Financial Data and Key Metrics Changes - The company has reduced well costs by over 25% and year-to-date costs are 30% lower than peers based on third-party well proposals [7][8] - The average breakeven cost is now less than $2.75 across the basin, showing significant efficiency gains [7][62] - Since the merger, the company has eliminated $1.2 billion in gross debt and returned nearly $850 million to shareholders [8] Business Line Data and Key Metrics Changes - The Hanzo asset position has seen a meaningful step change in efficiency, with seven rigs now delivering the same production that required thirteen rigs in 2023 [6] - Average well productivity is approximately 40% greater than the basin average, a trend expected to continue [7] Market Data and Key Metrics Changes - Natural gas demand is expected to grow by 20% by the end of the decade, driven by LNG power and industrial growth [9] - The company is positioned to serve customers along the Gulf Coast, where there is increasing competition for supply and lower carbon molecules [9] Company Strategy and Development Direction - The company aims to connect its global scale to growing markets, focusing on providing affordable, reliable, lower carbon energy [8][9] - The marketing strategy is evolving from value protection to value creation, enhancing the marketing and commercial organization to capitalize on its position as North America's largest natural gas producer [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to meet growing demand for natural gas, emphasizing the importance of reliable supply and flexibility in contracts [18][74] - The company is prepared for market volatility and is focused on achieving the best long-term, risk-adjusted returns possible [10][22] Other Important Information - The company has secured a supply agreement with Lake Charles Methanol, which is expected to commence operations in 2030, demonstrating a differentiated path to connect its molecules to high-growth markets at a premium price [10][71] - The company is actively pursuing bolt-on acquisitions to expand its resource base, particularly in Appalachia and the Western Hanzo [36][37] Q&A Session Summary Question: Can you discuss the evolution of gas demand regionally and the supply-demand dynamics? - Management highlighted growing demand along the Gulf Coast and the need for clarity on supply sources, emphasizing their unique position to meet this demand [16][18] Question: What is the current breakeven cost and how is it trending? - The company confirmed that the breakeven cost is now below $3, with significant improvements since the merger [30][62] Question: How do you see gas realization improving over time? - Management expects to add margin through their marketing business, optimizing delivery and aggregating supply to create value [34][35] Question: What are the expectations for the Western Hanzo asset? - The company is optimistic about the resource potential and plans to drill a horizontal production well in Q4, with a measured approach to development [41][67] Question: How does the company plan to manage capital expenditures in 2026? - The company anticipates a similar CapEx profile for 2026 as in 2025, with flexibility to adjust based on market conditions [49][50] Question: Can you elaborate on the Lake Charles Methanol deal? - The deal was motivated by the need for long-term security of supply and the ability to provide a differentiated, lower carbon product [71][74]
Expand Energy Corporation(EXE) - 2025 Q3 - Earnings Call Transcript