Shares of Comstock Resources (CRK) plummeted by over 6% on Wednesday, following the company's disappointing third-quarter earnings report released after the market close on Tuesday.
The oil and gas exploration and production company reported a quarterly adjusted net loss of $0.17 per share for the three months ended September 30, missing analysts' consensus estimate of a $0.16 loss per share. Revenue for the quarter fell 19.2% year-over-year to $304.47 million, also falling short of Wall Street's expectations of $323.14 million.
The weak results were primarily driven by continued low natural gas prices, with Comstock realizing an average gas price of only $1.90 per Mcf in the third quarter. Higher depreciation, depletion, and amortization rates, due to a decrease in proved undeveloped reserves, also contributed to the financial loss.
Additionally, Comstock warned of a 10% decrease in fourth-quarter production compared to the same period in 2023, citing reduced drilling activity. This disappointing outlook further fueled the sell-off in the stock.
Following the earnings miss and weak guidance, Piper Sandler analyst Mark Lear reiterated a "Sell" rating on Comstock's stock, further exacerbating the sell-off.
While Comstock highlighted some positive points, such as its strategic positioning in the Western Haynesville play and efforts to reduce well costs, the overall financial performance and challenging market conditions for natural gas appear to have overshadowed these factors, leading to the sharp decline in the company's stock price.
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