Comstock (CRK) Signs a $1.65B SOCAR Letter of Intent and a $450M Drilling Venture. Does Deleveraging Outweigh the Economics It Gives Up?

Comstock Resources, Inc. (NYSE: CRK ) signed a nonbinding letter of intent under which SOCAR would pay $1.65 billion in cash, subject to customary adjustments. SOCAR would acquire non-operated working interests representing 20% of the Legacy Haynesville and 15% of the Western Haynesville upstream interests held by Comstock Resources, Inc. (NYSE:CRK). SOCAR would also acquire 15% of the 73% ownership interest held by Comstock Resources, Inc. (NYSE:CRK) in Pinnacle Gas Services.

The letter of intent requires good-faith negotiations but does not obligate completion. The parties are targeting a definitive agreement by October 31, 2026, and closing by year-end, subject to negotiations, approvals, and customary conditions.

Separately, a Jerry Jones family partnership will fund 85% of the drilling and completion costs for 18 Western Haynesville wells and 80% for nine Legacy Haynesville wells. The total 27-well program is expected to cost approximately $450 million over 12 months. After a 15% return on investment, 50% of the interest covered by the venture will revert to Comstock Resources, Inc. (NYSE:CRK).

If the SOCAR transaction closes, Comstock Resources, Inc. (NYSE:CRK) estimates that the proceeds would reduce company-defined non-GAAP net debt from $3.1 billion to $1.5 billion as of June 30, 2026. Net debt is calculated as total debt less cash and cash equivalents. The approximately $1.6 billion reduction would nearly halve the measure and could improve financial flexibility.

The drilling venture allows development to continue without equivalent near-term cash funding. Following completion of the SOCAR transaction, Comstock Resources, Inc. (NYSE:CRK) would retain operatorship of the upstream assets and control of Pinnacle Gas Services. Drilling should provide volumes to Pinnacle and help delineate the 545,000 net acres in the Western Haynesville.

The reversion provisions would preserve some long-term upside. SOCAR's Western Haynesville interest would fall from 15% to 7.5% after five years, once SOCAR earns a 15% return. The drilling venture would also return 50% of the covered interests after its return threshold is met.

Comstock Resources, Inc. (NYSE:CRK) could fail to reach final terms, obtain approvals, or close the $1.65 billion transaction on schedule. Until definitive documents are executed, the projected debt reduction remains conditional.

The economic cost is also substantial. SOCAR would receive upstream production and cash flow, but its working interests would carry corresponding shares of development and operating costs. SOCAR would also obtain a share of the Pinnacle midstream business and participation rights in future Legacy and Western Haynesville opportunities at the acquired percentages. Comstock Resources, Inc. (NYSE:CRK) would therefore transfer both current economics and part of the value from future leasing, acquisitions, and development.