Core Insights - Expand Energy Corporation (EXE) reported second-quarter 2025 adjusted earnings per share of $1.10, missing the Zacks Consensus Estimate of $1.14, but surpassing the year-ago adjusted profit of 1 cent due to strong production and higher natural gas prices [1][9] - The company's revenues from 'natural gas, oil and NGL' totaled $2 billion, falling short of the Zacks Consensus Estimate by $74 million, yet significantly higher than the year-ago figure of $378 million [2] Production & Price Realizations - Average daily production for the second quarter was 7,202 million cubic feet of gas equivalent (MMcfe/day), a 162% increase from the year-ago level of 2,745 MMcfe/day, exceeding the Zacks Consensus Estimate of 7,150 MMcfe/day [3][9] - Natural gas volume for the period was 6,596 MMcf/day, up 140% year over year, slightly below the consensus mark of 6,600 MMcf/day [3] - The average sales price for natural gas was $2.98 per Mcf, an 18.7% increase from the prior-year realization of $2.51 per Mcf, but below the consensus mark of $3.02 [4] Costs & Expenses - Total operating expenses rose to $2.4 billion from $799 million in the year-ago quarter, primarily due to a nearly threefold increase in gathering, processing, and transportation costs to $563 million [5] - Marketing costs also rose significantly to $791 million from $141 million year over year [5] Dividend and Share Repurchases - In the second quarter, the company returned a total of $448 million to shareholders through a quarterly base dividend of $137 million, a variable dividend of $211 million, and share repurchases totaling $100 million [6] Financial Position - Cash flow from operations totaled $1.3 billion, a significant increase from $209 million in the prior-year quarter, while capital expenditure was $657 million, resulting in a free cash flow of $665 million [7][9] - As of June 30, 2025, the company had $731 million in cash and cash equivalents and long-term debt of $5.1 billion, reflecting a debt-to-capitalization ratio of 22.2% [7] Guidance - Expand Energy is targeting an average daily production range of 7,150-7,250 MMcfe for the third quarter and 7,000-7,200 MMcfe for the full year 2025 [10] - The company has budgeted capital spending between $760 million and $840 million for the upcoming quarter, and between $2.9 billion and $3 billion for 2025 [10]

Core Insights - The article promotes a free two-week trial for the investment group Distressed Value Investing, which provides exclusive research on various companies and investment opportunities [1] - The group has a significant focus on value opportunities and distressed plays, particularly in the energy sector [2] Group 1 - The author, Aaron Chow, has over 15 years of analytical experience and is recognized as a top-rated analyst on TipRanks [2] - Chow co-founded a mobile gaming company that was acquired by PENN Entertainment, showcasing his experience in the gaming industry [2] - The investment group Distressed Value Investing includes over 1,000 reports on more than 100 companies, indicating a comprehensive research portfolio [1][2] Group 2 - The article emphasizes that past performance is not indicative of future results, highlighting the importance of careful investment consideration [3] - It clarifies that no specific investment recommendations are being made, and the views expressed may not represent the broader platform [3]

Financial Data and Key Metrics Changes - The company expects to recognize approximately a 50% increase in annual synergies, translating to an additional $425 million in free cash flow for 2025 and $500 million for 2026 before accounting for NYMEX price changes [6][11] - Capital investments for 2025 have been reduced by approximately $100 million while maintaining production of approximately 7.1 Bcfe per day [9][10] - The company plans to return $585 million to shareholders in the first half of the year through dividends and share repurchases [11] Business Line Data and Key Metrics Changes - In Southwest Appalachia, the company drilled the longest lateral well and improved drilled footage per day by 62% in Northeast Appalachia and 25% in Haynesville [7][8] - The company has achieved a 25% improvement in footage drilled per day since the merger, with well costs in Haynesville around $1,300 per foot [78][79] Market Data and Key Metrics Changes - The company retains operational leverage to the largest gas demand center in North America through its Haynesville position, with over 12 Bcf per day of LNG demand under construction [9][10] - The company expects market volatility to remain a prevailing theme, but believes its investment-grade balance sheet is a strategic asset [11] Company Strategy and Development Direction - The merger aims to create long-term value through cost reduction and a geographically diverse portfolio serving premium markets [6] - The company is focused on optimizing contracts to reduce cash flow volatility and enhance pricing mechanisms [15][16] - The company is exploring various structures for gas sales, including direct sales and partnerships, to maximize value [22] Management's Comments on Operating Environment and Future Outlook - Management is optimistic about the long-term demand outlook for the industry and sees opportunities in LNG and power generation [10][11] - The company is prepared to adjust its operations based on market conditions while maintaining a focus on long-term fundamentals [92] Other Important Information - The company has improved its operational efficiency through the innovative use of AI and machine learning [7][8] - The company is actively engaged in discussions for potential agreements related to LNG and power that would be accretive to shareholders [10] Q&A Session Summary Question: Can you talk about Expand's strategy regarding gas contracts related to power growth opportunities? - Management is excited about opportunities in this space and aims to reduce cash flow volatility through long-term contracts [15][16] Question: What is the duration of the 70% deferred cash tax guidance for 2026? - The duration of tax savings is expected to be long as long as capital spending remains consistent [29] Question: What is the company's appetite for reducing net debt versus returning cash to shareholders? - The company believes strengthening the balance sheet benefits equity holders and will continue to reduce net debt while assessing market conditions [31][32] Question: What has driven the significant increases in footage drilled per day? - The increases are attributed to better integration of data sets and collaboration among teams, with AI playing a key role in optimizing performance [38][39] Question: How does the company view the balance between LNG contracts and other delivery methods? - The company is positioned to respond to various elements of growing demand, including LNG and data center contracts, without favoring one over the other [102][105]

Financial Data and Key Metrics Changes - The company expects to recognize approximately a 50% increase in annual synergies, translating to an additional $425 million in free cash flow for 2025 and $500 million for 2026 before accounting for NYMEX price changes [5][11] - Capital investments for 2025 have been reduced by approximately $100 million while maintaining production at approximately 7.1 Bcfe per day [8][11] - The company plans to return $585 million to shareholders in the first half of the year through dividends and share repurchases [11] Business Line Data and Key Metrics Changes - In Southwest Appalachia, the company improved drilled footage per day by 62%, while in the Haynesville, footage drilled per day improved by 25% [7][8] - The company has achieved a 25% improvement in footage drilled per day since the merger, with well costs in Haynesville around $1,300 per foot [73][74] Market Data and Key Metrics Changes - The company retains operational leverage to the largest gas demand center in North America through its Haynesville position, with over 12 Bcf per day of LNG demand under construction [9][10] - The company expects market volatility to remain a prevailing theme, but believes its investment-grade balance sheet is a strategic asset [11] Company Strategy and Development Direction - The company aims to create long-term value through cost reduction and developing a geographically diverse portfolio serving premium markets [5] - The focus is on optimizing contracts to reduce cash flow volatility and participate in upside opportunities [15][17] - The company is actively engaged in discussions for LNG and power-related agreements that will be accretive to shareholders [10][12] Management's Comments on Operating Environment and Future Outlook - Management is encouraged by the long-term demand outlook for the industry and believes the current macro landscape allows for sustainable value creation [8][12] - The company views the current market conditions as an opportunity to strengthen its balance sheet and enhance shareholder value [11][29] Other Important Information - The company has successfully integrated data sets across the combined companies, leading to improved drilling performance [34] - The company is focused on maintaining flexibility in capital allocation to adapt to market conditions while pursuing long-term growth [87] Q&A Session Summary Question: Can you talk about Expand's strategy regarding gas contracts related to power growth opportunities? - The company is focused on reducing cash flow volatility through long-term contracts and optimizing pricing mechanisms [14][15] Question: Is there urgency in signing deals compared to peers? - Management indicated there is no urgency and is taking a long-term view on LNG and power markets [20] Question: What is the duration of cash tax savings? - The company expects the duration of tax savings to be fairly long as long as capital investment continues at a similar cadence [26] Question: What is the appetite for reducing net debt? - The company is committed to strengthening its balance sheet and will continue to reduce net debt until better opportunities arise [28] Question: What is driving the increase in footage drilled per day? - The increase is attributed to better integration of data sets and the use of AI for optimization [34][36] Question: How does the company view the reporting issues in Louisiana? - Management believes the reporting issues are specific to the state and is working closely with agencies to resolve them [56][101] Question: What is the balance between LNG contracts and data center contracts? - The company is positioned to respond to both LNG and data center demands, leveraging its flexible portfolio [99]

Financial Performance - The company reported approximately $12 billion of adjusted EBITDAX for 2Q25[8] - Capital expenditures totaled approximately $727 million in 2Q25[8] - The company expects to increase net debt paydown to $1 billion in 2025[9] - $585 million was returned to shareholders through dividends and share repurchases in 1H25[9] - The company anticipates approximately $425 million improvement in FCF for 2025[8, 14] Operational Highlights - The company is the largest domestic natural gas producer, with production of approximately 72 Bcfe/d[8] - The company achieved its fastest drilling quarter in company history during 2Q25[9] - The company's annual synergy outlook increased to $600 million, expected by YE26[8] Production and Capital Allocation - The company anticipates full year 2025 production of approximately 71 Bcfe/d[12, 21] - The company reduced FY25 D&C capex spend by approximately $100 million[22] - The company has approximately 19 million net acres and approximately 71 Bcfe/d in 2025[12]

Experience is difficult to learn. After 30 plus years of critically analyzing the nuts and bolts of businesses as diverse as airlines, oil, retail, mining to fintech and ecommerce plus the macro, monetary and political drivers. I continue to immensely enjoy learning and applying my experience to unravel, comprehend and benefit from new ideas, technology, innovation and business models. In addition, living through multiple crises, tequila, Asia, dotcom, 9/11, the great recession and the Covid19 pandemia, plu ...

Group 1: Earnings Performance - Expand Energy reported quarterly earnings of $1.1 per share, missing the Zacks Consensus Estimate of $1.14 per share, compared to earnings of $0.01 per share a year ago, representing an earnings surprise of -3.51% [1] - The company posted revenues of $2.02 billion for the quarter ended June 2025, missing the Zacks Consensus Estimate by 3.53%, and this compares to year-ago revenues of $378 million [2] - Over the last four quarters, Expand Energy has surpassed consensus EPS estimates three times [2] Group 2: Stock Performance and Outlook - Expand Energy shares have lost about 1.4% since the beginning of the year, while the S&P 500 has gained 8.6% [3] - The current consensus EPS estimate for the coming quarter is $1.48 on $2.21 billion in revenues, and for the current fiscal year, it is $6.62 on $8.97 billion in revenues [7] - The company's earnings outlook and estimate revisions will be crucial for future stock performance, with the current Zacks Rank being 3 (Hold), indicating expected performance in line with the market [6] Group 3: Industry Context - The Alternative Energy - Other industry, to which Expand Energy belongs, is currently in the bottom 42% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor decisions [5]

PART I. FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Presents unaudited condensed consolidated financial statements, including balance sheets, operations, cash flows, and equity, with detailed notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly decreased to **$27.77 billion**, while liabilities fell to **$9.83 billion**, leading to an increase in stockholders' equity to **$17.94 billion** Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $731 | $317 | | Total current assets | $2,272 | $1,997 | | Total property and equipment, net | $24,172 | $24,282 | | **Total assets** | **$27,768** | **$27,894** | | **Liabilities & Equity** | | | | Total current liabilities | $2,924 | $3,123 | | Long-term debt, net | $5,122 | $5,291 | | **Total liabilities** | **$9,831** | **$10,329** | | **Total stockholders' equity** | **$17,937** | **$17,565** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net income for six months ended June 30, 2025, was **$719 million**, a turnaround from a **$201 million** loss, driven by **$5.89 billion** in revenues Six Months Ended June 30, Financial Performance (in millions, except per share data) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total revenues and other | $5,886 | $1,586 | | Income (loss) from operations | $1,001 | $(262) | | Net income (loss) | $719 | $(201) | | Diluted earnings (loss) per share | $2.99 | $(1.53) | Three Months Ended June 30, Financial Performance (in millions, except per share data) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total revenues and other | $3,690 | $505 | | Income (loss) from operations | $1,269 | $(294) | | Net income (loss) | $968 | $(227) | | Diluted earnings (loss) per share | $4.02 | $(1.73) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow surged to **$2.42 billion**, while investing and financing activities used **$1.10 billion** and **$909 million** respectively, increasing cash by **$411 million** Six Months Ended June 30, Cash Flow Summary (in millions) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,418 | $761 | | Net cash used in investing activities | $(1,098) | $(640) | | Net cash used in financing activities | $(909) | $(179) | | **Net increase (decrease) in cash** | **$411** | **$(58)** | | **Cash, cash equivalents and restricted cash, end of period** | **$806** | **$1,095** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides critical details on financial statements, including Southwestern Merger accounting, debt structure, revenue streams, derivative positions, and service commitments - Expand Energy is now the largest natural gas producer in the U.S. by net daily production, with operations in Louisiana, Pennsylvania, West Virginia, and Ohio[34](index=34&type=chunk) - The Southwestern Merger closed on October 1, 2024, with Expand Energy (formerly Chesapeake) as the accounting acquirer. The total consideration was approximately **$8.47 billion**[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk) - The company has a **35% interest** in a joint venture with Momentum Sustainable Ventures LLC to build a new natural gas gathering pipeline and carbon capture project in the Haynesville Shale, with a carrying value of **$314 million** as of June 30, 2025[110](index=110&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and operational results, highlighting the Southwestern Merger's impact, liquidity, capital resources, and detailed operational performance - Following the Southwestern Merger, Chesapeake Energy Corporation changed its name to Expand Energy Corporation and is now the largest independent natural gas producer in the U.S[118](index=118&type=chunk)[119](index=119&type=chunk) - The company achieved investment-grade ratings from S&P, Fitch, and Moody's, leading to less restrictive covenants on its Credit Facility[123](index=123&type=chunk) - An enhanced capital returns framework was announced, prioritizing a base dividend, **$1.0 billion** in annual net debt reduction for 2025, and returning **75%** of remaining free cash flow to shareholders[126](index=126&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained strong liquidity of **$3.2 billion**, with planned 2025 capital expenditures of **$2.85–$3.0 billion** and significant cash uses for debt and shareholder returns - Total liquidity as of June 30, 2025, was **$3.2 billion**, including **$0.7 billion** cash and **$2.5 billion** unused credit facility capacity[130](index=130&type=chunk) - The 2025 capital expenditure budget is projected to be between **$2.85 billion** and **$3.0 billion**, targeting **250 to 280** gross wells[138](index=138&type=chunk) Sources and Uses of Cash - Six Months Ended June 30, 2025 (in millions) | Item | Amount | | :--- | :--- | | Cash provided by operating activities | $2,418 | | Capital expenditures | $(1,220) | | Cash paid to purchase debt | $(553) | | Cash paid for common stock dividends & repurchases | $(378) | | **Net increase in cash** | **$411** | [Results of Operations](index=33&type=section&id=Results%20of%20Operations) Operational results for H1 2025 show total production averaging **6,996 MMcfe/day** and sales surging to **$4.32 billion**, with commensurate increases in operating expenses Average Daily Production (Six Months Ended June 30) | Period | Natural Gas (MMcf/d) | Oil (MBbl/d) | NGL (MBbl/d) | Total (MMcfe/d) | | :--- | :--- | :--- | :--- | :--- | | **2025** | 6,426 | 16 | 79 | **6,996** | | **2024** | 2,971 | — | — | **2,971** | Natural Gas, Oil and NGL Sales (Six Months Ended June 30, in millions) | Period | 2025 | 2024 | | :--- | :--- | :--- | | **Total Sales** | **$4,321** | **$967** | Key Operating Expenses per Mcfe (Six Months Ended June 30) | Expense Category | 2025 ($/Mcfe) | 2024 ($/Mcfe) | | :--- | :--- | :--- | | Production | $0.24 | $0.20 | | Gathering, Processing & Transportation | $0.89 | $0.60 | | DD&A | $1.17 | $1.38 | - The increase in sales for the first half of 2025 was driven by a **$2.43 billion** increase from higher volumes due to the Southwestern Merger and an **$837 million** increase from higher average commodity prices[149](index=149&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risk from volatile commodity prices and interest rates, using derivatives to mitigate price risk, with minimal interest rate exposure - The company's main market risks are commodity price volatility and interest rate changes[169](index=169&type=chunk) - A **10%** fluctuation in forward natural gas prices would change the fair value of the company's gas derivatives by approximately **$500 million**[172](index=172&type=chunk) - Based on H1 2025 production, a **10%** change in prices would have altered revenues by **$377 million** for natural gas, **$16 million** for oil, and **$38 million** for NGL[172](index=172&type=chunk) - Interest rate risk is minimal as of June 30, 2025, with no outstanding borrowings under the floating-rate Credit Facility[173](index=173&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[175](index=175&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter[176](index=176&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, with pre-petition matters resolved via Chapter 11, and no expected material adverse financial impact - The company is involved in ordinary course litigation. Pre-petition Chesapeake legal matters are being handled through the bankruptcy court's claims process[179](index=179&type=chunk) - Management does not expect current legal proceedings to have a material adverse impact on the company's financials[180](index=180&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors are reported, with readers directed to the 2024 Form 10-K for detailed discussion - The company refers to the risk factors disclosed in its 2024 Form 10-K, indicating no material changes during the quarter[182](index=182&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details the **$1.0 billion** share repurchase program, with **851,661** shares repurchased for **$100 million** in Q2 2025, leaving **$900 million** available Share Repurchases for the Quarter Ended June 30, 2025 | Period | Total Shares Purchased | Average Price Paid Per Share | Approx. Value Remaining (millions) | | :--- | :--- | :--- | :--- | | April 2025 | — | $— | $1,000 | | May 2025 | 144,583 | $116.17 | $983 | | June 2025 | 707,078 | $117.65 | $900 | | **Total** | **851,661** | **$117.40** | **$900** | [Item 3. Defaults Upon Senior Securities](index=43&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - None[186](index=186&type=chunk) [Item 4. Mine Safety Disclosures](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures, as required by the Dodd-Frank Act, are included in Exhibit 95.1 of this Form 10-Q - Mine safety disclosures are provided in Exhibit 95.1[187](index=187&type=chunk) [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended June 30, 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the quarter[188](index=188&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q, including Sarbanes-Oxley certifications and XBRL data files - Lists all exhibits filed with the report, including Sarbanes-Oxley certifications (31.1, 31.2, 32.1, 32.2) and XBRL data files[189](index=189&type=chunk)[191](index=191&type=chunk)

Core Insights - Expand Energy Corporation reported strong financial and operational results for Q2 2025, exceeding expectations with a significant increase in free cash flow and operational synergies [3][5][8]. Financial Performance - The company achieved net income of $968 million, or $4.02 per fully diluted share, with adjusted net income of $265 million, or $1.10 per share [8][21]. - Net cash provided by operating activities was $1,322 million, reflecting robust operational performance [8][22]. - Total revenues for Q2 2025 reached $3,690 million, a substantial increase from $505 million in Q2 2024 [21]. Operational Highlights - Expand Energy operated an average of 11 rigs, drilling 49 wells and turning 59 wells in line, resulting in net production of approximately 7.20 Bcfe per day, with 92% being natural gas [4][8]. - The company plans to reduce capital expenditures by $100 million in 2025, with total capital expenditures estimated at approximately $2.9 billion [6][8]. Synergy and Efficiency - The company is on track to capture approximately $500 million in annual synergies in 2025, with an ultimate goal of $600 million by the end of 2026 [5][8]. - Expand Energy reported a 50% increase in run-rate synergies since the merger, demonstrating significant operational efficiency gains [3][5]. Shareholder Returns - The company is increasing its net debt paydown from $500 million to $1 billion, enhancing its balance sheet strength [8]. - A total of $585 million is being returned to shareholders through dividends and share repurchases in the first half of 2025 [8][9]. Production and Pricing - The average realized price for natural gas was $2.98 per Mcf, while the average realized price for oil was $55.89 per Bbl [24]. - Total production for the first half of 2025 was approximately 6,996 MMcfe per day, with a significant contribution from the Haynesville and Northeast Appalachia regions [24][25].

[Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights) Expand Energy reported strong Q2 2025 results, achieving $968 million net income, reducing capital guidance, and increasing synergy outlook Q2 2025 Key Financial & Operating Metrics | Metric | Value | | :--- | :--- | | Net Cash from Operating Activities | $1,322 million | | Net Income | $968 million ($4.02/share) | | Adjusted Net Income (Non-GAAP) | $265 million ($1.10/share) | | Adjusted EBITDAX (Non-GAAP) | $1,176 million | | Net Production | ~7.20 Bcfe/d (92% natural gas) | - The company highlighted significant outperformance compared to initial merger expectations, resulting in an approximate **50% increase to run-rate synergies** and generating substantially more free cash flow than anticipated for 2025 and 2026[4](index=4&type=chunk) - Key strategic achievements for the quarter include reduced full-year 2025 drilling and completion capital expenditures guidance by **~$100 million**, increased annual synergy outlook to **$600 million by year-end 2026**, announced **~$425 million of incremental free cash flow in 2025** driven by business performance, and increased the 2025 net debt paydown target to **$1.0 billion**[5](index=5&type=chunk) [Operations and Outlook](index=2&type=section&id=Operations%20and%20Outlook) The company reduced 2025 capital spending while maintaining production guidance and increasing its annual synergy target for 2026 [Operations Update](index=2&type=section&id=Operations%20Update) In Q2, Expand Energy operated 11 rigs, drilled 49 wells, and brought 59 wells online, achieving **7.20 Bcfe/d** net production, 92% natural gas Q2 2025 Operational Activity | Metric | Value | | :--- | :--- | | Average Rigs Operated | 11 | | Wells Drilled | 49 | | Wells Turned in Line | 59 | | Net Production | ~7.20 Bcfe/d | [2025 Annual Synergy, Capital and Operating Outlook](index=2&type=section&id=2025%20Annual%20Synergy%2C%20Capital%20and%20Operating%20Outlook) The company upgraded its synergy forecast to **$600 million** by year-end 2026 and reduced 2025 capital expenditure to **$2.6 billion**, maintaining production guidance - On track for **~$500 million** in annual synergies in 2025, with an increased target of **$600 million by year-end 2026**[7](index=7&type=chunk) Updated 2025 Full-Year Outlook | Metric | Updated 2025 Guidance | | :--- | :--- | | Capital Spending | ~$2.6 billion (down $100M) | | Average Rigs | ~11 | | Daily Production | ~7.1 Bcfe/d | - The company plans an incremental **$275 million** capital investment to exit 2025 with **~12 rigs**, enabling a potential production increase to an average of **7.5 Bcfe/d** in 2026, market conditions permitting[8](index=8&type=chunk) [Shareholder Returns Update](index=2&type=section&id=Shareholder%20Returns%20Update) Expand Energy doubled its 2025 net debt paydown target to **$1 billion** and announced **$448 million** in Q2 shareholder returns, including a **$1.465** total dividend per share - The company is increasing its net debt paydown target for 2025 from **$500 million to $1 billion**[10](index=10&type=chunk) Q2 2025 Shareholder Returns | Return Component | Amount | | :--- | :--- | | Quarterly Base Dividend | $137 million | | Variable Dividend | $211 million | | Share Repurchases | $100 million | | **Total Q2 Return** | **$448 million** | Dividend Per Share (Payable Sept 2025) | Dividend Component | Amount per Share | | :--- | :--- | | Base Dividend | $0.575 | | Variable Dividend | $0.89 | | **Total Dividend** | **$1.465** | [Financial Statements](index=5&type=section&id=Financial%20Statements) The company's financial statements show significant revenue growth, a shift to net income, and strong cash flow from operations for the period ended June 30, 2025 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were **$27.77 billion**, total liabilities **$9.83 billion**, and stockholders' equity **$17.94 billion**, reflecting debt reduction and equity growth Balance Sheet Summary (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$27,768** | **$27,894** | | Cash and cash equivalents | $731 | $317 | | Total property and equipment, net | $24,172 | $24,282 | | **Total Liabilities** | **$9,831** | **$10,329** | | Long-term debt, net | $5,122 | $5,291 | | **Total Stockholders' Equity** | **$17,937** | **$17,565** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q2 2025, the company reported **$968 million** net income, a significant turnaround from a prior-year loss, driven by **$3.69 billion** in total revenues and **$4.02** diluted EPS Statement of Operations Summary - Three Months Ended June 30 (in millions) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenues and other | $3,690 | $505 | | Income (loss) from operations | $1,269 | $(294) | | **Net Income (Loss)** | **$968** | **$(227)** | | **Diluted EPS** | **$4.02** | **$(1.73)** | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash from operating activities significantly increased to **$2.42 billion**, with **$1.1 billion** used in investing and **$909 million** in financing activities Cash Flow Summary - Six Months Ended June 30 (in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $2,418 | $761 | | Net Cash Used in Investing Activities | $(1,098) | $(640) | | Net Cash Used in Financing Activities | $(909) | $(179) | | **Net Increase (Decrease) in Cash** | **$411** | **$(58)** | [Key Operating Metrics](index=8&type=section&id=Key%20Operating%20Metrics) In Q2 2025, total production significantly increased to **7,202 MMcfe/day**, with an average realized price of **$3.14/Mcfe**, and capital expenditures totaling **$727 million** [Production and Average Sales Prices](index=8&type=section&id=Production%20and%20Average%20Sales%20Prices) Q2 2025 total production reached **7,202 MMcfe/day**, primarily from Haynesville and Northeast Appalachia, with an average realized price of **$3.14/Mcfe** including derivatives Q2 2025 Production by Basin (MMcfe/day) | Basin | Production | | :--- | :--- | | Haynesville | 2,978 | | Northeast Appalachia | 2,662 | | Southwest Appalachia | 1,562 | | **Total** | **7,202** | Q2 Average Realized Prices (including derivatives) | Period | Price per Mcfe | | :--- | :--- | | Q2 2025 | $3.14 | | Q2 2024 | $2.51 | [Capital Expenditures](index=9&type=section&id=Capital%20Expenditures) Accrued capital expenditures for Q2 2025 totaled **$727 million**, more than double Q2 2024, with **$603 million** allocated to drilling and completion, primarily in Haynesville Capital Expenditures - Three Months Ended June 30 (in millions) | Category | 2025 | 2024 | | :--- | :--- | :--- | | Drilling and completion | $603 | $224 | | Non-drilling and completion | $124 | $69 | | **Total Capital Expenditures** | **$727** | **$293** | [Non-GAAP Financial Measures and Reconciliations](index=11&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) The company utilizes non-GAAP measures, including Adjusted Net Income, Adjusted EBITDAX, and Free Cash Flow, to provide a clearer view of core operating performance - Management uses non-GAAP measures like Adjusted Net Income, Adjusted EBITDAX, and Free Cash Flow to evaluate performance by excluding one-time items or items whose timing is unpredictable, such as unrealized derivative gains/losses[27](index=27&type=chunk) Q2 2025 GAAP to Non-GAAP Reconciliation Summary (in millions) | Metric | GAAP Value | Adjustments | Non-GAAP Value | | :--- | :--- | :--- | :--- | | Net Income | $968 | $(703) | $265 (Adjusted Net Income) | | Net Income | $968 | $208 | $1,176 (Adjusted EBITDAX) | Q2 2025 Free Cash Flow Reconciliation (in millions) | Metric | Value | | :--- | :--- | | Net cash provided by operating activities (GAAP) | $1,322 | | Cash capital expenditures | $(657) | | **Free cash flow (Non-GAAP)** | **$665** |