BAKU, Azerbaijan, September 4. S&P Global
Ratings has shared its view on the latest deal signed by
Azerbaijan's state oil company SOCAR and Comstock Resources Inc.,
based in Texas.


Comstock Resources Inc.’s has announced a binding letter of
intent with SOCAR, under which SOCAR or a wholly owned subsidiary
would acquire nonoperated working interests in certain Comstock
assets, is credit positive.


The transaction, announced on Sept. 1, 2026, includes a 20%
nonoperated working interest in Comstock’s Legacy Haynesville
upstream assets, a 15% nonoperated working interest in its Western
Haynesville upstream assets, and a 15% interest in Comstock’s 73%
stake in Pinnacle Gas Services LLC. The aggregate purchase price is
$1.65 billion in cash, subject to customary purchase price
adjustments. SOCAR’s 15% interest in the Western Haynesville assets
will be reduced to 7.5% after five years, once SOCAR achieves a 15%
return on its investment in those assets.


"The letter of intent binds the parties to negotiate a
definitive agreement, with a targeted execution date of Oct. 31,
2026, and a closing by year-end. It is subject to customary closing
conditions, with an effective date of July 1, 2026. SOCAR will have
the opportunity to participate in opportunities generated by
Comstock in the Legacy and Western Haynesville areas at the same
percentages it is acquiring. SOCAR will provide opportunities for
Comstock to market its natural gas to international customers,"
said S&P.







The rating agency noted that its ‘B’ issuer credit rating and
stable outlook are unchanged.


"While we view this transaction as positive for credit, the deal
has yet to be signed and Comstock’s credit measures remain highly
dependent on natural gas prices. Comstock will retain operatorship
of all assets involved in the transaction and majority ownership of
its Pinnacle midstream asset (62% pro forma). We expect Comstock to
use a portion of the net proceeds to reduce debt on its credit
facility; potentially take out some or all of its 2029 notes, which
are callable in March 2027; and for general corporate purposes,
including development of its 545,000 net acres in the Western
Haynesville. Additionally, SOCAR brings liquefied natural gas
opportunities to Comstock, offering the potential for international
sales outlets as well as expansion of its trading platform and
downstream marking capabilities. This transaction helps Comstock
offset its free cash flow deficit year to date and should improve
near-term credit metrics," said S&P.