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Item 1. Financial Statements

2025-05-01 compared with 2024-10-31 · 107 added, 168 removed, 346 unchanged (44% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30,

(In thousands)

11 unchanged sentences

Net property and equipment

Derivative financial instruments

Operating lease right-of-use assets

3 unchanged sentences

Operating leases

Derivative financial instruments

Total current liabilities

8 unchanged sentences

Common stock—$ 0.50 par, 400,000,000 shares authorized, 292,919,009

and 278,429,463 shares issued and outstanding at September 30, 2024

and 292,260,645 shares issued and outstanding at March 31, 2025

and December 31, 2024, respectively

1 unchanged sentence

Accumulated earnings

Total stockholders' equity attributable to Comstock

Total stockholders' equity attributable to the Company

Noncontrolling interest

4 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

(In thousands, except per share amounts)

8 unchanged sentences

General and administrative

Gain on sale of assets

Total operating expenses

1 unchanged sentence

Other income (expenses):

Gain from derivative financial instruments

Gain (loss) from derivative financial instruments

Interest expense

Total other income (expenses)

Income (loss) before income taxes

(Provision for) benefit from income taxes

Net income (loss)

Total other expenses

Loss before income taxes

Benefit from income taxes

Net income attributable to noncontrolling interest

Net income (loss) available to Comstock

Net income (loss) per share:

Net loss available to the Company

Net loss per share:

Weighted average shares outstanding:

Dividends per share

The accompanying notes are an integral part of these statements.

5 unchanged sentences

Stock-based compensation

Common stock dividends

Balance at March 31, 2023

Stock-based compensation

Common stock dividends

Balance at June 30, 2023

Stock-based compensation

Payment of preferred stock dividends

Balance at September 30, 2023

Balance at January 1, 2024

Stock-based compensation

Issuance of common stock

2 unchanged sentences

Balance at March 31, 2024

Stock-based compensation

Stock issuance costs

Net income (loss)

Contributions from noncontrolling interest

Distributions to noncontrolling interest

Balance at June 30, 2024

Balance at January 1, 2025

Stock-based compensation

Stock issuance costs

Net income (loss)

1 unchanged sentence

Distributions to noncontrolling interest

Balance at September 30, 2024

Balance at March 31, 2025

The accompanying notes are an integral part of these statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Deferred income taxes

Gain on sale of assets

Depreciation, depletion and amortization

Gain on derivative financial instruments

(Gain) loss on derivative financial instruments

Cash settlements of derivative financial instruments

1 unchanged sentence

Stock-based compensation

Decrease in accounts receivable

Increase in other current assets

(Increase) decrease in accounts receivable

Decrease in other current assets

Decrease in accounts payable and accrued expenses

3 unchanged sentences

Prepaid drilling costs

Proceeds from sales of assets

Net cash used for investing activities

2 unchanged sentences

Repayments of bank credit facility

Issuance of Senior Notes

Issuance of common stock

Common stock dividends paid

Debt and stock issuance costs

Income tax withholdings on equity awards

2 unchanged sentences

Net cash provided by financing activities

Net decrease in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

3 unchanged sentences

NOTES TO CONSOLIDA TED FINANCIAL STATEMENTS

September 30, 2024

March 31, 2025

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2 unchanged sentences

and its wholly-owned subsidiaries (collectively, "Comstock" or the "Company").

In management's opinion, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position of Comstock as of September 30, 2024, and the related results of operations and cash flows for the periods being presented.

In management's opinion, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position of Comstock as of March 31, 2025, and the related results of operations and cash flows for the periods being presented.

Net income (loss) and comprehensive income (loss) are the same in all periods presented.

3 unchanged sentences

These unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in Comstock's Annual Report on Form 10-K for the year ended December 31, 2024.

The results of operations for the period through September 30, 2024 are not necessarily an indication of the results expected for the full year.

The results of operations for the period through March 31, 2025 are not necessarily an indication of the results expected for the full year.

Pinnacle Gas Services ("PGS") is a joint venture entity formed by the Company and an affiliate of Quantum Capital Solutions.

2 unchanged sentences

Accordingly, Comstock is considered the primary beneficiary and consolidates the assets, liabilities and results of operations of PGS in the accompanying consolidated financial statements.

PGS assets that cannot be used by Comstock for general corporate purposes include $ 101.6 million and $ 54.9 million of other property and equipment as of September 30, 2024 and December 31, 2023 , respectively.

PGS assets that cannot be used by Comstock for general corporate purposes include $ 188.9 million and $ 140.3 million of other property and equipment as of March 31, 2025 and December 31, 2024 , respectively.

Other PGS assets that cannot be used by Comstock and PGS liabilities for which creditors do not have recourse to Comstock's assets are not material to the Company's consolidated financial statements.

1 unchanged sentence

Other Current Assets

Other current assets at September 30, 2024 and December 31, 2023 consisted of the following:

September 30,

Other current assets at March 31, 2025 and December 31, 2024 consisted of the following:

(In thousands)

1 unchanged sentence

Income tax receivable

Production tax refunds receivable

Other receivables

Production tax refunds receivable

Prepaid expenses

6 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

(In thousands)

3 unchanged sentences

Ending capitalized exploratory well costs

As of September 30, 2024 and December 31, 2023, the Company had no exploratory wells for which costs have been capitalized for a period greater than one year.

The Company assesses the need for an impairment of the capitalized costs for its proved natural gas and oil properties on a property basis.

As of March 31, 2025 and December 31, 2024, the Company had no exploratory wells for which costs have been capitalized for a period greater than one year.

The Company periodically assesses the need for an impairment of the capitalized costs for its proved natural gas and oil properties.

No impairments were recognized to adjust the carrying value of the Company's proved natural gas and oil properties during any of the periods presented.

2 unchanged sentences

The Company determines the fair value of its natural gas and oil properties using a discounted cash flow model and proved and risk-adjusted probable natural gas and oil reserves.

Undrilled acreage can also be valued based on sales transactions in comparable areas.

Undeveloped acreage can also be valued based on sales transactions in comparable areas.

Significant Level 3 assumptions associated with the calculation of discounted future cash flows included in the cash flow model include management's outlook for natural gas and oil prices, production costs, capital expenditures, and future production as well as estimated proved natural gas and oil reserves and risk-adjusted probable natural gas and oil reserves.

4 unchanged sentences

As a result of these changes, there may be future impairments in the carrying values of these or other properties.

The Company had goodwill of $ 335.9 million as of September 30, 2024 that was recorded in 2018.

The Company had goodwill of $ 335.9 million as of March 31, 2025 that was recorded in 2018.

The Company is not required to amortize goodwill as a charge to earnings;

16 unchanged sentences

The Company's drilling and completion operations routinely change due to changes in commodity prices, demand for natural gas and oil, and the overall operating and economic environment.

Accordingly, Comstock manages the terms of its contracts for drilling rigs and completion equipment so as to allow for maximum flexibility in

COMSTOCK RESOURCES, INC.

Comstock manages the terms of its contracts for drilling rigs and completion equipment so as to allow for maximum flexibility in responding to these changing conditions.

responding to these changing conditions.

The Company's hydraulic fracturing fleet contracts are on terms of less than one year and include rights of substitution.

The Company has three drilling rig contracts with a three year term with options to extend the term by mutual agreement at mutually acceptable terms or terminate the contracts at any time without default by the lessor.

The Company's other drilling rig contracts are presently either for periods of less than one year, or they are on terms that provide for cancellation with 30 or 45 days advance notice without a specified expiration date.

The Company has elected not to recognize right-of-use lease assets for contracts less than one year.

The Company has four drilling rig contracts with a three-year term with options to extend the term by mutual agreement at mutually acceptable terms or terminate the contracts at any time without default by the lessor.

The terms on the Company's other drilling rig contracts are presently either for periods of one year or less, or they are on terms that provide for cancellation with 30 or 45 days advance notice without a specified expiration date.

The Company has elected not to recognize right-of-use lease assets for contracts with terms of one year or less.

The costs associated with drilling and completion operations are accounted for under the successful efforts method, which generally require that these costs be capitalized as part of our proved natural gas and oil properties on our balance sheet unless they are incurred on exploration wells that are unsuccessful, in which case they are charged to exploration expense.

Lease costs recognized during the three months and nine months ended September 30, 2024 and 2023 were as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Lease costs recognized during the three months ended March 31, 2025 and 2024 were as follows:

Three Months Ended March 31,

(In thousands)

2 unchanged sentences

Operating lease cost included in natural gas and oil properties

Variable lease cost (drilling rig and completion costs included in natural gas and oil properties)

Variable lease cost (drilling rig costs included in natural gas and oil properties)

Short-term lease cost (drilling rig costs included in natural gas and oil properties)

Cash payments for operating leases associated with right-of-use lease assets included in net cash provided by operating activities were $ 1.0 million for both the three months ended September 30, 2024 and 2023, respectively, and $ 2.9 million for both the nine months ended September 30, 2024 and 2023, respectively.

Cash payments for operating leases associated with right-of-use lease assets included in net cash used for investing activities were $ 16.1 million and $ 64.7 million for the three months ended September 30, 2024 and 2023, respectively, and $ 51.2 million and $ 146.4 million for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024 and December 31, 2023, the operating leases had a weighted-average term of 2.2 years and 2.9 years, respectively, and the weighted-average discount rate used to determine the present value of future operating lease payments was 7.3 % and 7.2 % , respectively.

As of September 30, 2024, the Company also had expected future payments for short term leased drilling services of $ 53.7 million .

As of September 30, 2024, expected future payments related to contracts that contain operating leases were as follows:

Cash payments for operating leases associated with right-of-use lease assets included in net cash provided by operating activities were $ 0.9 million for both the three months ended March 31, 2025 and 2024, respectively.

Cash payments for operating leases associated with right-of-use lease assets included in net cash used for investing activities were $ 18.4 million and $ 20.9 million for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025 and December 31, 2024, the operating leases had a weighted-average term of 2.1 years and 2.0 years, respectively, and the weighted-average discount rate used to determine the present value of future operating lease payments was 7.2 % and 7.3 % , respectively.

As of March 31, 2025, the Company also had expected future payments for short term leased drilling services of $ 15.3 million .

As of March 31, 2025, expected future payments related to contracts that contain operating leases were as follows:

(In thousands)

October 1 to December 31, 2024

April 1 to December 31, 2025

Total lease payments

3 unchanged sentences

Accrued Costs

Accrued costs at September 30, 2024 and December 31, 2023 consisted of the following:

September 30,

Accrued costs at March 31, 2025 and December 31, 2024 consisted of the following:

(In thousands)

Accrued drilling costs

Accrued transportation costs

1 unchanged sentence

Accrued income and other taxes

Accrued drilling costs

Accrued employee compensation

Accrued lease operating expenses

Accrued employee compensation

Reserve for Future Abandonment Costs

1 unchanged sentence

The following table summarizes the changes in Comstock's total estimated liability for such obligations during the periods presented:

Nine Months Ended

September 30,

Three Months Ended

(In thousands)

11 unchanged sentences

None of the Company's derivative contracts were designated as cash flow hedges.

All of Comstock's natural gas derivative financial instruments are tied to the Henry Hub-NYMEX price index.

The Company had the following natural gas price derivative financial instruments at September 30, 2024:

All of Comstock's outstanding natural gas derivative financial instruments are tied to the Henry Hub-NYMEX price index.

COMSTOCK RESOURCES, INC.

The Company had the following natural gas price derivative financial instruments at March 31, 2025:

Future Production Period

Three Months Ending

December 31, 2024

Nine Months Ending

December 31, 2025

8 unchanged sentences

Average Floor

COMSTOCK RESOURCES, INC.

Subsequent to September 30, 2024, the Company entered into natural gas swap contracts to hedge an additional 7,300,000 MMBtu of natural gas production from January 2025 to December 2025 at an average price of $ 3.40 per MMBtu.

The classification of derivative financial instruments of assets or liabilities, consists of the following:

Consolidated Balance Sheet Location

September 30,

(In thousands)

2 unchanged sentences

Derivative Financial Instruments – current

Natural gas price derivatives

Derivative Financial Instruments – long-term

Liability Derivative Financial Instruments:

Natural gas price derivatives

Derivative Financial Instruments – current

Natural gas price derivatives

Derivative Financial Instruments – long-term

2 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Gain (loss) on Derivatives Recognized in Earnings

4 unchanged sentences

Compensation cost is measured at the grant date based on the fair value of the award and is recognized over the award vesting period and included in general and administrative expenses for awards of restricted stock and performance stock units ("PSUs") to the Company's employees and directors.

The Company recognized $ 3.9 million and $ 2.7 million of stock-based compensation expense within general and administrative expenses related to awards of restricted stock and PSUs to its employees and directors during the three months ended September 30, 2024 and 2023, respectively, and $ 11.4 million and $ 7.0 million for the nine months ended September 30, 2024 and 2023, respectively.

The Company recognized $ 4.4 million and $ 3.4 million of stock-based compensation expense within general and administrative expenses related to awards of restricted stock and PSUs to its employees and directors during the three months ended March 31, 2025 and 2024, respectively.

In February 2025, the Company granted an aggregate of 787,595 shares of restricted stock to its directors and employees, which were valued at $ 17.80 per share.

In June 2024, the Company granted an aggregate of 43,173 shares of restricted stock to its directors, which were valued at $ 12.16 per share.

As of September 30, 2024, Comstock had 2,091,087 shares of unvested restricted stock outstanding at a weighted average grant date fair value of $ 9.25 per share.

Total unrecognized compensation cost related to unvested restricted stock grants of $ 15.3 million as of September 30, 2024 is expected to be recognized over a period of 1.9 years.

In February 2024, the Company granted an aggregate of 705,603 PSUs to its executive officers at a value of $ 9.69 per unit.

As of September 30, 2024, Comstock had 1,290,755 PSUs outstanding with a weighted average grant date fair value of $ 13.21 per unit.

The number of shares of common stock to be issued related to the PSUs is based on the Company's stock price performance as compared to its peers which could result in the issuance of anywhere from zero to 2,581,510 shares of common stock.

Total unrecognized compensation cost related to these grants of $ 9.7 million as of September 30, 2024 is expected to be recognized over a period of 2.2 years.

As of March 31, 2025, Comstock had 2,455,831 shares of unvested restricted stock outstanding at a weighted average grant date fair value of $ 9.25 per share.

Total unrecognized compensation cost related to unvested restricted stock grants of $ 23.7 million as of March 31, 2025 is expected to be recognized over a period of 2.3 years.

As of March 31, 2025, Comstock had 1,290,755 PSUs outstanding with a weighted average grant date fair value of $ 13.21 per unit.

The number of shares of common stock to be issued related to the PSUs is based on the Company's stock price performance as

COMSTOCK RESOURCES, INC.

compared to its peers which could result in the issuance of anywhere from zero to 2,581,510 shares of common stock.

Total unrecognized compensation cost related to these grants of $ 7.0 million as of March 31, 2025 is expected to be recognized over a period of 1.8 years.

Segment Reporting

The Company presently operates in one business segment, the exploration and production of North American natural gas and oil, primarily in the Haynesville and Bossier shale.

The measure of segment profit or loss used by the chief operating decision maker ("CODM") is consolidated net income, which is provided in the accompanying consolidated statements of operations.

The significant segment expenses regularly provided to the CODM are operating expenses and certain significant non-operating items, such as gains or losses from derivative financial instruments, interest expense and income tax expense.

These items are also detailed in the accompanying consolidated statements of operations.

Revenue Recognition

3 unchanged sentences

Revenues are recognized upon completion of the gathering and treating of contracted natural gas volumes and delivery of purchased natural gas volumes to the Company's customers.

Profits and losses earned

COMSTOCK RESOURCES, INC.

from the gathering and treating of natural gas produced by the Company's natural gas wells are eliminated in consolidation.

Profits and losses earned from the gathering and treating of natural gas produced by the Company's natural gas wells are eliminated in consolidation.

Revenues and expenses associated with natural gas purchased for resale are presented on a gross basis in the Company's consolidated statements of operations as the Company acts as the principal in the transaction by assuming the risks and rewards from ownership of the natural gas volumes purchased and the responsibility to deliver the natural gas volumes to their sales point.

11 unchanged sentences

The amount of natural gas or oil sold may differ from the amount to which the Company is entitled based on its revenue interests in the properties.

The Company did not have any significant imbalance positions at September 30, 2024 or December 31, 2023.

The Company recognized accounts receivable of $ 100.8 million and $ 166.6 million as of September 30, 2024 and December 31, 2023 , respectively, from purchasers for contracts where performance obligations have been satisfied and an unconditional right to consideration exists.

The Company did not have any significant imbalance positions at March 31, 2025 or December 31, 2024.

The Company recognized accounts receivable of $ 175.0 million and $ 145.4 million as of March 31, 2025 and December 31, 2024 , respectively, from purchasers for contracts where performance obligations have been satisfied and an unconditional right to consideration exists.

Credit Losses

4 unchanged sentences

The Company has not had any significant credit losses in the past and believes its accounts receivable are fully collectible.

Accordingly, no allowance for doubtful accounts has been recorded for the nine months ended September 30, 2024 and 2023 .

Accordingly, no allowance for doubtful accounts has been recorded for the three months ended March 31, 2025 and 2024 .

COMSTOCK RESOURCES, INC.

Deferred income taxes are provided to reflect the future tax consequences or benefits of differences between the tax basis of assets and liabilities and their reported amounts in the financial statements using enacted tax rates.

5 unchanged sentences

The Company will continue to assess the valuation allowances against deferred tax assets considering all available information obtained in future periods.

COMSTOCK RESOURCES, INC.

The following is an analysis of the consolidated income tax provision (benefit):

The following is an analysis of the consolidated income tax benefit:

Three Months Ended

September 30,

Nine Months Ended

September 30,

(In thousands)

Current - Federal

Current - State

Deferred - Federal

2 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Tax at statutory rate

3 unchanged sentences

Nondeductible stock-based compensation

Noncontrolling interest

Effective tax rate

For the three and nine months ended September 30, 2024 , the effective tax rates for state income taxes, net of federal benefit, and other income taxes increased due to an increase in tax benefits within state jurisdictions with higher statutory tax rates and new claims for marginal well tax credits.

The Company's federal income tax returns for the years subsequent to December 31, 2019 remain subject to examination.

For the three months ended March 31, 2025, the effective tax rates for state income taxes, net of federal benefit, and other income taxes increased due to an increase in tax benefits within state jurisdictions with higher statutory tax rates .

The Company's federal income tax returns for the years subsequent to December 31, 2020 remain subject to examination, with the Company's 2022 and 2023 federal income tax returns currently under examination with the United States Internal Revenue Service.

The Company's income tax returns in major state income tax jurisdictions remain subject to examination for various periods subsequent to December 31, 2021.

The Company is currently under examination with the state of Louisiana and believes that its significant filing positions are highly certain and that all of its other significant income tax filing positions and deductions would be sustained under audit or the final resolution would not have a material effect on the consolidated financial statements.

The Company is also currently under examination with the state of Louisiana.

In both the federal and state examinations, the Company believes that its filing positions and deductions will be sustained under audit or the final resolution will not have a material effect on the consolidated financial statements.

Therefore, the Company has not established any significant reserves for uncertain tax positions.

5 unchanged sentences

Level 1 — Inputs used to measure fair value are unadjusted quoted prices that are available in active markets for the identical assets or liabilities as of the reporting date.

COMSTOCK RESOURCES, INC.

Level 2 — Inputs used to measure fair value, other than quoted prices included in Level 1, are either directly or indirectly observable as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active.

2 unchanged sentences

These values are generally determined using pricing models for which the assumptions utilize management's estimates of market participant assumptions.

COMSTOCK RESOURCES, INC.

Fair Values – Reported

The following presents the carrying amounts and the fair values of the Company's financial instruments as of September 30, 2024 and December 31, 2023:

September 30, 2024

The following presents the carrying amounts and the fair values of the Company's financial instruments as of March 31, 2025 and December 31, 2024:

March 31, 2025

December 31, 2024

9 unchanged sentences

(2) The carrying value of our floating rate debt outstanding approximates fair value.

(3) The fair value of the Company's fixed rate debt was based on quoted prices as of September 30, 2024 and December 31, 2023 , respectively, a Level 1 measurement.

(3) The fair value of the Company's fixed rate debt was based on quoted prices as of March 31, 2025 and December 31, 2024 , respectively, a Level 1 measurement.

Earnings Per Share

Unvested restricted stock containing non-forfeitable rights to dividends are included in common stock outstanding and are considered to be participating securities and included in the computation of basic and diluted earnings per share pursuant to the two-class method.

At September 30, 2024 and December 31, 2023, 2,091,087 and 1,429,084 shares of restricted stock, respectively, are included in common stock outstanding as such shares have a non-forfeitable right to participate in any dividends that might be declared and have the right to vote on matters submitted to the Company's stockholders.

At March 31, 2025 and December 31, 2024, 2,455,831 and 2,091,087 shares of restricted stock, respectively, are included in common stock outstanding as such shares have a non-forfeitable right to participate in any dividends that might be declared and have the right to vote on matters submitted to the Company's stockholders.

Weighted average shares of unvested restricted stock outstanding were as follows:

Three Months Ended

September 30,

Nine Months Ended

September 30,

(In thousands)

3 unchanged sentences

The treasury stock method is used to measure the dilutive effect of PSUs.

COMSTOCK RESOURCES, INC.

Weighted average unearned PSUs outstanding were as follows:

Three Months Ended

September 30,

Nine Months Ended

September 30,

(In thousands, except per unit amounts)

1 unchanged sentence

Weighted average grant date fair value per unit

COMSTOCK RESOURCES, INC.

Basic and diluted income (loss) per share for the three months and nine months ended September 30, 2024 and 2023 were determined as follows:

Three Months Ended September 30,

(In thousands, except per share amounts)

Net income (loss) attributable to common stock

Income allocable to unvested restricted shares

Basic income (loss) attributable to common stock

Diluted income (loss) attributable to common stock

Nine Months Ended September 30,

Basic and diluted loss per share for the three months ended March 31, 2025 and 2024 were determined as follows:

Three Months Ended March 31,

(In thousands, except per share amounts)

Net income (loss) attributable to common stock

Income allocable to unvested restricted shares

Basic income (loss) attributable to common stock

Diluted income (loss) attributable to common stock

Net loss attributable to common stock

Basic loss attributable to common stock

Diluted loss attributable to common stock

None of the Company's participating securities participate in losses and as such are excluded from the computation of basic earnings per share during periods of net losses.

Supplementary Information with Respect to the Consolidated Statements of Cash Flows

Cash payments made for interest and income taxes and other non-cash investing activities for the nine months ended September 30, 2024 and 2023, respectively, were as follows:

Nine Months Ended

September 30,

Cash payments made for interest and income taxes and other non-cash investing activities for the three months ended March 31, 2025 and 2024, respectively, were as follows:

Three Months Ended

(In thousands)

3 unchanged sentences

Non-cash investing activities include:

Decrease in accrued capital expenditures

Increase (decrease) in accrued capital expenditures

Liabilities assumed in exchange for right-of-use lease assets

Recent Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update ("ASU") 2023-07 "Segment Reporting–Improvements to Reportable Segment Disclosures".

ASU 2023-07 requires additional disclosures about a public entity's reportable segments, including requiring all annual disclosures of reportable segment's profit or loss and assets during interim periods, identifying the title and position of an entity's chief operating decision maker ("CODM"), disclosing significant expenses regularly provided to the CODM that are included in each reported measure of segment profit or loss, and disclosing additional measures of profit or loss used by the CODM in deciding how to allocate resources.

The update is effective for public entities for fiscal years beginning after December 15, 2023, and interim and fiscal years beginning after December 15, 2024.

ASU 2023-07 will not have an impact on the Company's reported results of operations, financial position or liquidity but will have an impact on the Company's financial statement disclosures.

In December 2023, the FASB issued ASU 2023-09 "Improvements to Income Tax Disclosures".

ASU 2023-09 requires additional disclosures around effective tax rates and cash income taxes paid and is effective for public entities for annual periods beginning after December 15, 2024.

ASU 2023-07 will not have an impact on the Company's reported results of operations, financial position or liquidity but will have an impact on the Company's financial statement disclosures.

ASU 2023-07 will not have an impact on the Company's reported results of operations, financial position or liquidity.

The Company does not expect this standard to have a material impact on its financial statement disclosures.

In November 2024, the FASB issued ASU 2024-03 "Disaggregation of Income Statement Expenses".

ASU 2024-03 requires additional disclosure, in the notes to the financial statements, of specified information about certain costs and expenses, including purchases of inventory, employee compensation, depreciation, intangible asset amortization and depreciation, depletion and amortization recognized as part of oil and gas-producing activities included in each relevant expense caption.

ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027 and will not have an impact on the Company's reported results of operations, financial position or liquidity.

The Company is still evaluating the impact of this standard on its financial statement disclosures.

COMSTOCK RESOURCES, INC.

(2) ACQUISITION

In March 2024, the Company acquired approximately 189,000 net undeveloped acres in its Western Haynesville area from an unaffiliated third party for $ 50.0 million, which was accounted for as an asset acquisition.

(2) LONG-TERM DEBT

At September 30, 2024, long-term debt was comprised of the following:

At March 31, 2025, long-term debt was comprised of the following:

(In thousands)

4 unchanged sentences

Debt issuance costs, net of amortization

As of September 30, 2024, the Company had $ 415.0 million outstanding under a bank credit facility.

As of March 31, 2025, the Company had $ 510.0 million outstanding under a bank credit facility.

Aggregate commitments under the bank credit facility are $ 1.5 billion, which matures on November 15, 2027.

2 unchanged sentences

Borrowings under the bank credit facility are secured by substantially all of the assets of the Company and its subsidiaries and bear interest at the Company's option, at either SOFR plus 2.25 % to 3.25 % or an alternate base rate plus 1.25 % to 2.25 %, in each case depending on the utilization of the borrowing base.

Additionally, beginning in the fourth quarter of 2024 through the second quarter of 2025, the bank credit facility will bear interest at the Company's option, at either SOFR plus 2.25 % to 3.25 % or an alternate base rate plus 1.25 % to 2.25 %, with either option also based on the utilization of the borrowing base.

Beginning in the third quarter of 2025 through maturity, the bank credit facility will bear interest at the Company's option, at either SOFR plus 2.0 % to 3.0 % or an alternate base rate plus 1.0 % to 2.0 %, with either option also based on the utilization of the borrowing base.

The Company also pays a commitment fee of 0.375 % to 0.5 % on the unused portion of the borrowing base.

The Company also pays a commitment fee of 0.375 % to 0.5 %, which is dependent on the utilization of the borrowing base.

The bank credit facility places certain restrictions upon the Company's and its subsidiaries' ability to, among other things, incur additional indebtedness, pay cash dividends, repurchase common stock, make certain loans, investments and divestitures and redeem the senior notes.

The only financial covenants are the maintenance of a leverage ratio of less than 4.0 to 1.0, which reduces to 3.75 to 1.0 at June 30, 2025 and to 3.5 to 1.0 at September 30, 2025, and an adjusted current ratio of at least 1.0 to 1.0.

The Company was in compliance with the covenants as of September 30, 2024.

The only financial covenants are the maintenance of a leverage ratio of less than 4.0 to 1.0, which reduces to 3.75 to 1.0 on June 30, 2025 and to 3.5 to 1.0 on September 30, 2025, and an adjusted current ratio of at least 1.0 to 1.0.

The Company was in compliance with the covenants as of March 31, 2025.

In April 2024, the Company issued $ 400.0 million principal amount of 6.75 % senior notes due 2029 (the "New 2029 Notes") in a private placement and received net proceeds after offering costs and deducting the initial purchasers' discounts of $ 365.2 million , which were used to pay down the outstanding borrowings on the Company's bank credit facility.

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In March 2024, the Company issued 12,500,000 shares of common stock in a private placement to two entities controlled by Comstock's majority stockholder, receiving proceeds of $ 100.5 million.

Following the issuance, Comstock's majority stockholder's beneficial ownership in the Company increased to 67 % and is currently approximately 71 % after subsequent open market purchases made in the third quarter of 2024 .

Following the issuance, Comstock's majority stockholder's beneficial ownership in the Company increased to 67 %.

As a result of open market purchases made by the Company's majority stockholder during the third quarter of 2024, beneficial ownership increased to 71 %.

(4) COMMITMENTS AND CONTINGENCIES

In August 2024, the Company entered into two agreements for two new drilling rigs, one with a three-year term and one with a one-year term, with an annual commitment of $ 12.8 million per drilling rig.

Comstock plans to take delivery of the rigs in December 2024 and February 2025, respectively.

COMSTOCK RESOURCES, INC.

Comstock took delivery of the rigs in January 2025 and April 2025, respectively.

From time to time, the Company is involved in certain litigation that arises in the normal course of its operations.

The Company records a loss contingency for these matters when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

The Company does not believe the resolution of these matters will have a material effect on the Company's financial position, results of operations or cash flows and no material amounts are accrued relative to these matters at September 30, 2024 or 2023 .

COMSTOCK RESOURCES, INC.

(5) RELATED PARTY TRANSACTIONS

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Comstock also provides natural gas marketing services to the partnerships, including evaluating potential markets and providing hedging services, in return for a fee equal to $ 0.02 per Mcf for natural gas marketed.

The Company received $ 0.3 million and $ 0.3 million for the three months ended September 30, 2024 and 2023, respectively, and $ 0.8 million and $ 1.0 million for the nine months ended September 30, 2024 and 2023, respectively, for drilling, operating and marketing services provided to the partnerships.

The Company received $ 339 thousand and $ 279 thousand for the three months ended March 31, 2025 and 2024, respectively, for drilling, operating and marketing services provided to the partnerships.

The fees received for the services are reflected as a reduction of general and administrative expenses in the accompanying consolidated statements of operations.

In connection with the operation of the wells, the Company had a $ 16.7 million and $ 16.1 million receivable from the partnerships at September 30, 2024 and December 31, 2023 , respectively.

In connection with the operation of the wells, the Company had a $ 10.9 million and $ 5.5 million receivable from the partnerships at March 31, 2025 and December 31, 2024 , respectively.

COMSTOCK RESOURCES, INC.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements