Cowboys' Jones invests in Haynesville to realize shale gas vision

By Luke Geiver | June 18, 2019

Dallas Cowboys owner Jerry Jones has a vision to create a leading shale gas production company. Jones intends to realize his vision in the Haynesville shale basin of eastern Texas. Through a $475 million investment, Jones-backed Comstock Resources has announced plans to acquire Covey Park Energy for a total price tag of $2.2 billion. Covey Park is a privately held shale gas producer in the heart of the Haynesville.

The purchase of Covey will give Comstock more than 1.1 billion cubic feet per day of natural gas production, 293,000 net acres with more than 2,000 drilling locations (of which 1,300 drilling locations offer lateral length capabilities of 5,000 feet or greater).

Jones will hold 75 percent stake in the company, with a total investment into Comstock equaling roughly $1.1 billion. Denham Capital, which also has invested more than $1 billion into the company, will be the second largest shareholder in the firm.

“I am excited to provide the funding and to team up with the Denham Capital team to combine the two companies to create the basin leader in the Haynesville shale,” Jones said. “This combination is another step toward completing my vision to create an industry leading natural gas company.”

M. Jay Allison, current Comstock CEO who will take on the same role after the merger, said Comstock has been looking at acquisition targets for months. “In integrating Covey Park we plan to focus on operating efficiency and having a combined drilling program that provides for substantial free cash flow to achieve our goal of reducing our leverage,” he said.

In the Haynesville, well economics are currently providing greater than 60 percent rate of return on shorter laterals when gas prices trade in the $3/mcf range. According to Comstock, the company is pumping the same amount of proppant—3,800 pounds per lateral foot—in all of its wells ranging in lateral lengths from 4,500 feet to 9,500 feet. For every thousand feet of lateral drilled and completed, Comstock produces roughly 2 to 2.5 bcf of natural gas.

On a gathering basis, Comstock pays roughly 26 cents per Mcfe. The company owns roughly 500 miles of gathering infrastructure in the region.