Comstock Resources Inc (NYSE: CRK) is having an incredibly strong day in the market today after announcing that it has withdrawn previously announced tender offers and has been granted a sizable investment. Of course, the news excited investors, sending the stock screaming for the top. Today, we’ll talk about:
- The news that was released today;
- what we’re seeing from CRK as a result;
- and what we’ll be watching for ahead.
CRK Announces News Surrounding A Withdrawn Tender Offer And An Investment
As mentioned above, Comstock Resources is having an overwhelmingly strong day in the market today after announcing two bits of news. In the first press release issued by the company this morning, it was announced that the company has withdrawn the previously announced offers to purchase any and all of its outstanding Senior Secured Toggle Notes due 2020, 7.75% Convertible Secured PIK Notes due 2019, and 9.5% Convertible Secured PIK Notes due 2020. In the release, CRK said that no notes were purchased under the tender offer.
In another release issued by CRK this morning, the company announced that it is currently in negotiations with Dallas Businessman and owner of the Dallas Cowboys Football Club, Jerry Jones, to make a substantial investment in the company. In the release, the company said that it has a letter of intent entered into by itself as well as Arkoma Drilling L.P., and Williston Drilling, L.P. The company said that it would acquire interest in certain oil and gas properties located in North Dakota in exchange for common stock. The properties are being acquired for a total of $620 million with no debt association. Arkoma is owned by Jerry Jones and the Jones family. In a statement, Mr. Jones had the following to offer about the deal with Comstock:
I am excited to be partnering with Comstock by contributing my oil and gas properties to Comstock which will allow them to strengthen their balance sheet. This combination provides Comstock with substantial cash flow to invest in their high return Haynesville shale drilling program and the capital to grow their already substantial inventory of drilling prospects.
The above statement was followed up by M. Jay Allison, CEO at CRK. Here’s what he had to offer:
The Arkoma investment in Comstock will allow us to refinance and simplify our capital structure and equip us with all the tools to substantially grow stockholder value… The proved reserve value and related cash flows from the North Dakota properties when combined with our properties will support the refinancing of our debt as well as fuel an expanded drilling program in the Haynesville shale. The strong balance sheet resulting from the combination will allow us to play offense after spending the last three years on defense.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dabble in the market is that the news causes moves. In this particular case, the news proved to be overwhelmingly positive. With the deal including Jerry Jones in mind, investors are excited and that can be seen in the drastic gains that we’re seeing in the value of the stock. At the moment (10:54), CRK is trading at $7.09 per share after a gain of $2.33 per share or 48.95% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on CRK. In particular, we’re interested in following the story surrounding the deal with Arkoma and excited to see the results of the deal. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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