CRK Q2 Earnings Beat Estimates, Revenues Miss on Weak Gas Prices

The better-than-expected earnings were driven by higher production volume. Lower natural gas prices and reduced gas services revenues offset the positives.

CRK's Production Returns to Sequential Growth

Total production averaged 1,243 million cubic feet equivalent per day (MMcfe/d), up from 1,233 MMcfe/d a year earlier. Natural gas production totaled 113,069 million cubic feet (MMcf) compared with 112,164 MMcf in the prior-year period, while oil production declined to 5,000 barrels from 13,000 barrels.

Comstock turned 16 operated wells to sales during the quarter. The company brought five Western Haynesville wells to sales with an average lateral length of 9,679 feet and an average initial production rate of 33 MMcf per day. It also turned 12 Legacy Haynesville wells to sales, including five horseshoe wells.

Comstock's Gas Pricing Weighs on Sales

The average realized natural gas price before hedging declined to $2.54 per thousand cubic feet (Mcf) from $3.02 per Mcf a year ago. Including hedging, the realized natural gas price was $2.93 per Mcf compared with $3.06 per Mcf in the second quarter of 2025.

Natural gas and oil sales, including realized hedging gains, totaled $331.55 million, down from $344.25 million a year earlier. The quarter included $43.33 million of natural gas hedging settlements, sharply higher than $4.29 million in the year-ago period, cushioning the impact of weaker market prices.

CRK's Gas Services Revenues Declines Sharply

Natural gas sales declined to $287.75 million from $339.23 million a year earlier. Gas services revenues decreased to $63.48 million from $130.30 million, accounting for much of the year-over-year decline in consolidated revenues.

Gas services expenses dropped to $63.01 million from $126.71 million. The business generated a margin of $467,000 compared with $3.58 million in the prior-year quarter, reflecting a substantially smaller level of activity.

Comstock Keeps Unit Production Costs in Check

Total production costs averaged 77 cents per Mcfe, improving from 80 cents a year ago. The cost structure per Mcfe for the second quarter of 2026 included 38 cents for gathering and transportation, 25 cents for lease operating expenses, 6 cents for production and ad valorem taxes, and 8 cents for cash general and administrative expenses compared with 37 cents, 28 cents, 9 cents and 6 cents, respectively, in the year-ago quarter.

Comstock’s unhedged operating margin was 70%, down from 73% in the prior-year period. The hedged operating margin remained unchanged at 74%, demonstrating the benefit of the company’s commodity-price protection during a weaker pricing quarter.

CRK's Cash Flow Supports Heavy Drilling Spend

Adjusted earnings before interest, taxes, depreciation, amortizations and explorations declined to $244.81 million from $259.74 million a year ago. Operating cash flow before working capital changes totaled $188.51 million or 65 cents per share compared with $209.64 million in the prior-year quarter.

Exploration and development capital expenditures increased to $390.43 million from $268.20 million. Comstock spent $174.36 million on exploratory drilling and completion and $199.36 million on development drilling and completion as it advanced both the Western and Legacy Haynesville programs.

Comstock Strengthens Its Balance Sheet With Pinnacle Deal

Comstock sold a 27% noncontrolling interest in Pinnacle Gas Services to Sixth Street for $600 million. The proceeds were used to retire Pinnacle’s preferred equity and outstanding debt. Comstock retained a 73% controlling stake and continued to operate the midstream business.

At June 30, 2026, CRK had $45.01 million in cash and $3.10 billion of long-term debt. Total liquidity was about $1.15 billion.

2026 Outlook of CRK

Comstock expects third-quarter 2026 production to be in the range of 1,300-1,400 MMcfe/d, above the second quarter’s 1,243 MMcfe/d. The company’s full-year production guidance remains unchanged at 1,250-1,400 MMcfe/d, supported by continued development across the Legacy and Western Haynesville areas. For 2026, CRK plans to drill 22 Western Haynesville wells and turn 21 wells to sales.

Total capital expenditures are projected to be in the range of $375-$450 million for the third quarter and $1.45-$1.55 billion for 2026. Pinnacle Gas Services spending is expected to total $25-$45 million in the third quarter and $100-$150 million for the full year.

CRK’s Zacks Rank & Key Picks

Comstock currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the energy sector are NOV Inc. NOV, HF Sinclair Corporation DINO and Cactus, Inc. WHD. NOV sports a Zacks Rank #1 (Strong Buy), while DINO and WHD carry a Zacks Rank #2 (Buy) each, at present. You can see the complete list of today’s Zacks Rank #1 stocks here.

NOV reported second-quarter 2026 adjusted earnings of 31 cents per share, which topped the Zacks Consensus Estimate of 16 cents per share.

As of June 30, 2026, NOV had long-term debt of $1.69 billion, and cash and cash equivalents of $1.16 billion.

HF Sinclair reported second-quarter 2026 adjusted earnings of $5.31 per share, which surpassed the Zacks Consensus Estimate of $4.39 per share.

As of June 30, 2026, DINO had total debt of $2.77 billion, and cash and cash equivalents of $2.26 billion.

Cactus reported second-quarter 2026 adjusted earnings of 93 cents per share, which beat the Zacks Consensus Estimate of 71 cents per share.

As of June 30, 2026, WHD had cash and cash equivalents of $365 million.

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