Comstock Resources, a pure-play natural gas company, is facing the challenges of a low natural gas price environment (below $2). To navigate this storm, they've implemented cost-cutting measures, acquired strategic acreage in the Western Haynesville Shale, and maintain a positive long-term outlook on gas demand. However, a subtle detail in their recent earnings call transcript hints at a bolder strategy – a "horseshoe well" – that could potentially make Comstock a leading player in the Haynesville Shale.

The Western Haynesville presents both attractive opportunities and unique difficulties. It boasts thicker gas-saturated rock formations than the core Haynesville, promising higher Estimated Ultimate Recoveries (EURs) – up to 3.5 billion cubic feet per thousand feet of lateral. But, tapping into this resource is expensive. Deeper wells and high temperatures mean drilling costs are estimated to be double those in the core Haynesville, slowing down development.

Comstock faces the problem of "stranded shorties" – isolated acreage sections that require shorter laterals for held-by-production purposes. These shorter laterals, due to the high initial costs, generate lower returns, affecting overall profitability.

The "horseshoe well," while not detailed in the transcript, appears to involve a single, long lateral that curves back on itself, allowing Comstock to develop multiple isolated sections with one extended wellbore.

This innovative well design could be a game-changer:

Unlocking Stranded Value: Turning "shorties" into extended laterals enables Comstock to access the Western Haynesville's higher EURs efficiently, significantly increasing returns on previously less profitable sections.

Accelerating Cost Reduction: Comstock has already reduced drilling days from 80 to 54. The horseshoe design enhances operational efficiency. Drilling one extended lateral instead of two separate shorter ones minimizes rig moves and time spent on vertical sections, further cutting costs.

Strategic Acreage Control: The horseshoe design allows Comstock to target and retain acreage within their vast 250,000+ net acre footprint in the Western Haynesville. This managed development approach maximizes efficiency and positions them strategically for future full-field development.

Let's delve into Comstock's operational plan based on the information shared in their Q1 2024 and Q4 2023 earnings calls. The following table illustrates their planned activities:

Activity Q4 2023 Q1 2024 Operated Rigs 7 (reduced to 5 by end of Q4) 5 (2 in Western Haynesville) Frac Crews 2 (reduced to 1-2 by end of Q4) 2 (equivalent of 1.5 in H2 2024) Western Haynesville Rigs 2 2

The chart below demonstrates Comstock's remarkable progress in reducing drilling days in the Western Haynesville, highlighting their commitment to operational efficiency.

Comstock's focus on the "horseshoe" technology, coupled with their operational enhancements and strategic acreage control, shows a company not just surviving the current low gas price environment, but preparing for future gas demand. If successful, the "horseshoe" innovation could reshape the economics of the Western Haynesville, potentially placing Comstock as a key player in the Haynesville Shale as it gains prominence in the global gas market.

"Fun Fact: The Haynesville Shale, named after a small town in Louisiana, is one of the largest natural gas fields in the United States. Its proximity to the Gulf Coast makes it strategically important for supplying both domestic and international markets."