Executive Summary

Q4 2024 delivered stronger cash generation and margins on higher realized gas prices and heavier hedging, despite lower volumes and a GAAP net loss driven by a $126.9M unrealized hedge loss; adjusted EPS was $0.16 and adjusted EBITDAX was $252M .
Production fell 12% YoY to 124.2 Bcfe due to dropping two rigs early-2024 and a Q3 frac holiday; operating cost/MCFE improved to $0.72 and hedged operating margin reached 73% vs 67% in Q3 .
Western Haynesville execution advanced: 6 new wells averaged 40 MMcf/d IP; cost/ft compressed meaningfully; 2025 plan lifts rigs from 5→7 with $1.0–$1.1B D&C and 46/46 wells drilled/turned (plus $130–$150M midstream funded by partner) .
Management reinforced hedge protection (~50% in 2025 at ~$3.48) and balance sheet path to ≤1.5x leverage by 2026; potential long-term demand catalysts include LNG, data centers, Gulf Coast industry .

What Went Well and What Went Wrong

What Went Well
- Hedging and pricing: Realized gas price improved to $2.70/Mcf with 51% hedged, lifting hedged operating margin to 73% (vs 67% in Q3) .
- Cost/margin execution: Production cost/MCFE fell to $0.72 (vs $0.77 in Q3) with improved EBITDAX margin; Q4 adjusted EBITDAX was $252M and operating cash flow $223M .
- Western Haynesville: 6 wells turned to sales at 40 MMcf/d average IP; drilling/completion cost-per-foot trending down; management: “golden age of natural gas is here” near LNG corridor .
What Went Wrong
- Lower volumes: Q4 production 124.2 Bcfe (down from 140.6 Bcfe in Q4’23) due to earlier rig drops and a Q3 completion pause .
- GAAP loss: Net loss $(55.3)M (−$0.19/sh) driven by a $126.9M unrealized hedge loss; without this, adjusted NI was $46.3M ($0.16/sh) .
- Free cash deficit: Despite higher OCF, Q4 free cash deficit after A&D was $(50.8)M due to elevated Q4 capital cadence and Western Haynesville/midstream build .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Total Revenues ($MM)	$410.6	$304.5	$366.5
Natural Gas & Oil Sales incl. Hedging ($MM)	$353.5	$305.0	$336.1
Adjusted EBITDAX ($MM)	$243.6	$201.7	$252.2
Operating Cash Flow ($MM, pre WC)	$206.9	$152.3	$222.8
GAAP Diluted EPS ($)	$0.39	$(0.09)	$(0.19)
Adjusted EPS ($)	$(0.24)	$(0.17)	$0.16
Production (Bcfe)	140.6	133.2	124.2
Avg Gas Price (Unhedged, $/Mcf)	$2.48	$1.90	$2.32
Avg Gas Price (Hedged, $/Mcf)	$2.51	$2.28	$2.70
Total Production Costs ($/Mcfe)	$0.81	$0.77	$0.72
Unhedged Operating Margin (%)	67%	60%	69%
Hedged Operating Margin (%)	68%	67%	73%

Segment/Revenue Mix

Revenue Component	Q4 2023 ($MM)	Q3 2024 ($MM)	Q4 2024 ($MM)
Natural Gas & Oil Sales (GAAP)	$349.4	$253.6	$288.3
Gas Services Revenue	$61.1	$50.8	$78.2
Total Revenues	$410.6	$304.5	$366.5

Key KPIs

KPI	Q4 2023	Q3 2024	Q4 2024
Gathering & Transportation ($/Mcfe)	$0.33	$0.41	$0.36
Lease Operating ($/Mcfe)	$0.23	$0.22	$0.25
Production & Ad Valorem Taxes ($/Mcfe)	$0.23	$0.09	$0.06
Cash G&A ($/Mcfe)	$0.02	$0.05	$0.05
E&D Capex ($MM)	$314.0	$184.4	$240.4
Gas Services Margin ($MM)	$3.4	$(1.8)	$5.6
Hedging Coverage (quarter)	n/a	28%	51%
Western Haynesville wells turned (count)	n/a	n/a	6

Notes: Q4 GAAP net loss included a $126.9M unrealized derivative loss; adjusted NI was $46.3M ($0.16/sh) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
D&C Capital	2025	N/A	$1.0B–$1.1B	New
Operated Rigs	2025	N/A	Increase from 5 to 7; 4 in Western Haynesville	New
Operated Wells Drilled / TTS	2025	N/A	Drill 46 (40.3 net); Turn 46 (39.7 net)	New
Midstream Capital	2025	N/A	$130M–$150M, funded by midstream partner	New
Hedging (Coverage/Price)	2025	Target ~50% (stated prior)	~50% hedged at ~$3.48 (mix swaps/collars)	Maintained/Specified
Hedging (2026)	2026	N/A	59% collars ($3.50 floor/$4.35 ceiling), 41% swaps ~$3.51	New

Q4’24 directional elements from Q3 call: production guidance 1,325–1,375 MMcf/d for Q4’24 (maintained context); DD&A $1.40–$1.55/MCFE; cash interest $54–$56M (Q4 only) .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2, Q3 2024)	Current Period (Q4 2024)	Trend
Western Haynesville execution	Rigs at 2; 6 wells expected around year-end; drilling days cut to ~54–56 days; early cost/ft down; footprint >450k net acres	518k net acres; 6 new wells avg 40 MMcf/d; 4 rigs in West Haynesville; cost/ft down sharply; 2025 focus on delineation	Accelerating delineation/cost gains
Horseshoe laterals	Concept initiated; first horseshoe well planned/tested; capex savings ~23% vs short laterals	First horseshoe well IP 31 MMcf/d; cost/ft competitive; inventory conversion progressing	Positive validation/expansion
Hedging strategy	Target 50% 2025–2026; Q2 28% hedged; move to 50% by Q4	~50% 2025 hedged at ~$3.48; 2026 collars/swaps implemented	Greater protection locked
Macro (LNG/data centers)	Position to benefit from LNG ramp; data center/power demand highlighted	“Golden age of gas”; proximity to Gulf Coast; direct offtake with LNG/power customers contemplated	Demand tailwinds reinforced
Midstream build (Pinnacle)	Bethel plant, buildup; 400 MMcf/d Marque plant coming; Q&A on capacity/runway	2025 midstream capex $130–$150M (partner funded); capacity to support growth; potential to self-fund later	Capacity expansion on track
Balance sheet/leverage	Bank base reaffirmed; covenant relief; Q4 outspend timing; move to FCF in 2025	Target ≤1.5x by 2026; 2025 deleveraging with improved prices/hedges	Deleveraging path clearer
Cost structure	Q3 cost/MCFE $0.77; normalization ahead; service deflation emerging	Q4 cost/MCFE $0.72; hedged margin 73%; severance tax cut helped	Improving

Management Commentary

Strategy and market positioning: “The golden age of natural gas is here and we're on the leading edge of technology to unlock the value of the Western Haynesville” (CEO) .
Hedge protection: “We have approximately 50% of our gas production hedged for this year at an average price of $3.48 or better… For ’26, 59%… collars… $3.50 floor… ceiling $4.35… 41% swaps $3.51” (CFO) .
Capital allocation and leverage: “We’re going to focus on getting our balance sheet back… 2026 will be a year… under 1.5x [leverage]” (CFO) .
2025 plan: “Increase the number of operating drilling rigs… from five to seven… spend approximately $1.0–$1.1 billion… drill 46… turn 46… spend $130–$150 million on [Western Haynesville] midstream” .

Q&A Highlights

Cost reductions and repeatability: Management emphasized more runway to lower Western Haynesville drilling costs and consistent completion execution; Q4 Western drilling cost ~$1,396/ft and completion ~$1,315/ft with pad efficiencies to come .
Horseshoe wells economics: ~23% capex savings vs short laterals; IRR “2–3x better” than short laterals, with similar performance to 10k-foot laterals (Ops/CFO) .
Marketing/contracting: Considering direct LNG and power contracts; aim for a balanced offtake portfolio rather than a single buyer (CFO) .
Midstream funding: Pinnacle JV expected to self-fund over time; potential for its own credit facility as EBITDA scales (CFO) .
Activity pace and leverage targets: Comfortable at ~7 rigs; aim to reach ≤1.5x leverage in 2026 with stronger prices and production rebuild (CFO) .

Estimates Context

We attempted to pull S&P Global consensus for Q4 2024 (EPS, Revenue, EBITDA) but encountered a temporary access limit (SPGI daily request limit). As a result, we cannot present a definitive beats/misses vs Wall Street consensus for this quarter at this time. If you’d like, we can refresh and add consensus comparisons once access is restored.

Key Takeaways for Investors

Q4 quality improved: better realized pricing and hedging drove margin expansion; adjusted profitability returned despite lower volumes; the GAAP loss was driven by non-cash hedge marks .
Western Haynesville moved from proof-of-concept to scaled delineation with 4 rigs; IPs (40 MMcf/d) and cost trajectories de-risk the asset ahead of LNG/power demand growth .
2025 is an investment/rebuild year: rigs rise to 7, $1.0–$1.1B D&C to position for medium-term growth; midstream funded externally limits capital strain .
Hedges (~50% at ~$3.48 in 2025) and service cost relief should stabilize cash flows, with leverage trending lower; management targets ≤1.5x by 2026 .
Horseshoe laterals are a material capital efficiency lever, potentially converting a sizable portion of short-lateral inventory into higher-IRR projects .
Near-term trading: stock may key off gas price volatility and Western Haynesville cadence/cost updates; medium-term thesis hinges on LNG ramp, direct offtake progress, and sustained cost discipline (capex/midstream execution).
Watch items: quarterly free-cash cadence amid higher capex, production rebuild timing, and continued cost-per-foot compression; reserve trajectory with higher price decks is constructive (7.0 Tcfe NYMEX case PV-10 $5.7B at YE’24) .

Sources: Q4’24 Form 8‑K and press release, Q4’24 earnings call transcript, prior Q2/Q3’24 8‑Ks and calls .

COMSTOCK RESOURCES INC (CRK)·Q4 2024 Earnings Summary