Analyst: Is Jerry Jones Making a Run to Take Comstock Private?

Jerry Jones watches his Dallas Cowboys play football on Sundays. But during the week, he gobbles up Comstock Resources (CRK) stock.

Analysts wonder if Jones might split the tackles and run downhill toward a go-private buyout of the Haynesville Shale gas producer.

Jones and his affiliated businesses, Arkoma Drilling LP, Blue Star Exploration Co., Williston Drilling LP and JWJ BES LLC, went on a share-buying spree in August, according to U.S. Securities & Exchange Commission filings.

The Jones family acquired more than 13.4 million CRK shares between Aug. 5 and Aug. 27 at average weighted prices ranging between $8.16 and $11.54 per share, filings show.

Based on average weighted prices, the share purchases in August were collectively valued at about $137.5 million.

The Jones family now owns 208.3 million Comstock shares, more than 71% of the company’s outstanding common stock.

Analysts at KeyBanc Capital Markets note there’s not much of Comstock left for Jones to buy.

“We can't help but notice similarities to Continental Resources, which went private in 2022 when majority shareholder Harold Hamm bought in all publicly traded shares,” KeyBanc analysts Tim Rezvan and Jonathan Mardini wrote in a Sept. 19 report.

Continental Resources was acquired by the Hamm family for $74.28 per share, or around $4.3 billion, in cash in 2022.

KeyBanc said it “can’t speak to Mr. Jones’ inclination to follow suit” after Hamm’s strategy. But the bank did note that Jones could have liquidity options to buyout Comstock when the NFL allows private equity investment to enter the league.

NFL team owners in late August voted to approve a measure to allow private equity funds to buy up to 10% stakes in league franchises.

“In our view, that is a significant funding lever that could fund the purchase of the remaining [$851 million] of CRK shares trading in the marketplace today,” Rezvan and Mardini wrote.

Comstock Resources did not respond to a request for comment. A Dallas Cowboys executive declined to comment.

The August share purchases come after Jones made a $100 million equity investment in Comstock earlier this year. Jones purchased 12.5 million CRK shares at a price of $8.036 per share, boosting his stake in Comstock from 65% to 67%.

“I want to compliment the Jones' for writing the $100 million check for the acreage that we've been acquiring,” Comstock Chairman and CEO Jay Allison said during a second-quarter earnings call. “I think that acreage is worth a fortune, and they were willing to backstop that and write the check.”

Comstock shares have underperformed the broader market and other gas-weighted peers over the past year.

Shares for CRK closed at $10.13 per share on Sept. 19, down around 8.6% year-over-year. The E&P-focused XOP index fell around the same amount.

The S&P 500 rose around 28% over the same period. Market values for other public gas producers also grew over the past year, including CNX Resources (+37%), Gulfport Energy (+31%), Antero Resources (+5%) and Southwestern Energy (+4%).

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Gassing up the Haynesville

Comstock Resources sits in a league of its own as the only publicly traded, pure-play producer in the Haynesville Shale, with acreage across north Louisiana and East Texas.

In March, Comstock acquired about 189,000 net undeveloped acres in its emerging western Haynesville area from an undisclosed seller for $50 million.

Comstock is reporting strong results from ultra-deep tests in the western Haynesville, north of College Station, Texas.

The company has been loosening up some chokes on its western Haynesville wells to better understand the roughly 2-year-old play’s super high-pressure regime, Comstock reported in second-quarter earnings.

Comstock has 12 producing horizontals in the area, six in the Haynesville and six in the Bossier formation. The other leading developer there, Aethon Energy, has five wells online.

Together, they have produced a cumulative 123.1 Bcf of gas from roughly two-mile laterals landed in the Bossier and Haynesville intervals, according to a Hart Energy analysis of Texas Railroad Commission (RRC) data.

Comstock is testing western Haynesville spacing with two 2-well pads expected to come online by year-end or in early January.

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