Expand Energy Q2 2025 Earnings Report

Expand Energy EPS Results

• Actual EPS: $1.10
• Consensus EPS: $1.14
• Beat/Miss: Missed by -$0.04
• One Year Ago EPS: N/A

Expand Energy Revenue Results

• Actual Revenue: $3.69 billion
• Expected Revenue: $2.09 billion
• Beat/Miss: Beat by +$1.60 billion
• YoY Revenue Growth: N/A

Expand Energy Announcement Details

• Quarter: Q2 2025
• Date: 7/29/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, July 30, 2025
• Conference Call Time: 9:00AM ET

Expand Energy (NASDAQ:EXE) is an independent natural gas producer principally in the United States. Expand Energy Corporation, formerly known as Chesapeake Energy Corporation, is based in OKLAHOMA CITY.

Expand Energy Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: We expect a ~50% increase in merger synergies, generating $500 million in 2025 and $600 million in 2026, boosting free cash flow by ~$425 million and $500 million, respectively.
• Positive Sentiment: Innovative use of AI and machine learning helped deliver record drilling speeds—including the longest lateral in SW Appalachia—and improved footage per day by 62% in NE Appalachia and 25% in the Haynesville.
• Positive Sentiment: Reduced 2025 capital investment by ~$100 million while maintaining ~7.1 Bcfe/d production and adding 0.3 Bcfe/d of capacity for 2026 optionality, demonstrating strong capital efficiency.
• Positive Sentiment: Strategically diversified portfolio with direct access to over 12 Bcfd of LNG demand under construction and growing power‐generation markets positions us to capture premium pricing opportunities.
• Positive Sentiment: Strengthening our investment‐grade balance sheet, we’re increasing 2025 net debt reduction to $1 billion and returning $585 million to shareholders via dividends and share repurchases.

Presentation

[Operator]

Good day, and welcome to Expand Energy twenty twenty five Second Quarter Earnings Teleconference. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please note, this event is being recorded. I would now like to turn the conference over to Chris Ayers, Vice President of Investor Relations and Special Projects. Please go ahead.

[Chris Ayres, VP - IR & Special Projects at Expand Energy]

Thank you, Carmen. Good morning, everyone, and thank you for joining our call today to discuss Expand's twenty twenty five second quarter financial and operating results. Hopefully, you've had a chance to review our press release and the updated investor presentation that we posted to our website yesterday. During this morning's call, we will be making forward looking statements, which consist of statements that cannot be confirmed by reference existing information, including statements regarding our beliefs, goals, expectations, forecasts, projections and future performance and the assumptions underlying such statements. Please note there are a number of factors that will cause actual results to differ materially from our forward looking statements, including the factors identified and discussed in our press release yesterday and other SEC filings.

[Chris Ayres, VP - IR & Special Projects at Expand Energy]

Please also recognize that as except required by law, we undertake no duty to update any forward looking statements, and you should not place undue reliance on such statements. We may also refer to some non GAAP financial measures, which facilitate comparisons across periods and with peers. For any non GAAP measure, we use a reconciliation to the nearest corresponding GAAP measure, which can be found on our website. With me on the call today are Nick Delasso, Mohit Singh, Josh Veets and Dan Turco. Nick will give a brief overview of our results and then we'll open it up for Q and A.

[Chris Ayres, VP - IR & Special Projects at Expand Energy]

So with that, thank you again. Over to you, Nick.

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

Good morning, and thank you all for joining our call. When we combine Chesapeake and Southwestern to create Xpand Energy, we did so with the intention of creating long term value through reducing costs and developing a deep geographically diverse portfolio serving premium markets. Our business continues to deliver and outperform every expectation pegged at merger onset. We now expect to recognize approximately a 50% increase to annual synergies, realizing $500,000,000 and $600,000,000 in 2025 and 2026, respectively. Relative to our expectations at the beginning of the year, this directly translates to approximately $425,000,000 more free cash flow in 2025 and $500,000,000 more in 2026 before accounting for NYMEX price changes.

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

Capturing synergies do not simply happen in a spreadsheet. We're drilling faster and smarter than ever before. Our team's innovative utilization of AI and machine learning is supporting record breaking performance as we drill the most productive wells in our collective company's histories. In Southwest Appalachia, we drilled the longest lateral well and measured depth by a single bit in U. S.

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

Land history. In Northeast Appalachia, our team improved its drilled footage per day by 62%. And in the Haynesville, our team improved footage drilled per day by 25%. Setting individual well records is nice, but delivering actual financial results that highlight these improvements is especially gratifying and is what creates sustainable value. These tremendous efficiency gains combined with the successful implementation of our productive capacity strategy has allowed us to hit our production and well count targets with fewer rigs than originally forecasted.

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

Overall, we've reduced our twenty twenty five capital investments by approximately 100,000,000 while maintaining production of approximately 7.1 Bcfe per day and building approximately 300,000,000 cubic feet equivalent per day of productive capacity to deploy in 2026 should market conditions warrant. Simply put, we're spending less while producing more, the very definition of capital efficient operations. We're encouraged by the long term demand outlook for our industry, and we're excited about the opportunities provided by our diversified portfolio. We retain operational leverage to the largest gas demand center in North America through our Haynesville position. Within a 300 mile radius of our assets, there is more than 12 Bcf per day of LNG demand under construction to be in service by 02/1930.

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

No other operator is better positioned to deliver gas into this demand complex, driving meaningful value creation over time. Next to LNG, power generation is the most attractive growth prospect through the end of the decade, especially for constrained basins like Pennsylvania, where we produce over five Bcf gross per day. Our deep multi basin portfolio with close access to demand centers and investment grade balance sheet make us a preferred partner to deliver the energy needed to supply the growing LNG market and support data center power demand. We expect to have a meaningful portion of cash flows linked to lower volatility pricing over time, and we'll continue to assess all opportunities through a simple lens of making us better and creating a more attractive cash flow profile. We remain actively engaged with many parties today, and any agreement we announce, whether LNG or power related, will be accretive to our shareholders for the long term.

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

In the short term, we expect market volatility to remain a prevailing theme in the space. We view our investment grade balance sheet as one of our most important strategic assets. Like any asset, we will periodically utilize capital to enhance and fortify its strength to perform through cycles. Our balance sheet can withstand cycles today, but we believe opportunistically using a portion of near term cash flows will put us in an even greater position of strength in the future. With our improving cash flow profile, we're electing to increase our 2025 net debt reduction to $1,000,000,000 In addition, we will be returning $585,000,000 to shareholders in the first half of the year through our quarterly base dividend, variable dividend and share repurchases.

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

Should near term cash flow ultimately retract, we retain the option to redirect and utilize our balance sheet's current strength to enhance returns. We firmly believe that our attractive and connected portfolio, diverse and agile production and resilient financial foundation equip us to thrive in today's macro landscape. We look forward to continuing to update you on our progress. And operator, we'll now open the call up for questions.

[Operator]

Thank you so much. And as a reminder, to ask a question, simply press 11 on your telephone and wait for your name to be announced. And it comes from the line of Scott Hanold with RBC. Please proceed.

[Scott Hanold, Managing Director - Energy Research at RBC Capital Markets]

Yes, morning. Thanks. A few of your peers have signed gas contracts related to power growth opportunities. Can you talk about expand strategy? And what are your goals that you're looking for in a commercial agreement?

[Scott Hanold, Managing Director - Energy Research at RBC Capital Markets]

And how do you think about the pricing mechanism for that?

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

Yes, great question, Scott. So, we're really excited about the opportunities in this space. And we have had a lot of conversations with a lot of folks. I would say, our goals are really, like I said in my comments, about making our business better. And one of the things we believe we can do with contracts like this is try to reduce the volatility of our cash flows.

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

So there's a couple of things that you could accomplish with a long term contract like this. You could achieve just better pricing than you otherwise would expect to receive because you can deliver gas in a way that is more reliable to a location that might be constrained or you can structure something that can be a win for both parties that reduces volatility. All of those things remain on the table and things that we're interested in. Dan, do you have anything else to add there?

[Dan Turco, EVP - Marketing & Commercial at Expand Energy]

Yes. Thanks for the question, Scott. I'm personally excited about this area because we start with a great footprint. Obviously, we have the size, we have the balance sheet, and we have a very interconnected portfolio. And so I'm trying to do multiple things, to bring extra value and realizations that I believe are there and truly add bottom line value to our company.

[Dan Turco, EVP - Marketing & Commercial at Expand Energy]

And one is just increasing that optimization at scale. I think Page 13 of our deck did a good job of showing how we are positioned to these premium markets. It's really around Haynesville and LNG focus, but that's also in Appalachia and Power. And as Nick alluded to, we're looking at some of these longer term tenor deals that provide some more structured terms, again, to lower the cash flow volatility, but also participate in the upside. And then the third thing I'm trying to do with that is make sure it's accretive to that portfolio we already have so we're building more scale, integration, and optionality.

[Dan Turco, EVP - Marketing & Commercial at Expand Energy]

So we can do things like move molecules to the best price market on any given day. So it's about getting to premium markets, structuring it to lower that cash flow volatility, but also increasing on any day where we can add just daily optimization value to increase realizations in the bottom line.

[Scott Hanold, Managing Director - Energy Research at RBC Capital Markets]

And my follow-up question is still going to be on the same line because I think it's important obviously for a lot of gas companies how they structure these deals going forward to maximize the value to the company. But can you talk about like two things here additionally? Number one, I alluded to the fact that a lot of your gas peers have done a few deals here. Do you feel there's a need to be you have some urgency in signing deals? And then with respect to, again, the commercial side of the agreement, if I look at like, say, an LNG opportunity, would you be willing to kind how do you want to structure the deals?

[Scott Hanold, Managing Director - Energy Research at RBC Capital Markets]

Would you be willing to send it or sell it to like an end user overseas or to a middleman? How do you see the best way to optimize that price?

[Dan Turco, EVP - Marketing & Commercial at Expand Energy]

Yeah. Thanks. I would start with there is no real urgency, right? We take a long term look, especially at the LNG and this power market, and there is no set what we wanted structure. We're looking at everything down the value chain.

[Dan Turco, EVP - Marketing & Commercial at Expand Energy]

So we're looking at selling gas domestically and internationally in all kind of different forms. The key to me in all this is, again, the risk reward and how do we protect the downside and make sure we're participating in the upside. And again, there's many ways to structure those deals. We can do them, as you said, direct sales. We can do them through partnerships or tolling.

[Dan Turco, EVP - Marketing & Commercial at Expand Energy]

But we're looking at the wide lens of these deals at the moment and continue to work and talk with many people at the moment. And we're in different areas and different time frames of those discussions.

[Scott Hanold, Managing Director - Energy Research at RBC Capital Markets]

Appreciate that. Thank you.

[Operator]

Thank you. Our next question comes from Doug Leggett with Wolfe Research. Please proceed.

[Doug Leggate, MD & Senior Research Analyst at Wolfe Research]

Thanks, good morning everyone. So Nick, there's a lot of detail in the report obviously to talk about today with synergies and everything else. But I would like to focus, if I may, specifically on cash taxes. I think we've looked at you on a discounted cash flow basis for a very long time and 70% deferred cash tax is the guidance for 2026, I believe. My question is what's the duration of that?

[Doug Leggate, MD & Senior Research Analyst at Wolfe Research]

Because that strip on our numbers, at least that could be pretty material. So any color you can offer on duration and how you get there would be appreciated.

[Mohit Singh, EVP & CFO at Expand Energy]

Good morning, Doug. This is Mohit. I'll take that. The preface I'll say is we are very excited about the passage of the big bill, which restores incentives for domestic capital investment. So the tax savings that you get, they're generally impacted by they're a function of relative capital spend that we will make.

[Mohit Singh, EVP & CFO at Expand Energy]

So with regards to your question around the longevity of that saving, as long as we keep investing at a similar cadence, we'll force we force, we forecast bigger tax DD and A due to, better tax planning and also the impact of the bill itself. So for all practical purposes, Doug, I would say the duration of the tax savings is is fairly long.

[Doug Leggate, MD & Senior Research Analyst at Wolfe Research]

I appreciate it, Mohan. I know it's complicated, but I think you've tried to distill it down to a fairly simple message. So thank you for that. My follow-up, Nick, this probably is for you and it's a question of cash returns. Obviously, was a variable dividend thrown in this quarter, but you also doubled the net debt reduction.

[Doug Leggate, MD & Senior Research Analyst at Wolfe Research]

So my question is what's your appetite to continue doing that, reducing net debt or put differently, putting cash on the balance sheet to the obvious benefit of your equity volatility?

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

Yeah. Great question, Doug. And I like the way you phrased that question, right? We do think it's absolutely to the benefit of our equity volatility and our equity holders over time to create a stronger balance sheet. So our appetite to do it really is a function of where we are in the market.

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

We believe that during strong markets, should be strengthening your balance sheet, and you should be willing to use that to the benefit of shareholders when markets soften. Most obvious way, of course, is that you're prepared to buy your stock. And we think that right now, we're seeing really nice market conditions that are giving us the opportunity to accelerate the improvement in our balance sheet relative to probably where we would have modeled it a year ago, and that's a great opportunity for us to create equity value through the reduction of leverage. We can keep doing that, and we will keep doing that until there is an opportunity to do something better with the cash. But as we all know that have followed this industry for a long time, a strong balance sheet is one of the most important assets that you'll have and one of the most unique ways that you can position yourself to create lasting value for shareholders through cycles.

[Doug Leggate, MD & Senior Research Analyst at Wolfe Research]

Great. Thanks, guys.

[Operator]

Thank you. Our next question comes from Zach Farnam with JPMorgan. Please proceed.

[Zach Parham, Executive Director at JP Morgan Chase & Co]

Thanks. You highlighted some significant increases in footage drilled per day over the last six months. Could you give us a little more detail on what's driven those increases? Maybe talk about where you could see those numbers going over the next few quarters? Do you see the ability to continue to increase that footage per day number going forward?

[Mohit Singh, EVP & CFO at Expand Energy]

Yes. Good morning, Zach.

[Josh Viets, Executive VP & COO at Expand Energy]

This is Josh. We've had some just tremendous performance, of course, really just since the merger closed. And I would say a lot of that was we really prioritized upfront the integration of our data sets, across the combined companies and getting all of our rigs coming into a common platform at which we could then assess individual performance of each rig. And from there, it's really about then connecting the team. And this is a highly collaborative effort for us.

[Josh Viets, Executive VP & COO at Expand Energy]

It starts with our contractors, the people on the well site, our engineers, our operations support center, and our geoscientists really all working together hand in hand to create better outcomes. And then probably one of the things that continues to mature and maybe to kind of address how we think about upside going forward, it really centers around data analytics. And we've included a slide in the slide deck that talks a little bit about that. But we have fifteen years history of drilling in a place like the Haynesville and also in Appalachia. So you think about combining that data set and using AI agents to go out and do the research effectively on your behalf to be able to provide intelligent insights and provide better opportunities to optimize the assets in real time.

[Josh Viets, Executive VP & COO at Expand Energy]

And we think we're just scratching the surface with where we're at today and we think we'll continue to find ways at which we improve the parameter optimization that's occurring by the minute. So pretty excited about what we've accomplished, but again, we think there's more to be done in the future.

[Zach Parham, Executive Director at JP Morgan Chase & Co]

Thanks, Josh. My follow-up, in the slide deck, you provided an update on Haynesville well productivity that I think clears up some things on the state data. It also looks like you've seen better a little bit better productivity year over year in 2025. Anything specific you'd highlight that's driving that increase? Do you expect that to continue going forward?

[Josh Viets, Executive VP & COO at Expand Energy]

Yes, Zach. There is a little bit of movement between '24 and '25. What that's largely attributed to, of course, prices were pretty weak in '24. You had relatively smaller data set, but probably one of the biggest drivers to the 2024 relative to 2025 is just how we think about drawdown in these wells. In the Haynesville, you have oftentimes over 9,000 PSI of flowing wellhead pressure.

[Josh Viets, Executive VP & COO at Expand Energy]

So really the wells could produce whatever you want them to produce. But in a poor price environment, it simply doesn't make sense to have aggressive drawdown strategies there. So obviously, in a little bit more constructive environment, that's been adapted. We continue to find opportunities as well to improve our completions. Right now, when we look at kind of relative to 2022 and 2023, our profit intensity has moved up by, say, 15% to 20%.

[Josh Viets, Executive VP & COO at Expand Energy]

And of course, what makes that so economic for us is the fact that we've developed our own sand source as well. So we're able to go out source cheaper sand, pump a little bit more into the wells and of course that starts to show up in the well performance as well.

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

Thanks, Josh.

[Operator]

Thank you. One moment for our next question. That comes from John Freeman with Raymond James. Please proceed.

[John Freeman, Managing Director at Raymond James Financial]

Thank you. Good morning. The first question, just kind of following up on Zach's question on the footage drilled, obviously, pretty remarkable improvements in the footage drilled per day across the portfolio, even just from the first quarter. And I'm just trying to get a sense of what's currently baked into y'all's full year guidance. Does that reflect those kind of leading edge 2Q cycle times?

[Josh Viets, Executive VP & COO at Expand Energy]

Yes, John, would. I mean, in fact, we have some expectations that we continue to get better. So we'd have a modest learning curve going forward. But we really expect that performance that we've seen in the second quarter carries forward.

[John Freeman, Managing Director at Raymond James Financial]

Okay. And then just the follow-up question I've got. When I look to kind of revisit that heat map table that you've got on optimizing free cash flow at various gas prices. And we look at sort of the meaningful improvement you all have now got on the free cash flow, especially starting next year, both on the lower costs and then the tax and interest savings. In the response to Doug's question, it does sound like this has got some legs in terms of that uplift on the tax side.

[John Freeman, Managing Director at Raymond James Financial]

I guess I'm surprised that the coloring of that chart, like hasn't changed at all since the start of the year. And I guess I'm just trying to get a sense for if that includes sort of the uplift, especially from on the tax side. And if it does, just what would potentially have to change for that chart to kind of shift at least in terms of that relationship? Like, what what would change that would cause a a $3.50 mid cycle price to point to y'all producing something above seven half b's or just I'm trying to get a sense of what would maybe cause that that chart to shift, if anything.

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

Yeah, that's a great question, John. So, what I would point you to is that the colors in the chart are all relative, right? So, where are you going to produce the optimum relative to a different price? And then the other point here is what we've done in order to recognize the improvements in our cash flows, we've lowered the maintenance capital at every level. So, that's how you're seeing that show up.

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

And the relative performance of each is reflected in the colors across the prices.

[John Freeman, Managing Director at Raymond James Financial]

Even though it looks like the cash flow uplift is not linear in terms of on the tax side, It doesn't necessarily have any any change to this chart.

[Chris Ayres, VP - IR & Special Projects at Expand Energy]

Yeah. John, this is Chris. That that's the right way to think of it. I I mean, put simply, if you were to go on that chart to the $4 column in the 7 and a half BCF a day, that light green, that's gonna effectively correspond to the 2026 free cash flow of $3,100,000,000 And so there would be a little bit of movement at the lower prices around or at the higher prices around what your absolute cash flow is because the tax is non linear as you highlight. But as Nick pointed out, it is just kind of relative one to another within the column and so the absolute free cash flow has increased but the relative position of how you optimize production doesn't necessarily move large enough that you would see that on the output.

[John Freeman, Managing Director at Raymond James Financial]

Appreciate it. Thanks guys.

[Operator]

Thank you. Our next question comes from Devin McDermott with Morgan Stanley. Please proceed.

[Devin Mcdermott, MD - Research at Morgan Stanley]

Hey, good morning. Thanks for taking my question. So I wanted to ask kind of along the similar lines on capital allocation and kind of optimizing for free cash flow. With some of the weakness in Henry Hub over the last month or two, we're now back below, at least on the prompt contract, below your mid cycle price range. So question is more on kind of duration of price.

[Devin Mcdermott, MD - Research at Morgan Stanley]

At what point do you start to toggle things or move around within this heat map? What are you looking for as we head into 2026 to kind of reaffirm the constructive view in that 7.5 Bcf a day target you all have on production for next year?

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

Yes, great question, Devin. And I think it's obviously timely. We're just not bothered by the volatility that we're seeing here this summer. If you think about where we are in the broader scheme of the year of the macro, demand is still growing pretty attractively and forward prices at a level that is still well above our mid cycle. And again, we think a lot about capital cycles.

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

And so the money we're spending today is all about bringing on production and delivering volumes into the pipe twelve to eighteen, twenty four months from now. So this kind of volatility, we pay attention to because we want to understand the drivers of it, but it doesn't necessarily change our plans in any way. However, as you know, we have a super flexible business and we really enjoy being able to use that flexibility and we think we can create a lot of value by using that flexibility. So, as conditions evolve throughout this year, if anything changes relative to what we may see as the prevailing conditions at this point, then we are absolutely ready to make changes to our business and adjust accordingly. But look, we've got two Bcf a day of new LNG capacity coming online, more than two Bcf a day of new LNG coming online between the rest of Plaquemines, Corpus Christi before the end of the year.

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

And then of course, you have a return of maintenance and cooler weather that increases capacity there. So just that demand alone is pretty significant. So we feel pretty good about the macro.

[Devin Mcdermott, MD - Research at Morgan Stanley]

Okay, great. Makes a lot of sense. And then I wanted to come back to the Haynesville and well productivity. Know there was a question on that before. Your results are strong.

[Devin Mcdermott, MD - Research at Morgan Stanley]

The state data also shows degradation across other producers in the basin. So, I guess my question is more broadly, is the reporting issue unique to expand? Is it broad across the basin? And what's your views on kind of marginal costs, breakevens, Haynesville growth capacity as we kind of head into this tightening market over the next few years in that backdrop?

[Josh Viets, Executive VP & COO at Expand Energy]

Yeah, so I'll take that. We think this issue is specific to the state of Louisiana. It's not just related to expand, it's likely impacting several other operators, specifically within the state. We work pretty closely with the agencies there to try to ensure that the reporting process is efficiently as it can be, but they're just a little bit behind there in the office. And so again, we'll continue to work with them to get that addressed.

[Josh Viets, Executive VP & COO at Expand Energy]

Really what we can speak to is the fact that we have this incredibly long lived, durable inventory to go develop within the basin. And I think the strength of our inventory, we see it here in the data sets where we've relatively consistent year over year performance going all the way back to 2020. Now I do think that when you look at industry more broadly, you are going to see some level of degradation as you move outside of the core area. Not everybody has the inventory depth that we have. In fact, if you look at who's been adding activity of late, we believe that operator has a relatively short inventory level to go develop.

[Josh Viets, Executive VP & COO at Expand Energy]

You'll see well productivity degrade a little bit again as you move to the West over into East Texas as well. And so again, we just think in general, we would anticipate some level of modest productivity decline as you move outside the core and especially as you move into some of the more for the private operators in the basin.

[Devin Mcdermott, MD - Research at Morgan Stanley]

Makes a lot of sense. Thanks so much.

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

Devin, let me just add to that real quick. I mean, just think about that dynamic and the fact that as you move outside the core and Haynesville needs to grow, the Haynesville needs to grow right now because of the fact that LNG demand is strong and it's going to continue to grow. Like I commented in my initial comments, there's well over 12 Bcf a day of demand growth showing up within 300 miles of our position. So that call on Haynesville is really significant and is going to continue to drive competitive tension into the supply demand fundamentals around our assets for some extended period of time here.

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

And just as a reminder, we deliver gas to a lot of different places from our Haynesville assets. We can go east to Perryville, we can go directly south to Gillis, and then there are a number of other off take points that we can deliver gas to along those routes. So we have a really flexible portfolio that's ready to do this. But clearly, the Haynesville is not going to deliver all 12 Bcf a day of that growth, but it is the closest and best positioned. And so we really like these dynamics.

[Devin Mcdermott, MD - Research at Morgan Stanley]

Makes a lot of sense. Thanks for all the detail.

[Operator]

Thank you. Our next question comes from Josh Silverstein with UBS. Please proceed.

[Josh Silverstein, Managing Director at UBS Group]

Yes, thanks. Good morning, guys. 2Q was challenging from a basis standpoint in both the Haynesville and Appalachia. Can you just give us an update on expectations for second half and maybe going into 2026? I know there's been some startup of infrastructure in the Haynesville, so how that may impact some of your capital allocation thoughts later on this year and into next year? Thanks.

[Dan Turco, EVP - Marketing & Commercial at Expand Energy]

Hey, Josh. Thanks for the question. In terms of basis, we look at structural basis, right? And when I talk about that, it's how these markets clear. So we can talk about the Appalachia and the Haynesville.

[Dan Turco, EVP - Marketing & Commercial at Expand Energy]

In Appalachia, the supply demand setup, yeah, there's going to be weather that's going change base over time, but there's a bit of demand coming in basin with potential power generation and pipeline egress. But there's also a lot of supply behind that. So structurally, yeah, demand is going to grow and the supply is going to catch up with it. So we do see a grinding up of basis over the medium long term there in Appalachia. But pivoting to Haynesville and your question specifically, I think was around how we're going to see the bases come online with NG3 coming online in fourth quarter this year and all that LNG demand that Nick was referring to.

[Dan Turco, EVP - Marketing & Commercial at Expand Energy]

So again, coming back to supplydemand, we really see the big demand pull in this area over the long term. In the short term quarter, what I think you were referring to on NG3, there's not going to be that much of a change. The basis, when we put production down that line, we also have to pay for that capacity. So it's a bit of a wash, if you will, in terms of the uplift we're going to get and the capacity we're going to see. But over the medium term, again, with that demand pull from LNG, we're expecting an increase in realizations and basis in that area.

[Josh Silverstein, Managing Director at UBS Group]

Got it. And then I want to see if I can also get kind of your views on Lower 48 production in total. We've seen a real big step up recently kind of into that 108, 109 area. Is the expectation that we maybe stay around here? Do we come down?

[Josh Silverstein, Managing Director at UBS Group]

Or just given some of the rig count increases that we've seen in the Haynesville, there's still expectations of growth going forward into 2026?

[Dan Turco, EVP - Marketing & Commercial at Expand Energy]

Yeah. We have been, I guess, little bit surprised by the upside in the last month or two with the prints around 107, depending on what data sources you're looking at. But as we said, that demand is still growing through the balance of the year here with about four BCFD of real LNG capacity coming online with Plaquemines, Corprus and then again coming out of maintenance and the weather. So we do see that demand coming and there might be a bit of a tick up in production as we go through or remain flat, but we see the demand outpacing that supply.

[Josh Silverstein, Managing Director at UBS Group]

Okay.

[Operator]

Thank you. One moment for our next question. And it comes from Neil Mehta with Goldman Sachs and Company. Please proceed.

[Neil Mehta, Head - Americas Natural Resources Equity Research at Goldman Sachs]

Yes. Good morning, Nick and Mohit and team. Just want to start on Slide six, the merger synergies. There's another $100,000,000 here of outperformance and I think you got four bullets that describe some of the pieces there. But could you unpack it, whether it's sand mine stuff or, some of the things that you're doing in the Haynesville to help us, get some color of what's happening on the ground?

[Josh Viets, Executive VP & COO at Expand Energy]

Yeah. Hey, Neil. This is Josh. Thanks for the question. Yes, the incremental $100,000,000 is really kind of split between our drilling completions activity in the Haynesville representing roughly half of that and then the other half is going to be attributed to specifically G and A.

[Josh Viets, Executive VP & COO at Expand Energy]

And so maybe just unpack the D and C component. There's a portion of that, which is purely attributed to the fact that we're just simply drilling faster than what we thought we'd be doing at this point in time. So again, been incredibly pleased with the results. We've demonstrated roughly a 25% improvement in footage per day, we kind of go back to the fourth quarter of last year. Maybe just one thing I'll kind of put out there.

[Josh Viets, Executive VP & COO at Expand Energy]

In fact, one of the things that we're seeing right now in the Haynesville is our well costs are around $1,300 a foot. So just think about where we've been historically. So just a ton of progress has been made there. And a lot of that again is attributed to drilling. There is a portion of the incremental synergy that's attributed to the sand mine.

[Josh Viets, Executive VP & COO at Expand Energy]

So we got the sand plant started up in and around the first quarter. We had some expectations around how quickly we could ramp that up and how many frac crews that we could support. We're simply able to support more frac crews than we thought we would be at this point in the year. So that's contributing to some incremental synergies through the course of the year. On the G and A component, that is largely attributed to non comp G and A.

[Josh Viets, Executive VP & COO at Expand Energy]

I think the teams have done a phenomenal job rationalizing our IT cost. You think about things like software subscriptions and license rationalization that's going to occur. And we've really just not only accelerated those synergies, the quantum has gone up as well.

[Neil Mehta, Head - Americas Natural Resources Equity Research at Goldman Sachs]

Thank you. And the follow-up is just around hedging strategy. You guys were aggressive in Q1 for locking in twenty six percent and almost at 40% now and that has kind of aged well. But your perspective as the curve has come off as hard as it has for '26, how do you think about being opportunistic versus ratable in the hedge the wedge strategy?

[Mohit Singh, EVP & CFO at Expand Energy]

Neil, good morning. This is a great question. You're correct in identifying in Q1, had signaled that we added seven forty Bcf of hedges. Just for comparison, that number for 2Q is about 169 Bcf of hedges. So while our approach and program on hedging is very disciplined and programmatic, but it also takes into account windows of opportunities where we see spike up in volatility, which allows us to further capitalize on that volatility by buying more downside protection through buying those puts and also selling calls at a higher price, which are then used to pay for the puts.

[Mohit Singh, EVP & CFO at Expand Energy]

So most of the hedges that we have layered in are costless callers. And as a point of reference for 2Q, the 169 BCF of new hedges that I mentioned, those are of various tenors going into 2027, and the weighted average floor price is $3.75 and then ceiling is $4.77 So it still remains above what we deem as our corporate breakevens. And that's what we continue to attempt to do is to try and add more hedges at above our breakeven prices and still retaining some of the upside till the sold calls at $0.77 So overall, the program is working. There will be windows when we'll be more active, as you said, and there'll be windows when we'll just back away. But, the overall structure is still to do it on a rolling eight quarter basis.

[Mohit Singh, EVP & CFO at Expand Energy]

And as we roll from one quarter to the next, we look at opportunities to add more to it when we can.

[Neil Mehta, Head - Americas Natural Resources Equity Research at Goldman Sachs]

Mohit, can I ask one quick follow-up on that, which is, the '26 curve has come down, it feels like, in large part of reflection of production, which is, you know, it's probably running a BU to a B and a half higher than most forecasters would have thought? Do you feel like that is structural in the sense that it could shift the way that we should be thinking about the 26 curve or is it just some of this production, which is deferred TILs just coming back, at which point, we should be less worried about the way that the 26 curve is moving?

[Mohit Singh, EVP & CFO at Expand Energy]

Yes. So that's a good follow-up, Neal. We still remain excited about the demand, which is showing up. Nick mentioned about Plaquemines will add another 1.5 Bcf, and then Corpus Christi will add some more. And then obviously, Golden Pass should start taking some gas as well.

[Mohit Singh, EVP & CFO at Expand Energy]

So our view is to try and grow into durable demand, and we view LNG demand pull as a durable demand that we'd like to grow our production into. And that's why when you look at the curve out in CAL twenty six, it's still close to $4 which is still above breakeven. So it's still we have to remember, while it has traded off a little bit, these are still pretty healthy prices. And at those prices, our business generates a tremendous amount of free cash flow.

[Operator]

Thank you. Our next question comes from Kevin McCarthy with Pickering Energy Partners. Please proceed.

[Kevin MacCurdy, Managing Director at Pickering Energy Partners]

Hey, good morning. There's some reports out there of assets being marketed in the basins you operate in. And do you feel like your balance sheet and organization are in a spot where you could would consider more M and A? And is there any differentiation you see between M and A potential in the Haynesville versus Marcellus?

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

Hey, Kevin, it's Nick. We're just finishing the integration of a very big merger. We have a lot to continue to do to improve upon our business. We're pretty satisfied with who we are today and what we have in front of us. We'll always consider opportunities, but I'll just remind you, we have our non negotiables and they're a pretty high bar.

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

They've worked well for us historically. They'll continue to work well for us, and we're pretty focused on what we've got right now.

[Kevin MacCurdy, Managing Director at Pickering Energy Partners]

I appreciate that answer. And as a follow-up, your guidance includes productive capacity of up to $275,000,000 CapEx this year. Your wording, while I know it's not changed, seems to leave a little bit of optionality on not spending the full amount. You said earlier in the call that you're not concerned about the long term macro, but is there anything in the near term gas markets that would lead you to maybe pull back on that productive spending? And when would you need to make that decision?

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

Yes. I think we feel pretty good about our plans right now, Kevin. The reason we think about it as productive capacity is that we want set a plan, be able to execute on it and then have the flexibility to decide how and when to produce those volumes based on the near term market conditions as those volumes become available. So, if the conditions change, we would adjust production, not necessarily the capital spend. Because, again, the long term fundamentals here, we still think are super strong.

[Kevin MacCurdy, Managing Director at Pickering Energy Partners]

Great. Thanks, Nick.

[Operator]

Thank you. One moment for our next question, please. And it comes from Phillips Johnston with Capital One. Please proceed.

[Phillips Johnston, Senior E&P Analyst at Capital One Securities, Inc]

Hey, thanks for the time. I also wanted to ask about M and A. I heard what you said, Nick, in terms of you guys are satisfied with what you have. But looking out over the next few years or so, I wanted to get a sense of whether or not you guys would consider Canada as an area to expand your footprint? Or would the AECO discount or any other factor be something that would generally sort of rule that out?

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

Yes. Look, we pay attention to all the trends of the industry. There's been a lot written about resource in Canada lately, and obviously, it's gotten a lot of attention. There's a lot of resource there. But frankly, at this point, our non negotiables would drive us to feeling like understanding the above ground economics of those assets today.

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

It's not clear that we would be better off doing something like that. So that's not in our near term plans.

[Phillips Johnston, Senior E&P Analyst at Capital One Securities, Inc]

Okay. Thanks for that, Nick. And I think the last time you all provided D and C well costs by area was in your February presentation. At these new faster drilling speeds, can you just give us a general sense of how much your well costs have fallen in all three areas, I guess, relative to the figures that you guys provided back in February?

[Josh Viets, Executive VP & COO at Expand Energy]

Yes, Phillips, Josh here. So I referenced the Haynesville cost earlier. When we compare back to the guide, we're probably closer to $1,200 a foot with our Haynesville formation wells, just under $1,500 a foot for Bossier. When we look at the cost relative to the guide in our two Appalachia business units, I would say we're within about 5% of where we guided to cost there. And so really not material movement just given how we forecasted improvements within those two basins, the move is just not simply as big.

[Josh Viets, Executive VP & COO at Expand Energy]

And of course, so much of that simply ties back to the merger synergies with the Haynesville specifically. And of course, those have shown up in a more material way, hence, a little bit lower well cost in the Haynesville.

[Phillips Johnston, Senior E&P Analyst at Capital One Securities, Inc]

Sounds good. Thanks, guys.

[Operator]

Thank you. And our last question comes from the line of Paul Diamond with Citi. Please proceed.

[Paul Diamond, Equity Research Analyst at Citigroup]

Thank you. Good morning, Thanks for taking the call. Just a quick question on kind of the larger portfolio dynamics. I guess from a longer term perspective, how do you think about the right balance between LNG contracts, data center contracts and then just general delivery otherwise?

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

Yes, that's a great question, Paul.

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

So again, we're really pleased with the fact that our portfolio sits in a place that we can be responsive to all of these elements of growing demand. It's a pretty exciting time for natural gas. I mean, you have people recognizing the value that gas plays in the economy, the efficiency that gas creates for the growth and power demand, is all tied to our growing economy fueled by the innovation associated with AI as well as a lot of other places where the economy is just putting capital to work. That's obviously a domestic international story connected through the LNG markets. So we're in a place that we can be responsive to all of the above.

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

And I think we're, again, unique in being able to do that. We know that our portfolio has the depth and quality so that we can continue to deliver resource to all of these very attractive oftentimes constrained markets, constrained either in infrastructure or just constrained by the fact that demand is growing faster than supply. And so we're well positioned to be responsive to all of these customers. And then we have the financial flexibility and strength to be responsive to create solutions that are effective in how we supply gas and structure contracts in a way that's good for both us as a producer and the customers. So, we really like these dynamics.

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

We don't think it's an eitheror in any way. We think, in fact, it is a story for our company of all of the above and think we're uniquely positioned to do that.

[Paul Diamond, Equity Research Analyst at Citigroup]

Understood. Makes perfect sense. Just a quick bookkeeping follow-up.

[Paul Diamond, Equity Research Analyst at Citigroup]

Circling back to slide 25 and Haynesville productivity, I know you said that they're working with, local state agencies in Louisiana, but do you guys have any line of sight on the timing of when that data should be captured accurately? And is is it a permanent fix, or could this happen again?

[Josh Viets, Executive VP & COO at Expand Energy]

Yeah. We'd like to think it'll be a permanent fix. Again, we work pretty closely with the state agencies. We have a really good relationship. You know, they're working the best they can with the resources they have available to them.

[Josh Viets, Executive VP & COO at Expand Energy]

We're hoping this gets resolved over the next several months. But again, it's something that we hope we don't have to deal with again. But nonetheless, we see them as a critical partner for us, and we'll continue to engage in a constructive way.

[Paul Diamond, Equity Research Analyst at Citigroup]

Understood. Appreciate the clarity.

[Operator]

And thank you so much. This concludes our Q and A session and I will pass it back to Nick Delosso for final remarks.

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

All right. Well, thanks, everyone, for taking the time to listen to our call today. We'll certainly be available for any follow-up questions. We think the second half of this year is setting up extremely well for EXPAND, And that, we believe, is just a start towards what 2026, 2027 and the rest of the decade will look like. The dynamics for natural gas are very strong, and we are uniquely positioned to succeed.

[Domenic Dell’Osso, President, Director & CEO at Expand Energy]

The creation of Expand Energy is putting us in a position where the benefits of this merger are showing up every day, and they're showing up in our financial results, not just through leading indicators. We're really excited about the future and look forward to continuing to talk to you about all of that in the coming days, weeks, quarters and years. Thank you.

[Operator]

And with that, ladies and gentlemen, we conclude our conference. Thank you all for participating, and you may now disconnect.

Participants

Executives

• Chris Ayres, VP - IR & Special Projects
• Domenic Dell’Osso, President, Director & CEO
• Dan Turco, EVP - Marketing & Commercial
• Mohit Singh, EVP & CFO
• Josh Viets, Executive VP & COO

Analysts

• Scott Hanold, Managing Director - Energy Research at RBC Capital Markets
• Doug Leggate, MD & Senior Research Analyst at Wolfe Research
• Zach Parham, Executive Director at JP Morgan Chase & Co
• John Freeman, Managing Director at Raymond James Financial
• Devin Mcdermott, MD - Research at Morgan Stanley
• Josh Silverstein, Managing Director at UBS Group
• Neil Mehta, Head - Americas Natural Resources Equity Research at Goldman Sachs
• Kevin MacCurdy, Managing Director at Pickering Energy Partners
• Phillips Johnston, Senior E&P Analyst at Capital One Securities, Inc
• Paul Diamond, Equity Research Analyst at Citigroup