March 15, 2013
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Comstock Resources (NYSE: CRK ) jumped as much as 18% today after announcing an asset sale.
So what: Comstock is selling 53,306 net acres in the West Texas Permian Basin to Rosetta Resources (NASDAQ: ROSE ) for $768 million. The money will be used to pay off debt and increase its drilling program in the Eagle Ford shale.
Now what: Capital expenditures are now expected to be $410 million for drilling activities, of which $312 million will be spent in Eagle Ford. I think the move to reduce debt and improve liquidity will be a positive for shareholders going forward. Still, I'd like to see consistent profits before jumping in, especially at this elevated price.
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