-$7.12
$8.12
bear -$7.12
base -$0.59
bull $8.12
margin of safety $2.50
market price* $14.00
Business condition attached to the margin of safety
Cash generated before interest, after the drilling spending needed to stay in place and excluding Western Haynesville and pipeline growth spending, running at about the 2025 level (roughly $488 million a year, or $1.65 per share) for two years in a row, with total debt held at or below about $3.1 billion.
Comstock Resources is a natural gas producer focused on the Haynesville and Bossier shale in North Louisiana and East Texas. It produced about 450 Bcf of gas in 2025 (down 15% from 527.5 Bcf in 2024) and reports 7.0 trillion cubic feet equivalent of proved reserves, roughly 16 years of production at current rates, only 41% of it already developed. Its earnings depend heavily on the gas price it realizes ($1.98 per Mcf in 2024, $3.17 in 2025, $6.23 in 2022), and it carries a lot of debt, so small changes in the business produce large swings in what is left for shareholders. How we measured earning power. We start from operating cash flow, take out swings in receivables and payables, subtract stock compensation as a real cost, and subtract the drilling spending needed to stay in place. Reported on that basis, owner earnings per share were about -$0.36 (2019), $0.02, $1.09, $2.76 (2022), -$0.95 (2023), $0.39 and $0.94 (2025). Because lenders are paid before shareholders, we then add back cash interest paid and value the whole business, and subtract what it owes afterwards. Capital spending was split using the company's own disclosure: exploratory drilling in the Western Haynesville, new acreage and the Pinnacle pipeline and treating build-out ($787 million of the $1.35 billion spent in 2025) are treated as growth spending, and development drilling on known acreage is treated as the cost of staying in place. A revenue-based split does not work for a gas producer because its revenue moves with price rather than capacity. We then tested that split against a specific fact: in 2025 production fell 15% even though the drilling spending we count as the cost of staying in place had run at about $550 to $565 million in 2024 and 2025, well below the roughly $750 million a year average over 2021 to 2025. So we set the cost of staying in place at that five-year average rather than the low recent years. This lowered our estimate of normal cash flow by about 23%. On that basis, the cash the business generates before paying lenders was $1.09 per share in 2020, $1.54 in 2021, $4.09 in 2022, $0.64 in 2023, $0.36 in 2024 and $1.03 in 2025. We use the median of 2020 to 2025, which covers a full gas price cycle: $1.06 per share, or about $311 million a year. 2019 is left out because the Covey Park acquisition in mid-2019 changed the business. Before that normalization, this figure was $1.66 per share in 2025 versus $1.05 in 2024 (up 58%); the base case starts at $1.06, below that last-year figure, because 2025 benefited from a $3.17 gas price we do not assume will persist. In the first half of 2026 operating cash flow was $442 million versus $522 million a year earlier, and revenue was $941 million versus $983 million, so nothing in the recent quarters argues for a higher level. What is owed before shareholders. At mid-2026 long-term debt was $3.10 billion carrying value (about $3.13 billion of principal), up from $2.81 billion at the end of 2025 because 2026 drilling and pipeline spending is running ahead of cash flow ($848 million of capital spending in the first half). The debt is a bank facility due November 2027 ($1.5 billion of commitments, $260 million drawn at the end of 2025, with a leverage limit of 3.5 times), $1.62 billion of 6.75% notes due March 2029 and $965 million of notes due 2030. Cash interest of $211 million in 2025 on roughly $2.9 billion of debt suggests a cost modestly above 6%, so we add about $50 million for that excess over the next few years. The Pinnacle pipeline partner, Quantum, has put in $584 million of outside capital that earns a 12% dividend, and we treat that as a claim ahead of shareholders. Together these come to about $3.77 billion, or $12.82 per share. Base case: $12.22 per share of business value ($3.6 billion) less $12.82 owed, for a value of about -$0.59 per share. The story: pre-interest cash flow of $1.06 per share stays flat for the 16 years the proved reserves last, then fades to zero over the following ten years as the reserves run out. We credit no growth. We left out the Western Haynesville (about $1.1 billion of exploratory drilling since 2023), the Pinnacle pipeline and higher LNG-driven Gulf Coast demand: we can point to no production results or contracts in the filing for the first two, and the last is a market view rather than something this business has done. The money already spent shows up as extra debt, but its payoff is not counted. On this view the company is worth roughly what it owes. Bear case: about -$7.12 per share. The story: gas realizations stay near the 2023 and 2024 levels ($2.40 and $1.98), pre-interest cash flow is $0.70 per share ($206 million, about equal to the $211 million of interest paid in 2025) for ten years and then fades to zero over the next ten. Evidence for a shorter reserve life is that at the low prices at the end of 2024, some undeveloped locations were dropped from proved reserves. Business value is $6.58 per share ($1.9 billion). Debt maturing in 2027, 2029 and 2030 is refinanced at about 1.5 points more than 6%, adding $0.88 per share, so owed claims are $13.70 per share. In this case the company appears to owe more than it is worth, by roughly $2.1 billion, which in practice means a restructuring with little or nothing for shareholders. Bull case: about $8.12 per share. The story: the business keeps earning what it did in 2025, $1.66 per share ($488 million) before interest, with the 2026 plan of 72 wells turned to sales at least holding volumes, for 20 years, then fading over ten. Business value is $20.93 per share ($6.2 billion) less $12.82 owed. This is the upper end because it requires both 2025's gas price and 2025's modest drilling spending to prove enough to sustain output. What changed since our last review. We previously showed a base value of $7.99, with a bear of $1.00 and a bull of $28.56. That view assumed earnings recover on LNG-driven demand growth and discounted at 10%. This time we credit no growth that is not already secured, we normalize drilling spending upward, debt is $290 million higher, and the partner's Pinnacle stake is deducted. A lower discount rate (6%) partly offsets those, but the net result is lower. What could make this wrong. The company's own reserve report shows $9.8 billion of after-tax future net cash flow from proved reserves, or $3.9 billion discounted at 10%, which points to more cash than our historical record supports; we could not reconcile that difference from the filings and relied on the demonstrated record. Higher gas prices held for years, or Western Haynesville wells that meaningfully lift output without more borrowing, would make the base case too low. In December 2025 the company sold its Shelby Trough properties (163 wells) for $417 million, which reduces future volumes from the 2025 level, and a further gas price fall or higher interest costs would push the shares toward the bear case.