COMSTOCK RESOURCES INC 10-Q

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) 3 COMSTOCK RESOURCES, INC. CONSOLIDATED BALANCE SHEETS As of March 31, 2026 December 31, 2025 (Unaudited) (In thousands) ASSETS Cash and cash equivalents $ 14,785 $ 23,930 Accounts receivable: Natural gas and oil sales and gas services 126,390 203,549 Joint interest operations 40,375 35,400 From affiliates 2,286 3,596 Derivative financial instruments 50,178 19,206 Other current assets 56,050 75,257 Total current assets 290,064 360,938 Property and equipment: Natural gas and oil properties, successful efforts method: Proved 9,333,762 8,984,969 Unproved 404,623 391,065 Other 441,408 386,656 Accumulated depreciation, depletion and amortization ( 3,688,228 ) ( 3,547,196 ) Net property and equipment 6,491,565 6,215,494 Goodwill 335,897 335,897 Derivative financial instruments 39,058 — Operating lease right-of-use assets 83,112 94,733 $ 7,239,696 $ 7,007,062 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ 552,967 $ 501,695 Accrued costs 100,810 153,248 Operating leases 43,263 46,937 Derivative financial instruments 14,882 27,636 Total current liabilities 711,922 729,516 Long-term debt 2,947,607 2,809,066 Deferred income taxes 449,088 437,098 Long-term operating leases 39,538 47,692 Reserve for future abandonment costs 21,125 20,787 Total liabilities 4,169,280 4,044,159 Commitments and contingencies Stockholders' equity: Common stock—$ 0.50 par, 400,000,000 shares authorized, 293,695,832 and 293,054,806 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively 146,848 146,527 Additional paid-in capital 1,378,963 1,376,053 Accumulated earnings 1,231,680 1,124,230 Total stockholders' equity attributable to the Company 2,757,491 2,646,810 Noncontrolling interest 312,925 316,093 Total stockholders' equity 3,070,416 2,962,903 $ 7,239,696 $ 7,007,062 The accompanying notes are an integral part of these statements. 4 COMSTOCK RESOURCES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended March 31, 2026 2025 (In thousands, except per share amounts) Revenues: Natural gas sales $ 418,275 $ 412,286 Oil sales 758 702 Total natural gas and oil sales 419,033 412,988 Gas services 166,501 99,866 Gain on sale of assets 1,820 — Total revenues and other operating income 587,354 512,854 Operating expenses: Production and ad valorem taxes 10,425 11,179 Gathering and transportation 41,804 42,617 Lease operating 28,281 35,000 Exploration 9,343 2,150 Depreciation, depletion and amortization 141,532 167,891 Gas services 162,856 116,769 General and administrative 18,222 11,080 Total operating expenses 412,463 386,686 Operating income 174,891 126,168 Other income (expenses): Gain (loss) from derivative financial instruments 2,396 ( 330,339 ) Other income 263 339 Interest expense ( 53,061 ) ( 54,837 ) Total other expenses ( 50,402 ) ( 384,837 ) Income (loss) before income taxes 124,489 ( 258,669 ) (Provision for) benefit from income taxes ( 11,990 ) 143,276 Net income (loss) 112,499 ( 115,393 ) Net income attributable to noncontrolling interest ( 5,049 ) ( 5,885 ) Net income (loss) available to the Company $ 107,450 $ ( 121,278 ) Net income (loss) per share: Basic $ 0.38 $ ( 0.40 ) Diluted $ 0.38 $ ( 0.40 ) Weighted average shares outstanding: Basic 291,317 290,303 Diluted 291,317 290,303 The accompanying notes are an integral part of these statements. 5 COMSTOCK RESOURCES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) Common Shares Common Stock- Par Value Additional Paid-in Capital Accumulated Earnings Noncontrolling Interest Total (In thousands) Balance at January 1, 2025 292,261 $ 146,130 $ 1,366,274 $ 728,619 $ 92,521 $ 2,333,544 Stock-based compensation 658 330 1,422 — — 1,752 Net income (loss) — — — ( 121,278 ) 5,885 ( 115,393 ) Contributions from noncontrolling interest — — — — 59,500 59,500 Distributions to noncontrolling interest — — — — ( 2,219 ) ( 2,219 ) Balance at March 31, 2025 292,919 $ 146,460 $ 1,367,696 $ 607,341 $ 155,687 $ 2,277,184 Balance at January 1, 2026 293,055 $ 146,527 $ 1,376,053 $ 1,124,230 $ 316,093 $ 2,962,903 Stock-based compensation 641 321 2,910 — — 3,231 Net income — — — 107,450 5,049 112,499 Distributions to noncontrolling interest — — — — ( 8,217 ) ( 8,217 ) Balance at March 31, 2026 293,696 $ 146,848 $ 1,378,963 $ 1,231,680 $ 312,925 $ 3,070,416 The accompanying notes are an integral part of these statements. 6 COMSTOCK RESOURCES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, 2026 2025 (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 112,499 $ ( 115,393 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Deferred income taxes 11,990 ( 143,276 ) Gain on sale of assets ( 1,820 ) — Depreciation, depletion and amortization 141,532 167,891 (Gain) loss on derivative financial instruments ( 2,396 ) 330,339 Cash settlements of derivative financial instruments ( 80,388 ) ( 7,959 ) Amortization of debt discount and issuance costs 3,037 2,944 Stock-based compensation 7,444 4,442 (Increase) decrease in accounts receivable 73,494 ( 33,660 ) Decrease in other current assets 9,199 559 Decrease in accounts payable and accrued expenses ( 2,626 ) ( 31,141 ) Net cash provided by operating activities 271,965 174,746 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures and acquisitions ( 415,812 ) ( 297,992 ) Prepaid drilling costs 10,864 ( 269 ) Proceeds from sales of assets 1,820 — Net cash used for investing activities ( 403,128 ) ( 298,261 ) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings on bank credit facilities 387,000 205,000 Repayments of bank credit facilities ( 250,000 ) ( 110,000 ) Debt and stock issuance costs ( 2,552 ) — Income tax withholdings on equity awards ( 4,213 ) ( 2,690 ) Contributions from noncontrolling interest — 59,500 Distributions to noncontrolling interest ( 8,217 ) ( 2,219 ) Net cash provided by financing activities 122,018 149,591 Net increase (decrease) in cash and cash equivalents ( 9,145 ) 26,076 Cash and cash equivalents, beginning of period 23,930 6,799 Cash and cash equivalents, end of period $ 14,785 $ 32,875 The accompanying notes are an integral part of these statements. 7 COMSTOCK RESOURCES, INC. NOTES TO CONSOLIDA TED FINANCIAL STATEMENTS March 31, 2026 (Unaudited) (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation These unaudited consolidated financial statements include the accounts of Comstock Resources, Inc. 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 March 31, 2026, 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. All adjustments are of a normal recurring nature unless otherwise disclosed. The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted pursuant to those rules and regulations, although Comstock believes that the disclosures made are adequate to make the information presented not misleading. 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, 2025. The results of operations for the period through March 31, 2026 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, Cactus Midstream (II), LLC ("Cactus"). PGS provides gathering and treating services for natural gas production in the Company's Western Haynesville area. Comstock directs the activities that most significantly impact the performance of PGS and has the obligation to absorb losses or right to receive benefits that could potentially be significant to PGS. 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 $ 412.5 million and $ 358.9 million of net other property and equipment as of March 31, 2026 and December 31, 2025 , respectively. Liabilities for which creditors do not have recourse to Comstock's assets include $ 47 million of borrowings under PGS's bank credit facility. 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. The portions of PGS net income and stockholders' equity not attributable to Comstock's controlling interest are shown separately as noncontrolling interests in the accompanying consolidated statements of operations and statements of stockholders' equity. In January 2026, PGS entered into an agreement with Cactus 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 during the second quarter of 2026. Other Current Assets Other current assets at March 31, 2026 and December 31, 2025 consisted of the following: As of March 31, 2026 December 31, 2025 (In thousands) Prepaid drilling costs $ 42,270 $ 53,134 Prepaid expenses 3,685 2,968 Production tax refunds receivable 3,526 5,827 Other receivables 3,462 9,929 Income tax receivable 3,024 3,024 Other 83 375 $ 56,050 $ 75,257 8 COMSTOCK RESOURCES, INC. Property and Equipment The Company follows the successful efforts method of accounting for its natural gas and oil properties. Costs incurred to acquire natural gas and oil leases and to drill and complete developmental wells are capitalized. Exploratory well costs are initially capitalized as proved property in the consolidated balance sheets but charged to exploration expense if and when the well is determined not to have found commercial proved natural gas and oil reserves. The changes in capitalized exploratory well costs are as follows: Three Months Ended March 31, 2026 2025 (In thousands) Beginning capitalized exploratory well costs $ 210,127 $ 68,223 Additions to exploratory well costs pending the determination of proved reserves 174,775 100,107 Determined to have found proved reserves ( 152,512 ) — Ending capitalized exploratory well costs $ 232,390 $ 168,330 As of March 31, 2026 and December 31, 2025, 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. Unproved natural gas and oil properties are also periodically assessed and any impairment in value is charged to expense. The costs related to unproved properties are transferred to proved natural gas and oil properties and amortized on an equivalent unit-of-production basis when they are reflected in proved natural gas and oil reserves. 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. 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. Management's natural gas and oil price outlook is developed based on 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. It is reasonably possible that the Company's estimates of undiscounted future net cash flows attributable to its natural gas and oil properties may change in the future. The primary factors that may affect estimates of future cash flows include future adjustments, both positive and negative, to proved and appropriate risk-adjusted probable natural gas and oil reserves, results of future drilling activities, future prices for natural gas and oil, and increases or decreases in production and capital costs. As a result of these changes, there may be future impairments in the carrying values of these or other properties. 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. 9 COMSTOCK RESOURCES, INC. The following table presents the balance of other property and equipment and accumulated depreciation as of March 31, 2026 and December 31, 2025: As of March 31, 2026 December 31, 2025 (in thousands) Midstream assets $ 418,547 $ 363,855 Accumulated depreciation ( 6,044 ) ( 4,914 ) Net midstream assets 412,503 358,941 Other property and equipment 22,861 22,801 Accumulated depreciation ( 2,359 ) ( 1,982 ) Net other property and equipment 20,502 20,819 Total $ 433,005 $ 379,760 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. Goodwill The Company had goodwill of $ 335.9 million as of March 31, 2026 that was recorded in 2018. The Company is not required to amortize goodwill as a charge to earnings; however, the Company is required to conduct an annual review of goodwill for impairment. The Company performs an annual assessment of goodwill on October 1 of each year and performs interim assessments if indicators of impairment are present. If the carrying value of goodwill exceeds the fair value, an impairment charge would be recorded for the difference between fair value and carrying value. No impairment indicators were identified during the periods presented. Leases The Company has right-of-use lease assets of $ 83.1 million related to its corporate office, certain office equipment, vehicles and drilling rigs with corresponding short-term and long-term liabilities. The value of the lease assets and liabilities are determined based upon discounted future minimum cash flows contained within each of the respective contracts. The Company determines if contracts contain a lease at inception of the contract. To the extent that contract terms representing a lease are identified, leases are identified as being either an operating lease or a finance-type lease. Comstock currently has no finance-type leases. Right-of-use lease assets representing the Company's right to use an underlying asset for the lease term and the related lease liabilities represent the Company's obligation to make lease payments under the terms of the contracts. 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. Short-term lease costs exclude expenses related to leases with a lease term of one month or less. Leases for the right to explore for and develop natural gas and oil reserves and the related rights to use the land associated with those leases are reflected as natural gas and oil properties. Comstock contracts for a variety of equipment used in its natural gas and oil exploration and development activities. Contract terms for this equipment vary broadly, including the contract duration, pricing, scope of services included along with the equipment, cancellation terms, and rights of substitution, among others. 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 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 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 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 the Company's proved natural gas and oil properties on its balance sheet unless they are incurred on exploration wells that are unsuccessful, in which case they are charged to exploration expense. 10 COMSTOCK RESOURCES, INC. Lease costs recognized during the three months ended March 31, 2026 and 2025 were as follows: Three Months Ended March 31, 2026 2025 (In thousands) Operating lease cost included in general and administrative expense $ 419 $ 424 Operating lease cost included in lease operating expense 605 517 Operating lease cost included in natural gas and oil properties 12,147 11,300 Variable lease cost (drilling rig costs included in natural gas and oil properties) 12,299 1,721 Short-term lease cost (drilling rig costs included in natural gas and oil properties) 12,148 5,388 $ 37,618 $ 19,350 Cash payments for operating leases associated with right-of-use lease assets included in net cash provided by operating activities were $ 1.0 million and $ 0.9 million for the three months ended March 31, 2026 and 2025, respectively. Cash payments for operating leases associated with right-of-use lease assets included in net cash used for investing activities were $ 36.6 million and $ 18.4 million for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026 and December 31, 2025, the operating leases had a weighted-average term of 2.2 years and 2.4 years, respectively, and the weighted-average discount rate used to determine the present value of future operating lease payments was 6.8 % and 6.8 % , respectively. As of March 31, 2026, the Company also had expected future payments for short term leased drilling services of $ 6.1 million . As of March 31, 2026, expected future payments related to contracts that contain operating leases were as follows: (In thousands) April 1 to December 31, 2026 $ 38,273 2027 29,238 2028 14,540 2029 7,440 2030 — Total lease payments 89,491 Imputed interest ( 6,690 ) Total lease liability $ 82,801 Accrued Costs Accrued costs at March 31, 2026 and December 31, 2025 consisted of the following: As of March 31, 2026 December 31, 2025 (In thousands) Accrued drilling costs $ 37,401 $ 36,148 Accrued transportation costs 25,433 28,304 Accrued interest payable 22,094 64,042 Accrued ad valorem and other taxes 6,740 4,000 Accrued lease operating expenses 3,907 3,744 Accrued employee compensation 2,939 14,926 Other 2,296 2,084 $ 100,810 $ 153,248 11 COMSTOCK RESOURCES, INC. Reserve for Future Abandonment Costs Comstock's asset retirement obligations relate to future plugging and abandonment expenses on its natural gas and oil properties and disposal of other facilities. The following table summarizes the changes in Comstock's total estimated liability for such obligations during the periods presented: Three Months Ended March 31, 2026 2025 (In thousands) Reserve for future abandonment costs at beginning of period $ 20,787 $ 33,996 New wells and facilities placed on production 38 18 Accretion expense 300 493 Reserve for future abandonment costs at end of period $ 21,125 $ 34,507 Derivative Financial Instruments and Hedging Activities All of the Company's derivative financial instruments are used for risk management purposes and, by policy, none are held for trading or speculative purposes. Comstock minimizes credit risk to counterparties of its derivative financial instruments through formal credit policies, monitoring procedures, and diversification. The Company is not required to provide any credit support to its counterparties other than cross collateralization with the assets securing its bank credit facility. None of the Company's derivative financial instruments involve payment or receipt of premiums. The Company classifies the fair value amounts of derivative financial instruments as net current or noncurrent assets or liabilities, whichever the case may be, by commodity contract. None of the Company's derivative contracts were designated as cash flow hedges. All of Comstock's outstanding 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 March 31, 2026: Future Production Period Nine Months Ending December 31, 2026 Year Ending December 31, 2027 Total Natural Gas Price Swap Contracts: Volume (MMBtu) 88,000,000 — 88,000,000 Average Price per MMBtu $ 3.51 $— $ 3.51 Natural Gas Price Collar Contracts: Volume (MMBtu) 126,500,000 146,000,000 272,500,000 Average Price per MMBtu: Average Ceiling $ 4.35 $ 4.44 $ 4.40 Average Floor $ 3.50 $ 3.50 $ 3.50 The classification of derivative financial instruments of assets or liabilities, consists of the following: As of Type Consolidated Balance Sheet Location March 31, 2026 December 31, 2025 (In thousands) Asset Derivative Financial Instruments: Natural gas price derivatives Derivative Financial Instruments – current $ 50,178 $ 19,206 Natural gas price derivatives Derivative Financial Instruments – long-term $ 39,058 $ — Liability Derivative Financial Instruments: Natural gas price derivatives Derivative Financial Instruments – current $ 14,882 $ 27,636 The Company recognized cash settlements and changes in the fair value of its derivative financial instruments as a single component of other income (expenses). 12 COMSTOCK RESOURCES, INC. Gains and losses related to cash settlements and changes in the fair value recognized on the Company's derivative contracts recognized in the consolidated statement of operations were as follows: Three Months Ended March 31, Gain (loss) on Derivatives Recognized in Earnings 2026 2025 (In thousands) Natural gas price derivatives $ 2,396 $ ( 330,339 ) $ 2,396 $ ( 330,339 ) Stock-Based Compensation Comstock accounts for employee stock-based compensation under the fair value method. 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 $ 7.4 million and $ 4.4 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, 2026 and 2025, respectively. In January 2026, the Company granted 894,373 shares of restricted stock to its directors and employees, which were valued at $ 22.47 per share. As of March 31, 2026, Comstock had 2,146,303 shares of unvested restricted stock outstanding at a weighted average grant date fair value of $ 16.90 per share. Total unrecognized compensation cost related to unvested restricted stock grants of $ 31.2 million as of March 31, 2026 is expected to be recognized over a period of 2.3 years. In January 2026, the Company granted 596,623 PSUs to its executive officers, which were valued at $ 27.85 per unit. As of March 31, 2026, Comstock had 2,200,539 PSUs outstanding with a weighted average grant date fair value of $ 21.74 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 4,401,078 shares of common stock. Total unrecognized compensation cost related to these grants of $ 32.1 million as of March 31, 2026 is expected to be recognized over a period of 2.3 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 Comstock produces natural gas and oil and reports revenues separately for each of these two primary products in its statements of operations. Revenues are recognized upon the transfer of produced volumes to the Company's customers, who take control of the volumes and receive all the benefits of ownership upon delivery at designated sales points. Gas services revenues represent sales of natural gas purchased for resale from unaffiliated third parties and fees received for gathering and treating services provided by PGS to third parties. 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 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. 13 COMSTOCK RESOURCES, INC. All natural gas and oil and gas services revenues are subject to contracts that have commercial substance, contain specific pricing terms, and define the enforceable rights and obligations of both parties. These contracts typically provide for cash settlement within 25 days following each production month and are cancellable upon 30 days' notice by either party for oil and vary for natural gas based upon the terms set out in the confirmations between both parties. Prices for sales of natural gas and oil are generally based upon terms that are common in the oil and gas industry, including index or spot prices, location and quality differentials, as well as market supply and demand conditions. As a result, prices for natural gas and oil routinely fluctuate based on changes in these factors. Prices for gathering and treating services are generally fixed in nature but can vary due to the quality of the gas being treated. Each unit of production (thousand cubic feet of natural gas and barrel of crude oil) represents a separate performance obligation under the Company's contracts since each unit has economic benefit on its own and each is priced separately according to the terms of the contracts. Comstock has elected to exclude all taxes from the measurement of transaction prices, and its 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. 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. Historically, differences between estimated revenues and actual revenues received have not been significant. 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 March 31, 2026 or December 31, 2025. The Company recognized accounts receivable of $ 126.4 million and $ 203.5 million as of March 31, 2026 and December 31, 2025 , respectively, from purchasers for contracts where performance obligations have been satisfied and an unconditional right to consideration exists. Credit Losses Substantially all of the Company's accounts receivable are due from either purchasers of natural gas and oil or participants in natural gas and oil wells for which the Company serves as the operator. Generally, operators of natural gas and oil wells have the right to offset future revenues against unpaid charges related to operated wells. Natural gas and oil sales are generally unsecured. Comstock assesses the collectability of its receivables based upon their age, the credit quality of the purchaser or participant and the potential for revenue offset. 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 three months ended March 31, 2026 and 2025 . Income Taxes 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. In recording deferred income tax assets, the Company considers whether it is more likely than not that its deferred income tax assets will be realized in the future. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those deferred income tax assets would be deductible. The Company believes that after considering all the available objective evidence, historical and prospective, with greater weight given to historical evidence, management is not able to determine that it is more likely than not that all of its deferred tax assets will be realized. As a result, the Company established valuation allowances for its deferred tax assets and U.S. federal and state net operating loss carryforwards that are not expected to be utilized due to the uncertainty of generating taxable income prior to the expiration of the carryforward periods. The Company will continue to assess the valuation allowances against deferred tax assets considering all available information obtained in future periods. The following is an analysis of the consolidated income tax provision (benefit): Three Months Ended March 31, 2026 2025 (In thousands) Deferred - Federal $ 18,824 $ ( 65,930 ) Deferred - State ( 6,834 ) ( 77,346 ) $ 11,990 $ ( 143,276 ) 14 COMSTOCK RESOURCES, INC. The difference between the federal statutory rate of 21% and the effective tax rate is due to the following: Three Months Ended March 31, 2026 2025 Tax at statutory rate 21.0 % 21.0 % Tax effect of: Research and development and other income tax credits ( 4.5 ) — State income taxes, net of federal benefit ( 3.5 ) 27.9 Valuation allowance on deferred tax assets ( 3.4 ) 2.0 Noncontrolling interest ( 1.4 ) 11.1 Nondeductible stock-based compensation 1.4 ( 6.6 ) Effective tax rate 9.6 % 55.4 % For the three months ended March 31, 2026, the effective rate differed from the statutory rate due primarily to the impact of federal research and development credits, release of federal valuation allowance and state income taxes resulting from state tax credits. For the three months ended March 31, 2025 , the effective tax rate differed from the statutory rate due to the impact of state income taxes and noncontrolling interest. 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 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. Fair Value Measurements The Company holds or has held certain financial assets and liabilities that are required to be measured at fair value. These include cash and cash equivalents held in bank accounts and derivative financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A three-level hierarchy is followed for disclosure to show the extent and level of judgment used to estimate fair value measurements: 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. 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. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument. Level 3 — Inputs used to measure fair value are unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management's estimates of market participant assumptions. 15 COMSTOCK RESOURCES, INC. Fair Values – Reported The following presents the carrying amounts and the fair values of the Company's financial instruments as of March 31, 2026 and December 31, 2025: As of March 31, 2026 December 31, 2025 Carrying Value Fair Value Carrying Value Fair Value (In thousands) Assets: Commodity-based derivatives (1) $ 89,236 $ 89,236 $ 19,206 $ 19,206 Liabilities: Commodity-based derivatives (1) $ 14,882 $ 14,882 $ 27,636 $ 27,636 Bank credit facilities (2) $ 397,000 $ 397,000 $ 260,000 $ 260,000 6.75 % senior notes due 2029 (3) $ 1,608,974 $ 1,593,932 $ 1,607,880 $ 1,603,582 5.875 % senior notes due 2030 (3) $ 965,000 $ 926,400 $ 965,000 $ 931,225 (1) The Company's commodity-based derivatives are classified as Level 2 and measured at fair value using third party pricing services and other active markets or broker quotes that are readily available in the public markets. (2) The carrying value of the Company's 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 March 31, 2026 and December 31, 2025 , 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 March 31, 2026 and December 31, 2025, 2,146,303 and 1,957,381 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 March 31, 2026 2025 (In thousands) Unvested restricted stock 2,247 2,319 PSUs represent the right to receive a number of shares of the Company's common stock that may range from zero to up to two times the number of PSUs granted on the award date based on the achievement of certain performance measures during a performance period. The number of potentially dilutive shares related to PSUs is based on the number of shares, if any, which would be issuable at the end of the respective period, assuming that date was the end of the performance period. The treasury stock method is used to measure the dilutive effect of PSUs. Weighted average unearned PSUs outstanding were as follows: Three Months Ended March 31, 2026 2025 (In thousands, except per unit amounts) Weighted average PSUs 2,028 1,291 Weighted average grant date fair value per unit $ 21.74 $ 13.21 16 COMSTOCK RESOURCES, INC. Basic and diluted loss per share for the three months ended March 31, 2026 and 2025 were determined as follows: Three Months Ended March 31, 2026 2025 Income Shares Per Share Loss Shares Per Share (In thousands, except per share amounts) Net income (loss) attributable to common stock $ 112,499 $ ( 115,393 ) Income allocable to unvested restricted stock ( 861 ) — Basic income (loss) attributable to common stock $ 111,638 291,317 $ 0.38 $ ( 115,393 ) 290,303 $ ( 0.40 ) Diluted income (loss) attributable to common stock $ 111,638 291,317 $ 0.38 $ ( 115,393 ) 290,303 $ ( 0.40 ) 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 three months ended March 31, 2026 and 2025, respectively, were as follows: Three Months Ended March 31, 2026 2025 (In thousands) Cash payments for: Interest payments $ 91,972 $ 93,887 Non-cash investing activities include: Increase in accrued capital expenditures $ 1,253 $ 10,202 Liabilities assumed in exchange for right-of-use lease assets $ 67 $ 34,603 Recent Accounting Pronouncements 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. (2) LONG-TERM DEBT At March 31, 2026, long-term debt was comprised of the following: (In thousands) 6.75 % Senior Notes due 2029: Principal $ 1,623,880 Discount, net of amortization ( 14,906 ) 5.875 % Senior Notes due 2030: Principal 965,000 Bank Credit Facilities: Comstock Principal 350,000 PGS Principal 47,000 Debt issuance costs, net of amortization ( 23,367 ) $ 2,947,607 17 COMSTOCK RESOURCES, INC. Comstock Bank Credit Facility As of March 31, 2026, Comstock had $ 350.0 million outstanding under a bank credit facility. Aggregate commitments under the bank credit facility are $ 1.5 billion, which matures on November 15, 2027. Borrowings under the bank credit facility are subject to a borrowing base that 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 subsidiaries, except for PGS, 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 utilization 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 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 March 31, 2026. PGS Bank Credit Facility As of March 31, 2026, PGS had $ 47.0 million outstanding under a bank credit facility. Aggregate commitments under the bank credit facility are $ 150 million, which matures on March 26, 2030. Borrowings under the bank credit facility bear interest at PGS's option, at either SOFR plus 2.5 % to 3.5 % or an alternate base rate plus 1.5 % to 2.5 %, in each case depending on a consolidated net leverage ratio. PGS also pays a commitment fee of 0.375 % to 0.5 %, which is dependent on the consolidated net leverage ratio. This bank credit facility contains financial covenants that require the maintenance of an interest coverage ratio of at least 2.5 to 1.0 and a consolidated net leverage ratio of less than 4.0 to 1.0. (3) COMMITMENTS AND CONTINGENCIES In October 2025, the Company entered into an agreement for one new drilling rig, with a pad to pad contract term. Comstock took delivery of this rig in January 2026. Remaining commitments for drilling rigs on pad to pad agreements total $ 6.1 million as of March 31, 2026. 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 March 31, 2026 or 2025 . (4) RELATED PARTY TRANSACTIONS Comstock operates natural gas and oil properties held by partnerships owned by its majority stockholder. The Company charges the partnerships for the costs incurred to drill, complete and produce wells, as well as drilling and operating overhead fees. 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 $ 239 thousand and $ 339 thousand for the three months ended March 31, 2026 and 2025, 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 $ 2.3 million and $ 3.6 million receivable from the partnerships at March 31, 2026 and December 31, 2025 , respectively. 18 COMSTOCK RESOURCES, INC.