SOCAR and Comstock Resources sign a Letter of Intent on strategic partnership
A Letter of Intent aimed at establishing a strategic partnership has been signed between SOCAR and the American company Comstock Resources, Inc.
As the company told AZERTAC, according to the document, SOCAR will acquire a 20 percent participating interest in Comstock's Legacy Haynesville upstream assets, a 15 percent participating interest in the Western Haynesville upstream assets, as well as a 15 percent interest in Comstock's 73 percent participating interest in Pinnacle Gas Services LLC. SOCAR's 15 percent participating interest in the Western Haynesville assets is envisaged to be reduced to 7.5 percent in accordance with the relevant terms, provided that a 15 percent return on investment in these assets is achieved.
The total value of the transaction, taking into account standard purchase price adjustments, amounts to $1.65 billion. SOCAR is planning the relevant measures to finance the transaction. The parties aim to agree upon and sign the final purchase and sale agreement no later than October 31 of this year, as well as to complete the transaction before December 31, 2026, following the fulfillment of the relevant conditions, including obtaining the necessary governmental and third-party approvals.
Within the framework of the strategic partnership, SOCAR's participation in new opportunities that will be created by Comstock in Legacy Haynesville and Western Haynesville in the future is planned, in accordance with the respective participating interests. In addition, the parties will cooperate toward expanding opportunities for access of Comstock's natural gas to international markets.
SOCAR President Rovshan Najaf said: "This partnership creates a solid foundation for the further expansion of our strategic cooperation, bringing together the rich experience and broad capabilities of SOCAR and Comstock. We are pleased to invest together with a team that has extensive experience in developing the Haynesville and Western Haynesville fields, and we believe that our long-term partnership will develop successfully."
Comstock's Chairman of the Board and Chief Executive Officer M. Jay Allison noted: "We are pleased to announce our strategic partnership with SOCAR. This partnership will make it possible to attract a reputable international strategic partner, which will contribute to accelerating value creation for our investors, while at the same time ensuring a significant reduction in the debt burden and full financing of the planned development of the Western Haynesville area. In addition, Comstock will retain the operator functions and control over the upstream and midstream assets, and, through a mechanism providing for a phased reduction of the participating interest, will retain the potential for future value creation."
It should be noted that Comstock will remain the operator of all upstream assets and will continue the management and operational control of Pinnacle Gas Services LLC. SOCAR's proportional participation in future development programs, as well as in new leases and acquisitions in the area of mutual interests, will be governed by separate agreements within the framework of the final transaction.
