What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2026-02-19 compared with 2025-02-21 · 129 added, 121 removed, 885 unchanged (22% of the section changed)

115 unchanged sentences

Comstock Resources, Inc.

2019 Long-term Incentive Plan Effective as of May 31, 2019 (incorporated by reference to Exhibit 99 to our Registration Statement on Form S-8 dated June 4, 2019).

2019 Long-term Incentive Plan Amended and Restated as of April 7, 2025 (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K dated June 3, 2025).

Employment Agreement dated September 7, 2018 by and between the Company and M.

5 unchanged sentences

dated December 22, 2023 (incorporated by reference to Exhibit 10.6 to our Annual Report on Form 10-K for the year ended December 31, 2023.

Insider Trading section of our Code of Business Conduct and Ethics.

Insider Trading sections of our Policy on Compliance with Federal Securities Laws for our Directors and Officers.

Insider Trading section of our Code of Business Conduct and Ethics (incorporated by reference to Exhibit 19.1 to our Annual Report on Form 10-K for the year ended December 31, 2024).

Insider Trading sections of our Policy on Compliance with Federal Securities Laws for our Directors and Officers (incorporated by reference to Exhibit 19.2 to our Annual Report on Form 10-K for the year ended December 31, 2024).

Subsidiaries of the Company.

81 unchanged sentences

These procedures included testing the effectiveness of controls relating to management's estimates of proved natural gas and oil reserve volumes.

The work of managements's specialists was used in performing the procedures to evaluate the reasonableness of the proved natural gas and oil reserve volumes.

The work of management's specialists was used in performing the procedures to evaluate the reasonableness of the proved natural gas and oil reserve volumes.

As a basis for using this work, the specialists' qualifications were understood and the Corporation's relationship with the specialists was assessed.

The procedures performed also included i) evaluating the methods and assumptions used by the specialists, ii) evaluating the specialists' findings related to estimated future production volumes by comparing the estimate to relevant historical and current period information, iv) for proved undeveloped reserves, we evaluated management's development plan for compliance with SEC requirements, as applicable.

The procedures performed also included i) evaluating the methods and assumptions used by the specialists, ii) testing the completeness and accuracy of the data used by the specialists related to historical production volumes, iii) evaluating the specialists' findings related to estimated future production volumes by comparing the estimate to relevant historical and current period information, iv) for proved undeveloped reserves, we evaluated management's development plan for compliance with SEC requirements, as applicable.

/s/ ERNST & YOUNG LLP

51 unchanged sentences

Gain on sale of assets

Total revenues

Total revenues and other operating income

Operating expenses:

4 unchanged sentences

General and administrative, net

Impairment of natural gas and oil properties

Total operating expenses

1 unchanged sentence

Other income (expenses):

Gain (loss) from derivative financial instruments

Gain from derivative financial instruments

Interest expense

Loss on early extinguishment of debt

Total other income (expenses)

2 unchanged sentences

Net income (loss)

Preferred stock dividends and accretion

Net income (loss) available to common stockholders

Net income attributable to noncontrolling interest

11 unchanged sentences

Balance at December 31, 2022

Conversion of preferred stock

Stock-based compensation

Income tax withholdings on equity awards

Payment of preferred stock dividends

Payment of common stock dividends

Contributions from noncontrolling interest

Balance at December 31, 2023

1 unchanged sentence

Income tax withholdings on equity awards

Payment of common stock dividends

Issuance of common stock

Stock issuance costs

Net income (loss)

Contributions from noncontrolling interest

Distributions to noncontrolling interest

Balance at December 31, 2024

1 unchanged sentence

Income tax withholdings on equity awards

Issuance of common stock

Stock issuance costs

Net income (loss)

Contributions from noncontrolling interest

12 unchanged sentences

Deferred income taxes

Impairment of natural gas and oil properties

Gain on sale of assets

Depreciation, depletion and amortization

(Gain) loss on derivative financial instruments

Gain on derivative financial instruments

Cash settlements of derivative financial instruments

1 unchanged sentence

Stock-based compensation

Loss on early extinguishment of debt

(Increase) decrease in accounts receivable

12 unchanged sentences

Issuance of common stock

Retirement of Senior Notes

Debt and stock issuance costs

Income tax withholdings on equity awards

Preferred stock dividends paid

Common stock dividends paid

1 unchanged sentence

Distributions to noncontrolling interest

Net cash provided by (used for) financing activities

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

50 unchanged sentences

Prepaid drilling costs

Income tax receivable

Other receivables

Production tax refunds receivable

Income tax receivable

Prepaid expenses

52 unchanged sentences

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, future natural gas and oil production, production costs, capital expenditures, and the total proved and risk-adjusted probable natural gas and oil reserves expected to be recovered.

Management's natural gas and oil price outlook is developed based on third-party longer-term price forecasts as of each measurement date.

Management's natural gas and oil price outlook is developed based on multiple third-party longer-term price forecasts as of each measurement date.

The expected future net cash flows are discounted using an appropriate discount rate in determining a property's fair value.

1 unchanged sentence

Unproved properties are evaluated for impairment based upon the results of drilling, planned future drilling and the terms of the natural gas and oil leases.

In the fourth quarter of 2025, the Company measured the fair value of its Eagle Ford shale proved property using Level 3 unobservable inputs at $ 1.2 million and as a result, the Company recognized an impairment charge of $ 7.8 million.

Comstock also recognized an impairment charge to its Eagle Ford shale unproved property of $ 21.3 million.

COMSTOCK RESOURCES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

charge primarily resulted from diminished activity in the area on its leasehold acreage by operators, low oil prices and the Company's capital allocation strategy, which prioritizes higher-return projects in the Haynesville and Bossier shales.

The Company's estimates of undiscounted future net cash flows attributable to its natural gas and oil properties may change in the future.

1 unchanged sentence

As a result of these changes, there may be future impairments in the carrying values of our natural gas and oil properties.

Other property and equipment consists primarily of pipelines, natural gas treating plants, computer equipment, furniture and fixtures and an airplane which are depreciated over estimated useful lives ranging from three to 50 years on a straight-line basis.

Other property and equipment consists primarily of pipelines and natural gas treating plants ("midstream assets"), computer equipment, furniture and fixtures, office buildings and an airplane which are depreciated over estimated useful lives ranging from three to 50 years on a straight-line basis.

The following table presents the balances of other property and equipment and accumulated depreciation as of December 31, 2025 and 2024:

As of December 31,

(in thousands)

Midstream assets

Accumulated depreciation

Net midstream assets

Other property and equipment

Accumulated depreciation

Net other property and equipment

The Company also assesses the need for an impairment of its midstream assets when events or changes in circumstances, such as a significant decline in natural gas volumes gathered and processed, indicate that the Company may not be able to recover its capitalized costs.

If impairment is indicated based on undiscounted expected future cash flows attributable to the pipelines and natural gas treating plants, then impairment is recognized to the extent the capitalized costs of the pipelines and natural gas treating plants exceed their estimated fair value.

Significant Level 3 assumptions associated with the calculation of discounted future cash flows included in the cash flow model include management's outlook for future natural gas gathering and processing volumes, operation costs and capital expenditures and the expected future net cash flows are discounted at an appropriate rate to determine fair value.

The Company had goodwill of $ 335.9 million as of December 31, 2025 and 2024.

11 unchanged sentences

Short-term leases that have an initial term of one year or less are not capitalized;

however, amounts paid for those leases are included as part of its lease cost disclosures.

COMSTOCK RESOURCES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

amounts paid for those leases are included as part of its lease cost disclosures.

Short-term lease costs exclude expenses related to leases with a lease term of one month or less.

3 unchanged sentences

Accordingly, 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.

As of December 31, 2024 , the Company had three drilling rig lease contracts with a three-year term with options to extend the term by mutual agreement at mutually acceptable terms or terminate the contract 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 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 costs associated with drilling and completion operations are accounted for under the successful efforts method, which 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.

For drilling rig leases, the Company has elected the practical expedient to not separate lease components from nonlease components in the determination of their lease asset and liability values.

COMSTOCK RESOURCES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

As of December 31, 2025 , the Company had four drilling rig lease 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 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 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.

For drilling rig leases, the Company has elected the practical expedient to not separate lease components from non-lease components in the determination of their lease asset and liability values.

Lease costs recognized during the years ended December 31, 2025, 2024 and 2023 were as follows:

16 unchanged sentences

Accrued expenses at December 31, 2025 and 2024 consist of the following:

COMSTOCK RESOURCES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31,

4 unchanged sentences

Accrued employee compensation

Accrued lease operating expenses

Accrued income and other taxes

COMSTOCK RESOURCES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accrued lease operating expenses

Reserve for Future Abandonment Costs

25 unchanged sentences

Derivative Financial Instruments and Hedging Activities

COMSTOCK RESOURCES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company accounts for derivative financial instruments (including derivative instruments embedded in other contracts) as either an asset or liability measured at its fair value.

3 unchanged sentences

Major Purchasers

In 2024, the Company had two major purchasers of its natural gas production that accounted for 21 % and 12 % of its total natural gas and oil sales.

In 2025, the Company had three major purchasers of its natural gas production that accounted for 18 % , 11 % and 10 % of its total natural gas and oil sales.

In 2024 , the Company had two major purchasers of its natural gas production that accounted for 21 % and 12 % of its total natural gas and oil sales.

In 2023 , the Company had three major purchasers of its natural gas production that accounted for 20 % , 17 % and 10 % of its total natural gas and oil sales.

The loss of any of these purchasers would not have a material adverse effect on the Company as there is an available market for its natural gas and oil production from other purchasers.

COMSTOCK RESOURCES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Revenue Recognition and Gas Balancing

13 unchanged sentences

Comstock has elected to exclude all taxes from the measurement of transaction prices, and its natural gas and oil revenues are reported net of royalties and exclude revenue interests owned by others because the Company acts as an agent when selling natural gas and oil, on behalf of royalty owners and working interest owners.

Natural gas and oil revenue is recorded in the month of production based on an estimate of the Company's share of volumes produced and prices realized.

Gas services revenue is recorded in the month the services are performed or purchased gas is sold based on an estimate of natural gas volumes and contract prices.

Natural gas and oil sales revenue is recorded in the month of production based on an estimate of the Company's share of volumes produced and prices realized.

Gas services revenue is recorded in the month the services are performed and purchased gas is sold based on an estimate of natural gas volumes and contract prices.

The Company recognizes any differences between estimates and actual amounts received in the month when payment is received.

3 unchanged sentences

The Company has recognized accounts receivable of $ 203.5 million and $ 145.4 million as of December 31, 2025 and 2024 , respectively, from customers for contracts where performance obligations have been satisfied and an unconditional right to consideration exists.

General and Administrative Expenses

General and administrative expenses are reported net of reimbursements of overhead costs that are received from working interest owners of the natural gas and oil properties operated by the Company of $ 30.7 million , $ 29.7 million and $ 27.5 million for the years ended December 31, 2024, 2023 and 2022 , respectively.

COMSTOCK RESOURCES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

General and Administrative Expenses

General and administrative expenses are reported net of reimbursements of overhead costs that are received from working interest owners of the natural gas and oil properties operated by the Company of $ 30.5 million , $ 30.7 million and $ 29.7 million for the years ended December 31, 2025, 2024 and 2023 , respectively.

The Company accounts for income taxes using the asset and liability method, whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis, as well as the tax consequences attributable to the future utilization of existing net operating loss and other carryforwards.

15 unchanged sentences

Weighted average grant date fair value per unit

The Series B Convertible Preferred Stock was convertible into 43,750,000 shares of common stock.

On November 30, 2022, all outstanding shares of the Series B Convertible preferred stock were converted into 43,750,000 shares of common stock.

The dilutive effect of preferred stock is computed using the if-converted method as if conversion of the preferred shares had occurred at the earlier of the date of issuance or the beginning of the period.

Weighted average shares of convertible preferred stock outstanding were as follows:

Year Ended December 31,

(In thousands)

Weighted average convertible preferred 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.

6 unchanged sentences

(In thousands, except per share amounts)

Net income (loss) available to common stockholders

Net income (loss)

Income allocable to unvested restricted stock

Basic net income (loss) available to common stockholders

Income allocable to convertible preferred stock

Basic net income (loss)

Income allocable to unvested restricted stock

Diluted net income (loss) available to common stockholders

Diluted net income (loss)

Basic weighted average shares outstanding

1 unchanged sentence

Restricted stock

Convertible preferred stock

Diluted weighted average shares outstanding

7 unchanged sentences

Cash payments for:

Income tax payments

Income tax payments (refunds):

Non-cash investing activities include:

1 unchanged sentence

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

Non-cash financing activities include:

Conversion of preferred stock into common stock

(1) State tax payments were made in Texas and Louisiana.

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 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 was implemented in this 2024 Annual Report.

See the Segment Reporting note above for the impact on the Company's 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 2023-09 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ASU 2023-09 was implemented retrospectively in this 2025 Annual Report.

See (9) Income Taxes for the impact on the Company's disclosures.

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

2 unchanged sentences

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

COMSTOCK RESOURCES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(2) Acquisitions and Dispositions of Natural Gas and Oil Properties

During 2025, 2024 and 2023, the Company spent $ 54.7 million , $ 106.4 million and $ 98.6 million on its leasing program to acquire 17,856 , 265,290 and 79,741 net acres, respectively, of undeveloped acreage in the Western Haynesville area through direct leasing or through acquisitions of undeveloped rights from third-party operators.

In 2022, the Company also acquired a pipeline and natural gas treating plant from an unaffiliated third party for $ 16.8 million .

The Company sold its interests in certain non-operated natural gas and oil properties for $ 1.2 million , $ 41.3 million and $ 4.1 million in 2024, 2023 and 2022, respectively.

On December 2, 2025, the Company sold its interest in its Shelby Trough assets in East Texas for net proceeds of $ 417.2 million.

The assets sold included 163 ( 74.8 net) producing wells and 36,000 net leasehold acres in Nacogdoches, San Augustine and Sabine counties in Texas.

The Company realized a $ 292.3 million pre-tax gain on the sale of the unproved property.

The producing wells and associated proved undeveloped reserves were valued at $ 120.5 million and recorded as a retirement of the Company's proved property.

The Company's reserve for future abandonment costs was reduced by $ 1.7 million as a result of the divestiture.

On September 2, 2025, the Company sold its interest in its Cotton Valley assets in East Texas and North Louisiana for net proceeds of $ 15.2 million.

The assets sold included the Company's interest in 883 ( 770.9 net) producing wells and 46 ( 27.3 net) inactive wells.

The Company incurred a $ 1.5 million pre-tax loss on the divestiture and the Company's reserve for future abandonment costs was reduced by $ 13.8 million.

The Company sold its interests in certain non-operated natural gas and oil properties for $ 1.2 million and $ 41.3 million in 2024 and 2023, respectively.

(3) Natural Gas and Oil Producing Activities

8 unchanged sentences

Unproved properties

COMSTOCK RESOURCES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Costs Incurred

2 unchanged sentences

Property acquisitions:

Proved property

Unproved property

6 unchanged sentences

Total capital expenditures

COMSTOCK RESOURCES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(4) Long-term Debt

4 unchanged sentences

6.75 % Senior Notes due 2029:

(Discount) premium, net of amortization

Discount, net of amortization

5.875 % Senior Notes due 2030:

9 unchanged sentences

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

Borrowings under the bank credit facility are subject to a borrowing base of $ 2.0 billion , which is re-determined on a semi-annual basis and upon the occurrence of certain other events.

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

Borrowings under the bank credit facility are subject to a borrowing base, which is currently set at $ 2.0 billion .

The borrowing base is re-determined on a semi-annual basis and upon the occurrence of certain other events.

Borrowings under the bank credit facility are secured by substantially all of the assets of the Company and its restricted subsidiaries and bear interest at the Company's option, at either adjusted SOFR plus 2.25 % to 3.25 % or an alternate base rate plus 1.25 % to 2.25 %, in each case depending on the unused portion of the committed 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 weighted average interest rate on borrowings under the bank credit facility were 6.76 % and 7.32 % during the years ended December 31, 2025 and 2024, respectively.

The bank credit facility places certain restrictions upon the Company's and its restricted

COMSTOCK RESOURCES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 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 bank credit facility places certain restrictions upon the Company's and its restricted 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 3.5 to 1.0 and an adjusted current ratio of at least 1.0 to 1.0.

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

1 unchanged sentence

The New 2029 Notes have substantially identical terms as the Company's $ 1,223.9 million aggregate principal amount of 6.75 % senior notes due 2029, which mature on March 1, 2029 and accrue interest at a rate of 6.75 % per annum, payable semi-annually on March 1 and September 1 of each year.

COMSTOCK RESOURCES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(5) Commitments and Contingencies

The Company has drilling rig contracts with terms ranging from less than one year to three years .

The service contracts with terms less than one year are generally for terms ranging from 45 days to six months .

The Company has three drilling rigs under contract with initial terms of three years that were put into service in 2023 and 2024 .

These three rigs qualify as operating leases and their corresponding lease obligation is reflected on the Company's balance sheet as of December 31, 2024.

In August 2024, the Company entered into agreements for two additional 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 both drilling rigs in 2025.

The service contracts with terms less than one year are generally for terms ranging from 30 to 45 days.

The Company has four drilling rigs under contract with initial terms of three years that were put into service in 2023, 2024 and 2025 .

These four rigs qualify as operating leases and their corresponding lease obligation is reflected on the Company's balance sheet as of December 31, 2025.

In 2025, the Company took delivery of one additional drilling rig with a one-year term, which has a remaining commitment of $ 3.2 million.

The Company has natural gas transportation and gathering contracts which extend to 2035.

15 unchanged sentences

During the years ended December 31, 2025, 2024 and 2023 the Company had $ 21.2 million , $ 15.3 million and $ 9.9 million , respectively, in stock-based compensation expense.

COMSTOCK RESOURCES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restricted Stock

4 unchanged sentences

Outstanding at December 31, 2025

COMSTOCK RESOURCES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year Ended December 31,

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Range of implied volatility:

COMSTOCK RESOURCES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of PSU activity is presented below:

11 unchanged sentences

The final number of shares of common stock issued may vary depending upon the performance multiplier and can result in the issuance of zero to 3,207,832 shares of common stock based on the achieved performance ranges from zero to two hundred percent.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(8) Retirement Plan

17 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The tax effects of significant temporary differences representing the net deferred tax liabilities were as follows:

4 unchanged sentences

Net operating loss carryforwards

Unrealized hedging losses

Research and development and other tax credits

Asset retirement obligation

Unrealized hedging losses

Valuation allowance on deferred tax assets

2 unchanged sentences

Property and equipment

Unrealized hedging gains

Deferred tax liabilities

Net deferred tax liability

COMSTOCK RESOURCES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The difference between the customary rate of 21.0% and the effective tax rate on income (losses) is due to the following:

3 unchanged sentences

Tax effect of:

Research and development and other income tax credits

Research and development

Other income tax credits

Valuation allowance on deferred tax assets

State income taxes, net of federal benefit (1)

Effect of changes in state tax laws or rates

Year Ended December 31,

1 unchanged sentence

Tax effect of:

Research and development and other income tax credits

Research and development

Other income tax credits

Valuation allowance on deferred tax assets

State income taxes, net of federal benefit (1)

Effect of changes in state tax laws or rates

Effective tax rate

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) State taxes in Texas and Louisiana contributed to the tax effect of this category.

At December 31, 2025, Comstock had the following carryforwards available to reduce future income taxes:

3 unchanged sentences

Net operating loss – U.S.

Net operating loss – state taxes

Net operating loss – State

Interest expense – U.S.

Interest expense – state taxes

Interest expense – State

Research and development tax credits – U.S.

Research and development tax credits – State

The Company's ability to use net operating losses ("NOLs") generated before its ownership change in 2018 to reduce taxable income is limited under IRC Section 382.

6 unchanged sentences

federal NOL carryforwards expiring in 2037 and $ 1.2 billion of the estimated state NOL carryforwards will expire unused.

The Company's federal income tax returns for the years subsequent to December 31, 2020 remain subject to examination.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company's federal income tax returns for the years subsequent to December 31, 2021 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, 2022.

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 upon 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 significant filing positions 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.

In July 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into United States federal law.

The Company is benefiting from certain provisions contained in the OBBBA, including increased interest expense deductions and bonus depreciation and has included these benefits in its income tax provision for the year ended December 31, 2025 .

(10) Derivative Financial Instruments and Hedging Activities

Comstock generally uses commodity price swaps, basis swaps and collars to hedge natural gas and oil prices to manage price risk.

Comstock generally uses commodity price swaps, basis swaps and collars to hedge natural gas prices to manage price risk.

Swaps are settled monthly based on differences between the prices specified in the instruments and the settlement prices of futures contracts.

12 unchanged sentences

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

COMSTOCK RESOURCES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Period Ending December 31, 2026

Natural Gas Price Swap Contracts:

6 unchanged sentences

Average Floor

Since December 31, 2024 , Comstock has entered into natural gas collar contracts to hedge an additional 47.5 Bcf of 2026 natural gas production at an average ceiling price of $ 5.05 per MMBtu and an average floor price of $ 3.50 per MMBtu.

Subsequent to December 31, 2025, the Company entered into natural gas collar contracts to hedge an additional 58.4 Bcf of 2027 natural gas production at an average ceiling price of $ 4.37 per MMBtu and an average floor price of $ 3.50 per MMBtu.

COMSTOCK RESOURCES, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The aggregate fair value of the Company's derivative financial instruments is presented on a gross basis in the accompanying consolidated balance sheets.

24 unchanged sentences

In connection with the operation of the wells, the Company had a $ 3.6 million and $ 5.5 million receivable from the partnerships at December 31, 2025 and 2024 , respectively.

(12) Subsequent Event

In January 2026, PGS entered into an agreement with Quantum under which PGS agreed to redeem all of the outstanding Class B Units of PGS in exchange for cash consideration of $ 440 million plus any accrued but unpaid distributions.

The redemption is expected to be completed in the first half of 2026.

COMSTOCK RESOURCES, INC.

8 unchanged sentences

Extensions and discoveries

Acquisitions of minerals in place

Sales of minerals in place

8 unchanged sentences

Revisions of previous estimates in 2024 and 2023 were primarily attributable to the significantly lower natural gas and oil prices that were used to determine proved reserves at the end of each year, which resulted in many of the Company's proved undeveloped locations being excluded from reserves since they did not generate an adequate return at those lower prices.

Revisions of previous natural gas estimates in 2022 were insignificant.

Extensions and discoveries.

Extensions and discoveries for 2025, 2024 and 2023 were primarily comprised of proved reserve additions attributable to the wells drilled in the current year that were not classified as proved undeveloped in prior years and additional proved undeveloped locations that are planned to be drilled in the Company's current development plan that were not included in the prior year's reserve estimates.

2025 extensions and discoveries include proved undeveloped reserves that were excluded in 2024 and 2023 due to low natural gas prices.

Sales of minerals in place.

During 2025, the Company sold certain natural gas and oil properties for $ 432.4 million .

During 2024, the Company sold its interest in certain non-operated wells for $ 1.2 million .

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Standardized Measure of Discounted Future Net Cash Flows

The following table sets forth the changes in the standardized measure of discounted future net cash flows relating to proved reserves:

COMSTOCK RESOURCES, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table sets forth the changes in the standardized measure of discounted future net cash flows relating to proved reserves:

Year Ended December 31,

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Extensions and discoveries

Acquisitions of minerals in place

Sales of minerals in place

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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-K

Item 9A. Controls and Procedures