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Cowboys Owner Jones’ Shale Driller Selling Shares; Stock Tumbles


By Joe Carroll

(Bloomberg)Comstock Resources Inc., the shale driller controlled by Dallas Cowboys owner Jerry Jones, plans to sell at least 40 million shares of common stock to redeem preferred convertible stock and reduce debt.The offering announced late Wednesday would represent a 21% dilution to current investors; that expands to 24% if underwriters exercise the full option to purchase an additional 6 million shares. The stock tumbled 28% at 8:29 a.m. before the start of regular stock trading in New York after earlier dipping as much as 30%.Comstock is testing the market at a time when rival gas producers such as Chesapeake Energy Corp. have seen financing options dry up amid a worldwide glut of the fuel and a demand outlook hobbled by Covid-19 lockdowns. Earlier this week, Chesapeake warned investors it had no access to capital, customers might be in danger of non-payment, and the company was on the verge of collapse.

Frisco, Texas-based Comstock priced the new shares at $5 apiece, according to a statement. That represents a 23% discount to Wednesday’s $6.50 closing price. The offering comes just a week after Comstock’s lenders lowered the driller’s borrowing base by 11% to $1.4 billion.

As recently as November, Jones said he was keen to expand his holdings in the natural gas-rich Haynesville shale region of Louisiana. Comstock’s output is 98% gas, which has insulated the company from the worst ravages of the unprecedented collapse in crude prices.



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