The Lowest Cost Producer Profiting from the AI Power Crisis
Breaking down the lowest cost natural gas producer in the country, how it is riding two massive tailwinds, and what the they are worth.
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This week’s spotlight? The lowest-cost gas driller in America positioned to feed the fastest electricity demand growth in 30 years, driven by LNG and data centers.
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🔦 This Week’s Portfolio Spotlight: Comstock Resources (CRK)
No one’s talking about natural gas, but it’s quietly becoming the most important fuel in the world. Comstock is the lowest-cost gas producer in America. Perfectly positioned to ride a once-in-a-generation demand surge, from data centers, LNG exports, and power-hungry infrastructure.
My thesis: Comstock stays disciplined, expands reserves, and gets revalued as gas prices rise and demand compounds into 2027.
Valuation upside: ~100% upside or 31% CAGR through 2027, even after the stock’s huge run.
Here’s what’s coming:
✅ What Comstock actually does and how it wins
✅ The full supply/demand setup
✅ My valuation
And after a full breakdown of my portfolio, my holdings, costs basis, weights, and targets.
🧠 What the Company Actually Does
Comstock Resources is a pure-play natural gas producer based in Frisco, Texas. They don’t own pipelines, refineries, or transport assets. They drill gas wells. That’s it.
Nearly all of their revenue comes from natural gas, with just a small contribution from oil sales.
Their business is straightforward:
Acquire acreage
Drill horizontally into high-pressure rock
Extract gas at low cost
Sell into nearby infrastructure
As of Q1 2025, Comstock controls:
That makes them one of the largest operators in the Haynesville. A high-output shale basin in North Louisiana and East Texas known for its rich gas deposits and close proximity to pipelines and LNG3 terminals along the Gulf Coast.
Comstock’s recent focus has been expanding westward into a less-developed zone called Western Haynesville. Here wells are deeper, more expensive to drill, but also significantly more productive.
This isn't a spray-and-pray E&P company. It’s a precision, gas-only machine built around one idea:
Be the lowest-cost, high-volume dry gas4 producer in one of the most infrastructure-rich basins in the U.S.
Jay Allison has led that mission since 1988. Through booms, busts, and shale revolutions, he’s stayed focused on one commodity and one basin. And it shows.
When you’re selling a commodity like gas, every penny of cost matters.
Comstock’s ability to consistently operate at the lowest cost in the industry is more than just a margin booster, it’s a competitive weapon.
Lower costs mean:
They stay profitable at lower gas prices.
They can outlast higher-cost peers in downturns.
And they don’t need to hedge as aggressively to protect cash flow.
When prices fall, Comstock takes share. When prices rise, it mints cash. That’s the setup.
🧠 The Thesis
Natural gas bottomed around $1.50 in February 2024. Since then it’s rallied ~140%, trading around $3.60 today
That short-term pop is only the start. Here’s what's fueling the case:
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