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

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Ron Mills: So the one comment I may add is, Leo, when you’re looking at that cost per completed well that there’s a big time difference. Drilling costs are the oldest cost in there. And so there — because these wells were drilled probably back a couple of quarters ago or at least a quarter ago. Completion costs are more in the quarter, but even all of them lag because we can’t report this until the well is completed. So there’s a disconnect between the drilling costs, which are older numbers that get reported this quarter. So you’ll see the drilling cost comes down last. So I do — I think what we would expect to see as you get kind of — if you go out and look in the future to what this chart may look like, we should see drilling costs continue to come down because we’ll get — we’ll start reporting more recent costs with wells that we complete, probably more first quarter.

I think that’s when we really see, I think, that the current costs we’re seeing now show up in this particular scorecard.

Daniel Harrison: Yes, that’s a really good point. I mean if you look at — if you — we report by wells when they turn to sales. So the [indiscernible] of wells that turned to sales in 3Q, a lot of that drilling cost was done back in Q1 as far as when we’re actually drilling the wells. So..

Roland Burns: Savings aren’t here yet in that number. That’s correct.

Leo Mariani: Okay. That’s helpful, guys. And then maybe just to follow up a little bit on just the kind of financing side. Obviously, you guys were able to mitigate some future CapEx with this deal, that’s great to see. So we noticed that the revolver debt popped up a fair bit this quarter. I guess we’ll see what gas prices do going forward. But I guess to the extent that, that revolver debt were to climb a little more, would you guys kind of look to term that out? Are you kind of thinking about sort of maximum liquidity as you kind of think about future funding needs and could we see some term out on some point in the near future?

Roland Burns: I would doubt it, Leo. I mean, we see repaying that as gas prices get back up over a — little bit over $3. I mean I think that kind of puts us back in a good balance. The second and third quarter had these very low gas prices, that had to lean into the revolver a little bit, but we see that trend reversing.

Operator: And our next question comes from Paul Diamond from Citi.

Paul Diamond: Could I just get a bit of a bit more detail on the breakdown of your development plans for Haynesville versus Bossier. I know you talked about 8 and 2 next year. Is that roughly where you guys think it fits long term? Or is that something that’s still kind of inflects the development of the play?

Daniel Harrison: Yes. So you — is that in relation to the Western Haynesville or just overall?

Paul Diamond: Western Haynesville.

Daniel Harrison: Yes. So we’ve got 7 wells that are currently producing now as we stated. All of those are producing from the Bossier with the exception for 1. We got 1 Haynesville producer in that bunch. And then next year, we don’t have any more wells turned into sales this year and that makes all turn to sales in January. So full year next year, we’ll have 10 wells that are scheduled to turn to sales and 8 of those will be the Haynesville, which is — that’s what we had said earlier, correct, and just 2 in the Bossier.

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