On Friday, June 15th, Comstock Resources (ticker: CRK) reported that the BSMC Unit 'B' #1 well in Polk County was unsuccessful in garnering a meaningful amount of pay sands in the Lower Woodbine. The immediate effect will be a dry hole charge of $14 million that will be reflected in the 2Q2005 earnings.
The "Big Sandy" prospect was a little bit of a problem child. Hoping to hit multiple pay sands, specifically the Upper Woodbine, CRK announced earlier that this formation was uncommercial earlier in the year. The Big Sandy was south of the Hammon discovery. The effect of the Big Sandy dry hole is two fold. The first is immediate with the dry hole cost but, the second is what effect will the results have on the drilling program in Polk County.
Southeast Texas was developing into a good complement for CRK's steady East Texas acreage. The Double A Wells field had more of a doubles and triples feel when compared to the singles the rest of CRK's operations were providing. The company was planning on drilling the Robin prospect, south of the Big Sandy, but the new information derived from the dry hole will now have to be considered before going forward.
The stock lost about 2.7% after the news was released, this could have been a big mover for the stock as the prospective reserves could have been prolific. Problems with the well had been promulgated in the past and the risk of a dry hole had to be considered by a prudent investor. What a person should look for in the next conference call is what CRK has planned for the Robin prospect.