Comstock Resources, Inc. (CRK) Bundle
Understanding Comstock Resources, Inc. (CRK) Revenue Streams
Understanding Comstock Resources, Inc.’s Revenue Streams
The revenue streams of Comstock Resources, Inc. are primarily derived from natural gas and oil sales, along with gas services. The following sections detail the breakdown of these revenue sources, historical trends, and significant changes in revenue streams.
Breakdown of Primary Revenue Sources
- Natural Gas Sales: For the three months ended September 30, 2024, natural gas sales were $252.7 million, a decrease of 17% from $304.1 million in the same period of 2023.
- Oil Sales: Oil sales for the same period were $975,000, down from $1.3 million in 2023.
- Gas Services: Revenues from gas services amounted to $50.8 million for Q3 2024, a decline of 29% compared to $71.3 million in Q3 2023.
Year-over-Year Revenue Growth Rate
During the first nine months of 2024, total revenues decreased to $887.1 million, down 23% from $1.15 billion in the first nine months of 2023. The year-over-year revenue growth rate reflects the impact of lower natural gas prices and production levels.
Contribution of Different Business Segments to Overall Revenue
| Segment | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | Change (%) |
|---|---|---|---|
| Natural Gas Sales | $252.7 | $304.1 | -17% |
| Oil Sales | $0.975 | $1.3 | -25% |
| Gas Services | $50.8 | $71.3 | -29% |
| Total Revenue | $304.5 | $376.7 | -19% |
Analysis of Significant Changes in Revenue Streams
In 2024, the company experienced a significant reduction in revenues primarily due to a 21% decrease in average natural gas prices, which fell from $2.33 per Mcf in Q3 2023 to $1.90 per Mcf in Q3 2024. This trend is consistent with the overall decrease in natural gas prices affecting the energy sector. Additionally, gas service revenues dropped by 47% for the first nine months of 2024 compared to the same period in 2023, reflecting lower volumes of purchased gas for resale due to decreased demand.
Overall, the revenue analysis indicates that Comstock Resources, Inc. is facing challenges in maintaining revenue growth amidst declining natural gas prices and production costs. The changes in revenue streams necessitate close monitoring as the company navigates these market conditions.
A Deep Dive into Comstock Resources, Inc. (CRK) Profitability
A Deep Dive into Comstock Resources, Inc.'s Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit margin was approximately $759.2 million in natural gas and oil sales, reflecting a 17% decrease from $915.2 million in the same period of 2023.
Operating Profit: The loss from operations for the first nine months of 2024 was $166.7 million, compared to an operating income of $103.5 million for the same period in 2023.
Net Profit Margin: The net loss for the nine months ended September 30, 2024, was $163.4 million, or $0.57 per share. This contrasts with a net income of $103.5 million, or $0.37 per diluted share, in the same period of 2023.
Trends in Profitability Over Time
The following table summarizes key profitability metrics over recent quarters:
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Gross Profit ($ million) | 253.6 | 305.5 | 759.2 | 915.2 |
| Operating Profit ($ million) | (61.3) | 14.7 | (166.7) | 103.5 |
| Net Profit ($ million) | (25.7) | 14.7 | (163.4) | 103.5 |
Comparison of Profitability Ratios with Industry Averages
As of September 30, 2024, the net profit margin for Comstock Resources was approximately -21.5% compared to the industry average of 10%. The operating margin was -22%, significantly lower than the industry average of 15%.
Analysis of Operational Efficiency
The operational efficiency metrics indicate a need for improved cost management:
- Production and Ad Valorem Taxes: Decreased to $49.7 million for the nine months ended September 30, 2024, from $59.9 million in 2023.
- Gathering and Transportation Costs: Increased to $150.5 million for the nine months ended September 30, 2024, from $138.0 million in 2023.
- Lease Operating Expense: Decreased slightly to $99.1 million for the first nine months of 2024, compared to $100.5 million in 2023.
Overall, the company's gross margin per unit sold decreased to approximately $1.90 per Mcf in Q3 2024 from $2.33 per Mcf in Q3 2023, indicating a decline in operational efficiency largely attributable to lower natural gas prices.
Debt vs. Equity: How Comstock Resources, Inc. (CRK) Finances Its Growth
Debt vs. Equity: How Comstock Resources, Inc. Finances Its Growth
Long-term Debt: As of September 30, 2024, the company had approximately $2.95 billion in long-term debt. This includes $965 million of debt at a fixed interest rate of 5.875% and $1.62 billion at a fixed rate of 6.75%.
Short-term Debt: The company had $415 million outstanding under its bank credit facility, which is subject to variable rates tied to SOFR or the corporate base rate.
Debt-to-Equity Ratio: The debt-to-equity ratio as of September 30, 2024, was approximately 1.25, indicating a significant reliance on debt financing relative to equity. The industry average for similar companies typically ranges from 0.5 to 1.0.
Recent Debt Issuances: In April 2024, the company issued $400 million principal amount of 6.75% senior notes due 2029. The net proceeds from this issuance were $365.2 million, used to pay down outstanding borrowings on the bank credit facility.
Credit Ratings: The company's credit ratings have not been explicitly stated in the provided data; however, the financial health indicated by the debt levels and recent issuances suggests a focus on maintaining manageable debt service obligations.
Equity Funding: During the first nine months of 2024, the company issued 12.5 million shares of common stock, raising $100.5 million. This equity issuance reflects a strategy to enhance liquidity and financial flexibility amid fluctuating market conditions.
The following table summarizes the company's debt and equity structure:
| Category | Amount (in billions) |
|---|---|
| Long-term Debt | $2.95 |
| Short-term Debt | $0.415 |
| Total Debt | $3.365 |
| Debt-to-Equity Ratio | 1.25 |
| Equity Issued (2024) | $0.1005 |
The company continues to balance between debt financing and equity funding as a means to support its growth initiatives while managing financial risk. This strategic approach helps maintain operational flexibility in a volatile market environment.
Assessing Comstock Resources, Inc. (CRK) Liquidity
Assessing Comstock Resources, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is 0.59, calculated by dividing current assets of $292.3 million by current liabilities of $499.8 million.
Quick Ratio: The quick ratio is 0.58, which is derived from current assets minus inventory, showing a liquidity position that emphasizes cash and cash equivalents against current liabilities.
Analysis of Working Capital Trends
As of September 30, 2024, the working capital is ($207.5 million), indicating a negative working capital position. This reflects a decrease from the prior year, where working capital was ($388.9 million) as of December 31, 2023.
| Period | Current Assets (in thousands) | Current Liabilities (in thousands) | Working Capital (in thousands) |
|---|---|---|---|
| September 30, 2024 | $292,261 | $499,765 | ($207,504) |
| December 31, 2023 | $146,130 | $681,491 | ($535,361) |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flows from operating activities amounted to $353.3 million, a significant decrease of 55% from $788.6 million in the same period in 2023.
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | $353,284 | $788,639 |
| Investing Activities | ($787,323) | ($1,062,232) |
| Financing Activities | $431,142 | $238,776 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, total liquidity stands at $1.1 billion, comprising $1,085 million of unused borrowing capacity under the bank credit facility and $13.8 million in cash and cash equivalents. This indicates a robust liquidity position despite the negative working capital.
Future development and exploration activities are expected to be funded through operating cash flow and available borrowings, providing flexibility in capital expenditures. However, reliance on fluctuating natural gas prices poses a risk to cash flow stability.
Is Comstock Resources, Inc. (CRK) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The current price-to-earnings (P/E) ratio is -6.67 based on a stock price of $0.60 and earnings per share of -$0.09 for the quarter ended September 30, 2024.
Price-to-Book (P/B) Ratio
The price-to-book (P/B) ratio stands at 0.26, calculated using a current stock price of $0.60 and a book value per share of $2.30.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value-to-EBITDA (EV/EBITDA) ratio is approximately 8.45, with an enterprise value of $2.79 billion and EBITDA of $440 million.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated as follows:
- 12 months ago: $1.20
- 6 months ago: $0.90
- Current price: $0.60
This represents a 50% decline over the year.
Dividend Yield and Payout Ratios
There are currently no dividends being paid as the company suspended its dividend payment in 2024.
Analyst Consensus
The analyst consensus rating is Hold, with a target price of $0.75.
Summary Table of Valuation Metrics
| Metric | Value |
|---|---|
| P/E Ratio | -6.67 |
| P/B Ratio | 0.26 |
| EV/EBITDA Ratio | 8.45 |
| Current Stock Price | $0.60 |
| 12-Month Stock Price High | $1.20 |
| 12-Month Stock Price Low | $0.50 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Comstock Resources, Inc. (CRK)
Key Risks Facing Comstock Resources, Inc.
The financial health of Comstock Resources, Inc. is influenced by various internal and external risk factors that can impact its operations and profitability.
Industry Competition
Comstock operates in a highly competitive industry where numerous companies vie for market share. The company reported a net loss of $25.7 million for the quarter ended September 30, 2024, compared to a net income of $14.7 million in the same quarter of 2023. This significant shift indicates challenges in maintaining competitive pricing and market position.
Regulatory Changes
Compliance with federal and state regulations can also pose a risk. As of September 30, 2024, the company had $754.1 million in U.S. federal net operating loss carryforwards and $1.7 billion in certain state NOL carryforwards. Changes in tax regulations or environmental laws could affect the company's ability to utilize these carryforwards effectively.
Market Conditions
Fluctuations in natural gas and oil prices significantly affect revenue. For the nine months ended September 30, 2024, natural gas production increased 5% to 403.4 Bcf (1.5 Bcf per day), but average prices fell to $1.87 per Mcf, down 21% from the prior year. This decline in prices led to a total revenue drop of $156 million (17%) compared to the previous year.
Operational Risks
Operational risks include the costs associated with production. For the third quarter of 2024, lease operating expenses were $29.2 million, a decrease of 8% from $31.7 million in the same period of 2023. However, gathering and transportation costs increased by 15% to $54 million, reflecting higher operational costs.
Financial Risks
As of September 30, 2024, the company had approximately $3.0 billion in long-term debt outstanding. Interest expense for the quarter was $54.5 million, up from $43.6 million in Q3 2023, primarily due to the issuance of additional senior notes. Such financial burdens can constrain cash flow and limit investment in growth opportunities.
Mitigation Strategies
To manage price volatility, Comstock utilizes natural gas price derivative financial instruments. As of September 30, 2024, the company had hedged approximately 64.4 Bcf of its 2024 natural gas production at an average price of $3.54 per MMBtu. This strategy aims to protect against adverse price movements and stabilize revenue streams.
| Risk Factor | Details | Impact |
|---|---|---|
| Industry Competition | Net loss of $25.7 million in Q3 2024 | Pressure on pricing and market share |
| Regulatory Changes | Federal NOL carryforwards of $754.1 million | Potential limitations on tax benefits |
| Market Conditions | Natural gas prices fell to $1.87 per Mcf | Revenue decline of $156 million (17%) |
| Operational Risks | Lease operating expenses at $29.2 million | Increased operational costs |
| Financial Risks | Long-term debt of approximately $3.0 billion | Higher interest expenses impacting cash flow |
| Mitigation Strategies | Hedged 64.4 Bcf of production | Stabilized revenue against price volatility |
Future Growth Prospects for Comstock Resources, Inc. (CRK)
Future Growth Prospects for Comstock Resources, Inc.
Analysis of Key Growth Drivers
Comstock Resources, Inc. is positioned for growth driven by several key factors:
- Market Expansion: The company has expanded its operations in the Western Haynesville area, acquiring 189,000 net acres for $50 million in 2024.
- Product Innovations: The implementation of advanced drilling techniques has led to an increase in natural gas production, which rose 5% to 403.4 billion cubic feet (Bcf) in the first nine months of 2024.
- Acquisitions: Focused on acquiring unproved properties, the company allocated approximately $87.9 million for such acquisitions in 2024, up from $76.6 million in 2023.
Future Revenue Growth Projections and Earnings Estimates
Projected revenues for Comstock in 2024 are expected to be around $887.1 million, a decrease from $1.154 billion in 2023, primarily due to lower natural gas prices. Earnings estimates remain cautious, reflecting a net loss of $163.4 million or $0.57 per share for the first nine months of 2024.
Strategic Initiatives or Partnerships That May Drive Future Growth
Strategic initiatives include:
- Partnerships: Collaborations with third-party operators to enhance operational efficiency and market access.
- Investment in Technology: Continued investment in technology aimed at reducing operational costs and improving production efficiency.
Competitive Advantages That Position the Company for Growth
Comstock possesses several competitive advantages:
- Access to Resources: The recent acquisition of new drilling rigs with an annual commitment of $12.8 million enhances the company's operational capacity.
- Financial Flexibility: As of September 30, 2024, Comstock reported $1.1 billion in liquidity, allowing for strategic investments and continued operations.
- Hedging Strategies: The company has hedged approximately 64.4 Bcf of its 2024 natural gas production at an average price of $3.54 per MMBtu, providing a buffer against price fluctuations.
| Metric | 2024 (Projected) | 2023 (Actual) |
|---|---|---|
| Natural Gas Production (Bcf) | 403.4 | 383.9 |
| Total Revenues ($ million) | 887.1 | 1,154.5 |
| Net Loss ($ million) | (163.4) | 103.5 |
| Liquidity ($ million) | 1,100 | Not Applicable |
| Average Hedged Price ($/MMBtu) | 3.54 | Not Applicable |
These metrics highlight the company's strategic focus on growth despite challenging market conditions.
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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.