CRK - Comstock Resources: A Leveraged Play On Gas Upside
- Comstock Resources produces natural gas in the Haynesville Shale field of Louisiana and Texas, a region that’s located close to the US Gulf coast and LNG export infrastructure.
- Environmental opposition to new interstate pipelines like the canceled Atlantic Coast project remains a key risk for producers in the Marcellus, CRK's access to easier-to-permit intrastate pipes is an advantage.
- CRK is paying down debt aggressively and on track to generate free cash flow north of $200 million in 2021,bringing leverage down to comfortable levels by 2022.
- Because of CRK's operational leverage to natural gas price gains, the stock tends to see more upside due to natural gas price rallies than higher quality peers like Cabot Oil & Gas.
- CRK has significant unhedged gas exposure in 2021 while only around 17.6% of 2022 output was hedged at the time of its Q4 earnings release in February.
For further details see:
Comstock Resources: A Leveraged Play On Gas Upside