Comstock lands $1.65B SOCAR deal, cutting net debt to $1.5B

Comstock Resources agreed to sell minority stakes in its Haynesville assets to Azerbaijan's state energy company for $1.65 billion in cash, a deal that would cut the natural-gas producer's net debt nearly in half and fund development of its Western Haynesville acreage. The letter of intent with SOCAR covers a 20 percent interest in Comstock's Legacy Haynesville holdings, a 15 percent interest in its Western Haynesville position that steps down to 7.5 percent after five years, and 15 percent of its 73 percent stake in midstream unit Pinnacle Gas Services.

"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," M. Jay Allison, chairman and chief executive officer at Comstock, said.

Pro forma for the transaction, Comstock's net debt falls to $1.5 billion from $3.1 billion as of June 30, 2026, according to the Frisco, Texas-based company. The shares rose 5.13 percent to $15.17 on the announcement, with trading volume running 158 times the average, and the company's market value stands at about $4.45 billion. Comstock retains operatorship of all upstream assets and continues to manage Pinnacle, with SOCAR's interests structured as non-operated working interests.

The deal marks the second major capital injection into Comstock this year after Sixth Street invested $600 million in Pinnacle Gas Services in June, and it hands Azerbaijan's largest integrated energy company a foothold in one of the biggest undeveloped natural-gas resources in the United States. Comstock holds 545,000 net acres in the Western Haynesville, positioned to serve LNG, power-generation and data-center demand along the Gulf Coast, including the Texas Power Generation Hub in Anderson County.

A second capital source

Alongside the SOCAR transaction, Comstock announced a $450 million drilling venture with Jerry Jones, its majority stockholder. A partnership owned by the Jones family will fund 85 percent of drilling and completion costs on 18 Western Haynesville wells and 80 percent on nine Legacy Haynesville wells over the next 12 months, with 50 percent of the well interests reverting to Comstock once a 15 percent return on investment is achieved.

The structure mirrors the SOCAR deal's reversion mechanism, under which the Azerbaijani company's Western Haynesville interest drops to 7.5 percent after it earns a 15 percent return. That design lets Comstock monetize its acreage now while retaining most of the long-term upside, a trade-off that has drawn international capital into the play as Gulf Coast gas demand grows.

SOCAR, advised by J.P. Morgan Securities, will also gain the right to participate pro rata in future Comstock opportunities in the Haynesville and will help market the producer's gas to international customers. "We are pleased to invest alongside a team with a demonstrated track record in developing the Haynesville and Western Haynesville," Rovshan Najaf, president of SOCAR, said.

The parties target a definitive purchase and sale agreement by Oct. 31 and a closing by year-end, subject to government and third-party approvals, with an effective date of July 1, 2026. Wells Fargo advised Comstock, with O'Melveny & Myers serving as legal counsel.

This article is for informational purposes only and does not constitute investment advice.