onurdongel/iStock via Getty Images Comstock Resources ( CRK ) presented during the conference call solid proposals to decrease Western Haynesville costs. This should have been expected. But it may have taken the market somewhat by surprise. Additionally, the company added three rigs and completion crews because natural gas prices have rallied quite a bit from the previous fiscal year. All of this ...
onurdongel/iStock via Getty Images Comstock Resources ( CRK ) presented during the conference call solid proposals to decrease Western Haynesville costs. This should have been expected. But it may have taken the market somewhat by surprise. Additionally, the company added three rigs and completion crews because natural gas prices have rallied quite a bit from the previous fiscal year. All of this is going to change the overall numbers in terms of adding reserves. Keep in mind that the Western Haynesville acreage is still being evaluated. That evaluation process overwhelmed the earnings report in a big way. The company has 4 rigs in the Western Haynesville. Therefore, there is likely a solid profit opportunity that is not yet apparent to the market. During the conference call, management was confident that the natural gas costs for the Western Haynesville would continue to decline. This is a normal situation for much of the current upstream business. Management discovers a potential find and then takes a few years to optimize the development plan. We really will not know the final costs for developing the acreage for some time. Last Article The last article noted that the company raised cash by selling noncore areas. Then the company got lucky because winter temperatures have aided natural gas prices to the point where the company posted a fourth quarter that was not predicted during the fiscal year until recently. The first quarter might be even better depending upon how the winter finishes. Now the midstream company that is helpful for the Western Haynesville apparently will go public in yet another strategy to remove the preferred stock while decreasing the necessary profit for the midstream profit to be adequate. Preferred stock can be expensive capital. A successful going public attempt could therefore materially lower overall costs. The biggest change from the last article is the various strategies that should result in tangible cost reductions throughout 2026....
RHJ/iStock via Getty Images Source: Own Processing Precious metals royalty and streaming companies represent a very interesting sub-industry of the precious metals mining industry. They provide some leverage to the growing metals prices, similar to the typical mining companies; however, they are less risky in comparison to them. Their incomes are derived from royalty and streaming agreements. Unde...
RHJ/iStock via Getty Images Source: Own Processing Precious metals royalty and streaming companies represent a very interesting sub-industry of the precious metals mining industry. They provide some leverage to the growing metals prices, similar to the typical mining companies; however, they are less risky in comparison to them. Their incomes are derived from royalty and streaming agreements. Under a metal streaming agreement, the streaming company provides an upfront payment to acquire the right to future deliveries of a predefined percentage of the metal production of a mining operation. The streaming company also pays some ongoing payments that are usually well below the market price of the metal. They can be set as a fixed sum (e.g., $300/toz gold) or as a percentage (e.g., 20% of the prevailing gold price) or a combination of both (e.g., the lower of a) $300/toz gold and b) 20% of the prevailing gold price). The royalties usually apply to a small fraction of the mining project production (usually 1-3%), and they are not connected with ongoing payments. They can have various forms, but the most common is a small percentage of the net smelter return ("NSR"). The NSR is calculated as revenues from the sale of the mined products minus transportation and refining costs. To better track the overall performance of the whole sub-industry, I created a capitalisation-weighted index (the Precious Metals Royalty and Streaming Index) consisting of 11 companies (in June 2020, expanded to 15). Later, based on the inquiries of readers, I also introduced an equal-weighted version of the index. Until March 2021, both indices included the same companies and were calculated back to January 2019. However, some major changes occurred in April 2021. Due to the boom of the royalty and streaming industry and the emergence of many new companies, the indices experienced two major changes. First of all, the market capitalisation-weighted index was modified to include only the 5 biggest co...