Free Annual Reports
Comstock Resources Second Quarter 2010 Recap (CRK)
Comstock Resources (NYSE:CRK) continued the development of its core properties in the Haynesville Shale during the second quarter of 2010, and hedged its bets slightly with the initiation of a position in the Eagle Ford Shale in Texas.
IN PICTURES: What Is Your Risk Tolerance?
Haynesville Shale
The Haynesville Shale is the company's core focus area for development, as Comstock Resources seems to have tied its fortunes to this well-known and high growth unconventional resource basin. The company had 78,000 net acres under lease here at the end of the second quarter.
Comstock Resources produced an average of 219 million cubic feet of natural gas equivalent per day in the second quarter of 2010, with 47% of this production from the company's Haynesville Shale wells. One year ago, Haynesville Shale production was only 19% of the company's total.
One of the problems that some exploration and production companies face in popular shale plays like the Haynesville Shale is difficulty in getting oil services on a timely basis. Comstock Resources is experiencing these issues, and now has 17 wells that are waiting on completion services. The company indicates that it might take until early 2011 until enough capacity is available to reduce this inventory of uncompleted wells.
This lack of capacity forced the company to lower its production growth estimate for 2010, with a sequential decline in production in the upcoming third quarter. The company is using a range of 13% to 18% growth in 2010 over the 65.5 Bcfe produced in 2009.
Other companies in the Haynesville Shale include Chesapeake Energy (NYSE:CHK), which has 530,000 net acres under lease, and average daily net production from of 560 million cubic feet equivalent per day during the second quarter of 2010. Cabot Oil and Gas (NYSE:COG) also has properties in the Haynesville Shale and completed it second horizontal well during the second quarter of 2010.
Eagle Ford Shale
Comstock Resources is hedging a little on its reliance on the Haynesville Shale for future growth and has initiated a position in the Eagle Ford Shale in Texas. The company has 18,000 net acres under lease and like every other exploration and production company is focusing on its properties here that are in the oil window of the play.
Comstock Resources is targeting the acquisition of another 10,000 net acres in the Eagle Ford Shale, and will transfer one of its contracted rigs from the Haynesville Shale to start up development in the third quarter of 2010.
Comstock Resources will move slowly in the Eagle Ford Shale, with only 3 wells planned in 2010 at a total cost of $13.7 million. A total of $104 million will be used in 2010 to acquire leasehold here.
Other companies are ahead of Comstock Resources in the Eagle Ford Shale. Petrohawk Energy (NYSE:HK) is developing the Black Hawk prospect and plans to drill 35 wells here in 2010.
Bottom Line
Comstock Resources is moving to develop the Haynesville Shale, while also attempting to diversify the company's operations with a move into the more oily part of the Eagle Ford Shale. (Learn about varying accounting methods used by oil firms in Accounting For Differences In Oil And Gas Accounting.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
Haynesville Shale
The Haynesville Shale is the company's core focus area for development, as Comstock Resources seems to have tied its fortunes to this well-known and high growth unconventional resource basin. The company had 78,000 net acres under lease here at the end of the second quarter.
Comstock Resources produced an average of 219 million cubic feet of natural gas equivalent per day in the second quarter of 2010, with 47% of this production from the company's Haynesville Shale wells. One year ago, Haynesville Shale production was only 19% of the company's total.
One of the problems that some exploration and production companies face in popular shale plays like the Haynesville Shale is difficulty in getting oil services on a timely basis. Comstock Resources is experiencing these issues, and now has 17 wells that are waiting on completion services. The company indicates that it might take until early 2011 until enough capacity is available to reduce this inventory of uncompleted wells.
This lack of capacity forced the company to lower its production growth estimate for 2010, with a sequential decline in production in the upcoming third quarter. The company is using a range of 13% to 18% growth in 2010 over the 65.5 Bcfe produced in 2009.
Other companies in the Haynesville Shale include Chesapeake Energy (NYSE:CHK), which has 530,000 net acres under lease, and average daily net production from of 560 million cubic feet equivalent per day during the second quarter of 2010. Cabot Oil and Gas (NYSE:COG) also has properties in the Haynesville Shale and completed it second horizontal well during the second quarter of 2010.
Comstock Resources is hedging a little on its reliance on the Haynesville Shale for future growth and has initiated a position in the Eagle Ford Shale in Texas. The company has 18,000 net acres under lease and like every other exploration and production company is focusing on its properties here that are in the oil window of the play.
Comstock Resources is targeting the acquisition of another 10,000 net acres in the Eagle Ford Shale, and will transfer one of its contracted rigs from the Haynesville Shale to start up development in the third quarter of 2010.
Comstock Resources will move slowly in the Eagle Ford Shale, with only 3 wells planned in 2010 at a total cost of $13.7 million. A total of $104 million will be used in 2010 to acquire leasehold here.
Other companies are ahead of Comstock Resources in the Eagle Ford Shale. Petrohawk Energy (NYSE:HK) is developing the Black Hawk prospect and plans to drill 35 wells here in 2010.
Bottom Line
Comstock Resources is moving to develop the Haynesville Shale, while also attempting to diversify the company's operations with a move into the more oily part of the Eagle Ford Shale. (Learn about varying accounting methods used by oil firms in Accounting For Differences In Oil And Gas Accounting.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Eric Fox
Eric J. Fox, CFA, is a freelance financial writer and has previous experience working in the asset management industry as an equity analyst and portfolio manager on the buy side. His favorite area to write on is the energy sector and he keeps current on the industry by reading Haynesville Shale, Permian Oil and Gas and various other blogs.
Free Annual Reports
