COMSTOCK RESOURCES INC

Previous wording

Natural gas and oil sales of $288.2 million for the three months ended June 30, 2026 decreased by $51.7 million (15%) as compared to $340.0 million for the second quarter of 2025. The decrease was due to lower natural gas prices realized in the second quarter of 2026 as compared to the same period in 2025. The average realized price for our natural gas was $2.54 per thousand cubic feet ("Mcf"), which decreased 16% from the average realized natural gas price in the second quarter of 2025. Our natural gas production for the second quarter of 2026 increased 1% to 113.1 billion cubic feet ("Bcf") (1.2 Bcf per day). Natural gas production for the second quarter of 2025 was 112.2 Bcf (1.2 Bcf per day) and was sold at an average price of $3.02 per Mcf.

Current wording

Natural gas and oil sales of $319.9 million for the three months ended September 30, 2026 increased by $11.3 million (4%) as compared to $308.6 million for the third quarter of 2025. The increase was due to higher production partially offset by lower natural gas prices realized in the third quarter of 2026 as compared to the same period in 2025. Our natural gas production for the third quarter of 2026 increased 10% to 122.4 billion cubic feet ("Bcf") (1.3 Bcf per day). Natural gas production for the third quarter of 2025 was 111.8 Bcf (1.2 Bcf per day) and was sold at an average price of $2.75 per Mcf. The average realized price for our natural gas for the third quarter of 2026 was $2.61 per thousand cubic feet ("Mcf"), which decreased 5% from the average realized natural gas price in the third quarter of 2025.

Previous wording

Natural gas and oil sales of $707.3 million for the six months ended June 30, 2026 decreased by $45.7 million (6%) as compared to $753.0 million for the six months ended June 30, 2025, which was primarily attributable to lower natural gas production, which decreased 7% to 210.9 Bcf (1.2 Bcf per day) during the first six months of 2026. Natural gas prices increased by 1% during the first six months of 2026 as compared to 2025 natural gas prices. Our natural gas production for the first six months of 2025 was 227.2 Bcf (1.3 Bcf per day) and was sold at an average price of $3.31 per Mcf.

Current wording

Natural gas and oil sales of $1.03 billion for the nine months ended September 30, 2026 decreased by $34.4 million (3%) as compared to $1.06 billion for the nine months ended September 30, 2025, which was primarily attributable to lower natural gas production, which decreased 2% to 333.3 Bcf (1.2 Bcf per day) during the first nine months of 2026 and lower natural gas prices. Natural gas prices decreased by 2% during the first nine months of 2026 as compared to 2025 natural gas prices. Our natural gas production for the first nine months of 2025 was 339.0 Bcf (1.2 Bcf per day) and was sold at an average price of $3.13 per Mcf.

Previous wording

Gas service revenues of $63.5 million decreased $66.8 million (51%) for the second quarter of 2026 from $130.3 million in the second quarter of 2025. Gas service revenues of $230.0 million decreased $0.2 million for the first six months of 2025 from $230.2 million for the first six months of 2025. The decreases were primarily due to lower natural gas prices related to sales of natural gas purchased to utilize our excess transport capacity.

Current wording

Gas services revenues of $64.5 million decreased $76.8 million (54%) for the third quarter of 2026 from $141.3 million in the third quarter of 2025. Gas services revenues of $294.5 million for the first nine months of 2026 decreased $77.0 million from the first nine months of 2025, which was $371.4 million. The decreases were primarily due to lower natural gas prices related to sales of natural gas purchased to utilize our excess transport capacity.

Previous wording

Our production and ad valorem taxes decreased $3.4 million (32%) to $7.2 million for the second quarter of 2026 from $10.6 million in the second quarter of 2025. Production and ad valorem taxes decreased $4.1 million (19%) to $17.6 million during the first six months of 2026 from $21.7 million during the first six months of 2025. The decreases were due primarily to the sale of producing properties in the prior periods and changes in natural gas prices.

Current wording

Our production and ad valorem taxes decreased $0.2 million (2%) to $11.0 million for the third quarter of 2026 from $11.2 million in the third quarter of 2025. Production and ad valorem taxes decreased $4.3 million (13%) to $28.7 million during the first nine months of 2026 from $33.0 million during the first nine months of 2025. The decreases were due primarily to changes in natural gas prices.

Previous wording

Gathering and transportation costs for the second quarter of 2026 increased $1.6 million (4%) to $43.3 million as compared to $41.8 million in the second quarter of 2025. Gathering and transportation costs during the first six months of 2026 increased $0.8 million (1%) to $85.1 million as compared to the first six months of 2025. The increases in both periods were due primarily to production growth in areas with higher average gathering and transportation rates.

Current wording

Gathering and transportation costs for the third quarter of 2026 increased $10.0 million (25%) to $50.0 million as compared to $40.0 million in the third quarter of 2025. Gathering and transportation costs during the first nine months of 2026 increased $10.8 million (9%) to $135.1 million as compared to the first nine months of 2025. The increases in both periods were due primarily to production growth in areas with higher average gathering and transportation rates.

Previous wording

Our lease operating expense of $28.2 million ($0.25 per Mcfe) for the second quarter of 2026 decreased $3.0 million (10%) as compared to our lease operating expense of $31.1 million ($0.28 per Mcfe) for the second quarter of 2025. Lease operating expense of $56.4 million ($0.27 per Mcfe) during the first six months of 2026 decreased $9.7 million (15%) from lease operating expense of $66.1 million ($0.29 per Mcfe) during the first six months of 2025. The decreases were due primarily to the sale of producing properties in the prior periods.

Current wording

Our lease operating expense of $28.5 million ($0.23 per Mcfe) for the third quarter of 2026 decreased $0.3 million (1%) as compared to our lease operating expense of $28.8 million ($0.26 per Mcfe) for the third quarter of 2025. Lease operating expense of $84.9 million ($0.25 per Mcfe) during the first nine months of 2026 decreased $10.0 million (11%) from lease operating expense of $94.9 million ($0.28 per Mcfe) during the first nine months of 2025. The decreases were due primarily to the sale of producing properties in 2025.

Previous wording

Gas service expenses of $63.0 million decreased $63.7 million (50%) for the second quarter of 2026 from $126.7 million in the second quarter of 2025. Gas service expenses of $225.9 million decreased $17.6 million (7%) for the first six months of 2026 from $243.5 million for the first six months of 2025. The decreases were primarily due to lower natural gas prices and volumes related to purchases of third party natural gas for resale.

Current wording

Gas services expenses of $59.4 million decreased $82.3 million (58%) for the third quarter of 2026 from $141.7 million in the third quarter of 2025. Gas services expenses of $285.3 million decreased $99.9 million (26%) for the first nine months of 2026 from $385.2 million for the first nine months of 2025. The decreases were primarily due to lower natural gas prices and volumes related to purchases of third party natural gas for resale.

Previous wording

Depreciation, depletion and amortization ("DD&A") increased $9.1 million to $167.4 million in the second quarter of 2026 from $158.4 million in the second quarter of 2025. Our DD&A per equivalent Mcf produced was $1.48 per Mcfe for the quarter ended June 30, 2026 as compared to $1.41 per Mcfe for the quarter ended June 30, 2025. The increase was due primarily to higher finding and development costs in 2026. DD&A decreased $17.3 million to $309.0 million for the first six months of 2026 from $326.3 million during the first six months of 2025. Our DD&A per equivalent Mcf produced was $1.46 per Mcfe for the six months ended June 30, 2026, which was comparable to $1.44 per Mcfe for the six months ended June 30, 2025.

Current wording

Depreciation, depletion and amortization ("DD&A") increased $28.3 million to $185.7 million in the third quarter of 2026 from $157.4 million in the third quarter of 2025, which was partially due to higher natural gas production in the third quarter of 2026. Our DD&A per equivalent Mcf produced was $1.52 per Mcfe for the quarter ended September 30, 2026 as compared to $1.41 per Mcfe for the quarter ended September 30, 2025. DD&A increased $11.0 million to $494.6 million for the first nine months of 2026 from $483.7 million during the first nine months of 2025. Our DD&A per equivalent Mcf produced was $1.48 per Mcfe for the nine months ended September 30, 2026, as compared to $1.43 per Mcfe for the nine months ended September 30, 2025. The increase in the DD&A per equivalent Mcf produced in both periods was due primarily to higher finding and development costs in 2026.

Previous wording

General and administrative expenses, which are reported net of overhead reimbursements, increased to $17.2 million for the second quarter of 2026 as compared to $12.3 million in the second quarter of 2025. General and administrative expenses increased to $35.4 million for the six months ended June 30, 2026 as compared to $23.4 million for the six months ended June 30, 2025. The increases in both periods were primarily due to higher stock-based compensation, which increased to $8.4 million in the second quarter of 2026 as compared to $5.5 million in the second quarter of 2025, and a reduction in overhead reimbursements resulting from the property divestitures completed in 2025. For the six months ended June 30, 2026, stock-based compensation increased to $15.8 million as compared to $10.0 million for the same period in 2025.

Current wording

General and administrative expenses, which are reported net of overhead reimbursements, increased to $16.1 million for the third quarter of 2026 as compared to $11.5 million in the third quarter of 2025. General and administrative expenses increased to $51.5 million for the nine months ended September 30, 2026 as compared to $34.9 million for the nine months ended September 30, 2025. The increases in both periods were primarily due to higher stock-based compensation, which increased to $7.5 million in the third quarter of 2026 as compared to $5.6 million in the third quarter of 2025, and a reduction in overhead reimbursements resulting from the property divestitures completed in 2025. For the nine months ended September 30, 2026, stock-based compensation increased to $23.3 million as compared to $15.6 million for the same period in 2025.

Previous wording

We use derivative financial instruments as part of our price risk management program to protect our capital investments. During the quarter ended June 30, 2026, we had net gains related to our derivative financial instruments of $44.4 million, as compared to net gains on derivative financial instruments of $235.8 million during the quarter ended June 30, 2025, resulting from the decrease in future natural gas prices since June 30, 2025. Realized net gains from our price risk management program were $43.3 million for the quarter ended June 30, 2026 as compared to realized net gains of $4.3 million for the quarter ended June 30, 2025. Net gains on derivative financial instruments were $46.8 million for the first six months of 2026 as compared to net losses of $94.5 million for the first six months of 2025, resulting from a decrease in future natural gas prices since December 31, 2025. Realized net losses from our price risk management program were $37.1 million for the first six months of 2026 as compared to realized net losses of $3.7 million for the first six months of 2025.

Current wording

We use derivative financial instruments as part of our price risk management program to protect our capital investments. During the quarter ended September 30, 2026, we had net gains related to our derivative financial instruments of $74.5 million, as compared to net gains on derivative financial instruments of $142.8 million during the quarter ended September 30, 2025, resulting from the increase in future natural gas prices since September 30, 2025. Realized net gains from our price risk management program were $39.5 million for the quarter ended September 30, 2026 as compared to realized net gains of $26.4 million for the quarter ended September 30, 2025. Net gains on derivative financial instruments were $121.3 million for the first nine months of 2026 as compared to net gains of $48.3 million for the first nine months of 2025, resulting from a decrease in future natural gas prices since December 31, 2025. Realized net gains from our price risk management program were $2.4 million for the first nine months of 2026 as compared to realized net gains of $22.7 million for the first nine months of 2025.

Previous wording

Interest expense was $55.0 million and $55.2 million for the quarters ended June 30, 2026 and 2025, respectively, and $108.1 million and $110.0 million for six months ended June 30, 2026 and 2025, respectively. The decrease in interest expense was due primarily to decreased borrowings on our bank credit facility.

Current wording

Interest expense was $58.3 million and $56.7 million for the quarters ended September 30, 2026 and 2025, respectively. The increase in interest expense was due primarily to increased borrowings on our bank credit facility. Interest expense was $166.4 million and $166.7 million for nine months ended September 30, 2026 and 2025, respectively.

Previous wording

Exploration expense was $4.4 million for the second quarter of 2026, and exploration expense was $13.8 million and $2.2 million for the six months ended June 30, 2026 and 2025, respectively, which were related to the acquisition of seismic data in our Western Haynesville area.

Current wording

Exploration expense was $10.7 million and $6.6 million for the quarters ended September 30, 2026 and 2025, respectively, and exploration expense was $24.5 million and $8.8 million for the nine months ended September 30, 2026 and 2025, respectively. The increases in both periods were related to the acquisition of seismic data in our Western Haynesville area and dry hole and abandonment charges related to a mechanical failure on an exploration well.

Previous wording

Income taxes for the quarters ended June 30, 2026 and 2025 were a benefit of $2.8 million and a provision of $141.5 million, respectively. Income taxes for the six months ended June 30, 2026 and 2025 were a provision of $9.2 million and a benefit of $1.8 million, respectively. Income taxes for the quarters ended June 30, 2026 and 2025 reflect an effective tax rate of (23.3)% and 52.0%, respectively, and income taxes for the six months ended June 30, 2026 and 2025 reflect an effective tax rate of 6.7% and (13.2)%, respectively. The difference between the federal statutory tax rate of 21% and our effective rate is primarily attributable to research and development and other tax credits, release of valuation allowance on deferred tax assets, state income taxes, changes in certain nondeductible items and the income attributable to noncontrolling interest.

Current wording

Income taxes for the quarters ended September 30, 2026 and 2025 were a provision of $14.0 million and $18.6 million, respectively. Income taxes for the nine months ended September 30, 2026 and 2025 were a provision of $23.1 million and $16.8 million, respectively. Income taxes for the quarters ended September 30, 2026 and 2025 reflect an effective tax rate of 35.5% and 13.6%, respectively, and income taxes for the nine months ended September 30, 2026 and 2025 reflect an effective tax rate of 13.1% and 11.2%, respectively. The difference between the federal statutory tax rate of 21% and our effective rate is primarily attributable to research and development and other tax credits, release of valuation allowance on deferred tax assets, state income taxes, changes in certain nondeductible items and the income attributable to noncontrolling interest.

Previous wording

We reported net income available to the Company of $8.8 million for the quarter ended June 30, 2026 as compared to net income available to the Company of $124.8 million for the quarter ended June 30, 2025. Income from operations for the second quarter of 2026 was $22.6 million as compared to income from operations of $89.4 million for the second quarter of 2025. In the first six months of 2026, we reported net income available to the Company of $116.2 million as compared to net income available to the Company of $3.6 million for the first six months of 2025. Income from operations for the first six months of 2026 was $197.5 million as compared to income from operations of $215.6 million for the first six months of 2025.

Current wording

We reported net income available to the Company of $22.3 million for the quarter ended September 30, 2026 as compared to net income available to the Company of $111.1 million for the quarter ended September 30, 2025. Income from operations for the third quarter of 2026 was $22.9 million as compared to income from operations of $50.2 million for the third quarter of 2025. In the first nine months of 2026, we reported net income available to the Company of $138.5 million as compared to net income available to the Company of $114.7 million for the first nine months of 2025. Income from operations for the first nine months of 2026 was $220.4 million as compared to income from operations of $265.8 million for the first nine months of 2025.

Previous wording

Cash flows from operating activities. Net cash provided by our operating activities decreased $80.1 million (15%) to $442.2 million in the first six months of 2026 from $522.3 million in the same period in 2025. The decrease was due primarily to lower natural gas production and lower realized natural gas prices.

Current wording

Cash flows from operating activities. Net cash provided by our operating activities decreased $53.0 million (8%) to $622.4 million in the first nine months of 2026 from $675.4 million in the same period in 2025. The decrease was due primarily to lower natural gas production and lower realized natural gas prices.

Previous wording

Contributions and redemption of noncontrolling interest. On June 15, 2026, PGS redeemed Cactus' interest in PGS for $445 million. The redemption was funded by the issuance of 600,000 Class A-2 Units representing a 27% ownership interest in PGS for $600 million to Starville, net of $18.5 million in related transaction costs.

Current wording

Contributions and redemption of noncontrolling interest. On June 15, 2026, PGS redeemed the noncontrolling interest in PGS for $445 million. The redemption was funded by the issuance of 600,000 Class A-2 Units representing a 27% ownership interest in PGS for $600 million to a new investor, net of $18.6 million in related transaction costs.

Previous wording

We drilled 34 (30.9 net) wells and completed 29 (24.4 net) Haynesville and Bossier shale operated wells during the first six months of 2026. We currently expect to spend an additional $720 million to $820 million in the remaining six months of 2026 on drilling, completion, infrastructure and other activity.

Current wording

We drilled 55 (38.7 net) wells and completed 52 (44.7 net) Haynesville and Bossier shale operated wells during the first nine months of 2026. We currently expect to spend an additional $135 million to $155 million in the remaining three months of 2026 on drilling, completion, infrastructure and other activity.

Previous wording

As of June 30, 2026, we had $1.2 billion of liquidity, comprised of $1.1 billion of unused borrowing capacity under our bank credit facilities and $45.0 million of cash and cash equivalents on hand. $150 million of unused borrowing capacity under our PGS bank credit facility is restricted to PGS midstream activities. Our short and long-term capital requirements consist primarily of funding our development, exploration and midstream activities, acquisitions, payments of contractual obligations and debt service.

Current wording

As of September 30, 2026, we had $868.6 million of liquidity, comprised of $850 million of unused borrowing capacity under our bank credit facilities and $18.6 million of cash and cash equivalents on hand. $150 million of unused borrowing capacity under our PGS bank credit facility is restricted to PGS midstream activities. Our short and long-term capital requirements consist primarily of funding our development, exploration and midstream activities, acquisitions, payments of contractual obligations and debt service.

Previous wording

As of June 30, 2026, we had $545.0 million outstanding under the Comstock bank credit facility. Aggregate commitments under this bank credit facility are $1.5 billion, which matures on November 15, 2027. Borrowings under our 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 Comstock bank credit facility are secured by substantially all of our assets and those of our subsidiaries, except for PGS, and bear interest at our 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. We also pay a commitment fee of 0.375% to 0.5%, which is dependent on the utilization of the borrowing base. Comstock's bank credit facility places certain restrictions upon our and our restricted 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. We were in compliance with the covenants as of June 30, 2026.

Current wording

As of September 30, 2026, we had $800.0 million outstanding under the Comstock bank credit facility. Aggregate commitments under this bank credit facility are $1.5 billion. The bank credit facility was amended on November 4, 2026 to mature on November 15, 2028. Borrowings under our 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 Comstock bank credit facility are secured by substantially all of our assets and those of our subsidiaries, except for PGS, and bear interest at our 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. We also pay a commitment fee of 0.375% to 0.5%, which is dependent on the utilization of the borrowing base. Comstock's bank credit facility places certain restrictions upon our and our restricted 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. We were in compliance with the covenants as of September 30, 2026.

Previous wording

As of June 30, 2026, PGS had no borrowings outstanding under its bank credit facility. Aggregate commitments under the PGS bank credit facility are $150 million, which matures on March 26, 2030. Borrowings under the PGS bank credit facility bear interest at our 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 PGS consolidated net leverage ratio. The PGS 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. PGS was in compliance with the covenants as of June 30, 2026.

Current wording

As of September 30, 2026, PGS had no borrowings outstanding under its bank credit facility. Aggregate commitments under the PGS bank credit facility are $150 million, which matures on March 26, 2030. Borrowings under the PGS 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 PGS consolidated net leverage ratio. The PGS 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. PGS was in compliance with the covenants as of September 30, 2026.

Previous wording

At June 30, 2026, we had $1.5 billion in U.S. federal net operating loss ("NOL") carryforwards and $2.0 billion in certain state NOL carryforwards. As a result of the change of control in August 2018, our ability to use NOLs to reduce taxable income is limited. If we do not generate a sufficient level of taxable income prior to the expiration of the pre-2018 NOL carryforward periods, then we will lose the ability to apply those NOLs as offsets to future taxable income. We estimate that $720.7 million of the U.S. federal NOL carryforwards and $1.2 billion of the estimated state NOL carryforwards will expire unused.

Current wording

At September 30, 2026, we had $1.5 billion in U.S. federal net operating loss ("NOL") carryforwards and $2.1 billion in certain state NOL carryforwards. As a result of the change of control in August 2018, our ability to use NOLs to reduce taxable income is limited. If we do not generate a sufficient level of taxable income prior to the expiration of the pre-2018 NOL carryforward periods, then we will lose the ability to apply those NOLs as offsets to future taxable income. We estimate that $740.6 million of the U.S. federal NOL carryforwards and $1.2 billion of the estimated state NOL carryforwards will expire unused.

Previous wording

States ("GAAP"). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities as of the date of the financial statements. On an ongoing basis, we evaluate our estimates and judgments. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.

Current wording

Our management’s discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities as of the date of the financial statements. On an ongoing basis, we evaluate our estimates and judgments. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.

Previous wording

In Part II, Item 7 of the Annual Report, we disclosed our critical accounting policies and estimates, which are made in accordance with GAAP, involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operation. There have been no significant changes to our critical accounting policies and estimates during the six months ended June 30, 2026, as compared to those disclosed in the Annual Report.

Current wording

In Part II, Item 7 of the Annual Report, we disclosed our critical accounting policies and estimates, which are made in accordance with GAAP, involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operation. There have been no significant changes to our critical accounting policies and estimates during the nine months ended September 30, 2026, as compared to those disclosed in the Annual Report.