Comstock Resources and the State Oil Company of the Azerbaijan Republic (SOCAR) have signed a framework agreement advancing SOCAR's $1.65bn (2.8bn manat) investment in Comstock's Haynesville Shale assets. The signing took place at the Azerbaijan International Investment Forum and formalises commitments set out in a previously announced letter of intent.

Both parties have committed to negotiating and completing a definitive purchase and sale agreement by no later than 31 October 2026, with the transaction expected to close before year-end.

The balance-sheet effect is the immediate driver for Comstock. On a pro forma basis as of 30 June 2026, net debt would fall from $3.1bn to $1.5bn once the deal completes. The company plans to direct the proceeds towards reducing total indebtedness, which it said would substantially lower financial leverage and strengthen liquidity.

The partnership centres on Comstock's position in the Haynesville Shale, the natural gas basin that sits close to the Gulf Coast's LNG export facilities. The agreement provides for joint development and management of upstream and midstream assets, while allowing SOCAR to market natural gas produced by Comstock as LNG to international buyers outside the US. Both companies plan to identify prospective offtake partners and examine pricing, logistics and regulatory issues tied to international LNG sales.

Operationally, little changes at the wellhead. Comstock retains operational control of all upstream assets and continues managing its midstream subsidiary, Pinnacle Gas Services. SOCAR gains the right to participate in future Comstock opportunities in the Legacy and Western Haynesville in the same proportions it is acquiring in the initial transaction.

The deal structure gives SOCAR the opportunity to achieve a 15% return on its investment while retaining a 7.5% long-term interest in Western Haynesville upstream assets. A reversion mechanism within the arrangement is designed to hand Comstock increased participation in future upside once those return thresholds are met.

The framework agreement sits within broader economic and energy cooperation between the US and Azerbaijan, following the signing of the protocol of the Azerbaijan-United States Economic Dialogue in June 2026.

For Comstock, the transaction supports development of its 545,000 net acres in the Western Haynesville, a resource the company positions against LNG, power generation and data centre demand along the Gulf Coast. Comstock is an independent natural gas producer with operations concentrated in the Haynesville Shale of North Louisiana and East Texas.

The SOCAR deal is the second monetisation Comstock has executed on its midstream and equity stack this year. In June 2026, the company divested a 27% non-controlling common equity interest in Pinnacle Gas Services to funds managed by Sixth Street for $600m.

The watch item: execution of the definitive purchase and sale agreement by the 31 October 2026 deadline, and the transaction's close before year-end, which will determine when Comstock's net debt steps down to $1.5bn.