Comstock Stays Neutral - Analyst Blog

We maintain our Neutral recommendation on Comstock Resources Inc. (CRK) with a target price of $33. 

Comstock has clearly emerged as a pure-play onshore operator following the divestiture of its offshore Gulf of Mexico assets in 2008, with a resource-play focused production base. Comstock’s major position in the prolific Haynesville Shale play and existing Cotton Valley centric East Texas producing assets provides it with a multi-year inventory of low-risk development drilling opportunities. 

Supplemented with a robust balance sheet, Comstock remains well positioned to maintain a strong growth trajectory in the near-to-medium term. 

However, the company’s highly gas weighted reserves/production profile and exposure to the inherently cyclical and volatile exploration and production sector offset these strengths and remain key areas of concern, in our view. In particular, Comstock’s high natural gas exposure raises its sensitivity to gas price fluctuations, compared to its more-diversified independent peers with a balanced oil/gas production profile. 

Considering these factors, we believe that Comstock’s current valuation adequately reflect its fairly balanced risk/reward profile. As such, we see limited upside from current levels and expect the company to perform in line with the broader market. 

Frisco, Texas-based Comstock Resources is an independent oil and gas exploration and production company engaged in the acquisition, exploration, and development of oil and gas properties. The company’s operations are concentrated primarily in two regions in the U.S., East Texas/North Louisiana and South Texas.
Read the full analyst report on "CRK"
Zacks Investment Research