Comstock Resources, Inc. (NYSE:CRK) Q3 2023 Earnings Call Transcript

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Noel Parks: Right. Great. And 1 thing I want to — sorry, just catching up on my note here. One thing we’re hearing about in other parts of the country, and it sort of depends a lot on just individual sort of grid operators and regulation given part of the country. But aside from LNG, I just wondered if you were getting many inquiries about DAS contracts with industrial users, maybe with an eye to some of the micro grid technology we’ve seen, it’s still small, but getting share just as people get more worried about either being able to expand their access to the grid or reliability of the grid. So I just wondered if you were hearing anything — getting any feelers out for customers that might be looking to do something like that?

Roland Burns: That’s a great question. No. We’ve had a big initiative that we really — we put in place a new team there and to really reach out to more industrial users. We luckily can access kind of the growing area along the Gulf Coast, the best Louisiana Gulf Coast, where there’s a lot of new construction for industrial demand that’s not LNG related in addition to the LNG users. And they all see the big demand pull coming in the area. And so where gas supply was relatively easy to get. It’s now being contracted up by the large LNG users. So we’re seeing a lot of interest from long-term supply contracts to those type users, and they offer maybe even stronger pricing for us and probably more very reliable customers. They have a — they can really predict what their demand is.

And I think as we go forward, you’ll see more and more of our sales are directly tied to either LNG shippers or industrial users. We would like to have a portfolio of all those users as we go forward that we can directly connect to either from our new growing Western Haynesville play or our base play in Louisiana, where we’re the anchor shipper on Acadian, and we can get a lot of gas down to that market.

Noel Parks: And just I’m sure nothing is really final or signed until it’s done. But when you have those discussions or do that outreach, what sort of terms are people thinking about 5 years, 20 years or just something more market tied where there wouldn’t be long contracts at all?

Roland Burns: I think the interest is 3 to 10 years as far as supply contracts. I mean 3 is very, very common. Longer-term contracts, obviously, because they’re — I think people are worried about the short-term contracts and just all of a sudden, the market being everybody pulling on gas at the same time. So yes, we’re seeing an interest in longer-term contracts from the end users. The key is us acquiring the transportation or getting — be able to directly connect to these parties. And that’s something we’ve been working on a lot and continue to work on, especially as we have kind of a blank canvas for our new gas in the Western Haynesville, where it’s not committed to a lot of other long-term contracts.

Operator: And our next question comes from Fernando Zavala Pickering Energy Partners.

Fernando Zavala: Just a quick one for me. With the plan to move to 1 rig — to move 1 rig from your legacy Haynesville into the Western Haynesville next year. Do you think your legacy Haynesville production can be held flat with that rate cadence? Or do you think it declines a little bit with a 4 rig program?

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