Comstock Resources, Inc. (CRK): Business Model Canvas [10-2024 Updated]
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Comstock Resources, Inc. (CRK) Bundle
Comstock Resources, Inc. (CRK) operates within the dynamic landscape of the energy sector, focusing on the exploration and production of natural gas and oil. Their business model is meticulously crafted around key partnerships with oilfield services and financial institutions, while emphasizing operational optimization and sustainable practices. By understanding their value propositions and customer segments, Comstock positions itself for resilience in volatile markets. Discover the intricacies of their business model canvas below, detailing how they drive revenue and manage costs effectively.
Comstock Resources, Inc. (CRK) - Business Model: Key Partnerships
Collaborations with oilfield services companies
Comstock Resources collaborates with various oilfield services companies to enhance its operational efficiency and reduce costs. These partnerships allow Comstock to leverage specialized services such as drilling, completion, and production operations. For instance, Comstock’s operational expenditures in the first nine months of 2024 included:
| Expense Type | Amount (in thousands) |
|---|---|
| Lease Operating Expenses | $99,125 |
| Gathering and Transportation | $150,456 |
| Gas Services Expenses | $132,796 |
These costs reflect the reliance on external service providers to manage and optimize their production capabilities effectively, especially in the competitive landscape of the natural gas market.
Strategic alliances in natural gas marketing
Comstock Resources has established strategic alliances for natural gas marketing to maximize revenue from its production. The company engages in natural gas marketing services, which include evaluating potential markets and providing hedging services. In the first nine months of 2024, Comstock reported:
| Revenue Source | Revenue (in thousands) |
|---|---|
| Gas Services Revenue | $127,889 |
| Natural Gas Sales | $756,260 |
These partnerships enable Comstock to effectively manage its exposure to price volatility and ensure a steady cash flow from its operations.
Partnerships with financial institutions for funding
Comstock Resources maintains partnerships with various financial institutions to secure funding for its capital expenditures and operational activities. As of September 30, 2024, Comstock had:
| Debt Type | Outstanding Amount (in thousands) |
|---|---|
| 6.75% Senior Notes due 2029 | $1,623,880 |
| 5.875% Senior Notes due 2030 | $965,000 |
| Bank Credit Facility | $415,000 |
These financial instruments provide Comstock with the necessary liquidity to fund its operations, allowing it to pursue growth opportunities while managing its debt effectively.
Comstock Resources, Inc. (CRK) - Business Model: Key Activities
Exploration and production of natural gas and oil
Comstock Resources, Inc. focuses on the exploration and production of natural gas and oil, primarily in the Haynesville Shale region. For the third quarter of 2024, the company reported natural gas production of 133.1 billion cubic feet (Bcf), an increase of 2% compared to 130.5 Bcf in the same period in 2023. The average realized price for natural gas was $1.90 per thousand cubic feet (Mcf), down 18% year-over-year from $2.33 per Mcf in Q3 2023.
In the first nine months of 2024, Comstock produced 403.4 Bcf of natural gas, averaging 1.5 Bcf per day. The average price realized for this period was $1.87 per Mcf, which reflects a decline from $2.37 per Mcf in the prior year.
Asset management and operational optimization
Comstock's asset management strategy emphasizes operational optimization and cost control. The total capital expenditures for the first nine months of 2024 were $788.5 million, a decrease of $315 million from $1.1 billion in the same period of 2023. This reduction was primarily attributed to lower drilling and completion activities.
The company drilled 35 (29.7 net) wells and completed 41 (35.9 net) wells during the first nine months of 2024. Comstock anticipates further capital expenditures of $225 million to $275 million in the remaining months of 2024.
| Category | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Capital Expenditures | $788,537 | $1,103,527 |
| Wells Drilled | 35 (29.7 net) | Data not available |
| Wells Completed | 41 (35.9 net) | Data not available |
Risk management through derivative contracts
To mitigate price volatility, Comstock employs derivative financial instruments. As of September 30, 2024, the company had natural gas price swaps hedging approximately 64.4 Bcf of its 2024 natural gas production at an average price of $3.54 per MMBtu. For 2025 and 2026, the company hedged approximately 136.9 Bcf and 109.5 Bcf of production, respectively, at an average price of $3.51 per MMBtu.
In the third quarter of 2024, Comstock reported net gains from its derivative instruments of $75.2 million, a significant increase from $14.3 million in Q3 2023. Total realized net gains from these instruments were $51.4 million for the same quarter.
| Derivative Type | Volume (MMBtu) | Average Price per MMBtu |
|---|---|---|
| Natural Gas Price Swaps (2024) | 64,400,000 | $3.54 |
| Natural Gas Price Swaps (2025) | 136,875,000 | $3.51 |
| Natural Gas Price Swaps (2026) | 109,500,000 | $3.51 |
Comstock Resources, Inc. (CRK) - Business Model: Key Resources
Extensive natural gas and oil reserves
As of September 30, 2024, Comstock Resources, Inc. reported natural gas production of 403.4 billion cubic feet (Bcf) for the first nine months of 2024, averaging 1.5 Bcf per day, which represents a 5% increase compared to 383.9 Bcf in the same period of 2023. The company primarily operates in the Haynesville shale region, which is known for its significant natural gas reserves. The average realized natural gas price during this period was $1.87 per thousand cubic feet (Mcf), a decrease from $2.37 per Mcf in the previous year.
Skilled workforce in exploration and production
Comstock Resources employs a skilled workforce dedicated to exploration and production, crucial for maintaining operational efficiency and maximizing extraction from their reserves. The company reported general and administrative expenses of $29.3 million for the first nine months of 2024, a decrease from $32.0 million in the same period of 2023, primarily due to lower employee compensation. This reduction indicates a strategic focus on optimizing workforce costs while retaining essential expertise within the company.
Strong financial liquidity and credit facilities
As of September 30, 2024, Comstock Resources had approximately $1.1 billion in liquidity, which included $1,085 million in unused borrowing capacity under their bank credit facility and $13.8 million in cash and cash equivalents. The company issued $400 million in senior notes with a 6.75% interest rate due in 2029, enhancing their financial flexibility. Additionally, their bank credit facility has a borrowing base of $2.0 billion, providing substantial support for ongoing operations and capital expenditures.
| Key Financial Metrics | 2024 (9 Months) | 2023 (9 Months) |
|---|---|---|
| Natural Gas Production (Bcf) | 403.4 | 383.9 |
| Average Realized Price (Natural Gas, per Mcf) | $1.87 | $2.37 |
| General and Administrative Expenses (in millions) | $29.3 | $32.0 |
| Liquidity (in millions) | $1,100 | N/A |
| Outstanding Senior Notes (in millions) | $400 | N/A |
| Bank Credit Facility Borrowing Base (in millions) | $2,000 | N/A |
Comstock Resources, Inc. (CRK) - Business Model: Value Propositions
Reliable supply of natural gas and oil
Comstock Resources, Inc. focuses on the production and sale of natural gas and oil, leveraging its extensive asset base in key regions such as the Haynesville and Bossier shale formations. As of September 30, 2024, the company reported natural gas production of 403.4 billion cubic feet (Bcf) for the first nine months of 2024, a 5% increase from 383.9 Bcf in the same period of 2023. The production was sold at an average price of $1.87 per thousand cubic feet (Mcf), compared to $2.37 per Mcf in the first nine months of 2023.
Competitive pricing in volatile markets
In the context of fluctuating market conditions, Comstock has maintained a competitive edge by employing financial instruments to hedge against price volatility. For the three months ended September 30, 2024, the average realized natural gas price was $1.90 per Mcf, which included cash settlements from derivatives that increased the effective price to $2.28 per Mcf. The company utilized natural gas price derivative financial instruments extensively, achieving net gains of $75.2 million in the third quarter of 2024.
| Period | Natural Gas Production (Bcf) | Average Price (per Mcf) | Effective Price (per Mcf) | Net Gains from Derivatives (in millions) |
|---|---|---|---|---|
| Q3 2024 | 133.1 | $1.90 | $2.28 | $75.2 |
| Q3 2023 | 130.5 | $2.33 | $2.41 | $14.3 |
Commitment to sustainable energy practices
Comstock Resources is increasingly focusing on sustainability within its operations. The company has adopted various practices aimed at reducing its environmental impact, including the implementation of more efficient drilling techniques and the management of emissions. As of September 30, 2024, Comstock's capital expenditures totaled $788.5 million, with a portion allocated to sustainability initiatives. Additionally, the company holds significant U.S. federal net operating loss (NOL) carryforwards amounting to $754.1 million, which reflects its strategic planning for long-term financial sustainability.
Comstock Resources, Inc. (CRK) - Business Model: Customer Relationships
Long-term contracts with key customers
Comstock Resources, Inc. has established long-term contracts with various customers to secure stable revenue streams. These contracts are essential for managing the volatility in natural gas and oil prices. As of September 30, 2024, Comstock reported natural gas sales of $252.7 million for the quarter, down from $304.1 million in the same quarter of the previous year, indicating a strategic focus on maintaining customer relations through long-term agreements despite market fluctuations.
Responsive customer service and support
The company emphasizes responsive customer service to enhance client satisfaction and retention. In the third quarter of 2024, Comstock's gas service revenues were $50.8 million, down from $71.3 million in 2023, reflecting challenges in maintaining service levels amid decreasing natural gas prices. The company aims to provide efficient support to its customers, ensuring they receive timely information and assistance regarding their contracts and service needs.
Engagement through transparency in operations
Comstock maintains a policy of transparency in its operations, which is crucial for building trust with its customers. The company regularly updates stakeholders on operational metrics and financial performance. For example, Comstock experienced a net loss of $25.7 million for the third quarter of 2024, compared to a net income of $14.7 million for the same period in 2023. This transparency helps customers understand the company's current position and future outlook, fostering stronger relationships.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Natural Gas Sales ($ millions) | $252.7 | $304.1 | -17.0% |
| Gas Service Revenues ($ millions) | $50.8 | $71.3 | -29.0% |
| Net Income (Loss) ($ millions) | ($25.7) | $14.7 | — |
| Average Realized Natural Gas Price ($ per Mcf) | $1.90 | $2.33 | -18.4% |
Comstock Resources, Inc. (CRK) - Business Model: Channels
Direct sales to industrial and commercial customers
Comstock Resources, Inc. primarily engages in the direct sale of natural gas and oil to a range of industrial and commercial customers. In the third quarter of 2024, the company reported natural gas sales of $252.7 million, reflecting a decrease from $304.1 million in the same quarter of the previous year. This trend continues in the nine-month period, where total sales reached $756.3 million, down from $911.1 million in 2023.
Partnerships with energy distributors
Comstock leverages strategic partnerships with energy distributors to enhance its market reach. The company provides natural gas marketing services to partnerships owned by its majority stockholder, generating fees for the marketing of natural gas. For the third quarter of 2024, Comstock earned $0.3 million from these services, consistent with the previous year. This relationship facilitates a more robust distribution network, allowing Comstock to effectively manage the sales and logistics of its products.
Participation in energy markets and exchanges
Comstock actively participates in energy markets and exchanges, employing derivative financial instruments to manage price risks associated with natural gas. As of September 30, 2024, the company had natural gas price swaps hedging approximately 64.4 billion cubic feet (Bcf) of its 2024 production at an average price of $3.54 per million British thermal units (MMBtu). This strategy not only stabilizes revenues but also positions Comstock competitively within the volatile energy market.
| Channel Type | Revenue (Q3 2024) | Revenue (Q3 2023) | Revenue (9M 2024) | Revenue (9M 2023) |
|---|---|---|---|---|
| Direct Sales | $252.7 million | $304.1 million | $756.3 million | $911.1 million |
| Gas Services Revenue | $50.8 million | $71.3 million | $127.9 million | $239.4 million |
| Natural Gas Price Swaps Hedged (2024) | 64.4 Bcf at $3.54/MMBtu | N/A | N/A | N/A |
Comstock Resources, Inc. (CRK) - Business Model: Customer Segments
Industrial manufacturers needing energy supplies
Comstock Resources, Inc. serves a variety of industrial manufacturers who rely on energy supplies, particularly natural gas, for their operations. In the third quarter of 2024, Comstock's natural gas production was 133.1 billion cubic feet (Bcf), which equates to approximately 1.4 Bcf per day. The average realized price for natural gas during this period was $1.90 per thousand cubic feet (Mcf), down from $2.33 per Mcf in the same quarter of 2023. This reduction in prices impacts the energy costs for industrial manufacturers, making competitive pricing essential for Comstock's value proposition.
Utility companies requiring natural gas for power generation
Utility companies are significant customers for Comstock, as they require substantial volumes of natural gas for power generation. In the nine months ended September 30, 2024, Comstock reported total natural gas and oil sales amounting to $759.2 million, a decrease of 17% from $915.2 million in the prior year. The utility sector's demand for natural gas is critical, especially during peak demand seasons, and Comstock's ability to supply this resource efficiently is paramount for maintaining relationships with these clients.
Wholesale energy traders in the market
Wholesale energy traders are another vital customer segment for Comstock Resources. These traders engage in buying and selling energy commodities, including natural gas. In the first nine months of 2024, Comstock's average realized natural gas price, including cash settlements from derivative instruments, was $2.27 per Mcf. The volatility in natural gas prices can present opportunities for traders to capitalize on market fluctuations, making Comstock's pricing strategies and production levels essential for maintaining a competitive edge in this segment.
| Customer Segment | Volume of Natural Gas (Bcf) | Average Price Realized ($/Mcf) | Total Revenue ($ millions) |
|---|---|---|---|
| Industrial Manufacturers | 133.1 | $1.90 | $253.6 |
| Utility Companies | 403.4 | $1.87 | $756.3 |
| Wholesale Energy Traders | 136.9 | $3.51 | N/A |
Comstock Resources, Inc. (CRK) - Business Model: Cost Structure
Significant operational costs in drilling and production
Comstock Resources, Inc. incurs substantial operational costs primarily associated with drilling and production activities. For the third quarter of 2024, the company reported:
- Production and ad valorem taxes: $12.6 million
- Gathering and transportation costs: $54.0 million
- Lease operating expenses: $29.2 million
In the first nine months of 2024, these costs totaled:
- Production and ad valorem taxes: $49.7 million
- Gathering and transportation costs: $150.5 million
- Lease operating expenses: $99.1 million
The overall increase in gathering and transportation costs reflects the company's production growth in areas with higher rates.
Fixed costs associated with leases and equipment
Comstock's fixed costs include expenses related to leases and equipment used in its operations. The company reported:
- Depreciation, depletion, and amortization (DD&A) for the third quarter of 2024: $208.4 million
- DD&A for the nine months ended September 30, 2024: $593.3 million
The DD&A per equivalent Mcf produced was $1.56 for the third quarter of 2024 and $1.47 for the first nine months.
Variable costs tied to commodity price fluctuations
Variable costs for Comstock are significantly influenced by fluctuations in commodity prices. For example:
- Average realized natural gas price for the third quarter of 2024 was $1.90 per Mcf, down from $2.33 in the same quarter of 2023.
- Cash settlements on derivative financial instruments for the third quarter of 2024 added $0.38 per Mcf to the price, bringing the effective price to $2.28 per Mcf.
The company's operational costs are also affected by its risk management strategies, which include derivative contracts to hedge against price fluctuations. For instance, as of September 30, 2024, Comstock had hedged approximately 64.4 Bcf of its natural gas production at an average price of $3.54 per MMBtu.
| Cost Type | Q3 2024 (in millions) | 9M 2024 (in millions) |
|---|---|---|
| Production and Ad Valorem Taxes | $12.6 | $49.7 |
| Gathering and Transportation | $54.0 | $150.5 |
| Lease Operating Expenses | $29.2 | $99.1 |
| Depreciation, Depletion & Amortization | $208.4 | $593.3 |
| Average Realized Natural Gas Price | $1.90 | $1.87 |
| Cash Settlements on Derivatives | $0.38 | $0.40 |
Comstock Resources, Inc. (CRK) - Business Model: Revenue Streams
Sales of natural gas and oil
For the three months ended September 30, 2024, Comstock Resources reported natural gas sales of $252.7 million, a decrease of 17% from $304.1 million for the same period in 2023. The average realized price for natural gas was $1.90 per thousand cubic feet (Mcf), down from $2.33 per Mcf in the third quarter of 2023. The company produced 133.1 billion cubic feet (Bcf) of natural gas during this period, which was an increase of 2% compared to 130.5 Bcf in the third quarter of 2023.
For the nine months ended September 30, 2024, natural gas and oil sales totaled $759.2 million, a decrease of 17% from $915.2 million in the same period in 2023. The average realized price for natural gas was $1.87 per Mcf, compared to $2.37 per Mcf in the first nine months of 2023. Natural gas production for this period was 403.4 Bcf, up 5% from 383.9 Bcf in the prior year.
Revenue from gas services provided to third parties
In the third quarter of 2024, Comstock generated $50.8 million from gas services, a decline of 29% compared to $71.3 million in the third quarter of 2023. For the first nine months of 2024, gas service revenues were $127.9 million, which represented a significant decrease of 47% from $239.4 million in the same period in 2023. This decline was attributed mainly to lower natural gas prices affecting sales of purchased gas that utilized excess transport capacity.
Gains from derivative financial instruments
Comstock Resources utilizes derivative financial instruments to hedge against price fluctuations in natural gas. For the three months ended September 30, 2024, the company reported net gains related to these instruments of $75.2 million, compared to $14.3 million in the third quarter of 2023. For the first nine months of 2024, net gains from derivative financial instruments amounted to $89.2 million, up from $76.2 million in the same period in 2023. Realized net gains for the first nine months of 2024 were $160.0 million, compared to $76.2 million in the prior year.
| Period | Natural Gas Sales ($ million) | Oil Sales ($ million) | Gas Service Revenue ($ million) | Derivative Gains ($ million) |
|---|---|---|---|---|
| Q3 2024 | 252.7 | 0.975 | 50.8 | 75.2 |
| Q3 2023 | 304.1 | 1.309 | 71.3 | 14.3 |
| 9M 2024 | 759.2 | 2.925 | 127.9 | 89.2 |
| 9M 2023 | 915.2 | 4.111 | 239.4 | 76.2 |
Article updated on 8 Nov 2024
Resources:
- Comstock Resources, Inc. (CRK) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Comstock Resources, Inc. (CRK)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Comstock Resources, Inc. (CRK)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.