COMSTOCK RESOURCES, INC. ANNOUNCES UPSIZE AND PRICING OF $400.0 MILLION OFFERING OF SENIOR NOTES DUE 2029

Rhea-AI Summary

Comstock Resources, Inc. (CRK) announces the pricing of $400.0 million senior unsecured notes due 2029, increasing from the initially proposed $375.0 million. The offering is expected to close on April 9, 2024, with net proceeds of approximately $365.0 million. The company plans to use the proceeds to repay borrowings under its bank credit facility and pay related fees.

Positive

• Comstock Resources, Inc. increases the size of its private placement of senior unsecured notes from $375.0 million to $400.0 million.
• The Notes will be issued at 93% of par and are due in 2029.
• The offering is expected to close on April 9, 2024, subject to customary closing conditions.
• The net proceeds from the sale of the Notes are estimated to be around $365.0 million after deducting discounts and expenses.
• The company intends to use the proceeds to repay a portion of its outstanding borrowings under the bank credit facility and pay associated fees.
• The senior unsecured notes are expected to be eligible for trading by qualified institutional buyers under Rule 144A and non-U.S. persons under Regulation S.

Negative

• None.

Insights

Financial Analyst

The issuance of new 6.75% senior unsecured notes by Comstock Resources represents a strategic financial maneuver to optimize its capital structure. By increasing the offering from $375 million to $400 million, the company is tapping into investor demand for higher-yielding debt instruments amidst a potentially volatile interest rate environment. The issuance price at 93% of par indicates a yield to maturity that is higher than the coupon rate, which could be indicative of the market's perception of the company's credit risk.

Investors should note that the decision to repay portions of the company's bank credit facility could signal a strategic pivot towards fixed-rate debt, hedging against future interest rate hikes. However, the discount on par value and the subsequent higher effective interest rate could impact the company's interest expense and profitability margins in the short term. Long-term, the move may strengthen the balance sheet if it leads to a more favorable debt maturity profile and interest expense savings.

Debt Market Analyst

The private placement of senior unsecured notes by Comstock Resources, especially to qualified institutional buyers and non-U.S. persons, reflects a broader trend in corporate debt markets where companies seek to diversify their investor base and capitalize on global investment appetites. The notes' eligibility for trading under Rule 144A and Regulation S is a key factor that could influence liquidity and pricing in the secondary market.

Prospective and current stakeholders should be aware that the unregistered nature of these notes under the Securities Act of 1933 limits their marketability to a certain extent. However, the trade-off for Comstock Resources could be a quicker access to capital and potentially lower issuance costs compared to a public offering. It's imperative to consider how the company's credit ratings and the overall industry's financial health might interact with this debt issuance, affecting its success and the perceived risk by investors.

Energy Sector Analyst

For an energy company like Comstock Resources, the infusion of capital through the issuance of senior unsecured notes is indicative of the capital-intensive nature of the industry. The intended use of proceeds to repay existing debt suggests a focus on maintaining liquidity and managing debt levels, which is important for energy companies facing fluctuating commodity prices and regulatory changes.

It's important to scrutinize the company's operational efficiency and project pipeline, as these factors will ultimately dictate its ability to service the new debt. Stakeholders should also consider the impact of environmental policies and energy market dynamics, as these could influence Comstock's future cash flows and ability to meet its financial obligations.

FRISCO, TX, April 02, 2024 (GLOBE NEWSWIRE) -- Comstock Resources, Inc. (NYSE:CRK) ("Comstock" or the "Company") announced today the pricing of its private placement of new 6.75% senior unsecured notes due 2029 in the aggregate amount of $400.0 million, which was increased from the originally proposed $375.0 million (the "Notes"). The Notes will be issued at 93% of par. The offering is expected to close on April 9, 2024, subject to customary closing conditions.

The aggregate net proceeds from the sale of the Notes are expected to be approximately $365.0 million, after deducting the initial purchasers' discounts and other offering expenses. The Company intends to use such proceeds to repay a portion of the borrowings currently outstanding under the Company’s bank credit facility and pay fees and expenses in connection therewith.

The Notes offered have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and unless so registered, the securities may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The senior unsecured notes are expected to be eligible for trading by qualified institutional buyers under Rule 144A and non-U.S. persons under Regulation S.

This press release is being issued pursuant to Rule 135c under the Securities Act., and is neither an offer to sell nor a solicitation of an offer to buy the Notes or any other securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the Notes or any other securities in any jurisdiction in which such offer, solicitation or sale is unlawful.

About Comstock Resources

Comstock Resources is a leading independent natural gas producer with operations focused on the development of the Haynesville shale in North Louisiana and East Texas. The Company's stock is traded on the New York Stock Exchange under the symbol CRK.

This press release may contain "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties which could cause actual results to differ materially from those described herein. Although the Company believes the expectations in such statements to be reasonable, there can be no assurance that such expectations will prove to be correct. The Company’s Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other SEC filings discuss important risk factors that could affect the Company’s business, results of operations and financial condition. The forward-looking statements in this news release speak only as of this date. Comstock does not undertake any obligation to revise or update publicly any forward-looking statement.

FAQ

What is the ticker symbol for Comstock Resources, Inc.?

The ticker symbol for Comstock Resources, Inc. is CRK.

What is the aggregate amount of the new senior unsecured notes due 2029 offered by Comstock Resources, Inc.?

Comstock Resources, Inc. is offering $400.0 million in new senior unsecured notes due 2029.

When is the expected closing date for the offering of the senior unsecured notes by Comstock Resources, Inc.?

The offering of the senior unsecured notes by Comstock Resources, Inc. is expected to close on April 9, 2024.

How much are the net proceeds estimated to be from the sale of the senior unsecured notes by Comstock Resources, Inc.?

The net proceeds from the sale of the senior unsecured notes by Comstock Resources, Inc. are expected to be approximately $365.0 million.

What does Comstock Resources, Inc. plan to do with the proceeds from the sale of the senior unsecured notes?

Comstock Resources, Inc. intends to use the proceeds to repay a portion of the borrowings under its bank credit facility and pay related fees.