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    EXE
    Earnings call· Mar 2026(Q1 FY26)

    EXPAND ENERGY Q1 FY26 earnings call EXE

    Apr 29, 2026 Source

    Executive summary

    Expand Energy Q1 FY26 — Strong FCF, Debt Reduction, and Strategic LNG Deal

    Expand Energy delivered a solid first quarter, marked by robust free cash flow generation and significant debt reduction, surpassing its annual target. The company also announced a strategic LNG offtake agreement, reinforcing its focus on premium markets and new demand. Management emphasized its proactive approach to value creation, leveraging its asset base and marketing strategy without waiting for a new CEO.

    Highlights

    5

    • Generated $1.7 billion in free cash flow, inclusive of working capital inflows.

    • Reduced gross debt by $1.3 billion, exceeding the full-year target of $1 billion.

    • Returned over $290 million to shareholders through base dividends and buybacks.

    • Secured a new LNG offtake SPA with Delfin LNG for 1.15 million tons per year, extending market reach.

    • Achieved 98% uptime for Appalachia assets during Winter Storm Fern.

    Concerns

    2

    • Gulf Coast assets were impacted by Winter Storm Fern, resulting in CapEx shifting from Q1 to Q2.

    • Near-term inflation around diesel prices tied to the conflict in Iran.

    Guidance & targets

    8
    CategoryTargetConfidence
    Full-year production
    Unchanged
    high materiality
    High
    Full-year capital
    Unchanged
    high materiality
    High
    Marketing margin improvement
    $0.20/share
    medium materiality
    Medium
    Incremental free cash flow from marketing
    $500 million per year
    medium materiality
    Medium
    Northeast demand growth
    4 to 6 Bcf per day
    low materiality
    Medium
    Debt reduction
    at least $1 billion
    high materiality
    High
    Production target
    7.5 Bcf a day
    high materiality
    Medium
    Capital expenditure
    $2.85 billion
    high materiality
    Medium

    Operational metrics

    14
    Gross debt reduction
    $1.3 billion
    Q1 FY26

    Debt reduction achieved in the first quarter, exceeding the full-year target.

    Shareholder returns
    $290 million
    Q1 FY26

    Total capital returned to shareholders in the first quarter.

    Appalachia asset uptime
    98%
    Q1 FY26

    Impressive uptime maintained during Winter Storm Fern.

    Lowest breakeven inventory ownership
    72%
    Current

    Company owns a significant portion of the lowest breakeven inventory in the Haynesville basin.

    Term sales and firm transportation
    0.5 Bcfd
    Past 6 months

    Added combined term sales and firm transportation to extend reach to premium markets.

    Incremental value from monetizing volatility
    $90 million
    Q1 FY26

    Value generated from capturing market volatility, aiming for more sustainable gains.

    LNG portfolio volumes
    1.15 million tons per year
    Future

    New agreement extending market reach to global demand centers.

    Current LNG supply to facilities
    2 Bcfd
    Current

    The company is currently supplying this volume to LNG facilities.

    Expected U.S. demand growth served by assets
    90%
    Future

    The company's assets are strategically located to serve a large portion of future U.S. demand growth.

    Western Haynesville well status
    1st well online
    Early March

    First well in the Western Haynesville has been online for a couple of months with encouraging early results.

    Western Haynesville wells planned
    more wells
    FY26

    Additional wells are planned for the Western Haynesville program this year.

    Western Haynesville 2nd well spud location
    50 miles north
    Last week

    The second well in the Western Haynesville program was recently spud.

    Q2 CapEx
    high point
    Q2 FY26

    Q2 is expected to be the highest CapEx quarter for the year due to program setup and timing of leasehold acquisitions and workovers.

    Rig count in Haynesville
    uptick
    Recent

    Noted an increase in rig counts in the Haynesville, but without significant cost impact yet.

    Industry KPIs

    5
    MetricValueDetails
    D c efficiency rig activityfastest well ever
    Cost of supply unit cash costbelow $3USD/boe
    FCF shareholder distributions$1.7 billion FCF, $290 million distributionsUSD
    Take or pay contract structurelong-term SBA
    Weather event volume earnings impactCapEx shifted

    Orderbook & backlog

    1
    LNG offtake SPA with Delfin LNG1.15 million tons per yearQ1 FY26

    new agreement, replacing previous

    Long-term contract, priced at cost of liquefaction. Aims to capture LNG market opportunity and premium pricing.

    Deals & partnerships

    1
    Delfin LNGNew offtake SPA for LNGlong-term

    New agreement for 1.15 million tons per year, replacing a previously terminated agreement. The company is also negotiating to be the gas supply manager for Delfin.

    Risks & headwinds

    3
    Winter Storm Fern impact on Gulf Coast assetsQ1 FY26

    CapEx shifted from Q1 to Q2

    Mitigation: Full year production and capital guidance remain unchanged, indicating recovery/mitigation plans in place.

    Near-term inflation on diesel pricesNear-term

    tied to the conflict in Iran

    Mitigation: Costs have been stable outside of this specific impact, suggesting broader cost control measures.

    Softening gas marketsNear-term

    strip landing below $3.60

    Mitigation: Company is responsive to pricing, has flexible operations, and can defer turn-in-minds or slow completion activities to align production with price.

    What to watch in Q2 FY26

    5

    Western Haynesville well performance

    Next quarter
    CurrentFirst well online since early March, encouraging early results
    TargetContinued positive performance, further appraisal results

    Why it matters

    Successful appraisal and development of Western Haynesville is key to long-term inventory and production growth.

    So the well has been online for the last couple of months now, came online in early March. And so we're still monitoring well performance there. I would say we've been very pleased with what we've seen to date.

    Q&A highlights

    7

    Why was the Delfin LNG project attractive, and what are the company's thoughts on global gas supply-demand balances and its LNG marketing portfolio?

    Delfin is an extension of the Haynesville strategy, aiming for exposure to international LNG pricing (JKM, TTF). It's a foundational contract to capture premium markets, monetize volatility, and facilitate new demand. The company is negotiating to be Delfin's gas supply manager, integrating its value chain.

    “Delfin is the start, and we'll call it a foundational sort of contract in order to start to capture the LNG market opportunity and the premium pricing.”

    asked by Matthew Portillo · answered by Michael Wichterich

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Positioning and Demand Drivers

    Expand Energy is uniquely positioned to capitalize on major demand growth drivers: AI power, reshoring of heavy industry, and global LNG growth. The company's Gulf Coast assets are at the epicenter of LNG demand, with LNG facilities being its largest customers. Its Appalachia assets are core to AI power demand, with the Northeast expected to see 4 to 6 Bcf per day of demand growth, unlocking pipeline-constrained production. The company believes the Gulf Coast is well-positioned to become a premium price market.

    02

    Marketing and Commercial Strategy

    Marketing and Commercial has been a primary focus, aiming for a $0.20 per share margin improvement, equating to approximately $500 million of repeatable incremental free cash flow per year. This strategy involves reaching premium markets, monetizing volatility (generating nearly $90 million incremental value in Q1), and facilitating new demand. The company is adopting a customer solution-focused mindset, adding 0.5 Bcfd of term sales and firm transportation to end users in the past six months.

    03

    Western Haynesville Progress

    Early production results from the first well in the Western Haynesville have been encouraging, with the well online since early March. The company is pleased with execution and cost competitiveness, with more wells planned for the year. A second well was spud 50 miles north of the first, and management expects to continue driving down the cost curve by leveraging expertise from the legacy Haynesville operations.

    04

    Balance Sheet and Capital Allocation

    Expand Energy generated $1.7 billion in free cash flow in Q1, reducing gross debt by $1.3 billion and returning over $290 million to shareholders. The company has achieved its full-year debt reduction goal of at least $1 billion. With this progress, management plans to rebalance capital allocation towards shareholder returns, specifically buybacks, while maintaining an investment-grade balance sheet through commodity cycles. Hedging strategy is key to protecting downside and preserving upside.

    05

    Operational Efficiencies and Cost Management

    The company continues to make progress on operational efficiencies, drilling the fastest well ever in its Utica program. Focus areas include perfecting 3-mile laterals in the Haynesville. Costs have remained stable, with only near-term inflation around diesel prices noted. Machine learning and AI are being leveraged to lower costs and enhance well productivity, contributing to a 'self-help program'.

    06

    LNG Strategy and Delfin SPA

    The new SPA with Delfin LNG for 1.15 million tons per year is a foundational contract to capture the LNG market opportunity and premium pricing. This deal is considered bigger, sooner, and cheaper than a previous terminated agreement. Expand Energy views its LNG strategy as dynamic, taking a portfolio approach to add opportunities with different contract types and pursuing integration as a gas supply manager for Delfin, leveraging its Haynesville assets.

    AI-generated summary of the company’s earnings call. Not investment advice.