Not to be outdone by large independents such as Anadarko Petroleum
When we talk about Comstock, we're really talking about two companies. Bois d'Arc
Excluding its subsidiary, Comstock drills solely on land, primarily in Texas and Louisiana. It's done well this year, boosting production by 18% overall, and by 34% in its core operating area through the first half of the year. That's come largely through the drill bit, thanks to an 88% success rate.
Bois d'Arc's offshore results have provided both bigger gains and bigger pains. Production was up 47% for the quarter, but exploration expense also ran high because of a lot of dry holes. Not all costs are out of control, though. Per-foot lease operating expenses (LOEs) have actually fallen since last year, thanks to a post-Katrina easing of well completion costs.
Looking at the future of Comstock as an onshore pure-play, the most critical factor is its leverage to the Cotton Valley in Louisiana. Forest Oil
If these Cotton Valley wells end up flowing more gas in absolute terms, rather than just front-loading the same quantity, then the higher cost of directional drilling will be well worth it, and Comstock may be sitting on some very prime real estate.
Fool contributor Toby Shute doesn't own any land in East Texas or shares in any company mentioned. Chesapeake Energy is a Motley Fool Inside Value recommendation. The Motley Fool has a prime disclosure policy.