COMSTOCK RESOURCES INC Annual Report - A Look at 2025 Performance

Business Overview

Comstock Resources, a leading independent energy company, acquires, develops, produces, and explores oil and natural gas assets. Its primary focus lies in the Haynesville Shale and Bossier Shale formations across North Louisiana and East Texas. The SEC recognizes Comstock as a "well-known seasoned issuer" and a "large accelerated filer," a designation that highlights its established market presence and robust financial reporting. As of December 31, 2025, its stock held by non-affiliates had a market value of approximately $2.2 billion, with about 294 million shares outstanding as of January 31, 2026.

Comstock's core business centers on its "proved reserves"—the oil and gas it can reliably extract. As of December 31, 2025, its proved reserves totaled an impressive 7 trillion cubic feet equivalent (TCFE) of natural gas, primarily natural gas, and 198 thousand barrels of proved oil reserves. Netherland, Sewell & Associates, Inc. independently audited this substantial resource base, which supports Comstock's long-term production capabilities. For the full year 2025, Comstock achieved average net production of approximately 1.5 billion cubic feet equivalent per day (Bcfe/d), predominantly natural gas.

Financial Performance

Comstock Resources delivered strong financial results for the fiscal year ended December 31, 2025:

• Total Revenues: Approximately $4.5 billion, driven by strong production volumes and commodity price movements.
• Net Income: Approximately $600 million, resulting in $2.00 per diluted share.
• Cash Flow from Operations: A robust $1.8 billion, demonstrating strong operational cash generation.
• Capital Expenditures (CapEx): Approximately $1.2 billion, primarily funding drilling and completion activities to develop its extensive Haynesville and Bossier Shale assets.

The estimated present worth (PV-10) of its proved reserves, discounted at 10%, reached $4.46 billion as of December 31, 2025. This valuation is based on projected future net revenues of approximately $11.06 billion and offers valuable insight into the intrinsic value of its underground assets.

Risk Factors

Like any energy company, Comstock faces inherent risks that investors should consider:

• Commodity Price Volatility: Its future revenues depend heavily on fluctuating oil and natural gas prices. While reserve valuations use specific prices ($65.34/barrel for oil and $3.387/MMBTU for gas), actual market prices can vary significantly, directly impacting profitability.
• Reserve Estimation Uncertainty: Proved reserves are estimates, and actual production may differ due to geological factors, drilling success rates, or changes in technology and economic conditions.
• Operational Risks: Drilling and production activities carry risks such as well blowouts, equipment failures, environmental incidents, and increased operating costs.
• Regulatory and Environmental Changes: Evolving government policies and environmental regulations (e.g., related to methane emissions, flaring, or hydraulic fracturing), along with climate change initiatives, could increase compliance costs, restrict operations, or reduce demand for fossil fuels.
• Interest Rate Risk: With significant debt, rising interest rates could increase Comstock's borrowing costs, impacting its financial performance.
• Dependence on Midstream Infrastructure: Comstock relies on third-party pipelines and processing facilities to transport and sell its production. Disruptions or capacity constraints in this infrastructure could reduce sales volumes.

Management's Discussion and Analysis (MD&A) Highlights

Comstock's Management's Discussion and Analysis (MD&A) offers a detailed narrative of the company's financial performance and condition. For 2025, key highlights include:

• Results of Operations: As detailed in the Financial Performance section, the company achieved approximately $4.5 billion in revenues and $600 million in net income. Strong production volumes and commodity prices drove these results, despite ongoing market volatility. The company successfully executed a robust drilling program, bringing numerous new wells online and optimizing efficiencies. However, it faced challenges from continued natural gas price volatility and inflationary pressures on service costs.
• Liquidity and Capital Resources: Comstock maintained a disciplined balance sheet, ending the year with approximately $150 million in cash and $800 million available under its revolving credit facility. This provided ample liquidity for operations and capital needs. Capital expenditures of approximately $1.2 billion primarily funded drilling and completion activities to develop its extensive Haynesville and Bossier Shale assets.
• Strategy and Outlook: Management focused strategically on optimizing its Haynesville asset base, emphasizing capital efficiency and maximizing returns. It plans to continue a disciplined capital program in 2026, focusing on cost efficiencies, leveraging technology, and prioritizing debt reduction.
• Market Trends and Regulatory Environment: Market trends such as LNG export growth, the energy transition, evolving environmental regulations, geopolitical factors, and technological advancements significantly influence the company's performance and outlook.

Financial Health

Comstock maintains a disciplined approach to its financial health. As of December 31, 2025:

• Cash and Cash Equivalents: Approximately $150 million.
• Total Debt: Approximately $3.5 billion, primarily from senior notes and borrowings under its revolving credit facility.
• Liquidity: It had approximately $800 million available under its revolving credit facility, providing ample flexibility for future operations and capital needs. Its debt maturity profile is well-managed, with no significant maturities until 2028.

Future Outlook

Looking ahead to 2026, Comstock plans to continue its disciplined capital program, aiming for sustained production levels from its Haynesville assets. It anticipates focusing on further cost efficiencies and leveraging technological advancements to enhance well performance and reduce its environmental footprint. Management remains optimistic about the long-term demand for natural gas, especially for LNG exports, which could support future pricing. The company will also navigate the broader energy transition and evolving environmental regulations. Comstock aims to prioritize debt reduction while maintaining a strong operational base and exploring opportunities for value creation. Its strategic focus remains on optimizing its Haynesville asset base, emphasizing capital efficiency, maximizing returns, and exploring bolt-on acquisitions within its core operating areas.

Competitive Position

Comstock stands as a dominant player in the Haynesville Shale, one of North America's most prolific natural gas basins. Its competitive advantages include a large, contiguous land position, an extensive drilling inventory, and a proven track record of efficient well development. It competes with other major and independent E&P companies for acreage, capital, equipment, and skilled personnel. Its low-cost operating structure in the Haynesville provides a competitive edge, especially during periods of lower commodity prices.