Mergers and Acquisitions - On October 1, 2024, the company completed the Southwestern Merger, issuing approximately 95.7 million shares valued at approximately $7.9 billion to Southwestern's shareholders[122]. - The company anticipates capturing synergies from the Southwestern Merger, which may positively impact future financial performance[167]. - Production expenses increased by $119 million in the current quarter and $309 million in the current period compared to the prior periods, mainly due to the Southwestern Merger[152]. - Gathering, processing, and transportation expenses rose by $456 million in the current quarter and $1,255 million in the current period compared to the prior periods, attributed to increased volumes and rates from the Southwestern Merger[153]. - Severance and ad valorem taxes increased by $37 million in the current quarter and $87 million in the current period compared to the prior periods, primarily due to the Southwestern Merger[154][155]. - General and administrative expenses (G&A) for Q3 2025 were $45 million, up from $39 million in Q3 2024, primarily due to increased employee compensation related to the Southwestern Merger[157]. - Depreciation, depletion, and amortization (DD&A) for Q3 2025 was $741 million, compared to $335 million in Q3 2024, reflecting the impact of the Southwestern Merger[160]. - Interest expense on debt for Q3 2025 increased to $72 million from $34 million in Q3 2024, largely due to the assumption of Southwestern's Senior Notes[164]. Financial Performance - The company reported cash provided by operating activities of $3,619 million for the nine months ended September 30, 2025, compared to $1,183 million for the same period in 2024, reflecting increased sales volumes and higher prices for natural gas, oil, and NGL[140]. - Natural gas, oil, and NGL sales increased by $1,443 million in the current quarter compared to the prior quarter, driven by increased volumes and higher average prices[150]. - Total natural gas, oil, and NGL sales for the current period increased by $4,797 million compared to the prior period, primarily due to the Southwestern Merger[151]. - Cash provided by operating activities increased to $3,619 million in the Current Period from $1,183 million in the Prior Period, primarily due to increased sales volumes and higher prices for natural gas, oil, and NGL[140]. - Natural gas, oil, and NGL sales during the Current Period increased by $4,797 million compared to the Prior Period, driven by a $3,718 million increase in volumes and a $1,079 million increase in average prices[151]. - The average realized price for natural gas in the Current Period was $3.01 per Mcf, compared to $1.75 per Mcf in the Prior Period[150]. - Other operating income for Q3 2025 included favorable legal settlements of approximately $40 million, contributing to a net income of $(37) million[162]. Capital Expenditures and Investments - The company plans to invest between $2.8 billion and $2.9 billion in capital expenditures for the year ending December 31, 2025, with expectations to complete 250 to 280 gross wells[138]. - The company plans to fund its 2025 capital program through cash on hand, expected cash flow from operations, and borrowings under its 2025 Credit Facility[138]. Shareholder Returns - The company declared a base quarterly dividend of $0.575 per share, payable on December 4, 2025[132]. - Common stock dividends paid amounted to $628 million in the current period, compared to $254 million in the prior period[147]. - The company repurchased 0.9 million shares for an aggregate price of $100 million during the current period[127]. - The company authorized a share repurchase program of up to $1.0 billion, repurchasing 0.9 million shares for $100 million during the current period[146]. Liquidity and Debt Management - As of September 30, 2025, the company had $4.1 billion of liquidity available, including $0.6 billion in cash on hand and $3.5 billion in unused borrowing capacity under the 2025 Credit Facility[130]. - The estimated gross undiscounted future commitments under various agreements were approximately $9.8 billion as of September 30, 2025[135]. - The company repaid $389 million of the 2025 Notes and $47 million of the 2026 Notes during the current period[145]. - The company has $3.5 billion available for borrowings under the Amended and Restated Credit Agreement as of September 30, 2025[136]. Taxation - The company recorded an income tax expense of $329 million for the current period, with an effective tax rate of 20.6%[166]. - The effective income tax rate was 20.6% in the current period, compared to 25.0% in the prior period, with a total income tax expense of $329 million recorded[166]. - The completion of the Southwestern Merger triggered an annual limitation on the utilization of tax attributes[172]. Risks and Challenges - Forward-looking statements indicate potential risks including reduced demand for natural gas and oil, competition, and commodity price volatility[167]. - The company faces risks from terrorist activities and cyber-attacks that could adversely impact operations[172]. - There are challenges related to employee retention in an increasingly competitive labor market[172]. - The company is exposed to inflation and commodity price volatility, influenced by OPEC+ decisions and geopolitical instability[172]. - The company may experience limitations on financial flexibility due to high levels of indebtedness and restrictive covenants[172]. - Risks associated with acquisitions or dispositions could affect the company's strategic direction[172]. - The company must navigate legislative and regulatory initiatives related to climate change and hydraulic fracturing[172]. - There are potential risks from cybersecurity threats that could disrupt business operations[172]. - The company is subject to federal and state tax proposals that may impact the industry[172]. - The company aims to achieve and maintain ESG certifications and commitments amidst evolving regulations[172].
Expand Energy Corporation(EXE) - 2025 Q3 - Quarterly Report