Q2 2025 Expand Energy Corp Earnings Call

Good day and welcome to Expand Energy 2025, second quarter earnings teleconference. At this time, all participants are in a listen-only mode.

After the speaker's presentation, there will be a question and answer session to participate. You will need to press star 1, 1 on your telephone. You will then hear a message. Advising. Your hand is raised to withdraw your question. Simply press star 1 1 again, please note this event is being recorded.

Chris Ayres: Thank you, Carmen. Good morning, everyone, and thank you for joining our call today to discuss EXPAND's 2025 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 to existing information, including statements regarding our beliefs, goals, expectations, forecast 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. 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.

I would now like to turn the conference over to Chris S vice president of investor relations and special projects. Please go ahead.

Chris Ayres: 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 D'Losso, Mohit Singh, Josh Veats, and Dan Turco. Nick will give a brief overview of our results, and then we'll open it up for Q&A. So with that, thank you again. Over to you, Nick.

During this morning's call, we will be making forward-looking statements, which consists of statements that cannot be confirmed by reference to existing information, including statements regarding our beliefs goals expectations, forecast, projections and future performance in 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. Please also recognize that is except required by law. We undertake no duty to update any forward-looking statements, and you should not play 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 wrecking affiliation to the nearest corresponding Gap measure, which can be found on our website with me on the call today or Nick, dell'aso mow at Singh, Josh vets. And Dan Turco, Nick will give a brief overview of our results.

Nick Dell'Osso: Good morning, and thank you all for joining our call. When we combined Chesapeake and Southwestern to create EXPAND 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 million and $600 million in 2025 and 2026, respectively. Relative to our expectations at the beginning of the year, this directly translates to approximately $425 million more free cash flow in 2025 and $500 million more in 2026, before accounting for NYMEX price changes. Capturing synergies do not simply happen in a spreadsheet. We're drilling faster and smarter than ever before.

And then we'll open it up for Q&A. So with that, thank you again, over to you Nick.

Good morning, and thank you all for joining our call.

When we combine Chesapeake and Southwestern to create Expand Energy, we did so with the intention of creating long-term value through reducing costs and developing a deep, geographically diverse portfolio that serves premium markets.

Our business continues to deliver an outperform. Every expectation pegged at merger onset.

We now expect to recognize approximately a 50% increase to annual synergies, realizing 500 million and 600 million in 2025 and 2026 respectively.

Relative to our expectations at the beginning of the year, this directly translates to approximately $425 million more free cash flow in 2025 and $500 million more in 2026 before accounting for NX price changes.

Capturing synergies, do not simply happen in a spreadsheet.

Nick Dell'Osso: 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. land history. In Northeast Appalachia, our team improved its drilled footage per day by 62%. And in the Hainesville, 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, have allowed us to hit our production and well count targets with fewer rigs than originally forecasted.

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 companies' histories.

in Southwest Appalachia, we drilled the longest lateral, well, and measured depth by a single bit in US 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.

Nick Dell'Osso: Overall, we've reduced our 2025 capital investments by approximately $100 million, while maintaining production of approximately 7.1 BCFE per day and building approximately 300 million 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 Hainesville 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 2030. No other operator is better positioned to deliver gas into this demand complex, driving meaningful value creation over time.

Has allowed us to hit our production and well count targets with fewer rigs than originally forecasted.

overall, we've reduced our 2025 Capital Investments by approximately 100 million while maintaining production of approximately 7.1 bcfe per day and building approximately, 300 million 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 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 B per day of LNG demand under construction 2B in service by 2030.

Nick Dell'Osso: 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 5 BCF gross per day. Our deep multi-basin portfolio, with close access to demand centers and investment-grade balance sheet, makes 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 accreted to our shareholders for the long term.

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 5 BCF gross per day.

Our deep multibase and 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 will 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 announced whether LG or power related will be a creative to our shareholders for the long term.

Nick Dell'Osso: 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 billion. In addition, we will be returning $585 million to shareholders in the first half of the year through our quarterly-based dividend, variable dividend, and share repurchases. Should near-term cash flow ultimately retract, we retain the option to redirect and utilize our balance sheet's current strength to enhance returns.

In the short term we expect Market volatility to remain at prevailing theme in the space.

Inevitably, 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 billion.

In addition, we will be returning, 585 million, to shareholders, in the first half of the Year through our quarterly, based dividend variable dividend and share repurchases.

Nick Dell'Osso: 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 the operator will now open the call up for questions.

Should near-term cash flow. Ultimately retract. We retain the option to redirect and utilize our balance sheets current strength to enhance returns. We firmly believe that our attractive and connected connected, portfolio, diverse, and agile production and resilient Financial Foundation. Equip us to thrive in today's macro landscape.

Carmen: Thank you so much. And as a reminder, to ask a question, simply press star 11 on your telephone and wait for your name to be announced. To remove yourself, press star 11 again. Please stand by for our first question, please. And it comes from the line of Scott Hennold with RBC. Please proceed.

We look forward to continuing to update you on our progress, and operator will now open the call up for questions.

Thank you so much. As a reminder, to ask a question, simply press *1 1 1 on your telephone and wait for your name to be announced. To remove yourself, press *1 1 1 again. Please stand by for our first question.

Analyst (various, e.g., Scott Hanold, Zach Parham, John Freeman, Josh Silverstein, Kevin McCurdy, Phillips Johnston, Paul Diamond): Yeah, good morning. Thanks. A few of your peers have signed, you know, 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? And how do you think about the pricing mechanism for that?

And it comes from the line of Scott hanold with RBC please proceed.

Yeah, good morning, thanks. Um, a few of your peers have signed, you know, gas contracts, related to power growth opportunities. Do you talk about expand strategy and 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?

Nick Dell'Osso: Yeah, 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, you know, 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 flow. So, you know, 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.

Yeah, great question, Scott. So, uh, we're really excited about the opportunities in this space and we have had a lot of conversations with a lot of folks. Um, I would say our goals are really, you know, like I said, in my comments about making our business better and 1 of the things, we believe we can do.

Nick Dell'Osso: All of those things remain on the table and things that we're interested in. Dan, do you have anything else to add there?

Mohit Singh: Yeah, thanks for the question, Scott. I'm personally excited about this area because we start with a great footprint. Obviously, we have a size, we have the balance sheet, and we have a very interconnected portfolio. And so I'm trying to do multiple things to bring picture value and realizations that I believe are there and truly add bottom-line value to our company. 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 Hainesville and LNG focused, 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, trying to lower the cash flow volatility, but also participate in the upside.

With contracts. Like this is try to reduce the volatility of our cash flows. So, you know, there's a couple 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, uh, gas in a way that is more reliable, uh, to a, a location that might be constrained or you can structure something that can be, uh, a win for both parties, uh, that reduces volatility, um, all of those things remain on the table and, and things that we're interested in. Um, Dan, do you have anything else to add there? Yeah, thanks for the question, Scott. I'm personally excited about this area, uh, 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, uh, to bring picture value and realizations that I, I believe are there and truly add bottom line value to our company and, and 1 is just increasing that optimization at scale. I think page 13 of Our Deck did a good job of showing how we are.

Mohit Singh: 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 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 and the bottom line.

Analyst (various, e.g., Scott Hanold, Zach Parham, John Freeman, Josh Silverstein, Kevin McCurdy, Phillips Johnston, Paul Diamond): Yeah, and my follow-up question is still going to be on the same line because I think it's important, obviously, you know, for a lot of gas companies how they structure these deals going forward to maximize, you know, the value to the company. But can you talk about like two things here additionally? Number one, you know, I alluded to the fact that a lot of your gas peers have done, you know, a few deals here. Do you feel there's a need to be, you know, have some urgency in signing deals? And then, you know, with respect to, you know, again, the commercial side of the agreement, if I look at like, say, an LNG opportunity, would you be willing to kind of, you know, how do you want to structure the deals?

Addition to these premium markets. It's really around Haynesville and LG Focus, but that's also an Appalachia and power. And as um, Nick alluded to, we're looking at some of these longer-term tenor deals that provide some more structured terms. Again, trying 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 a creative to that portfolio, we already have. So we're building more scale integration and optionality 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 and the bottom line.

Analyst (various, e.g., Scott Hanold, Zach Parham, John Freeman, Josh Silverstein, Kevin McCurdy, Phillips Johnston, Paul Diamond): Would you be willing to send it, sell it to like an end user overseas or to a middleman? You know, how do you see the best way to optimize that price?

Mohit Singh: 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 markets, and there is no set what we want to structure. We're looking at everything down the value chain. So we're looking at selling gas domestically and internationally in all kinds 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. 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.

Yeah. And and and my follow-up question is, is, you know, still going to be on on the same line because I think it's important, obviously, you know, for a lot of gas companies how they structure these deals going forward to, to maximize, you know, the value to the company. But can you can you talk about like 2 things here? Additionally number 1. Um, you know, I alluded to the fact that a lot of your gas peers, have done, you know, you know, a few deals here, do you feel there's a need to be, you know, have some urgency in in signing deals and then, you know, with respect to, um, you know, again, the commercial side of the agreement are, if I look at like a say, an LG opportunity, would you be willing to kind? You know, how do you want to structure the deals? Would you be willing to send it? We sell it to like an end user overseas, or to a middleman, you know, how do you see the best way to optimize that price?

Analyst (various, e.g., Scott Hanold, Zach Parham, John Freeman, Josh Silverstein, Kevin McCurdy, Phillips Johnston, Paul Diamond): Appreciate that. Thank you.

Continue to work and talk with many people at the moment and we're in different areas in different time, frames of those discussions.

Carmen: Thank you. Our next question comes from Doug Leggett with Wolf Research. Please proceed.

Appreciate that. Thank you.

Thank you.

Doug Leggate: 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, you know, 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? Because that's stripped 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.

Our next question comes from Doug Leet, with Wolf Research. Please proceed.

Mohit Singh: Yeah, 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 their function of the relative capital spend that we will make. So with regards to your question around the longevity of that saving, as long as we keep investing at a similar cadence, we forecast bigger tax DD&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 fairly long.

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

Good morning, Doug this is Mohit. I'll, I'll take that. Uh the the preference 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 their function of relative capital spend that we will make.

So, with regards to your question around, the longevity of that, saving, as long as we keep investing at at a similar, Cadence.

Uh, we we will force, we force, um, we forecast, bigger tax, ddna due to uh, 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: I appreciate it, Mohit. 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 the question of cash returns. Obviously, there was a variable dividend thrown in this quarter, but you also doubled the net debt reduction. 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?

Nick Dell'Osso: 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. We believe that during strong markets, you should be strengthening your balance sheet, and you should be willing to use that to the benefit of shareholders when markets soften. The most obvious way, of course, is that you're prepared to buy your stock. And we think that, you know, 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.

I appreciate it. I know there's it's complicated but I think you've tried to distill it down to fairly simple message. So thank you for that my my follow-up. Um, Nick this probably is for you and it's a question of cash returns. Obviously there was a a variable dividend thrown in this quarter but you also doubled the net debt that reduction. So my question is, what's your appetite to continue doing that? Reducing net debt, or put differently putting cash on the balance sheet, uh, to the obvious benefit of your Equity volatility.

Yeah, great question, Doug. And and I I like the way you phrase that question, right? We do think it's absolutely to the benefit of our Equity volatility, and our Equity holders, over time to, uh, create a stronger balance sheet. So our appetite to do it really is a function of where we are in the market. We believe that during strong markets, you should be strengthening your balance sheet, uh, and you should be willing to use that to the benefit of shareholders. Uh, when markets often

Most obvious way, of course, is that you're prepared to buy your stock.

Nick Dell'Osso: 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, you know, 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: Great. Thanks, guys.

And, uh, we think that, you know, right now, uh, we're seeing really nice market conditions that are giving us the opportunity to accelerate the improvement in our balance sheet, uh, relative to probably where we would have modeled it a year ago. And that's a great opportunity for us, uh, to create equity value through the reduction of leverage. Uh, we can keep doing that, and we will keep doing that until there is an opportunity to do something better with the cash. Uh, but, you know, 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.

Carmen: Thank you. Our next question comes from Zach Fardum with JP Morgan. Please proceed.

Great. Thanks guys.

Thank you.

Analyst (various, e.g., Scott Hanold, Zach Parham, John Freeman, Josh Silverstein, Kevin McCurdy, Phillips Johnston, Paul Diamond): 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. You know, do you see the ability to continue to increase that footage per day number going forward?

Our next question comes from Zack farum with JP Morgan please proceed.

Josh Viets: Yeah, good morning, Zach. This is Josh. You know, we've had some just tremendous performance, of course, really just since the merger closed. And I would say a lot of that was, you know, we really prioritized upfront the integration of our data sets, you know, across the combined companies and getting all of our rigs coming into a common platform at which we could then assess, you know, individual performance of each rig. And, you know, from there, it's really about then connecting the team. And, you know, this is a highly collaborative effort for us. It starts with our contractors, the people on the well side, our engineers, our operations support center, and our geoscientists really all working together hand in hand to create better outcomes.

Thanks. Uh, 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 driving those increases? Maybe talk about where you could see those numbers going over the next few quarters. You know, do you see the ability to continue to increase that footage per day number going forward?

Yeah, good morning Zach. This is Josh. You know, we we've had some just tremendous performance, of course, uh, really. Just since the merger closed and I would say, a lot of that was, you know, we we really prioritized upfront, the integration of our data sets. Um, you know, across the combined companies,

And getting all of our rigs coming into a common platform which we could then assess, you know, individual performance of of each rig and you know from there it's really about then connecting the team and you know this is a highly collaborative effort for for us.

Josh Viets: And then probably one of the things that continues to mature and maybe to kind of address, you know, 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, you know, we have 15 years of history of drilling in a place like the Hainesville 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. 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, you know, the parameter optimization that's occurring by the minute.

It starts with our contractors. The people on the well side are engineers or the Operations Support Center, and our data scientists are really all working together hand in hand to create better outcomes. Then probably one of the things that continues to mature, and maybe to kind of address.

Of if history of drilling in a place like the hanesville. And and also in Appalachia

Josh Viets: So pretty excited about what we've accomplished. But again, we think there's, you know, more to be done in the future.

So you think about combining that data set and using AI agents to go out and and do the research effectively on your behalf to be able to provide intelligent insights and and provide better opportunities to optimize the Assets in real time. 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 either the parameter optimization at the current by the minute. So pretty excited about what we've accomplished but again, we think there's uh, you know, more to be done in the future.

Analyst (various, e.g., Scott Hanold, Zach Parham, John Freeman, Josh Silverstein, Kevin McCurdy, Phillips Johnston, Paul Diamond): Thanks, Josh. And a follow-up, in the slide deck, you provided an update on Hainesville well productivity that I think clears up some things on the state data. It also looks like you've seen a little bit better productivity year over year in 2025. Anything specific you'd highlight that's driving that increase? You know, do you expect that to continue going forward?

Josh Viets: Yeah, 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, you know, a relatively smaller data set, but probably one of the biggest drivers to the '24 relative to '25 is just how we think about drawdown in these wells. You know, in the Hainesville, you have oftentimes over 9,000 PSI of swelling well head pressure. So really, the wells could produce whatever you want them to produce. But in a poor priced environment, you know, 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, you know, improve our completions.

Thanks Josh, uh my follow-up in the slide deck, you provided an update on on Hainesville. Well, productivity that I think, clears up some things on the state data. It, it also looks like you, you've seen better a little bit better. Productivity, year-over-year, 2025, anything specific, you'd highlight. That's driving that increase, you know, do you expect that to continue going forward?

Yes Zach um there there is a little bit of movement between 24 and 25. What, what that's largely attributed to, of course, prices were pretty weak and and 24 you had, you know, a relatively smaller data set but but probably 1 of the biggest drivers to the 24. Relatively 5 is just how we think about draw down and these Wells, you know, and the Haynesville you have often times over 9,000 PSI of flowing Wellhead pressure. So really the wells could produce whatever you want them to produce, but in a poor price environment, you know, a simp.

Josh Viets: You know, right now, when we look at, you know, kind of relative to '22 and '23, our profit intensity has moved up by, say, 15% to 20%. 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 outsource cheaper sand, pump a little bit more into the wells. And of course, that starts to show up in the well performance as well.

Simply doesn't make sense to, to have aggressive draw down strategies there. So obviously in a little bit more constructive environment that's been adapted. Uh, we continue to find opportunities as well to um, you know, improve our completions. Um, you know, right now when we look at, you know, kind of relative to 22 and 23, our profit intensities moved up by say 15 to 20% and of course, what makes that so economic for us uh is 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, uh, in in the well performance as well.

Analyst (various, e.g., Scott Hanold, Zach Parham, John Freeman, Josh Silverstein, Kevin McCurdy, Phillips Johnston, Paul Diamond): Thanks, Josh.

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

Thanks Josh.

Thank you. 1 moment for our next question.

John Freeman: Thank you. Good morning. The first question, just kind of following up on Zach's question on the footage drilled, obviously, you know, 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?

That comes from John Freeman. With Raymond James, please proceed.

Thank you. Good morning.

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

The uh the first question just kind of following up on on Zach's. Uh, question on the the footage drilled obviously, you know, pretty remarkable improvements in the the footage drilled per day across the portfolio. Uh, even just from from the first quarter. Uh, and I'm just trying to get a sense of what's currently baked into y'all's y'all's full year. Guidance, does that reflect those kind of Leading Edge 2q cycle times?

Yeah, John it. It would, I mean, in fact you know we have some expectations that we continue to get better so we'd have um, you know, a modest learning curve going forward. But you know, we really expect that, you know, that performance that we've seen in the, you know, we've seen in the second quarter, you know, carries forward.

John Freeman: Okay. And then just the follow-up question of Guy, you know, when I look to kind of revisit that heat map table that y'all have got on optimizing free cash flow at various gas prices, and we look at sort of the meaningful improvement y'all have now got on the free cash flow, especially starting, you know, next year, both on the lower cost and then the tax and interest savings. And, you know, 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. I guess I'm surprised at the kind of the coloring of that chart. Like, has it 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.

Okay, and then just the the follow-up question of guide. Um,

John Freeman: 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 would change that would cause a $350 mid-cycle price to point to y'all producing something above seven and a half Bs? Or just, I'm trying to get a sense of what would maybe cause that chart to shift, if anything.

You know, when I look to kind of revisit that, that heat map, uh, table that you have got on on optimizing free cash flow at various uh, gas prices. And we look at sort of the the meaningful Improvement that you all have. Now got on on the free cash flow, uh, especially starting, you know, next year, both on the lower costs and then the uh the tax and interest savings and you know in the response of Doug's question, it does sound like this has got some legs in terms of that uplift on the on the tax side. Um, I guess I'm surprised that the kind of the coloring of that chart like has it 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 the uplift especially from on the tax side. Uh, 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 350 mid-cycle price to point to y'all producing something above 7 and a half beads or just

Nick Dell'Osso: 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 flow is we've lowered the maintenance capital at every level. So that's how you're seeing that show up. And the relative performance of each is reflected in the colors across the prices.

I'm trying to get a sense of what would maybe cause that chart to shift, if anything?

Yeah, that's a great question, John. So what I would point you to, uh, 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? Uh, and then the, uh, 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. Uh, and the, the relative

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

Uh, performance of each is uh, reflected in the in the colors across the prices.

Chris Ayres: Yeah, John, this is Chris. That's the right way to think of it. I mean, put simply, if you were to go on that chart to the $4 column in the seven and a half BCF a day, that light green, that's going to effectively correspond to the 2026 free cash flow of $3.1 billion. 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 nonlinear, 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.

Side. It doesn't necessarily have any any change to this chart?

John Freeman: Appreciate it. Thanks, guys.

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 going to effectively correspond to the 2026 free cash flow of 3.1 billion and and so there would be a little bit of movement at the lower prices around, or at the higher prices around uh what your absolute cash flow is because the the tax is nonlinear as as you highlight. But as Nick pointed out, it is just kind of relative 1 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.

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

Appreciate it. Thanks guys.

Thank you.

Devin Mcdermott: Hey, good morning. Thanks for taking my question. So I wanted to ask kind of along similar lines on capital allocation and kind of optimizing for free cash flow. And 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 the question is more on kind of duration of price. 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 and that seven and a half BCF a day target y'all have on production for next year?

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

Hey, good morning. Thanks for taking my question.

Nick Dell'Osso: Yeah, great question, Devin. And I think it's, you know, 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 price is at a level that is still well above our mid-cycle. And, you know, again, we think a lot about capital cycles. And so the money we're spending today is all about bringing on production and delivering volumes into the pipe, you know, 12 to 18, 24 months from now. So, you know, 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.

So I I wanted to ask kind of a longer similar lines on on Capital allocation and and optimizing for free cash flow with some of the the weakness in Henry Hub over the last month or 2. We're now back below at least on the prompt contract below your, your mid-cycle price range. So questions more on kind of duration of price. Like, at what point do you start to toggle things or move around within this heat map? Um, what are you looking for as we head into 2026 to kind of reaffirm the the constructive View and that 7 and a half? BCF a day Target, you all have on on production for next year,

Nick Dell'Osso: 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, you know, 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 and Corpus Christi before the end of the year. 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.

Yeah, a great question Devin, and, um, I think it's, you know, obviously timely, we're just not bothered by the, uh, volatility that we're seeing here this summer. If you think about where we are in the broader scheme, uh, of the year of the macro demand is still growing pretty attractively. Um, and, you know, forward prices at a level that is still well, above our, uh, our, our mid cycle. And, you know, again, we think a lot about Capital cycles and so the money we're spending today is all about bringing on production and delivering volumes into the pipe. You know, 12 to 18, 24 months from now. So, uh, you know, this this kind of volatility, uh, 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, um, as you know, we have a super flexible business and we really

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, is the prevailing conditions, uh, at this point. Then we are absolutely ready to make changes to our business and, and adjust accordingly. Um, but, you know, look, we've got, um,

2 BCF a day of new LNG capacity, coming online, uh, more than 2 BCF day of of new LG coming online between, uh, the rest of Pacman's Corpus Christi, uh, before the end of the year. 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.

Devin Mcdermott: Okay, great. Makes a lot of sense. And then I wanted to come back to the Hainesville and well productivity. I know there was a question on that before. But your results are strong. 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, break-evens, and growth capacity as we kind of head into this tightening market over the next few years in that backdrop?

Uh, so we we feel pretty good about the macro.

Josh Viets: Yeah, so I'll take that. You know, 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, you know, try to ensure that the reporting process is as efficient as it can be, but, you know, 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. You know, really what we can speak to is the fact that we have this incredibly, you know, long-lived, durable inventory to go develop within the basin. And I think the strength of our inventory, you know, we see it here in the data sets where we've seen, you know, relatively consistent year-over-year performance going all the way back to 2020.

Okay, great. Make sure a lot of sense and then I, I wanted to come back to the, the Haynesville and, and well, productivity and know, there's a, a question on that before, but your results are strong that the the state data also shows a degradation, uh, across other producers in in the Basin. So I guess my question is more broadly like is, is the the reporting issue unique to expand, is it broad across the Basin and uh what's your your views on kind of marginal costs, break evens handle growth capacity as we kind of head into this tightening Market over the next few years and that backdrop.

Josh Viets: Now, I do think that when you look at industry more broadly, you are going to see, you know, 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, you know, who's been adding activity of late, you know, we believe that operator has a relatively short inventory level to go develop. 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, you know, we would anticipate, you know, some level of modest productivity decline as you move outside of the core, and especially as you move into some of the more private operators in the basin.

Uh, 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, you know, who's been adding activity of late,

You know, we believe that operator has a relatively short inventory level to, to go develop. Um, you'll see well productivity, degrade a little bit again, as you move, uh, to the West, uh, over into, uh, East Texas, as well.

Devin Mcdermott: Makes a lot of sense. Thanks so much.

And so again we we just think in general, you know, we would anticipate, you know, some level of of modest productivity decline As you move outside of the core and especially as you move into some of the more for the private operators in the basin.

Nick Dell'Osso: And so, yeah, Devin, let me just add to that real quick. I mean, just think about that dynamic and the fact that, you know, as you move outside the core and the Hainesville needs to grow. The Hainesville needs to grow right now because of the fact that LNG demand is strong and is 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 Hainesville 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. And just as a reminder, we deliver gas to a lot of different places from our Hainesville assets. We can go east to Perryville. We can go directly south to Gillis.

Makes a lot of sense. Thanks so much. And so, yeah, Deon, let me just add to that real quickly. I mean, just think about that Dynamic and the fact that, you know, as you move outside the core and the hanesville needs to grow. Uh, the hanesville needs to grow right now because of the fact that LNG demand is strong and is 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. Uh, so that that call on Hainesville is really significant. And, uh, is going to continue to drive competitive tension into the supply demand fundamentals, uh, around our assets, for some extended period of time here. And, you know, just as a reminder, we deliver gas to a lot of different places from our Haynesville assets. We can, uh,

Nick Dell'Osso: 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 Hainesville 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: Makes a lot of sense. Thanks for all the detail.

You can go east to Perryville, we can go directly south to Gillis and then there are a number of other offtake points that we can deliver gas to, uh, along those routes. So, um, we have a really flexible portfolio. That's ready to do this but um clearly the hanesville 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.

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

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

Thank you.

Analyst (various, e.g., Scott Hanold, Zach Parham, John Freeman, Josh Silverstein, Kevin McCurdy, Phillips Johnston, Paul Diamond): Yeah, thanks. Good morning, guys. Q2 was challenging from a basis standpoint in both the Hainesville and Appalachia. Can you just give us an update on expectations for the second half and maybe going into 2026? I know there's been some startup of infrastructure in the Hainesville, so how that may impact some of your capital allocation thoughts later on this year and into next year. Thanks.

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

You thanks. Good morning guys. Um Vicky was was challenging from a basis standpoint in both the hanesville and Appalachia uh can you just give us an update on on expectations for for um, second half and maybe going to 2026? I know there's been some startup of of infrastructure in the hanesville so how that may impact some of your Cal Capital, allocation thoughts, uh, later on this year and it's next year, thanks.

Mohit Singh: Hey, Josh. Thanks for the question. In terms of basis, we look at a structural basis, right? And when I talk about that, it's how these markets clear. So we can talk about Appalachia and the Hainesville. In Appalachia, the supply-demand setup, yeah, there's going to be weather that's going to change based over time, but there is 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.

Hey, Josh. Thanks for the question. Uh, in terms of basis we we look at, uh, structural basis, right? And when I talk about that, it's how these markets, clear. So, uh, we can talk about the app Alicia and the Haynesville in Appalachia, uh, the supply demand setup. Yeah, there's going to be whether that's going to change based over time, but there is a bit of demand coming in Basin with potential power generation and pipeline egress.

Mohit Singh: But pivoting to Hainesville and your question specifically, I think was around how we're going to see the basis come online with NG3 coming online in the fourth quarter of this year and all that LNG demand that Nick was referring to. So again, coming back to supply-demand, we really see the big demand pull in this area over the long term. In the short-term quarter, I think you're 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.

Devin Mcdermott: And then I want to see if I can also get kind of your views on lower 48th 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 or just given some of the rate count increases that we've seen in the Hainesville, there's still expectations of growth going forward into 2026?

Uh, 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, we do see a grinding up a basis over the medium long term there at Appalachia, uh, but pivoting to hazeville and your question specifically, I think was around how we're going to see the basis come online with ng3 coming online and uh, fourth quarter this year, and all that LNG, demand. That, uh, Nick was referring to. So, again, coming back to supply demand. We, we really see the big demand pull in this in this area, uh, over the long term in the short term quarter, I think you were referring to on ng3, there's not going to be that much of a change. Uh, the basis, uh, when we put production down that line, we also have to pay for that, um, uh, capacity. So, it's a bit of a, 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 pulled from LNG. We're expecting an increase in realizations and bases in that area.

And then um I want to see if I can also get kind of your your views on on Lower 48 production in total. We've seen a real big step up recently kind of into that 108 109 area. Uh is the expectations that we maybe stay around here. Do we come down or just give them some of the recount increases that we've seen in the Hansel, there's still expectations of growth going forward into 2026, thanks.

Mohit Singh: Yeah, we have been, I guess, a 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, Corpus, 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.

Uh, yeah, we have been, I guess a little bit surprised by the upside in the last month or 2, uh, with the prints around 107, uh, depending on what data sources you're looking at. Uh, but as we said, that demand is still growing through the the balance of the Year here with uh about 4 BC of real LG capacity coming online with Blackman's uh Corpus. And then again coming out of Maintenance and the weather. Um, so we do see that demand coming and there might be a bit of a tick up in in production as we go through or remain flat. But we see the demand outpacing that uh Supply

Devin Mcdermott: Thanks, guys.

okay.

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

Next question.

Josh Viets: Yeah, good morning, Nick and Mohit and team. I just want to start on slide six, the merger synergies. There's another $100 million 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 the stand mine stuff or some of the things that you're doing in the Hainesville to help us get some color of what's happening on the ground? Yeah, hey, Neil, this is Josh. Thanks for the question. Yeah, the incremental $100 million is really kind of split between our drill-in completions activity in the Hainesville, representing roughly half of that, and then the other half is going to be attributed to specifically G&A. And so maybe just unpack the D&C component.

And it comes from Neil, Mehta with Goldman Sachs and Company please proceed, yeah, good. Good morning, Nick and Mo and team. Just want to start on slide 6, uh, the merger synergies. So there's another hundred million dollars here of of outperformance. And I think you, you got 4 bullets that describe some of the, the pieces there. But could you unpack it whether it's sand mine stuff, or, uh, some of the things that you're doing in the Haynesville to help us

Get some color on what's happening on the ground.

Josh Viets: 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, just been incredibly pleased with the results. And we've demonstrated roughly a 25% improvement in footage per day if you kind of go back to the fourth quarter of last year. Maybe just one thing I'll kind of put out there. In fact, one of the things that we're seeing right now in the Hainesville 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.

Yeah, I think this is Josh, thanks for the question. Um, yeah, the the incremental 100 million is is really kind of split between um our drilling completions activity, and the Haynesville uh, representing roughly, half of that. And then the other half is going to be attributed to, uh, specifically GNA. And so maybe just unpack the the DNC component. Um, there's a portion of that, which is purely attribute to the fact that we're just simply drilling faster than we, what we thought would be doing at this point in time. Uh, so again just been incredibly pleased with the results, you know, we we've demonstrated roughly a 25% Improvement.

Josh Viets: 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&A component, that is largely attributed to non-com G&A. 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, you know, not only accelerated those synergies, but the quantum's gone up as well.

And footage per day, if you kind of go back to the fourth quarter of last year, maybe just 1 thing, I'll kind of put out there. In fact, 1 of the things that we're seeing right now in the hanesville are well cost or, you know, around 1300 a foot. So just think about where we've been historically. So just a ton of progress has been made there, um 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. Um so we got the the sand plant started.

It up uh in and around the first quarter. Uh we have some expectations around how quickly we could ramp that up. And how many Frack Crews that we could support. We're simply able to support more Frack 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 GNA component that is largely attributed to non-com GNA, I think the teams have done a phenomenal job rationalizing our IT costs. You think about things like software subscriptions.

And licensed rationalization that's going to occur. And we've really just, you know, not only accelerated those synergies but but you know, the quantum's gone up as well.

Chris Ayres: Thank you. And the follow-up's just around hedging strategy. You know, you guys were aggressive in Q1 and for locking in '26, and you're 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: Yeah, Neil, good morning. This is a great question. You're correct in identifying in Q1, we had signaled that we added 740 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, it also takes into account windows of opportunities where we see a 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. 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 standards going into 2Q of 2027.

Thank you. And and the follow-ups Just Around hedging strategy. Um, you know, you guys were aggressive in q1 and uh, and for locking in 26. And uh, and and almost at 40% now and and, and that is kind of aged. Well, but your perspective as the curve has come off as hard as it has for 26. Uh, how do you think about being opportunistic versus routable in the hedge of the wedge? Um, strategy.

I mean, uh, good morning. This is great question. Uh, you're correct in identifying in, in q1. We had signal that. We added 740. BCF of edges.

Uh, just for comparison, that number for Q2 is about 169 Bcf of hedges.

uh, 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, uh, through buying those puts

and uh, also uh

Selling calls at a higher price which uh, which are then used to pay for the put. So most of the the hedges that we have layered in

Our Costless Scholars. Um, and as, as a point of reference for 2 Q

Mohit Singh: 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 break-evens. And that's what we continue to attempt to do, is to try and add more hedges above our break-even prices and still retaining some of the upside till the sold calls at $4.77. 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 will just back away. But the overall structure is still to do it on a rolling eight-quarter basis. And as we roll from one quarter to the next, we look at opportunities to add more to it when we can.

The 169 BC of new Hedges that I mentioned, those are of various standards going into.

2 Q of 2027. And the weighted average floor price is $3.75 and then ceiling is 477. So it Still Remains above what we deem as our corporate break evens. And that's what we continue to attempt to do is to try and add more Hedges at above our break, even prices and still retaining some of the upside till the sold calls at 4.77. So overall the program is working,

Josh Viets: Well, can I ask one quick follow-up on that, which is the '26 curve has come down, it feels like, in large part a reflection of production, which is probably running a B 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 tills just coming back, at which point we should be less worried about the way that the '26 curve is moving?

Uh, there will be Windows, when will be more active as you said and there'll be Windows, when we will just back away, but, um, the overall structure and, uh, is still to do it on a rolling 8, quarter basis. And As We Roll from 1 quarter to the next, we we look at opportunities to add more to it when we can

Mohit Singh: Yeah, so that's a good follow-up, Neil. We still remain excited about the demand, which is showing up. Nick mentioned about Plaquemines. We'll add another BCF, one and a half BCF, and then Corpus Christi will add some more. And then obviously, Golden Pass should start taking some gas as well. 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 '26, it's still close to $4, which is still, I mean, above break-even. 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.

Josh Viets: Right. Thanks, Mohit.

That's a good follow-up. Neil the we still remain excited about the demand which is showing up. Nick mentioned about black comments will add another BC 1 and a half BCF and then the Corpus Christie will add some more. And then obviously golden pass, should start taking some gas as well. 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 26, it's still close to 4 dollars, which, which is still, I mean, about Break Even. 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 are business, generates, uh, tremendous amount of free cash flow.

Carmen: Thank you. Our next question comes from Kevin McCurdy with Pickering Energy Partners. Please proceed.

All right. Thanks bro.

Thank you.

Analyst (various, e.g., Scott Hanold, Zach Parham, John Freeman, Josh Silverstein, Kevin McCurdy, Phillips Johnston, Paul Diamond): 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 would consider more M&A? And is there any differentiation you see between M&A potential in the Hainesville versus the Marcellus?

Our next question comes from. Kevin mchardy, with Pickering, Energy Partners. Please proceed.

Nick Dell'Osso: Hey, Kevin, it's Nick. You know, 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 just remind you we have our non-negotiables, and they're a pretty high bar. 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.

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

Hey Kevin, it's Nick. Um you know we're uh just

Analyst (various, e.g., Scott Hanold, Zach Parham, John Freeman, Josh Silverstein, Kevin McCurdy, Phillips Johnston, Paul Diamond): I appreciate that answer. And as a follow-up, your guidance includes productive capacity of up to $275 million capex this year. Your wording, while I know it's not changed, it 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?

Finishing the integration of a very big merger. Um, we have a, a lot to continue to do to improve upon our business. Uh, we're, we're pretty satisfied with who we are today, and, and what we have in front of us, um, we'll always consider opportunities, but I just remind you, we have our non-negotiables, and they're a pretty high bar. They've worked well for us historically. They'll continue to work well for us. Uh, and we're pretty focused on what we've got right now.

Nick Dell'Osso: Yeah, 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 to 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.

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

Yeah, I think we feel pretty good about our plans right now. Kevin the reason we think about it as productive capacity is that, uh, we want to set a plan, be able to execute on it and then have the flexibility to decide how and when to produce those volumes, uh, based on the near-term market conditions as as those volumes become available. So, um, it's if the conditions change,

Analyst (various, e.g., Scott Hanold, Zach Parham, John Freeman, Josh Silverstein, Kevin McCurdy, Phillips Johnston, Paul Diamond): Great. Thanks, Nick.

We would adjust production, not necessarily the capital spend. Because, again, the long-term fundamentals here we still think are super strong.

Carmen: Thank you. One moment for our next question, please. Nick comes from Phillips Johnston with Capital One. Please proceed.

Great. Thanks. Nick.

Thank you. 1 moment for our next question, please.

Analyst (various, e.g., Scott Hanold, Zach Parham, John Freeman, Josh Silverstein, Kevin McCurdy, Phillips Johnston, Paul Diamond): Hey, thanks for the time. I also wanted to ask about M&A. I heard what you said, Nick, in terms of you guys are satisfied with what you had. 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 ACO discount or any other factor be something that would generally sort of rule that out?

Let me come from Philips. Johnston with capital 1, please proceed.

Nick Dell'Osso: Yeah, look, we, you know, 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, you know, our non-negotiables would drive us to feeling like understanding the above-ground economics of those assets today, it's not clear that we would be better off doing something like that. So that's not in our near-term plans.

Hey, thanks for the time. Uh, I also wanted to ask about m&a. Um, 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, wanted to get it sent to whether or not you guys would consider Canada as an area to expand your footprint or would the ACO discount or any other Factor. Be something that would generally sort of rule that out.

Analyst (various, e.g., Scott Hanold, Zach Parham, John Freeman, Josh Silverstein, Kevin McCurdy, Phillips Johnston, Paul Diamond): Okay. Thanks for that, Nick. And I think the last time you all provided D&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?

Yeah, um, look, we you know, we pay attention to all the trends of the industry. There's been a lot written about uh, resource in Canada lately and obviously it's gotten a lot of attention. Um, it there's a lot of resource there. But frankly, at this point, you know, our non-negotiables would drive us to feeling like uh, understanding the above ground economics of those assets today. Uh, it's not clear that we would be better off doing something like that. Uh, so that's not in our near-term plans.

Okay.

Josh Viets: Yeah, Phillips, Josh here. So I referenced the Hainesville cost earlier. When we, you know, compare back to the guide, we're, you know, probably closer to $1,200 a foot with our Hainesville formation wells, just under $1,500 a foot for Bozer. When we look at the cost relative to the guide in our two Appalachia business units, I would say, you know, we're within about 5% of, you know, where we guide as a cost there. And so really not a material movement. Just given, you know, how we forecasted improvements within those two basins, the move's just not simply as big. And of course, so much of that simply ties back to the merger synergies with the Hainesville specifically. And of course, those have shown up in a more material way, hence a little bit lower well cost in the Hainesville.

Thanks for that Nick. And uh I think the last time you you all provided DNC, well calls by area was in your February presentation, at these new uh faster drilling speeds. Can you just give us a general sense of of how much your well costs have fallen in all 3 areas, I guess relative to the figures that you guys provided back in February.

Analyst (various, e.g., Scott Hanold, Zach Parham, John Freeman, Josh Silverstein, Kevin McCurdy, Phillips Johnston, Paul Diamond): Sounds good. Thanks, guys.

Simply ties back to the merger synergies um with the hanesville specifically and of course those have shown up in a more material way hence a little bit lower uh well cost in the hanesville.

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

Sounds good. Thanks, guys.

Analyst (various, e.g., Scott Hanold, Zach Parham, John Freeman, Josh Silverstein, Kevin McCurdy, Phillips Johnston, Paul Diamond): Thank you. Good morning, all. 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, you know, LNG contracts, data center contracts, and then just general delivery otherwise?

Thank you in our last question, comes from the line of Paul diamond with City, please proceed.

Uh, thank you. Good morning. All right, thanks for taking the call. Uh, just a quick question on kind of the larger portfolio Dynamics. If you have a longer term perspective, how do you think about the right balance between, you know, LG contracts data, center contracts and then just general delivery? Otherwise

Nick Dell'Osso: Yeah, that's a great question, Paul. 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, which 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 story, but it's also very much an international story connected through the LNG markets. So we're in a place that we can be responsive to all of the above. And I think we're, you know, again, unique in being able to do that.

Yeah, that's a great question, Paul. 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. Uh, it's a pretty exciting time for natural gas and you have people recognizing the value that gas plays in the economy, the efficiency, the gas, uh, creates for the growth and power demand, which is all tied to our growing economy, uh, fueled by The Innovation associated with AI, uh, as well as a lot of other, uh, places where the economy is just putting Capital to work.

Nick Dell'Osso: 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. We don't think it's an either/or 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.

That's obviously a domestic story, uh, but it's also very much an international story connected through the LG markets. So we're in a place that we can be responsive to all of the above. And I think we're, you know, again, unique in being able to do that. Uh, we we know that our portfolio has the depth and quality so that we can continue to deliver resource to all of these uh very attractive. Uh, oftentimes constrained markets constrained, either in infrastructure or just constrained by the fact that demand is growing faster than Supply.

Uh, 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, uh, solutions that are effective in how we Supply gas and structure contracts in a way that's good for, uh, both us as a producer and the customer's. So we, we really like these Dynamics. We, we don't think it's an either or in any way. We think, in fact, it is a story for our company of all of the above uh and and think we're uniquely positioned to do that.

Analyst (various, e.g., Scott Hanold, Zach Parham, John Freeman, Josh Silverstein, Kevin McCurdy, Phillips Johnston, Paul Diamond): Understood. Makes perfect sense. Just a quick bookkeeping follow-up. Circling back to slide 25 in Hainesville 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 it a permanent fix or could this happen again?

Understood makes perfect sense.

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

You mentioned a quick book for keeping follow-up. I'm still going back to slide 25 in HBO 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 it a permanent fix, or could this happen again?

Yeah, we'd like to think it'll be a permanent fix. Um, again, we work pretty closely with the state agencies. We have a really good relationship. Um, you know, they're working in the best they can with the resources they have available to them. We're hoping this gets resolved over the next several months um you know but again it's something that we hope you know we don't have to deal with again. Uh but nonetheless you know we we see them as a critical partner for us and we'll continue to engage in a constructive way.

Chris Ayres: Visit Clarity.

Nick Dell'Osso: And thank you so much. This concludes our Q&A session, and I will pass it back to Nick Dell'Osso for final remarks.

Understood, is it clarity?

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

Analyst (various, e.g., Scott Hanold, Zach Parham, John Freeman, Josh Silverstein, Kevin McCurdy, Phillips Johnston, Paul Diamond): 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, '27, and the rest of the decade will look like. The dynamics for natural gas are very strong, and we are uniquely positioned to succeed. 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.

All right. Well, uh, thanks everyone for taking the time. Uh, to listen to our call today. Uh, we'll certainly be available for any follow-up questions. Uh, we think the second half of this year is setting up extremely well for expand. Um, and, and that we believe is just a start towards what 2026 27 and the rest of the decade will look like uh the Dynamics for natural gas are very strong and we are uniquely positioned to succeed. The creation of expand energy is putting us in a position where the benefits of this merger are showing

Nick Dell'Osso: And with that, ladies and gentlemen, we conclude our conference. Thank you all for participating. You may now disconnect.

Up every day and they're showing up in our financial results, not just through leading indicators. Uh, we're really excited about the future and look forward to continuing to uh talk to you about all of that uh in the coming uh days weeks, quarters and Years, thank you.

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