A planned $1.65 billion investment by Azerbaijan’s State Oil Company (SOCAR) in assets of US natural gas producer Comstock Resources Inc. is expected to have a positive impact on Comstock’s credit profile, S&P Global Ratings said. Under a letter of intent announced on September 1, SOCAR is set to acquire a 20% passive working interest in Comstock’s production assets at Legacy Haynesville, a 15% passive working interest in its Western Haynesville production assets, and 15% of Comstock’s 73% interest in Pinnacle Gas Services LLC. The total transaction value, subject to customary purchase-price adjustments, is $1.65 billion in cash.
S&P said the transaction would strengthen Comstock’s financial position and help offset the company’s lack of free cash flow accumulated since the beginning of the year. The parties intend to finalize the definitive agreement by October 31, 2026, with the transaction expected to close by the end of the year, subject to customary closing conditions. The agreement is set to become effective as of July 1, 2026.
SOCAR’s 15% working interest in the Western Haynesville assets will be reduced to 7.5% over five years after the investment achieves a 15% return. Following completion of the transaction, Comstock will remain the operator of all the assets covered by the deal. It will also retain a 62% controlling interest in Pinnacle Gas Services, which operates in the midstream and downstream segments of the natural gas industry.
S&P expects Comstock to use part of the proceeds to reduce borrowings under its credit facility and potentially repay some or all of its notes due in 2029, which become callable from March 2027. The remaining funds could be directed toward general corporate purposes, including development of Comstock’s approximately 545,000 net acres in Western Haynesville. The transaction could also create new opportunities for cooperation between SOCAR and Comstock beyond the acquired assets.
According to S&P, SOCAR will have the opportunity to participate in new projects developed by Comstock in the Legacy and Western Haynesville areas in proportions corresponding to its acquired interests. In return, SOCAR is expected to provide Comstock with opportunities to sell its natural gas to international buyers. S&P said this could potentially give Comstock greater access to international LNG markets while expanding its trading platform and downstream gas marketing capabilities.
Despite the positive assessment of the transaction, S&P maintained Comstock’s issuer credit rating at “B” with a stable outlook. The rating agency stressed that the final agreement remains pending and that the company’s financial performance will continue to be influenced significantly by movements in natural gas prices. Here we are to serve you with news right now.
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