A large cash injection by an obviously dedicated shareholder provided quite the lift for Comstock Resources (CRK 0.22%) stock this week. The completion of the arrangement brought the bulls rushing into the energy company’s stock — it was trading nearly 11% higher week to date as of early Friday morning, according to data compiled by S&P Global Market Intelligence.
A Cowboy rides to the rescue
That shareholder is the man who already controlled much of Comstock’s equity, veteran oil and gas tycoon Jerry Jones (who is arguably more famous for being the owner, president, and general manager of the Dallas Cowboys National Football League team).
Last week, Comstock announced that Jones would make a fresh investment of just under $100.5 million into the company’s equity, via a pair of businesses he controls. The arrangement, completed on Monday, gave him an additional 12.5 million shares and brought his total stake to 67%. That’s up from the previous 65%.
Comstock said it would use the bulk of Jones’ new funds to retire bank debt. It had incurred the debt from a set of land acquisitions in its Western Haynesville play. These amounted to 200,000 undeveloped acres, for which it paid $58.7 million.
The company did not specify how it would use the remaining proceeds of the stock sale.
One dedicated shareholder
It isn’t commonplace for an existing shareholder to willingly pump a nine-figure investment into their company, no matter how well or badly it’s doing. Jones’ willingness to support Comstock’s operations is admirable, and it’s clear investors are noticing and getting more bullish on the company’s future as a result.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
