Oppenheimer Lowers Rating On Comstock (CRK)

Oppenheimer & Co. analyst Fadel Gheit is downgrading shares of Comstock Resources, Inc. (NYSE: CRK) after the company reported weak earnings yesterday. He has a $55 price target on shares and now rates the shares at Perform, down from Outperform.

In the report Gheit writes, "We are lowering our rating on CRK shares to Perform from Outperform. CRK has lowered its 2010 production guidance to reflect a lack of well completions. Haynesville Shale well completion costs have increased 20-30% in the last 12 months and CRK has little bargaining power to contract services at the present time from large services companies. It will be forced to wait until 4Q10 or later for fracking crew availability. CRK's objective is to grow reserves at a low cost and to fund CAPEX internally. CRK has declined several joint venture
offers, which it considers dilutive to shareholders. CRK has no hedges on production."

Shares of Comstock Resources closed at $24.45 yesterday.