Do you add two more rigs in 2024?

No, because gas prices are low, so you do it in 2025. You know, kind of like what Dan is doing with these Rotary Steerable, you accelerate it and go into the Western Haynesville. So, and then if the opportunity comes where we should divest something in the core that we won’t drill for years, but somebody else would drill now, and you can both win, you toggle that. So that is what we’ve been doing, and that’s what we will do, for all the equity stakeholders and the bondholders and the banks and everybody else that believes in us. And, I can tell you that we work really hard. We’re gonna try to give you good news when it’s there, and if something’s not there, we’ll always tell you the truth. It’s a pretty good world we live in.

Thank you.

Conference Operator: Thank you. This concludes today’s conference call. Thanks for participating. You may now disconnect.