(WO) — Comstock Resources has announced a proposed $1.65 billion strategic partnership with Azerbaijan’s SOCAR alongside a $450 million drilling venture backed by Jerry Jones, providing new capital to accelerate development of the company’s Legacy and Western Haynesville natural gas assets.
Under a letter of intent, SOCAR would pay $1.65 billion in cash for a 20% non-operated working interest in Comstock’s Legacy Haynesville assets and a 15% interest in its Western Haynesville assets. The Western Haynesville interest would decline to 7.5% after five years and once SOCAR achieves a 15% return on its investment.
SOCAR would also acquire 15% of Comstock’s 73% ownership interest in Pinnacle Gas Services, which provides midstream services to the Western Haynesville. Comstock will retain operatorship and control of its upstream assets and continue to manage Pinnacle.
The companies are targeting a definitive agreement by Oct. 31 and closing by year-end, subject to negotiations and required approvals. The partnership would also give SOCAR opportunities to participate in future Comstock projects in the Legacy and Western Haynesville and provide Comstock access to SOCAR’s international natural gas marketing capabilities.
Separately, Comstock has entered a $450 million Haynesville drilling venture with Jerry Jones, the company’s majority shareholder. Beginning Sept. 1, a Jones family partnership will fund drilling and completion costs for 85% of 18 Western Haynesville wells and 80% of nine Legacy Haynesville wells planned over the next 12 months.
After the partnership achieves a 15% return on its investment, 50% of its interest in the wells will revert to Comstock.
The drilling program will support continued development and delineation of Comstock’s approximately 545,000 net acres in the Western Haynesville, where the company is targeting growing natural gas demand from Gulf Coast LNG exports, power generation and data centers.
“This partnership introduces a reputable international strategic partner to help accelerate value creation for our investors, while allowing us to materially reduce debt and fully fund the planned development of our Western Haynesville acreage,” said M. Jay Allison, chairman and CEO of Comstock.
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