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 oil and gas exploration company Comstock Resources
So what: In what amounts to a $332.7 million purchase from Eagle Oil & Gas, Comstock Resources secured 44,000 net acres in the highly coveted Delaware Basin in Texas. This area is projected to contain 23.2 million barrels of oil and sits on top of the Wolfcamp and Bone Spring oil shale deposits. The company also updated its capital expenditures forecast for 2012, and is calling for $545 million in spending, up from $381 million in 2011. Production growth is expected to jump by 28%-32% this year and taper off to 13%-17% in 2012, but with a lesser mix of natural gas and a greater emphasis on oil.
Now what: This seems like a pretty smart move for Comstock. Oil is up, natural gas seems to once again be the forgotten resource, and the price the company paid for the oil acreage was very reasonable. Comstock hasn't turned a full-year profit since 2008, but its gross margin continues to move higher and analysts fully anticipate the company to be profitable in 2012. This looks like another step in the right direction for Comstock if you ask me and, if anything, it at least deserves a spot on your watchlist.
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Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.