U.S. Comstock Finalizes $1.65 Billion Asset Sale and $450 Million Drilling Joint Venture

en.Wedoany.com Reported - Comstock Resources plans to sell a portion of its Haynesville natural gas asset interests to Azerbaijan's state oil company SOCAR in a deal valued at $1.65 billion. The company has also secured $450 million in drilling joint venture funding from its largest shareholder, Jerry Jones. The two new sources of capital will be used to accelerate development of its Legacy and Western Haynesville natural gas assets in the Haynesville shale play.

Under the letter of intent signed by both parties, SOCAR will acquire a 20% non-operated working interest in Comstock's Legacy Haynesville assets and a 15% interest in its Western Haynesville assets for $1.65 billion in cash. The latter interest will be reduced to 7.5% after five years and once SOCAR achieves a 15% return on investment.

SOCAR will also acquire 15% of Comstock's 73% stake in Pinnacle Gas Services, which provides midstream services for Western Haynesville. Following the transaction, Comstock will retain operatorship and control of the upstream assets and will continue to manage Pinnacle's operations. The parties plan to sign a definitive agreement by October 31 and close the transaction by year-end, subject to negotiation outcomes and necessary approvals.

The partnership also gives SOCAR the opportunity to participate in Comstock's future Legacy and Western Haynesville projects, while enabling Comstock to leverage SOCAR's international natural gas marketing capabilities.

Regarding the drilling joint venture, a Jones family partnership will fund 85% and 80% of the drilling and completion costs for 18 Western Haynesville wells and 9 Legacy Haynesville wells, respectively, scheduled to be spudded over the next 12 months starting September 1. Once the joint venture achieves a 15% return on investment, its 50% interest in these wells will revert to Comstock.

The drilling program will support Comstock's continued development and delineation of approximately 545,000 net acres in Western Haynesville. The company is targeting demand from Gulf Coast LNG exports, power generation, and data centers, all areas where natural gas demand is growing.

Comstock Chairman and CEO M. Jay Allison said that bringing in an international strategic partner will accelerate value creation for investors, help the company significantly reduce debt, and fully fund the established development program for the Western Haynesville block.