Comstock to acquire Covey Park for $2.2 billion

Comstock Resources has agreed to acquire privately held, Haynesville-focused Covey Park Energy in a $2.2-billion cash and stock deal. The deal, which includes the assumption of Covey Park’s outstanding debt and the retirement of its $1.1 billion in existing preferred units, expands Comstock’s position in the Haynesville natural gas basin.

Comstock Resources Inc. has agreed to acquire privately held, Haynesville-focused Covey Park Energy LLC in a $2.2-billion cash and stock deal.

The deal, which includes the assumption of Covey Park’s outstanding debt and the retirement of its $1.1 billion in existing preferred units, expands Comstock’s position in the Haynesville natural gas basin to 293,000 net acres with 2,000 net drilling locations including 1,300 net locations with lateral length over 5,000 ft and over 1.1 bcfd of gas equivalent net production, and 500 miles of gas gathering infrastructure.

Jerry Jones, owner of the Dallas Cowboys Football Club Ltd., will invest an additional $475 million in cash for 50 million newly issued shares of Comstock common stock to be issued at an agreed upon price of $6/share and $175 million of newly issued shares of perpetual convertible preferred stock. Jones remains Comstock’s largest shareholder with 75% ownership interest. Denham Capital becomes the second largest shareholder with 16% common stock ownership interest.

Upon closing—expected on or before July 31 subject to regulatory approvals and customary closing conditions—Comstock’s board will be expanded to include Covey Park’s co-CEO John Jacobi and Jordan Marye, a managing partner of Denham Capital. The management team will be led by Comstock’s current CEO M. Jay Allison but will include representation from both management teams and will combine the two companies’ operating staffs.

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