Comstock Sells Pinnacle Stake for $600M, Ends Quantum Overhang

Comstock Resources sold its stake in Pinnacle Gas LLC for $600 million to a group led by Quantum Energy Partners, the company said Tuesday. The cash removes a funding overhang that had weighed on the stock for months.

The deal gives Comstock breathing room to continue a capital program that has regularly outspent cash flow from operations. The company drilled 28 wells in the first quarter and spent $267 million on drilling and completions. Operating cash flow came in at $134 million, according to the Q1 earnings report. That gap forced Comstock to draw on its credit facility and sell assets.

The Pinnacle proceeds will cover the shortfall for the rest of 2026 without additional borrowing, the company said. Comstock’s credit line stood at $1.1 billion drawn as of March 31, down from $1.3 billion at year-end. Total debt sits at $3.8 billion. The sale also ends the so-called Quantum overhang – the market’s concern that Quantum, a large investor, would push for a sale or restructuring.

Jerry Jones and his family control about 70% of Comstock’s common stock. The company’s governance structure means the Jones family can approve major transactions without a minority vote. The Pinnacle deal was structured as a sale of the asset itself, not equity. That structure avoided a shareholder vote, two people familiar with the matter said.

Comstock’s natural gas production averaged 1.6 billion cubic feet per day in Q1. The company expects to hold that level through yearend, assuming full-year capital spending of $950 million to $1.05 billion. Henry Hub forward gas prices for the rest of 2026 trade near $3.20 per million British thermal units, down from the $4-plus levels that Comstock assumed in its budget.

A sustained drop below $3 would force Comstock to either cut the rig count or draw the credit line back up, the company said in its Q1 conference call. The Pinnacle cash delays that decision by at least three quarters. The company is running four rigs in the Haynesville Shale and one in the Eagle Ford.

The sale closed Monday. Proceeds went to pay down the credit facility and build a cash buffer. Comstock said it expects to end the second quarter with $150 million to $200 million in cash, plus undrawn credit capacity of about $400 million.

Comstock shares trade near $12.50, down about 30% from their 52-week high. The stock carries an Alpha Score of Unscored, meaning the AlphaScala model does not have sufficient data to generate a signal. The company remains in the energy sector with a market cap of roughly $3 billion.