COMSTOCK RESOURCES INC 10-K

ITEM 1. BUSINESS We are a leading independent natural gas producer operating primarily in the Haynesville shale, a premier natural gas basin located in North Louisiana and East Texas with superior economics given its geographical proximity to the Gulf Coast natural gas markets. As of December 31, 2024, substantially all of our proved natural gas and oil reserves were in the Haynesville and Bossier shale plays. We are focused on creating value through the development of our substantial inventory of highly economic drilling opportunities in the Haynesville and Bossier shales and through our exploration activities in our Western Haynesville play. Our common stock is listed and traded on the New York Stock Exchange under the symbol "CRK". Our operations are concentrated in Louisiana and Texas. Our natural gas and oil properties are estimated to have proved reserves of 3.8 Tcfe with a PV 10 Value of $1.6 billion as of December 31, 2024 based on SEC prices. Our proved reserves are principally natural gas, which were 73% developed as of December 31, 2024 with an average reserve life of approximately 7 years. Using NYMEX futures market natural gas and oil prices as of December 31, 2024, proved reserves are estimated at 7.0 Tcfe with a PV 10 Value of $5.7 billion. Using these prices, our proved reserves were 41% developed as of December 31, 2024, with an average reserve life of approximately 13 years. Strengths High Quality Properties . As of December 31, 2024, we have 1,099,090 acres (819,489 net) prospective for the Haynesville and Bossier shale plays, located in North Louisiana and East Texas, including our extension of the plays in our Western Haynesville area. Our Haynesville/Bossier shale properties have extensive development and exploration potential. Advances in drilling and completion technology have allowed us to increase the reserves recovered through drilling longer horizontal lateral lengths and applying substantially improved well stimulations, as well as successfully drilling horizontal wells in our deeper Western Haynesville extension of the Haynesville and Bossier Shale plays. As a result of the improved economic returns, we have focused our development activities primarily on drilling Haynesville and Bossier horizontal wells since 2015. Our Haynesville and Bossier shale acreage is located in one of the premier North American natural gas basins and has access to the growing natural gas demand in the Gulf Coast markets related to LNG exports and the petrochemical industry due to its geographic proximity. We believe we are well positioned for future growth due to the following: • Premier natural gas resource . The Haynesville and Bossier shales in our legacy area has been substantially delineated since commercial operations started in 2008 and the consistent and successful results of our first eighteen wells in our Western Haynesville area indicate substantial upside to our extension of the Haynesville and Bossier shale plays. We believe that these shale plays represent some of the most economic natural gas drilling opportunities in North America. • Management and operating team with extensive experience in developing the Haynesville and Bossier shales . We were among the first exploration and production companies to effectively apply horizontal drilling techniques in the Haynesville and Bossier shales beginning in 2007. In 2015, we restarted a drilling program in the Haynesville and Bossier shales utilizing enhanced completion well designs that have significantly improved the economics of these wells. In 2022, we started exploratory drilling in the Western Haynesville area and now have eighteen successful wells turned to sales through the end of 2024. We have also drilled some of the longest lateral wells in the basin. We successfully drilled 31 wells with laterals of 15,000 feet or greater from 2021 through 2024. • Attractive economic returns . The Haynesville and Bossier shales offer highly economic drilling opportunities through application of advanced drilling and completion technologies, including the use of longer laterals, horseshoe laterals and high intensity fracture stimulation using tighter frac stages and higher proppant loading. Our Western Haynesville wells are some of the deepest horizontal wells in a high pressure and high temperature shale in the industry. Our management and operating teams are instrumental in developing and optimizing some of the most effective completion techniques in the Haynesville and Bossier shales and such completion techniques have resulted in a substantial improvement in initial production rates and recoverable reserves, which has resulted in some of the highest single well rates of return when compared to results from other natural gas basins in North America. • Proximity to premium natural gas markets . Our natural gas production benefits from the strong regional Gulf Coast demand growth driven by a substantial increase in LNG exports, exports to Mexico and new or expanded petrochemical facilities. Producers, such as us, with access to the Gulf Coast natural gas markets are receiving higher net realized prices than most 6 COMSTOCK RESOURCES, INC. producers in other regions. We are also able to realize higher margins due to our ability to access an extensive midstream infrastructure with lower cost, flexible gas marketing arrangements. • Company-owned Midstream. In 2023, we formed Pinnacle Gas Services LLC to provide gathering and treating services for our emerging Western Haynesville. At December 31, 2024, the Pinnacle system included a gas treating plant in Bethel, Texas and 246 miles of high-pressure pipelines. • Organic Drilling Inventory Growth. We focus on growing our inventory of drilling locations organically by acquiring undeveloped leasehold through direct leasing or acquisitions of undeveloped acreage in contrast to many of our peers who have focused on mergers or acquisitions of producing properties to replenish drilling inventory. Over the last five years we have acquired a total of approximately 517,624 net undeveloped acres prospective for the Haynesville and Bossier shales. • Successful Drilling Program. We spent $902.1 million on exploration and development activities in 2024, almost exclusively in the Haynesville and Bossier shale. We spent $858.1 million on drilling and completion activities and an additional $44.0 million on other development costs. We drilled 50 (42.9 net) wells in 2024, which had an average lateral length of approximately 10,759 feet. Our drilling program in 2024 replaced 101% of our 2024 production based on proved reserves added in our SEC price case and 170% based on proved reserves added in our alternative price case. • Efficient Operator. We operated 98% of our proved reserve base as of December 31, 2024. As the operator, we are better able to control operating costs, the timing and plans for future development, the level of drilling and lifting costs, and the marketing of production. As an operator, we receive reimbursements for overhead from other working interest owners, which reduces our general and administrative expenses. Business Strategy Our strategy consists of the following principal elements: • Prudently grow cash flow, production and reserves through development of our high-quality inventory of drilling locations . We have an extensive inventory of de-risked, high-return drilling locations prospective for the Haynesville and Bossier shales. As of December 31, 2024, we have identified 2,658 drilling locations (1,350 net to us) which gives us decades of drilling activity. We have optimized the economics of our drilling location inventory by extending the lateral lengths. In 2024, we successfully drilled our first "horseshoe" well, which allowed us to convert two 4,500-foot lateral locations to one 9,382 horizontal well. Our drilling inventory now includes 113 horseshoe locations with superior economics compared to the 226 short lateral locations they replaced. The average lateral length of our drilling location inventory is 9,603 feet. • Grow reserve base through active exploration program. We are investing a substantial portion of our annual capital budget to expand our acreage holdings and delineate our emerging Western Haynesville and Bossier shale plays in East Texas. Our first seven exploratory wells turned to sales in 2022 and 2023 have been successful. In 2024, we turned an additional eleven Haynesville and Bossier shale wells in this play to sales. In 2025, we currently intend to drill an additional 20 Haynesville and Bossier shale wells in this play. • Evaluate and pursue strategic acquisition opportunities and conduct an active leasing program to grow our reserves, production, and drilling location inventory. We intend to leverage our management and operating team's significant technical expertise and experience in the Haynesville and Bossier shale plays to continue to pursue acquisition opportunities in that region and to successfully execute and integrate acreage acquisitions that will add to our drilling inventory. We also plan to continue to acquire prospective acreage with an active leasing program. • Maintain disciplined financial strategy. Given the current natural gas price outlook, we intend to maintain a conservative operating plan in 2025 with the primary goal of protecting our balance sheet. Our current plan is to fund our exploration and development activity with operating cash flow that we generate. We believe our low operating cost structure combined with maximizing the capital efficiency of our drilling program and maintaining financial discipline will allow us to achieve this goal. • Focus on environmental stewardship. We achieved independent, third-party audited certification of our natural gas operations under the MiQ standard for methane emissions. We became one of the first operators to certify all operated natural gas production. The certification allows us to document to both domestic and international customers that we provide responsibly sourced ‎natural gas. We utilize cleaner burning natural gas rather than diesel fuel when possible to 7 COMSTOCK RESOURCES, INC. reduce emissions in our drilling and completion operations and design our wells to drill longer laterals and utilize multi-well pad locations to minimize our above-ground footprint. • Manage commodity price exposure. We maintain an active natural gas price hedging program designed to mitigate volatility in natural gas prices and to protect a portion of our expected future cash flows to insure that we have adequate cash flow to meet our financial obligations. Beginning in 2025, we also have access to gas storage in Western Haynesville that will allow us greater operational flexibility and take advantage of seasonal natural gas pricing. Property Acquisitions In 2024, we added 265,290 net acres to our Western Haynesville area through acquisitions and an active leasing program at a cost of $106.4 million. In 2023, we added 79,741 net Haynesville and Bossier shale acres in Western Haynesville for $98.6 million. In 2022, we added 104,314 net Haynesville and Bossier shale acres in Western Haynesville for $54.4 million. Western Haynesville Midstream Venture To support the continued development of the Western Haynesville and Bossier shale, we entered into a partnership with Quantum Capital Solutions ("Quantum") in 2023 to finance the buildout of natural gas gathering and treating facilities required to handle the expected growth in our natural gas production from wells we plan to drill in this area. Pinnacle Gas Services LLC ("Pinnacle") was formed by the contribution of a high pressure pipeline and natural gas treating plant which we acquired in 2022. We invested $30.0 million in these midstream assets including the initial acquisition costs. Quantum agreed to fund up to $300 million for the future build out of the gathering and gas treating system. We manage the operations of Pinnacle under a management contract and appoint the majority of Pinnacle's board of directors. Quantum is entitled to a 12% dividend on its invested capital and 80% of any distributions from Pinnacle until certain return hurdles are met. After the return hurdles are met, Quantum's ownership reduces to 30%. In 2024 and 2023, Quantum contributed $60.5 million and $24.0 million, respectively, to fund Pinnacle's capital expansion. Property Dispositions In 2024, 2023 and 2022 we sold our working interest in certain non-strategic, non-operated properties for $1.2 million, $41.3 million and $4.1 million, respectively. Natural Gas and Oil Reserves The following table sets forth our estimated proved natural gas and oil reserves as of December 31, 2024: Oil (MBbls) Natural Gas (MMcf) (1) Total (MMcfe) (1) PV 10 Value (000's) (2) Proved Developed: Producing 305 2,683,022 2,684,851 $ 1,465,335 Non-producing 26 48,790 48,946 15,614 Total Proved Developed 331 2,731,812 2,733,797 1,480,949 Proved Undeveloped — 1,030,286 1,030,286 121,825 Total Proved 331 3,762,098 3,764,083 1,602,774 Discounted Future Income Taxes (4,580 ) Standardized Measure of Discounted Cash Flows $ 1,598,194 ______________ (1) Natural gas volumes include NGLs. Oil and NGLs are converted to natural gas equivalents by using a conversion factor of one barrel of oil or NGLs for six Mcf of natural gas based upon the approximate relative energy content of oil to natural gas, which is not indicative of natural gas and oil prices. (2) The PV 10 Value represents the discounted future net cash flows attributable to our proved natural gas and oil reserves before income tax, discounted at 10%. Although it is a non-GAAP measure, we believe that the presentation of PV 10 Value is relevant and useful to our investors because it presents the discounted future net cash flows attributable to our proved reserves prior to taking into account corporate future income taxes and our current tax structure. We use this measure when assessing the potential return on investment related to our natural gas and oil properties. The standardized measure of discounted future net cash flows represents the present value of future cash flows attributable to our proved natural gas and oil reserves after income tax, discounted at 10%. 8 COMSTOCK RESOURCES, INC. The following table sets forth our year end reserves as of December 31 for each of the last three fiscal years: 2024 2023 2022 Oil (MBbls) Natural Gas (MMcf) (1) Oil (MBbls) Natural Gas (MMcf) (1) Oil (MBbls) Natural Gas (MMcf) (1) Proved Developed 331 2,731,812 548 2,734,175 480 2,531,462 Proved Undeveloped — 1,030,286 — 2,206,051 69 4,166,108 Total Proved Reserves 331 3,762,098 548 4,940,226 549 6,697,570 ______________ (1) Natural gas volumes include NGLs. NGLs are converted to natural gas equivalents by using a conversion factor of one barrel of NGLs for six Mcf of natural gas based upon the approximate relative energy content. All of our proved reserves are in the Haynesville and Bossier shales in North Louisiana and East Texas. These wells produce from depths of 10,500 to 19,000 feet. All of our proved undeveloped reserves represent wells to be drilled in the next five years on our Haynesville and Bossier shale acreage. Proved reserves that are attributable to existing producing wells are primarily determined using decline curve analysis and rate transient analysis, which incorporates the principles of hydrocarbon flow. Proved reserves attributable to producing wells with limited production history and for undeveloped locations are estimated using performance from analogous wells in the surrounding area and geologic data to assess the reservoir continuity. Technologies relied on to establish reasonable certainty of economic producibility include electrical logs, radioactivity logs, core analyses, geologic maps and available production data, seismic data and well test data. There are numerous uncertainties inherent in estimating quantities of proved natural gas and oil reserves. Natural gas and oil reserve engineering is a subjective process of estimating underground accumulations of natural gas and oil that cannot be precisely measured. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. Results of drilling, testing and production subsequent to the date of the estimate may justify revision of such estimate. Accordingly, reserve estimates are often different from the quantities of natural gas and oil that are ultimately recovered. Prices used in determining quantities of natural gas and oil reserves and future cash inflows from natural gas and oil reserves represent the average first of the month prices received at the point of sale for the last twelve months. These prices have been adjusted from index prices for both location and quality differences. The natural gas and oil prices used for reserves estimation were as follows: Year Natural Gas Price (per Mcf) Oil Price (per Bbl) 2024 $ 1.84 $ 71.07 2023 $ 2.39 $ 72.63 2022 $ 6.03 $ 91.21 Reserves may be classified as proved undeveloped if there is a high degree of confidence that the quantities will be recovered, and they are scheduled to be drilled within five years of their initial inclusion as proved reserves, unless specific circumstances justify a longer time. In connection with estimating proved undeveloped reserves for our reserve report, reserves on undrilled acreage were limited to those that are reasonably certain of production when drilled where we can verify the continuity of the reservoir. We only include wells in our proved undeveloped reserves that we currently plan to drill and in which we have adequate capital resources to enable us to drill them. Using empirical evidence, we utilize control points and sample sizes to show continuity in the reservoir. We reflect changes to undeveloped reserves that occur in the same field as revisions to the extent that proved undeveloped locations are revised due to changes in future development plans, including changes to proposed lateral lengths, development spacing and timing of development. As of December 31, 2024, our proved undeveloped reserves did not include any undrilled wells with a rate of return less than 10%. As of December 31, 2024, our proved undeveloped reserves were comprised of 1.0 Tcf of natural gas consisting of 56 undeveloped locations. All of our natural gas undeveloped reserves are associated with our Haynesville and Bossier shale (including Western Haynesville and Bossier) properties where our 2025 drilling program is focused. Our natural gas and oil proved undeveloped reserves decreased by 1.2 Tcf during 2024 due to low natural gas prices used to determine the proved 9 COMSTOCK RESOURCES, INC. reserves as 83 proved undeveloped reserve locations previously included in our proved reserves no longer generate an economic return using the prescribed SEC natural gas and oil prices. During 2024, 21 proved undeveloped locations included in our 2023 reserves were converted to proved developed reserves. As of December 31, 2023, our proved undeveloped reserves were comprised of 2.2 Tcf of natural gas, all of which were associated with our Haynesville and Bossier shales (including Western Haynesville and Bossier) properties. Our natural gas proved undeveloped reserves decreased by 2.0 Tcf during 2023. During 2023, 67 proved undeveloped locations were converted to proved developed reserves. The following table presents the changes in our estimated proved undeveloped natural gas and oil reserves for the years ended December 31, 2024, 2023 and 2022: Proved Undeveloped Reserves 2024 2023 2022 Oil (MBbls) Natural Gas (MMcf) Oil (MBbls) Natural Gas (MMcf) Oil (MBbls) Natural Gas (MMcf) Beginning Balance — 2,206,051 69 4,166,108 — 3,872,423 Revisions — (996,816 ) — (1,634,178 ) (68 ) (1,545 ) Extension and Discoveries — 94,538 — 407,629 137 920,825 Conversion from Undeveloped to Developed — (273,487 ) (69 ) (733,508 ) — (625,595 ) Total Change — (1,175,765 ) (69 ) (1,960,057 ) 69 293,685 Ending Balance — 1,030,286 — 2,206,051 69 4,166,108 The timing, by year, when our proved undeveloped reserve quantities are estimated to be converted to proved developed reserves is as follows: Proved Undeveloped Reserves 2024 2023 2022 Year ended December 31, Oil (MBbls) Natural Gas (MMcf) Oil (MBbls) Natural Gas MMcf) Oil (MBbls) Natural Gas (MMcf) 2023 — — — — 69 974,476 2024 — — — 273,487 — 868,692 2025 — 162,370 — 425,458 — 961,824 2026 — 90,525 — 656,609 — 881,972 2027 — 70,859 — 509,227 — 479,144 2028 — 302,749 — 341,270 — — 2029 — 403,783 — — — — Total — 1,030,286 — 2,206,051 69 4,166,108 The following table presents the timing of our estimated future development capital costs to be incurred for the years ended December 31, 2024, 2023 and 2022: Future Development Costs Total Proved Undeveloped Reserves 2024 2023 2022 Year ended December 31, (in millions) 2023 $ — $ — $ 810.0 2024 — 184.5 890.0 2025 97.1 427.2 957.0 2026 65.7 728.7 942.4 2027 55.4 522.4 497.8 2028 279.1 351.3 — 2029 394.2 — — Total $ 891.5 $ 2,214.1 $ 4,097.2 10 COMSTOCK RESOURCES, INC. The following table presents the changes in our estimated future development costs for the years ended December 31, 2024 and December 31, 2023: (in millions) Total as of December 31, 2022 $ 4,097.2 Development Costs Incurred (844.3 ) Additions 461.4 Revisions (1,500.2 ) Total Changes (1,883.1 ) Total as of December 31, 2023 2,214.1 Development Costs Incurred (422.6 ) Additions 96.2 Revisions (996.2 ) Total Changes (1,322.6 ) Total as of December 31, 2024 $ 891.5 Our estimated future capital costs to develop proved undeveloped reserves as of December 31, 2024 of $891.5 million decreased by $1.3 billion from our estimated future capital costs of $2.2 billion as of December 31, 2023. Our estimated future capital costs to develop proved undeveloped reserves as of December 31, 2023 of $2.2 billion decreased by $1.9 billion from our estimated future capital costs of $4.1 billion as of December 31, 2022. These decreases were attributable to the lower number of future proved undeveloped locations expected to generate an economic return as a result of lower natural gas prices. Given the low reference natural gas price prescribed by the SEC rules of $1.84 per Mcf for the year ended December 31, 2024, we performed an analysis to compare our proved reserve estimates as of December 31, 2024, to proved reserve estimates using a $3.26 per Mcf natural gas price and a $59.10 per Bbl oil price, which represents the NYMEX futures market prices as of December 31, 2024, adjusted for basis differentials ("alternative price case"), to show the sensitivity of our proved reserve estimates to price fluctuations. The alternative price case includes proved undeveloped locations that we intend to drill that do not generate an economic return using the SEC prescribed prices. This sensitivity analysis is only meant to demonstrate the impact that changing natural gas and oil prices may have on our proved reserve estimates and the related PV 10 Value and there is no assurance this outcome will be realized. Our proved natural gas and oil reserves utilizing SEC prices and the alternative price case are as follows: SEC Price Case Alternative Price Case Oil (MBbls) Proved Developed 331 376 Proved Undeveloped — — Total 331 376 Natural Gas (MMcf) (1) Proved Developed 2,731,812 2,845,669 Proved Undeveloped 1,030,286 4,174,614 Total 3,762,098 7,020,283 Total Proved Reserves (MMcfe) (1) 3,764,083 7,022,537 PV 10 Value (in thousands) (2) $ 1,602,774 $ 5,677,971 ______________ (1) Natural gas volumes include NGLs. Oil and NGLs are converted to natural gas equivalents by using a conversion factor of one barrel of oil or NGLs for six Mcf of natural gas based upon the approximate relative energy content of oil to natural gas, which is not indicative of natural gas and oil prices. (2) The PV 10 Value represents the discounted future net cash flows attributable to our proved natural gas and oil reserves before income tax, discounted at 10%. Although it is a non-GAAP measure, we believe that the presentation of PV 10 Value is relevant and useful to our investors because it presents the discounted future net cash flows attributable to our proved reserves prior to taking into account corporate future income taxes and our current tax structure. We use this measure when assessing the potential return on investment related to our natural gas and oil properties. The standardized measure of discounted future net cash flows represents the present value of future cash flows attributable to our proved natural gas and oil reserves after income tax, discounted at 10%. 11 COMSTOCK RESOURCES, INC. Proved reserve information in this report is based on estimates prepared by our petroleum engineering staff and is the responsibility of management. We retained an independent petroleum consultant to conduct an audit of our December 31, 2024 reserve estimates. Netherland, Sewell & Associates, Inc. ("NSAI") audited 100% of our total PV 10 Value as of December 31, 2024. The purpose of this audit was to provide additional assurance on the reasonableness of internally prepared reserve estimates. NSAI was selected for its geographic expertise and historical experience. The audit letter prepared by NSAI is included as an exhibit to this report. The technical persons at the independent petroleum consulting firm responsible for reviewing the reserve estimates presented herein meet the requirements regarding qualifications, independence, objectivity and confidentiality as set forth in the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers. The independent consultant's estimates of proved reserves and the pretax present value of such reserves discounted at 10% did not differ from our estimates by more than 2% in the aggregate. However, when compared on a lease-by-lease, field-by-field or area-by-area basis, some of our estimates may be greater than those of our independent consultant and some may be less than the estimates of the independent consultant. When such differences do not exceed 10% in the aggregate, our reserve auditor is satisfied that the proved reserves and pretax present value of such reserves discounted at 10% are reasonable and will issue an unqualified opinion. The remaining differences are not resolved due to the limited cost benefit of continuing such analysis. During the year, our reserves group also performs separate, detailed technical reviews of reserve estimates for significant acquisitions or for properties with problematic indicators such as excessively long lives, sudden changes in performance or changes in economic or operating conditions. We have established and maintain internal controls designed to provide reasonable assurance that the estimates of proved reserves are computed and reported in accordance with rules and regulations promulgated by the SEC. These internal controls include documented process workflows, employing qualified engineering and geological personnel, and on-going education for personnel involved in our reserves estimation process. Our internal audit function routinely tests our processes and controls. Throughout the year, our technical team meets periodically with representatives of our independent petroleum consultants to review properties and discuss methods and assumptions. We provide historical information to our consultants for our largest producing properties such as ownership interest, production, well test data, commodity prices and operating and development costs. In some cases, additional meetings are held to review identified reserve differences. All of our reserve estimates are reviewed with our executive management, our independent consultants perform an independent analysis, and ultimately our reserve estimates are approved by our Director of Reservoir Engineering, Kristine Bartlett. Ms. Bartlett holds a Bachelor of Science degree in Petroleum Engineering and Geoscience from the University of Texas at Austin and has 12 years of engineering experience in the oil and gas industry. We did not provide estimates of total proved natural gas and oil reserves during the three-year period ended December 31, 2024 to any federal authority or agency, other than the SEC. Production, Price and Cost Summary Annual production, average prices that we realized from sales of natural gas and oil and the associated lifting costs for each of the last three fiscal years were as follows: Year Ended December 31, 2024 2023 2022 Net Production Volumes: Natural gas - MMcf 527,548 524,467 500,616 Oil - MBbls 50 70 82 Average Prices: Natural Gas - $/Mcf $ 1.98 $ 2.40 $ 6.23 Oil - $/Bbl $ 71.94 $ 73.73 $ 92.65 Lifting Costs - $/Mcfe: Lease operating $ 0.25 $ 0.25 $ 0.22 Gathering and transportation $ 0.37 $ 0.35 $ 0.31 Production and ad valorem taxes $ 0.11 $ 0.18 $ 0.16 12 COMSTOCK RESOURCES, INC. Drilling Activity Summary During the three-year period ended December 31, 2024, we drilled development and exploratory wells as set forth in the table below: 2024 2023 2022 Gross Net Gross Net Gross Net Development: Oil — — — — — — Gas 39 31.9 63 47.6 116 58.6 Dry — — 1 1.0 — — 39 31.9 64 48.6 116 58.6 Exploratory: Oil — — — — — — Gas 11 11.0 7 6.9 2 2.0 Dry — — — — — — 11 11.0 7 6.9 2 2.0 Total 50 42.9 71 55.5 118 60.6 As of December 31, 2024, 2023 and 2022, we had 21 (17.3 net), 30 (26.9 net), and 42 (29.0 net), respectively, operated wells in the process of being drilled and completed. Producing Well Summary The following table sets forth the gross and net producing natural gas and oil wells in which we owned an interest as of December 31, 2024: Oil Natural Gas Gross Net Gross Net Louisiana 4 2.6 1,308 742.1 Oklahoma 6 0.6 98 8.8 Texas 11 6.2 974 780.4 Wyoming — — 26 1.9 Total 21 9.4 2,406 1,533.2 We operate 1,747 of the 2,427 producing wells presented in the above table. As of December 31, 2024, we did not own an interest in any wells containing multiple completions, which means that a well is producing from more than one completed zone. Acreage The following table summarizes our developed and undeveloped leasehold acreage as of December 31, 2024, all of which is onshore in the continental United States. We have excluded acreage in which our interest is limited to a royalty or overriding royalty interest. Developed Undeveloped Gross Net Gross Net Louisiana 198,432 153,980 25,284 19,290 Oklahoma 26,080 3,382 — — Texas 220,286 169,569 737,197 528,385 Wyoming 13,440 927 — — Total 458,238 327,858 762,481 547,675 13 COMSTOCK RESOURCES, INC. As of December 31, 2024, our undeveloped acreage expires as follows: Gross Net 2025 35,313 5 % 27,636 5 % 2026 83,625 11 % 63,181 12 % 2027 49,734 7 % 35,582 6 % 2028 28,754 4 % 18,827 3 % 2029 2,833 — % 2,075 — % Thereafter 562,222 73 % 400,374 74 % 762,481 100 % 547,675 100 % The title to our natural gas and oil properties is subject to royalty, overriding royalty, carried and other similar interests and contractual arrangements customary in the natural gas and oil industry, liens incident to operating agreements and for current taxes not yet due and other minor encumbrances. All of our natural gas and oil properties are pledged as collateral under our bank credit facility. As is customary in the natural gas and oil industry, we are generally able to retain our ownership interest in undeveloped acreage by production from wells producing from a different reservoir, by drilling activity which establishes commercial reserves sufficient to maintain the lease, by payment of delay rentals or by the exercise of contractual extension rights. Markets and Customers The market for our production of natural gas and oil depends on factors beyond our control, including the extent of domestic production and imports of natural gas and oil, the proximity and capacity of natural gas pipelines and other transportation facilities, demand for natural gas and oil, the marketing of competitive fuels and the effects of state and federal regulation. The natural gas and oil industry also competes with other industries in supplying the energy and fuel requirements of industrial, residential and commercial consumers along with electric generator customers. Our natural gas production is primarily sold under contracts with various terms and priced on first of the month index prices or on daily spot market prices or fixed prices. We target selling approximately 70% to 75% of our natural gas on first of month index price, with the remaining volumes on daily spot market pricing. The percentage of natural gas sold on spot market pricing can be impacted when new wells commence production as such production is typically sold on daily spot market pricing during the month the well is first brought on line. Enterprise Products Operating and its subsidiaries and Venture Global LNG, Inc. accounted for 21% and 12%, respectively, of our total 2024 sales. The loss of any of these customers would not have a material adverse effect on us as there is an available market for our natural gas and oil production from other purchasers. We have entered into longer-term transportation arrangements to ensure that we have adequate transportation to deliver our natural gas production in North Louisiana and East Texas to various markets. As an alternative to constructing our own gathering and treating facilities, we have entered into a variety of gathering and treating agreements with midstream companies to transport our natural gas to a central point or other long-haul natural gas pipelines. We currently have agreements with certain natural gas midstream companies to provide us with firm transportation for an average of approximately 1.7 Bcf per day in 2025 on the long-haul pipelines. To the extent we are not able to deliver the contracted natural gas volumes, we may be responsible for the transportation costs. Competition The natural gas and oil industry is highly competitive. Competitors include major oil companies, other independent energy companies and individual producers and operators, many of which have financial resources, personnel and facilities substantially greater than we do. We face intense competition for the acquisition of natural gas and oil properties and leases for natural gas and oil exploration. Regulation General. Various aspects of our natural gas and oil operations are subject to extensive and continually changing regulation, as legislation affecting the natural gas and oil industry is under constant review for amendment or expansion. Numerous departments and agencies, both federal and state, are authorized by statute to issue, and have issued, rules and regulations binding upon the natural gas and oil industry and its individual members. The Federal Energy Regulatory Commission ("FERC") regulates the transportation and sale for resale of natural gas in interstate commerce pursuant to the Natural Gas Act of 1938 ("NGA") and the Natural Gas Policy Act of 1978. In 1989, however, Congress enacted the Natural 14 COMSTOCK RESOURCES, INC. Gas Wellhead Decontrol Act, which removed all remaining price and nonprice controls affecting all "first sales" of natural gas, effective January 1, 1993, subject to the terms of any private contracts that may be in effect. While sales by producers of natural gas and all sales of crude oil, condensate and natural gas liquids can currently be made at uncontrolled market prices, in the future Congress could reenact price controls or enact other legislation with detrimental impact on many aspects of our business. Under the provisions of the Energy Policy Act of 2005 (the "2005 Act"), the NGA has been amended to prohibit any form of market manipulation with the purchase or sale of natural gas, and the FERC has issued new regulations that are intended to increase natural gas pricing transparency. The 2005 Act has also significantly increased the penalties for violations of the NGA. The FERC has issued Order No. 704 et al. which requires a market participant to make an annual filing if it has sales or purchases equal to or greater than 2.2 million MMBtu in the reporting year to facilitate price transparency. Regulation and transportation of natural gas. Our sales of natural gas are affected by the availability, terms and cost of transportation. The price and terms for access to pipeline transportation are subject to extensive regulation. The FERC requires interstate pipelines to provide open-access transportation on a not unduly discriminatory basis for similarly situated shippers. The FERC frequently reviews and modifies its regulations regarding the transportation of natural gas, with the stated goal of fostering competition within the natural gas industry. Intrastate natural gas transportation is subject to regulation by state regulatory agencies. The Texas Railroad Commission has been changing its regulations governing transportation and gathering services provided by intrastate pipelines and gatherers. While the changes by these state regulators affect us only indirectly, they are intended to further enhance competition in natural gas markets. We cannot predict what further action the FERC or state regulators will take on these matters; however, we do not believe that we will be affected differently in any material respect than other natural gas producers with which we compete by any action taken. Additional proposals and proceedings that might affect the natural gas industry are pending before Congress, the FERC, state commissions and the courts. The natural gas industry historically has been very heavily regulated; therefore, there is no assurance that the less stringent regulatory approach pursued by the FERC, Congress and state regulatory authorities will continue. Federal leases. Some of our operations are located on federal natural gas and oil leases that are administered by the Bureau of Land Management ("BLM") of the United States Department of the Interior. These leases are issued through competitive bidding and contain relatively standardized terms. These leases require compliance with detailed Department of Interior and BLM regulations and orders that are subject to interpretation and change. These leases are also subject to certain regulations and orders promulgated by the Department of Interior's Bureau of Ocean Energy Management, Regulation & Enforcement, through its Minerals Revenue Management Program, which is responsible for the management of revenues from both onshore and offshore leases. Our operations located on federal natural gas and oil leases are insignificant to our total operations. Oil and natural gas liquids transportation rates. Our sales of crude oil, condensate and natural gas liquids are not currently regulated and are made at market prices. In a number of instances, however, the ability to transport and sell such products is dependent on pipelines whose rates, terms and conditions of service are subject to FERC jurisdiction under the Interstate Commerce Act. In other instances, the ability to transport and sell such products is dependent on pipelines whose rates, terms and conditions of service are subject to regulation by state regulatory bodies under state statutes. The price received from the sale of these products may be affected by the cost of transporting the products to market. The FERC's regulation of pipelines that transport crude oil, condensate and natural gas liquids under the Interstate Commerce Act is generally more light-handed than the FERC's regulation of natural gas pipelines under the NGA. FERC-regulated pipelines that transport crude oil, condensate and natural gas liquids are subject to common carrier obligations that generally ensure non-discriminatory access. With respect to interstate pipeline transportation subject to regulation of the FERC under the Interstate Commerce Act, rates generally must be cost-based, although settlement rates agreed to by all shippers are permitted and market-based rates are permitted in certain circumstances. Effective January 1, 1995, the FERC implemented regulations establishing an indexing system (based on inflation) for transportation rates governed by the Interstate Commerce Act that allowed for an increase or decrease in the transportation rates. The FERC's regulations include a methodology for such pipelines to change their rates through the use of an index system that establishes ceiling levels for such rates. The mandatory five-year review in 2005 revised the methodology for this index to be based on Producer Price Index for Finished Goods (PPI-FG) plus 1.3 percent for the period July 1, 2006 through June 30, 2011. The mandatory five-year review in 2012 revised the methodology for this index to be based on PPI-FG plus 2.65 percent for the period July 1, 2011 through June 30, 2016. The regulations provide that each year the Commission will publish the oil pipeline index after the PPI-FG becomes available. 15 COMSTOCK RESOURCES, INC. With respect to intrastate crude oil, condensate and natural gas liquids pipelines subject to the jurisdiction of state agencies, such state regulation is generally less rigorous than the regulation of interstate pipelines. State agencies have generally not investigated or challenged existing or proposed rates in the absence of shipper complaints or protests. Complaints or protests have been infrequent and are usually resolved informally. We do not believe that the regulatory decisions or activities relating to interstate or intrastate crude oil, condensate or natural gas liquids pipelines will affect us in a way that materially differs from the way it affects other crude oil, condensate and natural gas liquids producers or marketers. Environmental regulations. We are subject to stringent federal, state and local laws. These laws, among other things, govern the issuance of permits to conduct exploration, drilling and production operations, the amounts and types of materials that may be released into the environment, the discharge and disposition of waste materials, the remediation of contaminated sites and the reclamation and abandonment of wells, sites and facilities. Numerous governmental departments issue rules and regulations to implement and enforce such laws, which are often difficult and costly to comply with and which carry substantial civil and even criminal penalties for failure to comply. Some laws, rules and regulations relating to protection of the environment may, in certain circumstances, impose strict liability for environmental contamination, rendering a person liable for environmental damages and cleanup cost without regard to negligence or fault on the part of such person. Other laws, rules and regulations may restrict the rate of natural gas and oil production below the rate that would otherwise exist or even prohibit exploration and production activities in sensitive areas. In addition, state laws often require various forms of remedial action to prevent pollution, such as closure of inactive pits and plugging of abandoned wells. The regulatory burden on the natural gas and oil industry increases our cost of doing business and consequently affects our profitability. These costs are considered a normal, recurring cost of our on-going operations. Our domestic competitors are generally subject to the same laws and regulations. We believe that we are in substantial compliance with current applicable environmental laws and regulations and that continued compliance with existing requirements will not have a material adverse impact on our operations. Environmental laws and regulations have been subject to frequent changes over the years, and the imposition of more stringent requirements or new regulatory schemes such as carbon "cap and trade" or pricing programs could have a material adverse effect upon our capital expenditures, earnings or competitive position, including the suspension or cessation of operations in affected areas. The Biden administration has made, and the Trump administration may also make additional changes to applicable regulations. There are costs associated with responding to changing regulations and policies, whether such regulations are more or less stringent. As such, there can be no assurance that material costs and liabilities will not be incurred in the future. The Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") imposes liability, without regard to fault, on certain classes of persons that are considered to be responsible for the release of a "hazardous substance" into the environment. These persons include the current or former owner or operator of the disposal site or sites where the release occurred and companies that disposed or arranged for the disposal of hazardous substances at such sites. Under CERCLA, such persons may be subject to joint and several liability for the cost of investigating and cleaning up hazardous substances that have been released into the environment, for damages to natural resources and for the cost of certain health studies. In addition, companies that incur liability frequently also confront third party claims because it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by hazardous substances or other pollutants released into the environment from a polluted site. Many states have adopted similar statutes that impose liability for the release of hazardous substances and petroleum. In addition, from time to time the U.S. Environmental Protection Agency ("EPA"), states, and other agencies make new findings that certain chemicals are potential environmental concerns, sometimes referred to as emerging contaminants. These agencies may also adjust risk-based assessment or cleanup levels, in some instances, to be more stringent. The EPA and other agencies may impose new restrictions or cleanup requirements on such chemicals. We may incur costs to comply with such requirements. The Federal Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 ("RCRA"), regulates the generation, transportation, storage, treatment and disposal of hazardous wastes and can require cleanup of hazardous waste disposal sites. RCRA currently excludes drilling fluids, produced waters and other wastes associated with the exploration, development or production of natural gas and oil gas from regulation as "hazardous waste". Disposal of such non-hazardous natural gas and oil exploration, development and production wastes usually are regulated by state law. Other wastes handled at exploration and production sites or used in the course of providing well services may not fall within this exclusion. Moreover, stricter standards for waste handling and disposal may be imposed on the natural gas and oil industry in the future. From time to time, legislation is proposed in Congress that would revoke or alter the current exclusion of exploration, development and production wastes from RCRA's definition of "hazardous wastes", thereby potentially subjecting such wastes to more stringent handling, disposal and cleanup requirements. If such legislation were enacted, it could have a significant 16 COMSTOCK RESOURCES, INC. impact on our operating costs, as well as the natural gas and oil industry in general. The impact of future revisions to environmental laws and regulations cannot be predicted. Certain natural gas and oil wastes may also contain naturally occurring radioactive material ("NORM"), which is regulated by the federal Occupational Safety and Health Administration and state agencies. These regulations require certain worker protections and waste handling and disposal procedures. We believe our operations comply in all material respects with these worker protection and waste handling and disposal requirements. Our operations are also subject to the Clean Air Act ("CAA"), and comparable state and local requirements. Amendments to the CAA were adopted in 1990 and contain provisions that may result in the gradual imposition of certain pollution control requirements with respect to air emissions from our operations. EPA issued its final rule on December 2, 2023 that has a number of provisions intended to reduce methane emissions from natural gas and oil operations. We believe our operations will not be materially adversely affected by the new requirements, and the requirements will not be any more burdensome to us than to other similarly situated companies involved in natural gas and oil exploration and production activities. The Federal Water Pollution Control Act of 1972, as amended (the "Clean Water Act"), imposes restrictions and controls on the discharge of produced waters and other wastes into navigable waters. Permits must be obtained to discharge pollutants into state and federal waters and to conduct construction activities in waters and wetlands. In January 2023, the EPA and the U.S. Army Corps of Engineers issued a new rule that revises the definition of "waters of the United States" ("WOTUS"). The new rule has been challenged by several states and industry groups. If upheld, such regulations may impact certain exploration and production activities. Certain state regulations and the general permits issued under the Federal National Pollutant Discharge Elimination System program prohibit the discharge of produced waters and sand, drilling fluids, drill cuttings and certain other substances related to the natural gas and oil industry into certain coastal and offshore waters, unless otherwise authorized. Further, the EPA has adopted regulations requiring certain natural gas and oil exploration and production facilities to obtain permits for storm water discharges. Costs may be associated with the treatment of wastewater or developing and implementing storm water pollution prevention plans. The Clean Water Act and comparable state statutes provide for civil, criminal and administrative penalties for unauthorized discharges for oil and other pollutants and impose liability on parties responsible for those discharges for the cost of cleaning up any environmental damage caused by the release and for natural resource damages resulting from the release. We believe that our operations comply in all material respects with the requirements of the Clean Water Act and state statutes enacted to control water pollution and that the requirements, including those under the 2023 WOTUS rule, are not any more burdensome to us than to other similarly situated companies involved in natural gas and oil exploration and production activities. The Federal Safe Drinking Water Act of 1974, as amended, requires the EPA to develop minimum federal requirements for Underground Injection Control ("UIC") programs and other safeguards to protect public health by preventing injection wells from contaminating underground sources of drinking water. The UIC program does not regulate wells that are solely used for production. However, the EPA has authority to regulate hydraulic fracturing when diesel fuels are used in fluids or propping agents. In February 2014, the EPA issued guidance on when UIC permitting requirements apply to fracking fluids containing diesel. We believe that our operations comply in all material respects with the requirements of the Federal Safe Drinking Water Act and similar state statutes. We believe the requirements are not any more burdensome to us than to other similarly situated companies involved in natural gas and oil exploration and production activities. State and federal regulatory agencies have studied possible connections between hydraulic fracturing related activities and the increased occurrence of seismic activity. When caused by human activity, such events are called induced seismicity. In a few instances, operators of injection wells in the vicinity of seismic events have been ordered to reduce injection volumes or suspend operations. Some state regulatory agencies, including those in Arkansas, California, Colorado, Illinois, Kansas, Ohio, Oklahoma, and Texas, have modified their regulations to account for induced seismicity. There continues to be research into the possible linkage between natural gas and oil activity and induced seismicity. A 2012 report published by the National Academy of Sciences, as well as a more recent paper published in the journal Reviews of Geophysics and cited on the U.S. Geological Survey website, concluded that only a very small fraction of the tens of thousands of injection wells have been suspected to be, or have been, the likely cause of induced seismicity. In 2015, the U.S. Geological Survey identified eight states, including Texas, with areas of increased rates of induced seismicity that could be attributed to fluid injection or natural gas and oil extraction. In March 2016, the U.S. Geological Survey identified six states with the most significant hazards from induced seismicity, including Texas, Colorado, Oklahoma, Kansas, New Mexico, and Arkansas. In addition, a number of lawsuits have been filed, including in Oklahoma, alleging that disposal well operations have caused damage to or injury at nearby properties or otherwise violated state and federal rules regulating waste disposal. It is possible that the EPA or other agencies may develop rules to specifically address the disposal of wastewater from natural gas and oil development and the potential for induced seismicity from wastewater injection. Future regulatory developments could adversely affect our 17 COMSTOCK RESOURCES, INC. operations by placing restrictions on the use of injection wells and hydraulic fracturing and/or causing us to incur increased operating expenses. In December 2016, the EPA finalized its report on the potential impacts of hydraulic fracturing on drinking water resources, which concluded that hydraulic fracturing activities could impact drinking water resources under some circumstances. Other governmental agencies, including the U.S. Department of Energy, have evaluated or are evaluating various other aspects of hydraulic fracturing. These ongoing or proposed studies have the potential to impact the likelihood or scope of future legislation or regulation. Federal regulators require certain owners or operators of facilities that store or otherwise handle oil to prepare and implement spill prevention, control, countermeasure and response plans relating to the possible discharge of oil into surface waters. The Oil Pollution Act of 1990 ("OPA") contains numerous requirements relating to the prevention and response to oil spills in the WOTUS. The OPA subjects owners of facilities to strict joint and several liability for all containment and cleanup costs and certain other damages relating to a spill. Noncompliance with OPA may result in varying civil and criminal penalties and liabilities. Executive Order 13158, issued on May 26, 2000, directs federal agencies to safeguard existing Marine Protected Areas, or MPAs, in the United States and establish new MPAs. The order requires federal agencies to avoid harm to MPAs to the extent permitted by law and to the maximum extent practicable. It also directs the EPA to propose new regulations under the Clean Water Act to ensure appropriate levels of protection for the marine environment. This order has the potential to adversely affect our operations by restricting areas in which we may carry out future exploration and development projects and/or causing us to incur increased operating expenses. Certain flora and fauna that have officially been classified as "threatened" or "endangered" are protected by the Endangered Species Act. This law prohibits any activities that could "take" a protected plant or animal or reduce or degrade its habitat area. If endangered species are located in an area we wish to develop, the work could be prohibited or delayed and/or expensive mitigation might be required. Other statutes that provide protection to animal and plant species and which may apply to our operations include, but are not necessarily limited to, the Oil Pollution Act, the Emergency Planning and Community Right to Know Act, the Marine Mammal Protection Act, the Marine Protection, Research and Sanctuaries Act, the Fish and Wildlife Coordination Act, the Fishery Conservation and Management Act, the Migratory Bird Treaty Act and the National Historic Preservation Act. These laws and regulations may require the acquisition of a permit or other authorization before construction or drilling commences and may limit or prohibit construction, drilling and other activities on certain lands lying within wilderness or wetlands and other protected areas and impose substantial liabilities for pollution resulting from our operations. The permits required for our various operations are subject to revocation, modification and renewal by issuing authorities. In addition, laws such as the National Environmental Policy Act and the Coastal Zone Management Act may make the process of obtaining certain permits more difficult or time consuming, resulting in increased costs and potential delays that could affect the viability or profitability of certain activities. Administrative policies with respect to such laws are also changing, and we incur costs to follow such changes and comply as changes become effective. Certain statutes, such as the Emergency Planning and Community Right to Know Act, require the reporting of hazardous chemicals manufactured, processed, or otherwise used, which may lead to heightened scrutiny of the company's operations by regulatory agencies or the public. In 2012, the EPA adopted the Petroleum and Natural Gas Systems Greenhouse Gas Reporting Rule (40 C.F.R. Part 98, Subpart W), which requires certain onshore petroleum and natural gas facilities to collect data on their emissions of greenhouse gases ("GHG"). GHGs include gases such as methane, a primary component of natural gas, and carbon dioxide, a byproduct of burning natural gas. Different GHGs have different global warming potentials with CO2 having the lowest global warming potential, so emissions of GHGs are typically expressed in terms of CO2 equivalents ("CO2e"). The rule applies to facilities that emit 25,000 metric tons of CO2e or more per year, and requires onshore petroleum and natural gas operators to group all equipment under common ownership or control within a single hydrocarbon basin together when determining if the threshold is met. These greenhouse gas reporting rules were amended on October 22, 2015 to expand the number of sources and operations that are subject to these rules, and again on November 18, 2016 to provide less burdensome reporting requirements. We have determined that these reporting requirements apply to us and we believe we have met all of the EPA required reporting deadlines and strive to ensure accurate and consistent emissions data reporting. Other EPA actions with respect to the reduction of greenhouse gases (such as the EPA's Greenhouse Gas Endangerment Finding, and the EPA's Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule) and various state actions have or could impose mandatory reductions in greenhouse gas emissions. We are unable to predict at this time how much the cost of compliance with any legislation or regulation of greenhouse gas emissions will be in future periods. 18 COMSTOCK RESOURCES, INC. The U.S. has not passed legislation to expressly regulate GHG emissions; however, in recent years the EPA moved ahead with its efforts to regulate GHG emissions from certain sources by rule. Beyond requiring measurement and reporting of GHGs as discussed above, the EPA issued an "Endangerment Finding" under section 202(a) of the Clean Air Act, concluding greenhouse gas pollution threatens the public health and welfare of current and future generations. However, in 2025, President Trump directed the EPA to reevaluate the Endangerment Finding, which could impact the EPA's prior and future rulemaking. The EPA has adopted regulations that would require permits for and reductions in greenhouse gas emissions for certain facilities. States in which we operate may also require permits and reductions in GHG emissions. Additionally, as discussed above, the EPA has promulgated rules that require reductions in volatile organic compounds ("VOCs") and methane generation from natural gas and oil operations. In addition, on April 10, 2024, the BLM finalized a rule establishing new requirements designed to reduce waste of natural gas from venting, flaring and leaks. Since all of our natural gas and oil production is in the United States, laws or regulations that have been or may be adopted to restrict or reduce emissions of greenhouse gases could require us to incur substantial increased operating costs, and could have an adverse effect on demand for the natural gas and oil we produce. In addition, efforts have been made and continue to be made in the international community toward the adoption of international treaties or protocols that would address global climate change issues. In 2015, the United States participated in the United Nations Conference on Climate Change, which led to the creation of the Paris Agreement. The Paris Agreement requires ratifying countries to review and "represent a progression" in the ambitions of their nationally determined contributions, which set GHG emission reduction goals, every five years. The United States signed the Paris Agreement on April 22, 2016; although the Trump administration provided notice of its intent to withdraw from the Paris Agreement in 2017 and again in 2025. Further, the United States has made additional commitments with respect to GHG emissions through the United Nations Climate Change Conference, including with respect to reducing methane emissions. It is difficult to predict the timing and certainty of any future government action and the effect on our operations. Future legislation or regulations adopted to address climate change could also make our products more or less desirable than competing sources of energy. However, we expect that the impacts to our operations will not be materially different from other similarly situated companies involved in natural gas and oil exploration and production activities. The Inflation Reduction Act (the "IRA"), which was signed into law on August 16, 2023, established a new program, the Methane Emission Reduction Program, that imposes a first-time federal fee on methane emissions for the oil and gas sector. In general, covered facilities that emit 25,000 metric tons of carbon dioxide equivalent or more per year are required to pay for "excess" methane emissions, with the fee starting at $900 per metric ton in 2024, and increasing to $1,500 per metric ton by 2026. The calculation of the methane fee is determined by (1) the facility's reported emissions under the federal Greenhouse Gas Reporting Program, and (2) an emissions threshold that varies by facility type. For example, for offshore and onshore petroleum and natural gas production facilities, the fee applies to the number of reported tons of methane that exceed (i) 0.2% of the natural gas sent to sale from the facility. We believe our operations will not be materially adversely affected by the IRA, and the requirements will not be any more burdensome to us than to other similarly situated companies involved in natural gas and oil exploration and production activities. In 2021, the Biden administration issued an Executive Order pausing new natural gas and oil leasing and drilling permits for U.S. public lands and offshore waters until the Secretary of the Interior conducts a comprehensive review and reconsideration of Federal natural gas and oil permitting and leasing practices. In 2022, the Biden administration reopened federal lands for natural gas and oil leasing under a reformed program that significantly reduces the acreage available for lease and, in 2025, President Trump revoked the 2021 Executive Order. We believe our operations will not be materially adversely affected by these changes and expect that the impacts to our operations will be similar to other similarly situated companies involved in natural gas and oil exploration and production activities. Such changes in environmental laws and regulations which result in more stringent and costly reporting, or waste handling, storage, transportation, disposal or cleanup activities, could materially affect companies operating in the energy industry. Adoption of new regulations further regulating emissions from natural gas and oil production could adversely affect our business, financial position, results of operations and prospects, as could the adoption of new laws or regulations which levy taxes or other costs on greenhouse gas emissions from other industries, which could result in changes to the consumption and demand for natural gas. We may also be assessed administrative, civil and/or criminal penalties if we fail to comply with any such new laws and regulations applicable to natural gas and oil production. Regulation of natural gas and oil exploration and production. Our exploration and production operations are subject to various types of regulation at the federal, state and local levels. Such regulations include requiring permits and drilling bonds for the drilling of wells, regulating the location of wells, the method of drilling and casing wells and the surface use and restoration of properties upon which wells are drilled. Many states also have statutes or regulations addressing conservation matters, including provisions for the unitization or pooling of natural gas and oil properties, the establishment of maximum rates of production from natural gas and oil wells and the regulation of spacing, plugging and abandonment of such wells. Some 19 COMSTOCK RESOURCES, INC. state statutes limit the rate at which natural gas and oil can be produced from our properties. It is also possible that certain states may increase regulatory activity in response to changing federal regulations or policies. State regulation. Most states regulate the production and sale of natural gas and oil, including requirements for obtaining drilling permits, the method of developing new fields, the spacing and operation of wells and the prevention of waste of natural gas and oil resources. The rate of production may be regulated and the maximum daily production allowable from both natural gas and oil wells may be established on a market demand or conservation basis or both. Office and Operations Facilities Our executive offices are located at 5300 Town and Country Blvd., Suite 500 in Frisco, Texas 75034, and our telephone number is (972) 668-8800. We lease office space in Frisco, Texas covering 66,382 square feet. This lease expires on December 31, 2031. We have an option to terminate the lease on December 31, 2028. We also own production offices and pipe yard facilities near Carthage, Franklin, Nacogdoches, Marshall, Marquez and Tennessee Colony in Texas and Bossier City, Grand Cane, Greenwood, Homer, Mansfield and Logansport in Louisiana. Human Capital As of December 31, 2024, we had 256 employees and utilized contract employees for certain of our drilling, completion and production operations. We seek to attract a qualified workforce and maintain strong non-discrimination and anti-harassment policies. The safety of our employees, contractors and the community is a core business value and in order to achieve our goals of operational excellence and an injury-free workplace, we maintain a strong health and safety management system. The framework includes policies and procedures outlining how we do our work, programs to engage employees and drive a proactive safety culture, employee training to help ensure our employees have the knowledge to perform their work safely, setting targets and objectives for clearly defined deliverables and accountabilities and periodic audit and inspection of results using data collection of key performance indicators and scorecards to measure our success and develop improvement strategies. We utilize a third-party contractor management service to ensure a consistent approach in aligning our expectations with all third parties involved in our operations. We hold our contractors accountable to the highest performance standards through our contractor onboarding and continuous auditing process. Directors and Executive Officers The following table sets forth certain information concerning our executive officers and directors. Name Position with Company Age M. Jay Allison Chief Executive Officer and Chairman of the Board of Directors 69 Roland O. Burns President, Chief Financial Officer, Secretary and Director 64 Daniel S. Harrison Chief Operating Officer 61 Clifford D. Newell Chief Commercial Officer and Vice President of Corporate Development 46 Patrick H. McGough Vice President of Operations 44 Ronald E. Mills Vice President of Finance and Investor Relations 52 Daniel K. Presley Vice President of Accounting, Controller and Treasurer 64 LaRae L. Sanders Vice President of Land 62 Brian C. Claunch Vice President of Financial Reporting 50 Elizabeth B. Davis Director 62 Morris E. Foster Director 82 Jim L. Turner Director 79 20 COMSTOCK RESOURCES, INC. A brief biography of each person who serves as an executive officer or director follows below. Executive Officers M. Jay Allison has been our Chief Executive Officer since 1988. Mr. Allison was elected Chairman of the Board in 1997 and has been a director since 1987. From 1988 to 2013, Mr. Allison served as our President. From 1981 to 1987, he was a practicing oil and gas attorney with the firm of Lynch, Chappell & Alsup in Midland, Texas. He received B.B.A., M.S. and J.D. degrees from Baylor University in 1978, 1980 and 1981, respectively. Roland O. Burns has been our President since 2013, Chief Financial Officer since 1990, Secretary since 1991 and a director since 1999. Mr. Burns served as our Senior Vice President from 1994 to 2013 and Treasurer from 1990 to 2013. From 1982 to 1990, Mr. Burns was employed by the public accounting firm, Arthur Andersen. During his tenure with Arthur Andersen, Mr. Burns worked primarily in the firm's oil and gas audit practice. Mr. Burns received B.A. and M.A. degrees from the University of Mississippi in 1982 and is a Certified Public Accountant. Daniel S. Harrison has been our Chief Operating Officer since 2019 and served as Vice President of Operations since 2017. Mr. Harrison has been with us since 2008 and served in various engineering and operations management positions of increasing responsibility during that time. Prior to joining us, Mr. Harrison was an operations engineer at Cimarex Energy Company from 2005 to 2008. Prior to 2005, he worked in various petroleum engineering operations management positions for several independent oil and gas exploration and development companies. Mr. Harrison received a B.S. Degree in Petroleum Engineering from the Louisiana State University in 1985. Clifford D. Newell has been our Chief Commercial Officer and Vice President of Corporate Development since December 2022. Mr. Newell has over 15 years of experience in commercial, marketing and operations experience in the midstream energy industry. Prior to joining us, Mr. Newell was responsible for producer relationships, business development, project management, scheduling and marketing as Commercial Vice President at Trace Midstream, Blue Mountain Midstream and Penntex Midstream. He received his Bachelor of Business Administration in Economics and Pre-Law and Executive Master of Business Administration from Centenary College of Louisiana in 2006 and 2013, respectively. He also received his Master of Energy Business from the University of Tulsa in 2015. Patrick H. McGough has been our Vice President of Operations since 2019 following our acquisition of Covey Park Energy, LLC. He joined Covey Park in August 2018 as the Vice President of Operations, where he was responsible for drilling, completion, and production operations and engineering. Prior to his time at Covey Park, Mr. McGough held significant roles as a drilling, completion, and production engineer at Brammer Engineering. Mr. McGough received a Bachelor of Science in Chemical Engineering from Louisiana Tech University in 2003 and an MBA from Centenary College of Louisiana in 2010. Ronald E. Mills has been our Vice President of Finance and Investor Relations since 2019. Prior to joining us, Mr. Mills was an Equity Member and Senior Analyst responsible for covering exploration and production companies at Johnson Rice & Company LLC. Mr. Mills joined Johnson Rice in August 1995. Mr. Mills received a Bachelor of Arts in Economics and Master of Business Administration from Tulane University in 1994 and 1995, respectively. Daniel K. Presley has been our Treasurer since 2013. Mr. Presley, who has been with us since 1989, also continues to serve as our Vice President of Accounting and Controller, positions he has had held since 1997 and 1991, respectively. Prior to joining us, Mr. Presley had six years of experience with several independent oil and gas companies including AmBrit Energy, Inc. Prior thereto, Mr. Presley spent two and one-half years with B.D.O. Seidman, a public accounting firm. Mr. Presley received a Bachelor of Business Administration degree from Texas A & M University in 1983. LaRae L. Sanders has been our Vice President of Land since 2014. Ms. Sanders has been with us since 1995. She has served as Land Manager since 2007 and has been instrumental in all of our active development programs and major acquisitions. Prior to joining us, Ms. Sanders held positions with Bridge Oil Company and Kaiser-Francis Oil Company, as well as other independent exploration and production companies. Ms. Sanders is a Certified Professional Landman and became the nation's first Certified Professional Lease and Title Analyst in 1990. Brian C. Claunch has been our Vice President of Financial Reporting since June 2021. Mr. Claunch joined the Company in June 2020 as Director of Financial Reporting. Prior to joining Comstock, Mr. Claunch served as Director of Financial Reporting at Guidon Energy and Controller at Pioneer Natural Resources Company. He received his Bachelor of Business Administration and Master of Science in Accounting degrees from the University of Texas at Arlington in 1999 and is a Certified Public Accountant. 21 COMSTOCK RESOURCES, INC. Outside Directors Elizabeth B. Davis has served as a director since 2014. Dr. Davis is currently the President of Furman University. Dr. Davis was the Executive Vice President and Provost for Baylor University until July 2014 and served as Interim Provost from 2008 until 2010. Prior to her appointment as Provost, she was a professor of accounting at the Hankamer School of Business at Baylor University where she also served as associate dean for undergraduate programs and as acting chair for the Department of Accounting and Business Law. Prior to joining Baylor University, she worked for the public accounting firm Arthur Andersen from 1984 to 1987. Morris E. Foster has served as a director since 2017. Mr. Morris retired in 2008 as Vice President of ExxonMobil Corporation and President of ExxonMobil Production Company following more than 40 years of service with the ExxonMobil group. Mr. Foster served in a number of production engineering and management roles domestically as well as in the United Kingdom and Malaysia prior to his appointment in 1995 as a Senior Vice President in charge of the upstream business of Exxon Company, USA. In 1998, Mr. Foster was appointed President of Exxon Upstream Development Company and following the merger of Exxon and Mobil in 1999, he was named to the position of President of ExxonMobil Development Company. In 2004, Mr. Foster was named President of Exxon Mobil Production Company, the division responsible for ExxonMobil's upstream oil and gas exploration and production business, and a Vice President of ExxonMobil Corporation. Mr. Foster currently serves as Chairman of Stagecoach Properties Inc., a real estate holding corporation with properties in Salado, Houston and College Station, Texas and Carmel, California and as a member of the Board of Regents of Texas A&M University. In addition, Mr. Foster currently serves on the board of directors of Scott & White Medical Institute. Jim L. Turner has served as a director since 2014. Mr. Turner currently serves as Chairman of Turner Holdings, LLC and CEO of JLT Automotive, Inc. Mr. Turner served as President and Chief Executive Officer of Dr Pepper/Seven Up Bottling Group, Inc. from its formation in 1999 through 2005, when he sold this interest in that company. Prior to that, Mr. Turner served as Owner/Chairman of the Board and Chief Executive Officer of the Turner Beverage Group, the largest privately owned independent bottler in the United States. Mr. Turner is past-Chairman and currently serves on the Board of Trustees of Baylor Scott and White Health, the largest not-for-profit healthcare system in the State of Texas, where he also serves as Chairman of the Finance Committee and as a member of the Executive Committee. He is a Director of Crown Holdings where he also serves as Chairman of the Compensation Committee and as a member of the Nominating and Governance Committee. He is on the Board of Directors of INSURICA, a full-service insurance agency. Mr. Turner is former Chairman of Dean Foods Company where he also served as Chairman of the Compensation Committee. Available Information We file annual, quarterly and current reports, proxy statements and other documents with the SEC under the Securities Exchange Act of 1934. The SEC maintains a website that contains reports, proxy and information statements, and other information that is electronically filed with the SEC. The public can obtain any documents that we file with the SEC at www.sec.gov. We also make available free of charge on our website (www.comstockresources.com) our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and, if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) of the Exchange Act as soon as reasonably practicable after we file such material with, or furnish it to, the SEC. ITEM 1A. R ISK FACTORS You should carefully consider the following material risk factors as well as the other information contained or incorporated by reference in this report, as these important factors, among others, could cause our actual results to differ from our expected or historical results. It is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete statement of all of our potential risks or uncertainties. Based on the information currently known to us, we believe the following information identifies the most material risk factors affecting us, but the below risks and uncertainties are not the only ones related to our businesses and are not necessarily listed in the order of their significance. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business. An extended period of depressed natural gas prices would adversely affect our business, financial condition, cash flow, liquidity, results of operations and our ability to meet our capital expenditure obligations and financial commitments. Our business is heavily dependent upon the price of and demand for natural gas. Historically, natural gas prices have been volatile and are likely to remain volatile in the future. The prices we receive for our natural gas production depend on numerous factors beyond our control, including the following: 22 COMSTOCK RESOURCES, INC. • the domestic and foreign supply of natural gas; • weather conditions; • the price and quantity of exports of natural gas; • political conditions and events in other natural gas-producing countries, including embargoes and other sustained military campaigns, and acts of terrorism or sabotage; • domestic government regulation, legislation and policies; • the level of global natural gas inventories; • technological advances affecting energy consumption; • the price and availability of alternative fuels; and • overall U.S. and global economic and political conditions, including inflationary pressures, further increases in interest rates, a general economic slowdown or recession, political tensions and war (including future developments in the ongoing Russia-Ukraine and Israel-Hamas conflicts). Lower natural gas prices will adversely affect: • our revenues, profitability and cash flow from operations; • the value of our proved natural gas reserves; • the economic viability of certain of our drilling prospects; • our borrowing capacity; and • our ability to obtain additional capital. Our future production and revenues depend on our ability to replace our reserves. Our future production and revenues depend upon our ability to find, develop or acquire additional natural gas reserves that are economically recoverable. Our proved reserves will generally decline as reserves are depleted, except to the extent that we conduct successful drilling activities or acquire properties containing proved reserves, or both. To increase reserves and production, we must continue our acquisition and drilling activities. We cannot assure you that we will have adequate capital resources to conduct acquisition and drilling activities or that our acquisition and drilling activities will result in significant additional reserves or that we will have continuing success drilling productive wells at low finding and development costs. Furthermore, while our revenues may increase if prevailing natural gas and oil prices increase significantly, our finding costs for additional reserves could also increase. Substantial exploration and development activities could require significant outside capital, which could dilute the value of our common shares and restrict our activities. Also, we may not be able to obtain needed capital or financing on satisfactory terms, which could lead to a limitation of our future business opportunities and a decline in our natural gas and oil reserves. We expect to expend substantial capital in the acquisition of, exploration for and development of natural gas reserves. In order to finance these activities, we may need to alter or increase our capitalization substantially through the issuance of debt or equity securities, the sale of non-strategic assets or other means. The issuance of additional equity securities could have a dilutive effect on the value of our common shares and may not be possible on terms acceptable to us given the current volatility in the financial markets. The issuance of additional debt would likely require that a portion of our cash flow from operations be used for the payment of interest on our debt, thereby reducing our ability to use our cash flow to fund working capital, capital expenditures, acquisitions, dividends and general corporate requirements, which could place us at a competitive disadvantage relative to other competitors. Our cash flow from operations and access to capital is subject to a number of variables, including: • our estimated proved reserves; • the level of natural gas we are able to produce from existing wells; • our ability to extract natural gas liquids from the natural gas we produce; • the prices at which natural gas liquids and natural gas are sold; and • our ability to acquire, locate and produce new reserves. If our revenues decrease as a result of lower natural gas prices, operating difficulties or declines in reserves, our ability to obtain the capital necessary to undertake or complete future exploration and development programs and to pursue other opportunities may be limited, which could result in a curtailment of our operations relating to exploration and development of our prospects, which in turn could result in a decline in our natural gas and oil reserves. Prospects that we decide to drill may not yield natural gas in commercially viable quantities or quantities sufficient to meet our targeted rate of return and firm transportation commitments. 23 COMSTOCK RESOURCES, INC. A prospect is a property in which we own an interest, or have operating rights to, and that has what our geoscientists believe, based on available seismic and geological information, to be an indication of potential oil or natural gas. Our prospects are in various stages of evaluation, ranging from a prospect that is ready to be drilled to a prospect that will require substantial additional evaluation and interpretation. There is no way to predict in advance of drilling and testing whether any particular prospect will yield oil or natural gas in sufficient quantities to recover drilling or completion costs or to be economically viable. The use of seismic data and other technologies and the study of producing fields in the same area will not enable us to know conclusively prior to drilling whether oil or natural gas will be present or, if present, whether oil or natural gas will be present in commercial quantities. The analysis that we perform using data from other wells, more fully explored prospects and/or producing fields may not be useful in predicting the characteristics and potential reserves associated with our drilling prospects. If we drill additional unsuccessful wells, our drilling success rate may decline and we may not achieve our targeted rate of return. Further, unsuccessful drilling may impact our ability to fulfill our firm transportation commitments. Our operations may incur substantial liabilities due to compliance with environmental laws and regulations. We are subject to stringent federal, state and local laws. These laws, among other things, govern the issuance of permits to conduct exploration, drilling and production operations, the amounts and types of materials that may be released into the environment, the discharge and disposition of waste materials, the remediation of contaminated sites and the reclamation and abandonment of wells, sites and facilities. Numerous governmental departments issue rules and regulations to implement and enforce such laws, which are often difficult and costly to comply with and which carry substantial civil and even criminal penalties for failure to comply. The regulatory burden on the natural gas and oil industry from these environmental laws and regulations increases our cost of doing business and consequently affects our profitability. Environmental laws and regulations have been subject to frequent changes over the years, and the imposition of more stringent requirements or new regulatory schemes such as carbon "cap and trade" or pricing programs could have a material adverse effect upon our capital expenditures, earnings or competitive position, including the suspension or cessation of operations in affected areas. We may be subject to physical and financial risks associated with climate change. Changing climate may create physical and financial risks to our business. ‎Energy needs vary with weather ‎conditions. To the extent weather conditions may be affected ‎by climate change, energy use could increase or decrease depending on ‎the duration and ‎magnitude of any changes. Increased energy use due to weather changes may require us to ‎invest in more infrastructure to serve increased demand. A decrease in energy use due to ‎weather changes may affect our financial ‎condition through decreased revenues. Extreme ‎weather conditions in general require more equipment redundancy, adding to costs, and can ‎‎contribute to increased risk of delivery disruptions. ‎ Additionally, many climate models indicate that global warming is likely to result in rising sea ‎levels and increased frequency ‎and severity of weather events, which may lead to higher ‎insurance costs, or a decrease in available coverage, for our assets in areas ‎subject to severe ‎weather. These climate-related changes could damage our physical assets, especially operations ‎located in low-lying ‎areas near coasts and riverbanks, and facilities situated in hurricane-prone ‎and rain-susceptible regions. To the extent the frequency of extreme weather events increases, ‎this could increase our cost of ‎producing products. We may not be able to pass on the higher ‎costs to our customers or recover all costs related to mitigating these ‎physical risks.‎ Regulations relating to climate change and/or greenhouse gases could also reduce demand for our products or increase our operating and drilling costs. Our business could also be affected by the potential for lawsuits against companies that emit greenhouse gases, based on links drawn between greenhouse gas emissions and climate change. To the extent financial markets view climate change and GHG emissions as a financial risk, this ‎could ‎negatively impact our cost of and access to capital. Increasing scrutiny and changing expectations from stakeholders with respect to our ‎environmental, social and governance ‎practices may impose additional costs on us or expose ‎us to new or additional risks.‎ Companies across all industries are facing increasing scrutiny from stakeholders related to their ‎environmental, social and ‎governance ("ESG") practices. Investor advocacy groups, certain ‎institutional investors, investment funds and other influential ‎investors are also increasingly ‎focused on ESG practices and in recent years have placed increasing importance on the ‎implications ‎and social cost of their investments. Regardless of the industry, investors' increased ‎focus and activism related to ESG and similar ‎matters may hinder access to capital, as investors ‎may decide to reallocate capital or to not commit capital as a result of their ‎assessment of a ‎company's ESG practices. Companies that do not adapt to or comply with investor or other ‎stakeholder expectations ‎and standards, which are evolving, or that are perceived to have not ‎responded appropriately to the growing concern for ESG issues, ‎regardless of whether there is a ‎legal requirement to do so, may suffer from reputational damage and the business, financial ‎‎condition, and/or stock price of such a company could be materially and adversely affected.‎ 24 COMSTOCK RESOURCES, INC. We face pressures from our stockholders, who are increasingly focused on climate change, to ‎prioritize sustainable energy ‎practices, reduce our carbon footprint and promote sustainability. ‎Our stockholders may require us to implement new ESG procedures or ‎standards in order to continue ‎engaging with us, to remain invested in us or before they may make further investments in us. ‎‎Additionally, we may face reputational challenges in the event our ESG procedures or standards ‎do not meet the standards set by certain constituencies. We have adopted certain practices and ‎metrics as highlighted on our website, including with respect to air emissions, land use, ‎environmental, health and safety management and corporate governance. It is possible, ‎however, that our stockholders might not be satisfied with our sustainability efforts or the ‎speed ‎of their adoption. If we do not meet our stockholders' expectations, our business, ability to ‎access capital, and/or our stock price ‎could be harmed.‎ Additionally, adverse effects upon the oil and gas industry related to the worldwide social and ‎political environment, including ‎uncertainty or instability resulting from climate change, ‎changes in political leadership and environmental policies, changes in ‎geopolitical-social views ‎toward fossil fuels and renewable energy, concern about the environmental impact of climate ‎change, and ‎investors' expectations regarding ESG matters, may also adversely affect demand ‎for our products. Any long-term material adverse ‎effect on the natural gas and oil industry could have a ‎significant financial and operational adverse impact on our business.‎ The occurrence of any of the foregoing could have a material adverse effect on the price of our ‎stock and our business and ‎financial condition.‎ We pursue acquisitions as part of our growth strategy and there are risks associated with such acquisitions. Our growth has been attributable in part to acquisitions of producing properties and companies. Recently we have been focused on acquiring acreage for our drilling program. We expect to continue to evaluate and, where appropriate, pursue acquisition opportunities on terms we consider favorable. However, we cannot assure you that suitable acquisition candidates will be identified in the future, or that we will be able to finance such acquisitions on favorable terms. In addition, we compete against other companies for acquisitions, and we cannot assure you that we will successfully acquire any material property interests. Further, we cannot assure you that future acquisitions by us will be integrated successfully into our operations or will increase our profits. The successful acquisition of producing properties requires an assessment of numerous factors beyond our control, including, without limitation: • recoverable reserves; • exploration potential; • future natural gas prices; • operating costs; and • potential environmental and other liabilities. In connection with such assessments, we perform a review of the subject properties that we believe to be generally consistent with industry practices. The resulting assessments are inexact and their accuracy uncertain, and such a review may not reveal all existing or potential problems, nor will it necessarily permit us to become sufficiently familiar with the properties to fully assess their merits and deficiencies. Inspections may not always be performed on every well, and structural and environmental problems are not necessarily observable even when an inspection is made. Additionally, significant acquisitions can change the nature of our operations and business depending upon the character of the acquired properties, which may be substantially different in operating and geologic characteristics or geographic location than our existing properties. While our current operations are focused in Texas and Louisiana, we may pursue acquisitions or properties located in other geographic areas. Market conditions or operational impediments may hinder our access to natural gas markets or delay our production. Market conditions or the unavailability of satisfactory natural gas transportation arrangements may hinder our access to natural gas markets or delay our production. The availability of a ready market for our natural gas production depends on a number of factors, including the demand for and supply of natural gas and the proximity of reserves to pipelines and processing facilities. Our ability to market our production depends in a substantial part on the availability and capacity of gathering systems, pipelines and processing facilities, which, in some cases, may be owned and operated by third parties. Our failure to obtain such services on acceptable terms, if at all, could materially harm our business. We may be required to shut in wells due to a lack of market demand or because of the inadequacy or unavailability of pipelines or gathering system capacity. If that were to occur, then we would be unable to realize revenue from those wells until arrangements were made to deliver our production to market. 25 COMSTOCK RESOURCES, INC. Our debt service requirements could adversely affect our operations and limit our growth. We had $3.0 billion principal amount of debt as of December 31, 2024. Our outstanding debt has important consequences, including, without limitation: • a portion of our cash flow from operations is required to make debt service payments; • our ability to borrow additional amounts for capital expenditures (including acquisitions) or other purposes is limited; and • our debt limits (i) our ability to capitalize on significant business opportunities, (ii) our flexibility in planning for or reacting to changes in market conditions, and (iii) our ability to withstand competitive pressures and economic downturns. Future acquisitions or development activities may require us to alter our capitalization significantly. These changes in capitalization may significantly increase our debt. Moreover, our ability to meet our debt service obligations and to reduce our total debt will be dependent upon our future performance, which will be subject to general economic conditions and financial, business and other factors affecting our operations, many of which are beyond our control. If we are unable to service our indebtedness and to meet other commitments, we will be required to adopt one or more alternatives, such as refinancing or restructuring our indebtedness, selling material assets or seeking to raise additional debt or equity capital. We cannot assure you that any of these actions could be affected on a timely basis or on satisfactory terms or that these actions would enable us to continue to satisfy our capital requirements. Our debt agreements contain a number of significant covenants. These covenants limit our ability to, among other things: • borrow additional money; • merge, consolidate or dispose of assets; • make certain types of investments; • enter into transactions with our affiliates; and • pay dividends. Our failure to comply with any of these covenants could cause a default under our bank credit facility and the indentures governing our outstanding notes. A default, if not waived, could result in acceleration of our indebtedness, in which case the debt would become immediately due and payable. If this occurs, we may not be able to repay our debt or borrow sufficient funds to refinance it given the current status of the credit markets. Even if new financing is available, it may not be on terms that are acceptable to us. Furthermore, our bank credit facility is subject to various interest rates that are tied to adjusted Secured Overnight Financing Rate ("SOFR") or an alternate base rate, at our option. Any increase in these interest rates would have an adverse impact on our results of operations and cash flow. Complying with these covenants may cause us to take actions that we otherwise would not take or not take actions that we otherwise would take. Our business involves many uncertainties and operating risks that can prevent us from realizing profits and can cause substantial losses. Our success depends on the success of our exploration and development activities. Exploration activities involve numerous risks, including the risk that no commercially productive natural gas reserves will be discovered. In addition, these activities may be unsuccessful for many reasons, including weather, cost overruns, equipment shortages and mechanical difficulties. Moreover, the successful drilling of a natural gas well does not ensure we will realize a profit on our investment. A variety of factors, both geological and market-related, can cause a well to become uneconomical or only marginally economical. In addition to their costs, unsuccessful wells can hurt our efforts to replace production and reserves. Our business involves a variety of operating risks, including: • unusual or unexpected geological formations; • fires; • explosions; • blow-outs and surface cratering; • uncontrollable flows of natural gas and formation water; • natural disasters, such as hurricanes, tropical storms and other adverse weather conditions; • pipe, cement, or pipeline failures; • casing collapses; • mechanical difficulties, such as lost or stuck oil field drilling and service tools; 26 COMSTOCK RESOURCES, INC. • abnormally pressured formations; and • environmental hazards, such as natural gas leaks, oil spills, pipeline ruptures and discharges of toxic gases. If we experience any of the above operating risks, our well bores, gathering systems and processing facilities could be affected, which could adversely affect our ability to conduct operations. We could also incur substantial losses as a result of: • injury or loss of life; • severe damage to and destruction of property, natural resources and equipment; • pollution and other environmental damage; • clean-up responsibilities; • regulatory investigation and penalties; • suspension of our operations; and • repairs to resume operations. We maintain insurance against "sudden and accidental" occurrences, which may cover some, but not all, of the risks described above. Most significantly, the insurance we maintain will not cover the risks described above which occur over a sustained period of time. Further, there can be no assurance that such insurance will continue to be available to cover all such cost or that such insurance will be available at a cost that would justify its purchase. The occurrence of a significant event not fully insured or indemnified against could have a material adverse effect on our financial condition and results of operations. Loss of our information and computer systems could adversely affect our business. We are heavily dependent on our information systems and computer-based programs, including our well operations information, seismic data, electronic data processing and accounting data. If any of these programs or systems were to fail or create erroneous information in our hardware or software network infrastructure, possible consequences include loss of our communication links, our inability to find, produce, process and sell natural gas and oil and the inability to automatically process commercial transactions or engage in similar automated or computerized business activities. Any of these consequences could have a material effect on our business. Our business could be negatively impacted by security threats, including cybersecurity threats and other disruptions. We rely on information technology and operational technology systems to process, transmit, and store information, to manage and support a variety of business processes and activities, and to comply with regulatory, legal and tax requirements. Our information technology and operational technology systems, some of which are dependent on third-party business partners, may be vulnerable to damage, interruption or shutdown due to any number of causes outside of our control such as catastrophic events, natural disasters, fires, power outages, systems failures, telecommunications failures and employee error or malfeasance. As a natural gas and oil producer, we face various security threats, including cybersecurity threats to gain unauthorized access to sensitive information or to render data or systems unusable, threats to the safety of our employees, threats to the security or operation of our facilities and infrastructure or third party facilities and infrastructure, such as processing plants and pipelines, and threats from terrorist acts. Cybersecurity attacks in particular are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to data, and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information and corruption of data. We seek to prevent, detect and investigate cybersecurity incidents, but in some cases, we might be unaware of an incident or its magnitude and effects. Although we utilize various procedures and controls to monitor and protect against these threats and to mitigate our exposure to such threats, there can be no assurance that these procedures and controls will be sufficient in preventing security threats from materializing. Further, we rely on third-party service providers and technologies on a limited basis to operate business systems to process sensitive information in a variety of contexts, including, without limitation, cloud-based infrastructure, encryption and authentication technology and other similar functions. Our ability to monitor these third parties' information security practices is limited, and these third parties may not have adequate information security measures in place, or they may suffer unexpected power losses or computer system or data network failures that negatively impact the systems or solutions on which we rely. If our third-party service providers experience a security incident or other type of interruption or if an unexpected flaw or failed software update related to third-party software used in our information systems occurs, even if inadvertent, our information systems may become disabled or inaccessible and access to our data and other business information may be limited, which could materially disrupt our operations. If any of these events were to materialize, either to the Company or a third party upon which we rely, they could lead to, without limitation, any of the following: • Loss of or damage to our data, intellectual property, or other proprietary or confidential information; 27 COMSTOCK RESOURCES, INC. • Interruption or degradation of our operations, services, or systems availability; • Compromise or corruption of our data or systems integrity; • Reputational harm or loss of customer trust or confidence; • Legal liability, regulatory fines, penalties, or sanctions; • Remediation or mitigation costs, such as increased security expenditures, investigation expenses, or litigation fees; • Increased insurance premiums or difficulty in obtaining adequate insurance coverage; or • Other negative consequences. Any of the foregoing could have a material adverse effect on our reputation, financial position, results of operations, or cash flows. We are subject to extensive governmental laws and regulations that may adversely affect the cost, manner or feasibility of doing business. Our operations and facilities are subject to extensive federal, state and local laws and regulations relating to the exploration for, and the development, production and transportation of, natural gas and oil, as well as the safe operations thereof. Future laws or regulations, adverse changes in the interpretation of existing laws and regulations or our failure to comply with existing legal requirements may harm our business, results of operations and financial condition. We may be required to make large and unanticipated capital expenditures to comply with present and future governmental laws and regulations, such as: • lease permit restrictions; • drilling bonds and other financial responsibility requirements, such as plug and abandonment bonds; • spacing of wells; • unitization and pooling of properties; • safety precautions; • regulatory requirements; and • taxation. Under these laws and regulations, we could be liable for: • personal injuries; • property and natural resource damages; • well reclamation costs; and • governmental sanctions, such as fines and penalties. Our operations could be significantly delayed or curtailed and our cost of operations could significantly increase as a result of regulatory requirements or restrictions. There are also costs associated with responding to changing regulations and policies, whether such regulations are more or less stringent. As such, there can be no assurance that material cost and liabilities will not be incurred in the future. Our hedging transactions could result in financial losses or could reduce our income. To the extent we have hedged a significant portion of our expected production and our actual production is lower than we expected or the costs of goods and services increase, our profitability would be adversely affected. To achieve more predictable cash flows and to reduce our exposure to adverse fluctuations in the prices of natural gas, we have entered into and may continue to enter into hedging transactions for certain of our expected natural gas production. These transactions could result in both realized and unrealized hedging losses. Further, these hedges may be inadequate to protect us from continuing and prolonged declines in the price of natural gas. To the extent that natural gas prices remain at current levels or decline further, we will not be able to hedge future production at the same level as our current hedges, and our results of operations and financial condition would be negatively impacted. The extent of our commodity price exposure is related largely to the effectiveness and scope of our derivative activities. For example, the derivative instruments we utilize are primarily based on NYMEX futures prices, which may differ significantly from the actual natural gas prices we realize in our operations. Furthermore, we have adopted a policy that requires that we enter into derivative transactions related to only a portion of our expected production volumes and, as a result, we will continue to have direct commodity price exposure on the portion of our production volumes not covered by these derivative financial instruments. Our actual future production may be significantly higher or lower than we estimate at the time we enter into derivative transactions. If our actual future production is higher than we estimated, we will have greater commodity price exposure than we intended. If our actual future production is lower than the nominal amount that is subject to our derivative financial 28 COMSTOCK RESOURCES, INC. instruments, we might be forced to satisfy all or a portion of our derivative transactions without the benefit of the cash flow from our sale or purchase of the underlying physical commodity, resulting in a substantial diminution in our profitability and liquidity. As a result of these factors, our derivative activities may not be as effective as we intend in reducing the volatility of our cash flows, and in certain circumstances may actually increase the volatility of our cash flows. In addition, our hedging transactions are subject to the following risks: • we may be limited in receiving the full benefit of increases in natural gas prices as a result of these transactions; • a counterparty may not perform its obligation under the applicable derivative financial instrument or may seek bankruptcy protection; • there may be a change in the expected differential between the underlying commodity price in the derivative instrument and the actual price received; and • the steps we take to monitor our derivative financial instruments may not detect and prevent violations of our risk management policies and procedures, particularly if deception or other intentional misconduct is involved. ITEM 1B. UNRES OLVED STAFF COMMENTS None. ITEM 1C. CYBERSECURITY We face various cybersecurity threats that could adversely affect our business, financial condition, and results of operations. We have implemented processes and procedures and engaged third-party service providers to assess, identify, and manage these risks , as well as to respond to and mitigate the impact of any potential or actual cybersecurity incidents to our information systems and the information residing therein. Risk Management and Strategy Our cybersecurity risk management processes have been integrated into our enterprise risk framework, which identifies, aggregates, and evaluates risks across the enterprise. We identify our enterprise risks through each member of our management team, along with counsel from our internal auditors and attorneys and we present an assessment of our enterprise risks to our board of directors on an annual basis. Our information technology management plays an integral part in the identification and communication of cybersecurity risks to our management team. Our processes for assessing and identifying cybersecurity risks include, but are not limited to, the following elements: • regular network security assessments and vulnerability scans performed by third parties; • third-party audits of our information systems, • third-party systems for monitoring and analysis of network activity and threat intelligence; • systems for protecting our information technology, such as firewalls and anti-virus software; • cybersecurity awareness training for our employees and contractors, including senior management; • and processes to oversee and identify cybersecurity risks associated with our use of third-party service providers, such as conducting due diligence, reviewing contracts, and verifying compliance with security standards and best practices. Despite our efforts, there is the ever-present risk that our systems and/or data will suffer a successful cyber incident such as unauthorized access, use, disclosure, modification, or destruction by hackers, cybercriminals, state-sponsored actors, insiders, or other malicious actors. We have experienced attempts to compromise our systems and/or data. These attempts included phishing attacks, malware infections, and unauthorized access attempts. We do not believe that these attempts, if successful, would have resulted in a material adverse effect on our business, financial condition, or results of operations. We continue to be diligent in preventing, detecting, and responding to cyber incidents. However, we cannot guarantee that we will not suffer cybersecurity incidents in the future. See Item 1A. Risk Factors " Our business could be negatively impacted by security threats, including cybersecurity threats and other disruptions. " Governance The Audit Committee of our Board of Directors provides oversight over our cybersecurity risk management and strategy. The committee receives updates from our information technology management and external advisors on our cybersecurity posture, initiatives, and incidents on an annual or as needed basis. Our information technology department is responsible for assessing and managing our cybersecurity risks on a day-to-day basis and their processes for managing cybersecurity risks include implementing and maintaining security controls, policies, and procedures to protect our information systems and the information residing therein. They also provide periodic awareness notifications to our employees and contractors on 29 COMSTOCK RESOURCES, INC. cybersecurity best practices and their roles and responsibilities. In addition, we have established an incident response plan to coordinate our response to and recovery from any cybersecurity incidents. Our Director of Information Technology has over 20 years of experience in managing organizations in the energy and telecom industries. We also have a Certified Information Systems Security Professional, who has eight years of experience in cyber and information security.