Expand Energy Q3 2024 Earning Call Summary

1. Historical and Forecast Production Levels for Natural Gas

• Q3 2024 Production: 6.75 Bcfe/day.

• 2025 Forecast: Expected average 7 Bcfe/day, supported by $2.7 billion in capital.

• 2025 Exit Rate: Projected at 7.2 Bcfe/day, with potential growth to 7.5 Bcfe/day depending on conditions.

2. Production Curtailments or Shut-Ins

• Curtailment Quote: “We have around 200 million cubic feet a day of net gas curtailed... split across Haynesville and Northeast.”

• Curtailment is monitored daily, with adjustments for market demand.

3. TIL (Turned in Line) and DUC (Drilled but Uncompleted) Wells

• Deferred TILs and Capacity: Plan to build ~80 deferred TILs, achieving up to 1 Bcf/day of short-cycle capacity by year-end.

• Flexibility Quote: “We’re ready to rapidly respond to market conditions when pricing improves.”

4. Hedging Strategy / Break-Even Production Costs

• Hedging Strategy: Utilizes “hedge to wedge strategy” to secure financial stability.

• Price Coverage: Collars and ceilings are set “well into the $4 per MMBtu range,” protecting against down-cycles but capturing upside in high prices.

5. Rig and Frac Crew Numbers

• Current Rig Count: Ending 2024 with 12 rigs, planned reduction to 10 rigs in Q1 2025.

• 2025 Year-End: Likely ramping back to 12 rigs as market conditions dictate.

• Long-Term Rig Outlook: Potential average rig count at 12 in 2026, dependent on capital efficiencies and synergies.

6. New Pipelines, LNG Projects, and Energy Infrastructure

• Matterhorn Pipeline: New capacity launched in October 2024; expected to reach full capacity in the coming months.

• Focus on LNG-ready strategy for increased domestic and international demand.

7. Market Activity and State of the Market

• Expected Volatility: Market fundamentals signal continued price volatility, with flat-to-declining supply anticipated through 2025.

• Growth Drivers: Increasing domestic demand driven by AI and power generation; significant LNG demand ramp expected by 2026.

• Rig Count Insight: Current rig count insufficient for supply growth; supply likely to stay flat until forward price improves.

Key Figures and Dates

• Q3 2024 Production: 6.75 Bcfe/day.

• 2025 Target: 7 Bcfe/day average, $2.7 billion capital.

• Curtailment Capacity: 200 MMcf/day (Haynesville, Northeast).

• Deferred TILs: ~80 by year-end 2024, 1 Bcf/day capacity.

• Matterhorn Pipeline: Online October 2024, ramping up.

• 2025 Year-End Production: 7.2 Bcfe/day target exit rate.