Domestic energy explorer, Comstock Resources Inc. (CRK) has entered into a new revolving credit facility worth $1 billion. This new 5-year syndication with 21 banks replaces the previous $750 million bank credit facility.
The credit facility allows an initial borrowing base of $625 million, and was arranged by Bank of Montreal’s (BMO) wholly owned subsidiary BMO Capital Markets. This bank facility was secured by Comstock’s oil and gas properties.
Frisco, Texas-based Comstock is an independent oil and gas exploration and production company engaged in the acquisition, exploration, and development of oil and gas properties.
Last week, Comstock signed a deal with Ursa Resources Group II LLC to acquire a 70% stake of the latter in the East Texas portion of the Eagle Ford Shale. The deal – involving oil and gas properties in the cities of Burleson and Washington – was priced at $66.5 million. Prior to that, the company had announced its decision to enter and explore the Tuscaloosa Marine shale – a promising oil play in Louisiana and Mississippi. These acquisitions should be advantageous to the company in the long run.
However, as is the case with other independent exploration and production companies, results for Comstock Resources are directly exposed to oil and gas prices, which are inherently volatile and subject to complex market forces. Realized prices could differ significantly from our estimates, thereby affecting the company’s revenues, earnings and cash flows.
Comstock currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can consider better-ranked stocks in the same industry such as Abraxas Petroleum Corp. (AXAS) and Harvest Natural Resources Inc. (HNR). Both these stocks sport a Zacks Rank #1 (Strong Buy).
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