Expand Energy Corporation Q2 FY2025 earnings call

• Combined Chesapeake and Southwestern to create Expand Energy with intention of long-term value through cost reduction and diverse portfolio. • Expect ~50% increase in annual synergies to $500M in 2025 and $600M in 2026, translating to more free cash flow. • Drilling faster and smarter using AI and machine learning, with record-breaking performance in different regions. • Reduced 2025 capital investments by ~$100M while maintaining production at ~7.1 Bcfe/day and building ~300 MMcf/d productive capacity. • Encouraged by long-term demand outlook, diversified portfolio, and investment-grade balance sheet. • Intend to increase 2025 net debt reduction to $1B and return $585M to shareholders in first half.

No detailed breakdown of product segment financial performance with absolute terms and revenue contribution % provided in the transcript.

• Expect ~50% increase in annual synergies to $500M in 2025 and $600M in 2026. • Reduced 2025 capital investments by ~$100M. • Intend to increase 2025 net debt reduction to $1B and return $585M to shareholders. • Forward-looking on LNG and power demand opportunities, with focus on premium markets like Haynesville and Appalachia.

• Market volatility remains a theme. • Potential issues with state data reporting in Louisiana affecting Haynesville well data, but working with agencies to address. • General market risks that could impact financial performance.

Q: A few of your peers have signed gas contracts related to power growth opportunities. Can you talk about Expand's strategy? And what are your goals that you're looking for in a commercial agreement? And how do you think about the pricing mechanism for that?

A: Domenic J. Dell'Osso: Goals are about making the business better, trying to reduce cash flow volatility, achieve better pricing, and structure wins for both parties. Dan Turco: Excited about the footprint, looking at longer-term tenured deals to lower cash flow volatility and participate in upside, ensuring accretive to portfolio.

Q: What's the duration of the cash taxes mentioned?

A: Mohit Singh: Tax savings duration is fairly long as long as capital spend continues at similar cadence due to tax planning and bill impact.

Q: What's your appetite to continue reducing net debt?

A: Domenic J. Dell'Osso: Appetite is a function of market conditions, believe in strengthening balance sheet during strong markets to create equity value through leverage reduction.

Q: What's driven the increases in footage drilled per day and where could it go?

A: Joshua J. Viets: Integration of data sets, collaborative effort with contractors, engineers, etc., and data analytics using AI to optimize, seeing more to be done in future.

Q: Does the free cash flow chart include tax uplift?

A: Chris Ayres: Chart colors are relative, absolute free cash flow increased but relative optimization position doesn't move significantly enough to change chart much.

Q: At what point do you start to toggle things with price weakness?

A: Domenic J. Dell'Osso: Not bothered by short-term volatility, demand still growing attractively, forward price above mid-cycle, plans unchanged but flexible to adjust if conditions evolve.

Q: Is the reporting issue in Haynesville unique to Expand?

A: Joshua J. Viets: Issue specific to Louisiana, impacting several operators, working with agencies to address, expecting modest productivity decline outside core area.

Q: Update on second half expectations and infrastructure impact?

A: Joshua J. Viets: Basis in Appalachia to grind up, Haynesville basis to improve with LNG demand, short-term NG3 impact limited but medium term positive.

Q: Views on Lower 48 production and hedging strategy?

A: Joshua J. Viets: Demand growing, production may stay or grow, Mohit Singh: Hedging program disciplined, costless collars, weighted average floor price above breakeven.

Q: Thoughts on M&A potential and differences in basins?

A: Domenic J. Dell'Osso: Focused on integrating merger, will consider opportunities but with high nonnegotiables, no near-term plans for Canada M&A.

Q: How much have well costs fallen in different areas?

A: Joshua J. Viets: Haynesville wells closer to $1,200/foot, Appalachia within 5% of guide, move not material except Haynesville due to synergies.

Q: Balance between LNG, data center, and general delivery contracts?

A: Domenic J. Dell'Osso: Uniquely positioned to be responsive to all, not an either/or, well-positioned to supply diverse markets with financial flexibility.