Comstock Resources: Serious Cash Flow, Debt And Dividend Headwinds Loom

Elliott Gue
6.24K Followers

Summary

  • Comstock Resources (CRK) is expected to continue underperforming due to high costs and limited hedge coverage for 2024.
  • The company is projected to have a cash flow outspend of up to $500 million in 2024, leading to a deterioration in its credit position.
  • CRK may need to cut capital expenditures and eliminate its dividend to preserve cash.
  • The stock faces a potential negative borrowing base redetermination on its credit line this spring.

Liquefied natural gas tanker ship in sea

alvarez

Back on April 26, 2023, I wrote a bearish article on natural gas-focused producer Comstock Resources (NYSE:CRK) titled "Comstock Resources: 2023 Will Be Messy."

My thesis was simple: CRK's high cash breakeven cost coupled with low natural gas prices and

This article was written by

Elliott Gue
6.24K Followers
Elliott Gue knows energy. Since earning his bachelor’s and master’s degrees from the University of London, Elliott has dedicated himself to learning the ins and outs of this dynamic sector, scouring trade magazines, attending industry conferences, touring facilities and meeting with management teams. For seven years, Elliott Gue shared his expertise and stock-picking abilities with individual investors through a highly regarded, energy-focused research publication. Elliott Gue’s knowledge of the sector and prescient investment calls prompted the official program of the 2008 G-8 Summit in Tokyo to call him “the world’s leading energy strategist.” He has also appeared on CNBC and Bloomberg TV and has been quoted in a number of major publications, including Barron’s, Forbes and the Washington Post. In October 2012, Elliott Gue launched the Energy & Income Advisor (www.EnergyandIncomeAdvisor.com), a semimonthly online newsletter that’s dedicated to uncovering the most profitable opportunities in the energy sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships. Roger Conrad also contributes analysis of master limited partnerships and Canadian energy stocks to the publication. The masthead may have changed, but subscribers can expect the same in-depth analysis and rational assessments of investment opportunities in the energy sector.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of SWN either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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