SHREVEPORT, La.—Comstock Resources Inc. “will entertain any proposal that helps” increase shareholder value “where you win (and) we win,” chairman and CEO Jay Allison told nearly 1,000 fellow operators as well as investors and oilfield-service providers at Hart Energy’s inaugural DUG Haynesville conference.
“We want to make the Haynesville great again. We want to be successful and we want you to be successful,” Allison said.
Being asked to speak at the conference, he said, “is like Christmas” finally, after the Thanksgiving Day 2014 blow from Vienna that crushed many U.S. producers. “A lot of companies didn’t survive.” Comstock had “great impairments, great debt,” but it survived. “We didn’t go bankrupt.”
The Haynesville’s return to recognition is more than a Christmas present, he added. “It’s a miracle,” he said.
Comstock has some 68,000 net Haynesville acres and 47,000 net Bossier acres “and we have great friends out there.” In the past 30 years, the company has done business with “almost all of you … You’re family.” The company’s stock peaked at $90 and fell to 50 cents. “I want it to be $90 again.”
The company’s Haynesville story is one of commitment. “Let me tell you how committed we are. When everything fell apart” the team remained convinced the best U.S. gas-field economics are in the Haynesville.
“Our G&T (gathering and transportation) is about 22 cents (an Mcf) and basis differential is about 12 cents…. That’s the difference.” Comstock doesn’t have “those onerous transportation commitments” other operators experienced in the play, he added. “If we had those, we probably wouldn’t be here today, making the Haynesville great again.”
Some of its leasehold is in a joint venture with USG Haynesville Properties LLC that came about after the gas-price downturn, which was to as little as $1.63 on Christmas Eve of 2015. After recapitalizing, Comstock put three rigs back to work, putting bigger stimulations on longer laterals. All-in finding cost is 54 cents an Mcf today.
“That’s what the Haynesville can give you. We call it Hayneville 2.0.”
Gen 2.0 involves 50 stages 150 feet apart, down from 30 stages 250 feet apart. Gen 2.0 clusters number 250 in a 7,500-foot lateral versus 150. Stimulations had been with 1,000 pounds of sand per lateral foot; today, they’re with 3,800 pounds per foot.
“I think that’s what makes the Haynesville great again. It’s the sand,” he said. The new-model IP is 32% higher “and that’s across the board.”
The rate of return is between 30% and 40%. “If you look at the real strip of $2.75 to $3, we get a 60% to 70% rate of return and we have a lot of inventory to do that.”
Comstock has 460 Haynesville locations in inventory to drill and 390 Bossier locations. “We think the Bossier is going to be almost as good as the Haynesville. Is it derisked? No, it’s not,” but the company has a four-well test underway.
In the E&P business, “you have to have good rock. Well, we have good rock.”
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