Expand Energy Corporation(EXE) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) Presents unaudited condensed consolidated financial statements, including balance sheets, operations, cash flows, and equity, with detailed notes Condensed Consolidated Balance Sheets 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 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 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 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] - 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][42][43] - 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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][119] - The company achieved investment-grade ratings from S&P, Fitch, and Moody's, leading to less restrictive covenants on its Credit Facility[123] - 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] Liquidity and Capital Resources 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] - The 2025 capital expenditure budget is projected to be between $2.85 billion and $3.0 billion, targeting 250 to 280 gross wells[138] 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 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] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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] - A 10% fluctuation in forward natural gas prices would change the fair value of the company's gas derivatives by approximately $500 million[172] - 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] - Interest rate risk is minimal as of June 30, 2025, with no outstanding borrowings under the floating-rate Credit Facility[173] Item 4. Controls and Procedures 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] - No material changes to internal control over financial reporting occurred during the quarter[176] PART II. OTHER INFORMATION Item 1. Legal Proceedings 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] - Management does not expect current legal proceedings to have a material adverse impact on the company's financials[180] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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 No defaults upon senior securities were reported during the period - None[186] Item 4. Mine Safety Disclosures 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] Item 5. Other Information 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] Item 6. Exhibits 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][191]