Natural gas producer Comstock Resources (CRK) has signed an agreement with Minnesota-based energy firm Northern Oil & Gas, Inc. (NOG) for the sale of its assets in the Bakken shale for $154 million in cash.
Headquartered in Texas, Comstock acquires, develops and explores oil and natural gas. It is also focused on the development of the Haynesville shale in North Louisiana and East Texas.
The assets being sold include non-operated interests in over 400 wells that have recently shown production of over 4,500 net barrels of oil equivalent per day. The sale is expected to close in the fourth quarter of 2021.
Comstock expects to record a pre-tax loss of $130 million to $140 million on the sale. The company’s shares closed 2.7% down on Thursday but gained 2.4% in the extended trading session to end the day at $10.50. (See Comstock stock chart on TipRanks)
Notably, the company plans to use the sale proceeds for its Haynesville shale development program, including completing 13 drilled wells that were originally budgeted to be completed next year.
Furthermore, Comstock could use a portion of the sale proceeds to fund additional drilling activity and acquire an additional leasehold in 2022.
On October 7, Truist Financial analyst Neal Dingmann reiterated a Hold rating on the stock and raised the price target to $12 from $7 (17.1% upside potential).
The analyst said, “Consensus estimates continue to trend below rising spot and forward prices, creating an environment whereby free cash flows should, for the most part, be able to surprise to the upside.”
Overall, the stock has a Moderate Buy consensus rating based on 1 Buy and 1 Hold. The average Comstock Resources price target of $10.50 implies 2.4% upside potential. Shares have gained 126.3% year-to-date.
According to TipRanks’ Smart Score rating system, Comstock scores a 9 out of 10, suggesting that the stock is likely to outperform market averages.
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