Expand Energy Corporation

Good day, and welcome to Expand Energy 2024 fourth quarter and full year teleconference. At this time, all participants are in a listen-only mode. If you would like to ask a question, please press Star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. If you would like to remove yourself, please press Star 1-1 again. Please note, this event is being recorded. I would now like to turn the conference over to Chris Ayers, Vice President of Energy Relations and Special Projects. Please go ahead.

Thank you Lisa. Good morning everyone and thank you for joining our call today to discuss EXPAND's 2024 fourth quarter and full year financial and operating results. Hopefully you've had a chance to review our press release and the updated investor presentation we posted to our website yesterday. During this morning's call we will be making forward-looking statements which consist of statements that cannot be confirmed by reference to existing information Dave Kuntz, Including statements regarding our beliefs goals expectations forecast projections and future performance and the assumptions underlying such statements. Dave Kuntz, Please also note, there are a number of factors that will cause actual results to materially differ from our forward looking statements, including factors identified and discussed in our press release yesterday and other SEC filings. Please also recognize that as except required by law, we undertake no duty to update any forward-looking statements and you should not place undue reliance on such statements. We may also refer to some non-GAAP measures which will help facilitate comparisons across periods and with peers. For any non-GAAP measure, there's a reconciliation on our website. With me on the call today are Nick Delosso, Mohit Singh, Josh Vietz, and Dan Turco, our new EVP of Marketing and Commercial. Nick will give a brief overview of our results, and then we will open up the teleconference Q&A. So with that, thank you again, and I will now turn the teleconference over to Nick.

Good morning, and thank you for joining our call today. The world's need for energy continues to grow. With our attractive, market-connected portfolio, resilient financial foundation, and peer-leading returns, Xpand Energy was created specifically to better respond to this growing demand and yield stronger returns for shareholders in times of volatility. Our productive capacity strategy uniquely positions us to not simply react, but to capitalize on the dynamic market we see today. As our 2025 capital and operating plan demonstrates, this is exactly what we are doing. Benefiting from a powerful combination of premium ROC returns and runway across our portfolio, access to advantage markets, and some of the most capital efficient operations in the industry, we've enhanced our outlook for 2025. We continue to benefit from the tailwind of our 2024 productive capacity strategy and now expect to produce approximately 7.1 BCF per day for a capital investment of approximately $2.7 billion. As market fundamentals continue to improve the outlook for natural gas, we are electing to invest an incremental $300 million to build approximately 300 million cubic feet per day of additional productive capacity. This will allow us to efficiently deliver 7.5 BCF per day in 2026, should market conditions warrant. We believe this level of production optimizes free cash flow at mid-cycle prices. Since we won't pull the trigger on this incremental capacity until mid-year, we have time to watch the market and will have the flexibility to adjust as necessary. Successful integration has further strengthened our outlook. We continue to capture significant capital and operating efficiencies rapidly accelerating the achievement of our annual synergies. We now expect to achieve approximately $400 million of our annual synergy target in 2025 and to capture the entire $500 million target by year end 2026. I am especially encouraged to see the 20% plus improvement we are delivering in our Haynesville drilling performance. In the fourth quarter alone, we cut nearly nine days and $1.5 million in cost per well from Southwestern's legacy drilling performance. The definition of synergy success is clear, achieving capital and operating efficiencies that result in spending less while producing more, which is exactly what we're doing. Our resilient financial foundation and peer-leading returns program are two areas which also further differentiate our company. At today's prices, we expect to end 2025 with less than $4.5 billion in net debt. Our debut $750 million investment grade issuance set a record spread for an energy rising star at 132 basis points over 10-year treasuries and cleared all near-term maturities through 2029. Our enhanced capital return framework is designed to efficiently return cash to shareholders and reduce net debt. After paying our $2.30 per share dividend, we expect to allocate $500 million to debt reduction in 2025. Given our strong free cash flow outlook, we expect to have additional cash available to allocate to a combination of variable dividends, share repurchases, and the balance sheet. Turning to our marketing program, we see great opportunity to capitalize on our position as the nation's largest natural gas producer. There is greater than 11 BCF per day of LNG capacity under construction, and the domestic power market continues to grow in support of data centers and rising consumer demand. We have the assets, balance sheet, and capital efficient operations to help meet this new demand. I'm pleased to welcome Dan Turco to our team to lead this effort. Dan has extensive experience creating value for marketing and trading programs and will help us realize the benefit of our advantage position. The marketing program has already seen the value of our combined portfolio. Our team worked extremely hard from the date of close to fully integrate our marketing and transportation portfolio by January 1st of this year allowing us to optimize the flow of volumes across pipes, increasing value for our gas, and reducing costs. Looking forward to 2026, once the NG3 pipe is online, approximately 75% of our marketed volumes are expected to reach strategic markets, including 2.5 BCF per day directly to the growing LNG corridor. EXPAND's powerful combination of an attractive connected portfolio, a peer-leading returns program, and resilient financial foundation is distinct among natural gas producers. Today's market provides a unique opportunity for our company, and we look forward to expanding opportunity for our shareholders in the year ahead. Operator will now take questions.