Expand Energy Corporation

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Expand Energy Corporation fourth quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question, press star 1-1 on your telephone keypad. If your question has been answered or you wish to remove yourself from your queue, simply press star 1-1 again. As a reminder, this conference call is being recorded. At this time, I would like to turn the conference over to Mr. Colby Arnold. Sir, please begin.

Thank you, Howard. Good morning, everyone, and thank you for joining our call today to discuss Expand Energy's 2025 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 that 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 COB, Chris Hagelin, Including statements regarding our beliefs goals expectations forecast projections and future performance and the assumptions underlying such statements. COB, Chris Hagelin, Please note that there are a number of factors that will cause actual results to differ materially from our forward looking statements. COB, Chris Hagelin, Including the factors identified and discussed in our press release yesterday and in other SEC filings. Please recognize that, except as required by applicable 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 financial measures, which help facilitate comparisons across periods and with peers. For any non-GAAP measure, we use a reconciliation to the nearest corresponding GAAP measure and can be found on our website. With me on the call today are Mike Wistrich, Josh Feets, Dan Turco, and Brittany Rayford. Mike will give a brief overview of our results, and then we will open up the teleconference to Q&A. So with that, thank you again, and I will now turn the teleconference over to Mike.

Thanks, Kobe. Good morning. I'd like to start out by talking about 2025. I think we had a really phenomenal execution year. I mean, we have 15% reduction in our break-evens in the Hainesville. That is very difficult to do. The team should be sort of congratulated on that. It's sort of phenomenal. It doesn't just help our reinvestment rate. It also helps our inventory. You'll notice in the deck we've moved locations over to the left, getting closer to lower break-evens. I think that is a real attribute to the team. When we did the Southwestern merger, we focused on reducing debt. We're fulfilling that promise this year. We've reduced debt, but we also returned a lot of money to our shareholders, and we continue to think that's a good way for the company to continue. Volatility. Look, we're seeing volatility gas prices today. You've seen it all quarter. We believe in hedging and our hedging program has been effective. We have $200 million in gains this year, but I mean, just look at today's prices and we're glad we have them. You'll see we're very active this quarter. What I like about the 15% break evens and the Hainesville is, you know, they're real and they know they're real because when we talk about 26, we've reduced our maintenance capital. That absolutely is a proof positive that the team is working and it's working well. 26, we'll continue to do our buy down of debt. We'll also consider shareholder returns as we always have. Big news, of course, is the change that we made last week. That is really a reflection of the changing natural gas business. We believe the world has fundamentally changed in natural gas. We're seeing a tremendous growth in demand. We're seeing 35 to 40% in the next five years. This move is absolutely trying to address that reality. Today, our marketing business, while we think about it, is in sort of three buckets. The first bucket that we consider is how do we get our gas to premium markets? This has been a goal for the company from the very beginning last year. When we started in Chesapeake in 2021, we had our goal of removing these numbers. It was at the time we're almost all in basin sales. Today we're close to 50%. We feel good progress has been made. The second leg of marketing is we need to take care of volatility. We live in a very volatile gas market. We know that. And so by hedging, by doing storage transactions, this helps us in the low price environments. which we always are concerned about. It's about discipline. Hedging is about that. Our third, which we have not made as much progress and we're disappointed in, and we expect to do better is we need to capture and facilitate new demand. We need to get our fair share of this market. Our team has done some good stuff. We saw the LCM deal this year, but we have not done enough and we're sort of taking that challenge. And that is really some of the fundamental reasons why we're moving to Houston. In order to participate in that market, you can see you have to sort of compete on our trading side of our business or our marketing side. We're not the only ones who are saying this. I mean, you see wellhead to water. You see wellhead to watts. We have to think beyond the wellbore. We have to say it's not good enough anymore to just drill great wells. We have to compete on the marketing side of our business. What is the size of the prize? Been asked many times about that. I think the size of the prize we're chasing is 20 cents. We're looking for improved realizations across our business. We think that will make us competitive and a better energy company. These changes, as all changes, you have some things that are unfortunate. Obviously, our senior leadership has changed. That does not change our mission. That does not change our strategy. But what you're seeing is a change in tactics. and focus that we have a new business we have to spend time on that business what's not changing our operations have been great look at the results we're not changing our leadership we're not changing our location we plan to stay in oklahoma city with our ops team uh we josh is still leading that group and we don't expect to have changes there because frankly it works and so we don't do things that that don't work so when you think about us our sort of our sort of mantra is Our foundation is in place. Our strategy is clear. Opportunity set is huge. It is time for us to act. And so we're talking about urgency. We're talking about competitiveness. And so all we need to do to be successful is execute. So with that, we'd like to turn it over to questions.

Ladies and gentlemen, if you have a question or comment at this time, please press star 1-1 on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press star 11 again. Please stand by while we compile the Q&A roster. Our first question or comment comes from the line of Neil Mehta from Goldman Sachs. Your line is open.

Good morning, Mike. Morning, team. Thanks for taking the time. Mike, I appreciate some of the color that you provide around management change. Maybe you could talk about the characteristics you and the board are looking for in that next CEO, and any thoughts on timing, how long you think the search could take?

Sure. Thank you for the question. We're looking for a leader who has a bigger view of energy, will be an energy person, but someone who's going to continue our mission and look beyond the wellhead. That is someone who thinks about the whole value chain, including we need to get closer to customers, not just here in the U.S., but we need to get closer to customers in Europe. So it's someone who's a sort of a bigger view of the energy industry at whole. How long does it take? Well, we've done the search before for CEO. It took about six months. This is a bigger, more complicated company. I wouldn't be surprised if it went to nine months. But call it six is sort of the goal. I'll tell you, I'm committed to find the right person. I will be here until that occurs.

Okay, that's really helpful. And then as you talk about marketing, can you talk about the quantification of the uplifted cash flow or realizations that you think could happen if you optimize the commercial side of the business. And one case study could be Fern. Did you guys capture all the upside that you think you could have in that event? And if you had a more robust marketing effort, do you feel like you would have done even better?

Well, I think all energy companies and gas companies are moving towards more marketing because we can no longer give away margin to the guys in between us, the marketers. So number one, our first goal is premium markets. We're starting to see a little bit of results this year on that. I expect that to be the near-term catalyst for us to increase our realizations across our portfolio. That will move into 2027. I think volatility. Joe Trumpey, When especially when prices are low storage is is phenomenal volatilities high storage, it will be very helpful moving our gas to premium markets, whether it be gillis or to Perryville has been been very helpful on those is sort of the near term sort of sort of ways to help our margins right away. Joe Trumpey, To go get that 20 cents a little bit longer let's call it three to five years, we have to do more lcm deals, I mean to facilitate demand generally that has to do with building something. building a plant, building a facility of some sort, so they take a little bit longer, but that is really the future. We're really fighting for years three to five. Again, goal is $0.20. $0.20 improved realization is obviously very material to our margin, and we think we can make it there.

That's about $500 million in EBITDA, right?

That's what we're talking about.

Neil, you asked about Winter Storm Fern. I think your question around what are you going to be able to do with the integration of the operations that we have with the marketing and commercial business. All those things have to work in tandem. I think just talk about that entire value chain and starting with the operations. Those operations have to hold up when you have these types of weather events. And, of course, it really is going to depend on the type of weather that we incur. In the Northeast, really across our entire Appalachian region, the operations held up incredibly well and performed incredibly strong through the weather events. In fact, the other thing I'd just point out, in Northeast Pennsylvania, we were actually peaking out on our production levels as we headed into January. So, again, just thinking about the flexibility of our business there. You know, in the Haynesville, you know, that was a little bit different of a challenge. We had over an inch of ice accumulate on roads, and that simply was detrimental to the power infrastructure as well as our ability to manage water across the asset. So definitely a little bit of a different situation there that had some impact on our volumes across that time period, but we absolutely know that In order for us to realize these aspirations, the entire value chain has to work, and that includes our operations, that has to include our marketing commercial business, and it also implies that we have to gain additional access to infrastructure further down the value chain.

Thank you. Our next question or comment comes from the line of Matthew Portillo from TPH. Mr. Portillo, your line is open.

Good morning, all. Maybe just to follow up on the marketing front, it feels like, and I know you lay it out in your slide deck, but it feels like there's been a pretty significant shift in a constructive way in the supply-demand balances for natural gas on the Gulf Coast. I was curious if you might be able to discuss at a high level how you think the demand dynamics have been changing, and if there's any shift in your conversations for contract tenor, but also pricing dynamics for offtake agreements, whether it be LNG players, utilities, or industrial consumers around Louisiana and Texas?

I'll start and let Dan finish. Really high level, we're definitely seeing the Gulf Coast be very active. It is a unique area. Of course, it's 50% of our production where it is. We're seeing gas on gas demand. We're seeing that end-use customers want to be closer to wellhead. And so we think that is going to go into our favor. And you can see others talking about this as well. We're not the only ones. You know, in the Northeast, of course, that's a power market. And it's a little different. It's actually having some, of course, with Virginia and the data centers built, it's a little bit different market. Generally think that there's more diversity in the Gulf Coast. But Dan, you should add additional color.

Yeah, thanks, Matt. I think you've nailed it. The Gulf Coast is a place where we're seeing growing demand. If you look at the entire United States, we're seeing about 25 billion cubic feet a day of gas demand coming online. A lot of that, half of that's coming from the LNG, and that sits right in our backyard, right where our Hainesville asset is and right where our pipeline capacity gets down to Gillis. And somebody asked me the other day, how do I feel about this market? And I said, I've been around this market for like 25 years, and the first time we're getting tons of inbounds, people looking for that security supply that you referenced. So the team is out there working, working all these deals, trying to do something better. As Mike pointed out, you know, this opportunity is huge and we're accelerating what we're trying to do here and grow and further expand down the value chain. And where we're set up, our Hainesville asset deal list and that demand is quite unique for us. Not only the Louisiana side of the border, the Texas side of the border is growing as well. There's a unique aspect going on between Texas and Louisiana, just with the amount of demand growth. People talk about the Permian a lot. The Permian will grow into these markets. But, of course, Texas is growing substantially as well as Louisiana, and the ability to get from interstate pipelines across the border to meet that demand is also a little bit challenging. So we're set up quite well here to go and capture all this demand.

Great. And then maybe a question for Josh. One thing we've noticed on the macro side is the industry has continued to accelerate kind of the rig count in the Haynesville, but more of those rigs, are making their way to East Texas and then in the core of the basin, some of your peers are starting to face degradation on their well results. I guess, Josh, as we look at your well data and then also, I guess, the slide you laid out on page 12, just curious how you think about expand productivity trends in the Haynesville over the next few years and how that might contrast to the industry as a whole.

yeah thanks for the question matt i mean i mean the reality is the inventory that we carry in the haynesville is just simply unmatched it's both in terms of depth and quality you see that you know show up in a number of different spots and then you combine that with you know what is a you know 15 plus year history of operating the basin and so that simply leads to operational excellence and and then at the end of the day you know that's going to show up in the break even of our inventory you know we're just in one year alone we've been able to add the five years of inventory below $3.50. And so yes, though we've seen roughly 10 rigs added to the Hainesville, those 10 rigs that are being added by no means make any comparison to a rig that we might choose to add. In fact, if you reference slide 30, we've characterized there what over a two-yard time period of production of our rig is able to generate relative to an average rig in the industry. So the things that we're continuing to be focused on, of course, is operational excellence and continuing to manage the way at which we drill our wells. And that's primarily around how we manage temperature. And then the other differentiator for us is, of course, how we source sand. And not only that is lowering the input cost, but it's simply allowing us to optimize a better economic outcome by increasing profit intensity and driving our well productivity higher. That's not about IPs. I'll just note that's really about, you know, changing the decline parameters of the well, which again translates to value at the end of the day.

Thank you. Just a second. Our next question or comment comes from the line of Doug Legate from, let's see, stand by. There we go. Doug Legate from Wolf Research. Mr. Legate, your line is open.

You had me on pause there for a minute. Thanks so much. Good morning, guys. Mike, I wonder if I could ask two quick things to the extent you're able to answer them. There's a lot of focus, obviously, on your breakeven. When you and I have chatted, it's almost like you've kind of laser focused on how you get this breakeven down. Some of your peers have obviously taken different routes on this, whether it be greater liquids mix, introducing midstream deleveraging. I'm wondering to the extent you can share your vision for how Xpand gets that break-even down, given the proportion of dry gas you have. That's my first one. My second one is you've called the 2029 bonds, and big nut, obviously. I'm wondering if this is... defining a different priority for the use of cash in terms of balance sheet over buybacks. And I'll leave it there. Thank you.

Great. Thanks, Doug. A couple of things. I do think we focus a lot of break-evens, but we also need to focus on our total financial picture, including earnings per share. Obviously, we're making a big debt in our debt. We think that actually helps. That's one way to do it. But we're also thinking about marketing. It's a top line. We have to have the margin get better. And so I think We're trying to squeeze this number anyway. We're fighting for pennies. We know we're fighting for pennies as an industry. And so you sort of have to use the whole tool chest to get that done. And so between debt reductions, between I think you've noticed this last couple years we've made pretty good synergy adjustments and like G&A and not just our business. And so we hope marketing will be the next leg of that. As far as paying down debt versus buyback shares, of course, we like to do both. We've done both this year. We continue to do both. But we're in a very volatile commodity business. And with that, having a non-negotiable of a fantastic balance sheet comes first. And so that's why you're seeing our priority to pay down debt. I think we'll lean into that. We'd like to be a little bit less prescriptive on our buybacks. I think it's a terrible policy to tell the market exactly when we're buying back shares and when we're not. We want to be smart about it. But first deal is balance sheet first. And so that's why you'll see us focus on that. And I think that's also, again, great for EPS, which is important.

Michael, I want to just add a quick follow-up there. I wonder, does M&A come into the picture here in terms of resetting that break-even again midstream and Liquid is kind of what I'm driving at here. What would you say to that?

Well, I'd say we're very actively look at every potential party in the basins that we operate. And some of those have liquids. But the more important part of that question is you have to have discipline. I'd say this year we looked at a lot of transactions and we passed on a lot because it starts with our non-negotiables. Our non-negotiables is balance sheet. It's accretion. And sometimes, you know, this year gas price was pretty high, and so those deals weren't that attractive. But if you're asking about liquids and helping margin, is that a possible answer? It is. It is.

Great. Appreciate the comments. Thanks so much.

Thank you. Our next question or comment comes from the line of Kevin McCurdy from Pickering Energy Partners. Mr. McCurdy, your line is now open.

Mr. McCurdy, you may need to unmute your phone.

Sorry about that. Good morning and thank you for taking my question. I wanted to ask about your maintenance capex and specifically slide six. It looks like there were some improvements to your maintenance capital compared to last quarter, although the guidance didn't change, if I'm reading that correctly. And I also noticed that there were three production levels bolded on the left-hand side there, 7.25 BCF to 7.75 BCF. a range a little bit wider than your 2026 guidance. Is there anything to read into that as well?

Yeah, Kevin, I mean, I think the first thing is, I think just to re-emphasize the improvement that we've seen in our maintenance capex. I mean, if you were to go back to a year ago and look at this slide, it would have been $225 million higher to deliver the 7.5 BCF a day. So first, I think just acknowledging that the business has gotten stronger and that's reflected here. So, you know, you will see that You know, our program does have the ability to still be incredibly efficient from a free cash flow generation standpoint up to 7.75 BCF a day. But one of the things that I just think is incredibly important to, you know, recall and really what is underwriting this slide is a view on mid-cycle price. And that view on mid-cycle price remains unchanged from 350 to $4. 50 cents for us is a pretty big range. And so one of the things we really want to continue to be focused on is maintaining a level of flexibility in the business and therefore how much we produce in any given month or across a given year based upon how we see those prices trend. And so in certain instances, that might cause us to push volumes a little bit higher. But if we see the market maybe turn a little bit bearish, whether that's shorter term or even longer term, we want to have the ability to flex those volumes.

Thank you for that. And for my second question, your budget outlines $75 million for the Western Hainesville this year. Can you talk a little bit about how that program will progress when you'll be drilling and what you're looking for in results?

Yeah, Kevin, Josh, this is Josh again. On that, you know, we have roughly two and a half wells scheduled. There's a little bit of carry in and carry out capital that, you know, take place across the year. We've just finished drilling the first well. That was a horizontal well. Those operations went incredibly well. In fact, when we benchmark our performance, both in terms of days and cost, we're at the very low end of what we've seen from some of the bigger competitors in the western Hainesville, so feel really good about that. That well is being completed as we speak, and we expect first production sometime in late Q1, early Q2. You know, really there, you know, we're obviously going to be interested in longer-term decline parameters there. You know, we know the reservoir is there. We know it's, you know, highly saturated with overpressure gas. But understanding those decline characteristics will be really important. For the rest of the year, we have, again, roughly, you know, two additional wells that we plan to drill. And those are really going to be, you know, centered around helping us appraise kind of the full extent of the acreage position that we put together there.

Thanks, Josh.

Thank you. Our next question or comment comes from the line of Scott Hanold from RBC Capital Markets. Mr. Hanold, your line is open.

Yeah, thanks. You know, I'd like to maybe key off something, you know, Mike, you had said in your overview. And one of the things you kind of mentioned is that, you know, you want to look to, you know, just can't give away margin to the middleman. And, and, As you step back and think about that, would that also contemplate looking at more of an integrated operations, such as going out and actually owning midstream to be more integrated? Does that help the effort? Is that a possible avenue you'd be willing to look at?

Yeah, I think generally speaking, we're focused more on partnerships with midstream companies. We are looking at stuff like momentum that we've done in the past. We're looking, and we actually, LCM deal has a momentum component on it. So I imagine this is more partnerships. We have to get our gas to premium markets. It's unrealistic to think we're not going to have to deal with some sort of transportation to get there. We'd like to be part of that equation. So I think it's that more than just going out and buying gathering systems. I'm not sure that would be really helpful for us. So we have to get to end-use customers. So yes, integrated, but maybe think about that in a partnership way.

Okay. Understood. Appreciate the context. And then if I could ask, you know, on cash taxes, surprised that, you know, the middle model cash tax that you're looking at this year, can you give us a sense of, you know, what drove that? Is that part of the OBVA from last year? And Do you have any kind of visibility over the next couple of years where that cash tax rate might go?

Yeah, Scott, this is Brittany. So you're absolutely right. It is the benefit of the O triple B. And we saw that last year and seeing the benefit of it this year. So we do expect to be a full cash taxpayer probably in the back part of the decade. And so I'd expect us to stair step our cash tax increase throughout the next couple of years to be a full cash taxpayer probably later, closer to 2030.

Thank you.

Thank you. Our next question or comment comes from the line of Zach Parham from J.P. Morgan. Mr. Parham, your line is open.

I wanted to follow up on Matt's question earlier. In the slide deck, you highlighted an increase in your first-year queues that you expect from the Hainesville in 2026. Can you talk about that a little bit, what drove that expected increase, and if you see that as sustainable going forward?

Yeah, good morning, Zach. Yeah, is it sustainable? Absolutely. Again, you can tie back to my earlier comments. You know, we've really been able to reset the economics of the Haynesville with improvements in drilling efficiency, you know, self-sourcing our own sand. And, you know, we've been able to drive this higher productivity largely through enhancing the completion designs. On the call during the third quarter, I talked about, you know, at the merger onset, We came together, we put together what we've referred to as our Gen 1 completion design. You know, we're already now progressing to what's considered our Gen 3 completion design and seeing really improved results from that. And so, you know, we expect that this type of trend that you're seeing, you know, continues forward. And again, I'll just kind of bring it back to, you know, we have an unmatched inventory quality and depth in the Haynesville area. And that, you know, combined with, you know, our history in the basin, you know, there's a good reason why we're delivering these outsized results relative to peers.

Thanks, Josh. And then my follow-up, just on DNC costs in the Hainesville, you've done a lot to bring down costs over the last several years. You've got a slight reduction in your numbers for 2026, but can you talk about your ability to potentially drive that number even lower going forward?

Yeah, you know, pretty – My expectations are pretty high for the organization and our ability to do that. We continue to find opportunities to improve tool reliability. One of the bigger issues you fight in the Hainesville is temperature, and so we continue to partner with some of our service providers to increase tool reliability. In addition, we're seeing some pretty significant advancements with artificial intelligence to help us refine in a more optimal way our well designs, but more importantly, a faster real-time optimization of drilling parameters. And we think those two items there are really going to allow us to unlock further savings from a DNC standpoint.

Thanks, Josh. Thank you. Our next question or comment comes from the line of Josh Silverstein from UBS. Mr. Silverstein, your line is now open.

Yep, good morning, guys. Mike, you talked about the challenge to get expanded volumes to the demand growth areas. Can you just talk about what the biggest challenges are in doing so? Is it getting the customer to actually just agree to supply? Is it price? Concerns over inventory duration? I'm just curious.

Well, there's sort of two challenges for our team, and one is on us, and one is just the facts of the world. The first is our team needs to be more aggressive to review more transactions or potential transactions. We'll build more generators. We'll add to the team to be in the room more often. A big part of moving to Houston is to be in that room. And so we have to get out of our own way. The other side is just real, which is you need to get your gas to them physically. And so you always are thinking about transportation, how to get it there, how to service those clients. And that gives advantages to companies, frankly, like Williams, who have been connected to them for a generation. We have to compete by having assured production that they do not have. And so that's our competitive advantage. But we definitely have to partner. That's why we want to partner with midstream companies, because that's the biggest thing to overcome.

Got it. And then you talked about, you know, trying to get an incremental 20 cents of, you know, realizations or margins there. What's the cost to get it there? Because you are going to have to start to build out a bit more. Is this going to cost you more up front to then have benefits later? Just some sort of sense of that would be great too.

Yeah, I think that's a great question. And the first thing is we talk about our culture of discipline. We talk about rate of return. We think of ourselves as how do you grow long-term shareholder value? And that means you have to talk about the cost as well. Generally speaking, we have the lowest dollar change will be on just trading to premium markets. Those will turn into commitments at FT. Those are not debt necessarily, but let's call it commitments. Everything else, if we have to put more capital to work or risk our balance sheet, has to have a higher rate of return, has to have a bigger payout because we're returns. Do I think we'll probably spend some money over the next three to five years? Undoubtedly. Undoubtedly we have to, but we'll put it in context of our rate of return framework. We have to have a decent rookie in our program, and so these things will have to have discipline around that. Thanks, Mike.

Thank you. Our next question or comment comes from the line of John Freeman from Raymond James. Mr. Freeman, your line is now open.

Good morning. It was nice to see the Hainesville productivity improvements continue, but it does look like the upside on production in the quarter was actually from the Appalachia region. Maybe it looks like, I don't know if it's quicker turning lines, but just any color you could provide on that relative to y'all's guide for the quarter.

yeah yeah so john is josh I mean just to you know address that really that's really about our returning our production from curtailments in the fourth quarter. That was a big piece of it, you know coming into the end of the year, and of course most of those curtailments would have been taking place across northeast Appalachia. And then, of course, in Q1 we would have had a little bit more weather related downtime in the hainesville. As a result of winter storm fern where we, you know, again, you know, so, you know, roughly an inch of ice, you know, show up at the end of January. So that had some modest amount of impacts. And but across the full course of the year, you know, we do, you know, anticipate to be averaging in around 7.5 BCF a day.

Got it. Thanks, Josh. And then Mike started to belabor the marketing topic, but just It seems like, and I don't want to put words in your mouth, but you're a lot more focused, it appears, on sort of the LCM type agreements as opposed to maybe like long-term sort of LNG supply agreements. Is that like a fair characterization?

I don't think that's fair. I think we're looking at both. We're looking at both. We're chasing margin. We have to participate in the value chain of downstream of us. That's definitely LNG. That's definitely, you know, manufacturing, it's power, I think it's all. And so all of the above. I just want to be more aggressive because to get in the room, we have to hustle. It's a competitive space. I mean, it's a super competitive space. We'll have to focus.

Thanks. Appreciate it.

Thank you. Our next question or comment comes from the line of Neil Dingman from William Blair. Mr. Dingman, your line is now open.

Morning, Mike. Nice quarter. Mike, my question, you know, I talked about a little bit of this last night, was on your upstream position. Just looking at your share price, it certainly doesn't seem to me that you all are getting credit for the massive, you know, what, the 2 million plus acres position on top of your material production. So, I'm just wondering, is there something you all would consider doing with, you know, I don't know if it's either monetizing a bit of the inventory or drilling carry to something, somebody or, you know, something to unlock some of this value given, you know, it just seems like, you know, given that sizable position, your investors are just not recognizing this.

Well, first of all, thank you for saying that we're not getting full credit. We'd love to get full credit. We hope you all are paying attention. We think we have a good business. Generally speaking, you know, we're not actively looking to do what you're talking about, but I would say it's always on the table. It has to be. You know, just to say no for the sake of no is the wrong answer. If we see something that's attractive and part of our portfolio that someone wants to overpay, you know, we're a public company. That could happen in any day, and so nothing's off the table. But I don't think we're actively doing that right now.

Makes sense. And then just secondly, look like on the guide you're going to run about the same rig count. Do you assume – you know, I'm just wondering if you're running – that you've recently seen, would you see yourself potentially, you know, let's say you are running ahead of schedule by, I don't know, second, third quarter, would you pull back on the rig count and just sort of, you know, continue to bank that, that free cashflow or would you continue to potentially, you know, boost the production a little more than suggested?

Well, I mean, I think, Neil, we'd have to take a look at the fundamentals and understanding, you know, where supply-demand balances sit. You know, we really take great pride in maintaining the high-level flexibility within our business. You know, we've noted today that, you know, we see this business being efficient, you know, up to that 7.75 BCF a day number. But at this point in time, you know, we feel really good about the program that we've laid out, you know, delivering the 7.5 BCF a day at the 2.85% billion at CapEx, and until the market fundamentals start to sure up, that's the plan that we expect to execute this year. Well said. Thanks, guys.

Thank you. Our next question or comment comes from the line of Charles Mead from Johnson Rice. Mr. Mead, your line is now open.

Good morning, Mike, to you and the whole expand team there. I'd like to ask a question about maybe drilling down on one piece of your marketing push, and that's on storage. You guys, in your presentation, say you have five BCF of storage that you own now. Can you talk about the nature of those assets and what the trajectory has been for building that position? And is storage an area that you expect to be I guess, competitive in acquiring more.

Yeah. Hey, Charles. This is Dan. I'll take that question. This year we added about three and a half BCF storage in the last quarter here to our one and a half we already had. So we like this storage and we like it for many reasons, right? You go back to our MNC strategy. One of the key components is managing volatility. This market is highly volatile as we've seen over the last few months. not only from like time movements, but geography movements. So we actively using that storage. We like that storage and we've made money on it already and we plan on turning that storage a lot more. We would like to grow that storage position, but it is a very competitive market. The total demand of this market has grown substantially and storage has not caught up. That's why you are seeing a lot of volatility. So it's highly competitive to actually get more capacity, but we continue to actively look at it. And back to our discipline approach here, we're only going to take that capacity we feel is going to make us value. and help us manage that volatility and create more margin ultimately.

Got it. Thank you. And then if I could ask a question about the West Virginia Utica. You guys also in your presentation talked about bringing the potential of bringing some Ohio Utica development concepts towards West Virginia and a lot of upside there. Can you elaborate on what that is and how big the upside might be?

Yeah, Charles, I mean, we're pretty excited about our Southwest App program. I mean, the reality is there's not been a lot of Utica development as you move across the Ohio River, and I can assure you the geology does not stop at the river. And so we think there's quite a bit of upside with that. It's something that the teams have been working for some time. It's just really about, you know, kind of getting into the right environment. which that inventory development makes sense. There will be some infrastructure requirements to be able to process it, but it's something that we think we can take some of the learnings that we've built up of drilling deeper gas wells in the Haynesville and leverage those learnings in the Utica and expect it to be a highly profitable part of the business going forward.

Thank you, Josh.

Thank you. Our next question or comment comes from the line of Mr. Philip Youngworth from BMO. Sir, your line is open.

Yeah, thanks. Good morning. With the NG3 pipeline now flowing volumes, can you talk through how this will benefit, expand this year, also as Golden Path starts up? And is there a benefit to maintaining ownership in the project long-term or at least through a potential expansion?

Yeah, hi, Philip. This is Dan. I'll talk about the market dynamics. So yeah, NG3 came out October last year, and that's providing us just, again, more market optionality, and that's bringing our gas to Gillis, which over time is going to be a pretty premium market. At the moment, we're getting about even on where we are and the capacity payments we get and the uplift we're getting. But over time, back to the structural demand of this market, LNG is growing significantly, and we see Gillis becoming an even more premium. So it's providing us two things. It's getting us to premium wholesale market and it's providing us market optionality where we can move between Gillis and Perryville on any given day.

Okay, great. And then besides the capacity going to Gillis, you also have two bees a day going to Perryville. So it's further away from the LNG corridor. So can you just talk about the advantages of selling gas to this hub, and how would the go-forward marketing strategy be tailored here versus volumes going to Gillis?

Yeah, Perryville is also a great market. There's a strong pull from the utilities down in the southeast. A lot of that's coming from the dynamics of Gillis. You know, more gas is being redirected to Gillis for the LNG demand, and the historic gas that would come across over to Perryville is being less. And there's more demand that's going to be taken away from Perryville. There's, I think, three BCFD of new pipeline capacity coming online, pulling further down to the southeast. So this market is also a premium, and a lot of utilities are looking for that longer-term reliable supply. So our advantage here is actually the ability to go to both markets, not only structurally selling to these markets, but any given day being able to move molecules between the two markets. If we sell down in Gillis and the Perryville market changes, we can buy back that position at Gillis or buy gas into that position and move gas to Perryville. We've been doing this quite a lot and quite proud of the team and how they're capturing that optionality value, and we're just going to continue doing more of that.

Thank you.

Thank you. Our next question or comment comes from the line of Betty Jang from Barclays. Ms. Jang, your line is open.

Hello. Good morning. Mike, I'm completely with you on the scale of the marketing opportunity and sort of the need to think bolder. I'm just curious on your 20 cents uplift that we talked about, just how you came up with that target and do you see that as a reasonably achievable number or it's more of a stretch goal for the organization?

I don't think it's a stretch. Let's just start with that. I think it's something that we'll have to be aggressive to do. It's something that we'll have to invest time and energy into, but I don't think it's a stretch. We'll definitely have to pull all three of our levers. Lever one is premium markets. Two, we need to work on our storage. And three, we're going to have to participate in the value chain beyond the wellbore And that means LNG or industrial. And so I don't think that. I think this will be a big part of our business going forward. And I also think that will help our break even. That will help our downside protection because those tend to be a bit more fixed, closer to a fixed fee concept, if you think about it. So I don't think it's a stretch. I sure hope that we make it really quick so that y'all can be comfortable. And then I hope to expand that over time.

Great. No, that makes sense. And definitely a lot of opportunity to fill in the hopper. My follow-up is on M&A. A lot of talk already on the Gulf Coast, but we have also seen just rising deal-making in Appalachia. What's your appetite for M&A in the Northeast? Is there value to having more in-basin exposure in order to capture that growing power opportunity?

I think M&A has been something that we've done a lot of over the past five years. You can see I think we've done over $15 billion of transactions. So it's in our DNA to continue to look at everything. In Appalachia, of course, and the liquids concept that you all mentioned earlier, of course. The question is can you do a discipline? Can you do it to protect the balance sheet? Can you do it with the non-negotiables? This year we weren't able to. I mean, some of these deals went for premium prices that we didn't think were fair value. So the answer is we'll look at everything in our basins. Of course, that's our job. But, you know, M&A is a tricky market. You just kind of have to think about your base business first. And we'll do that.

Great. Appreciate your comments.

Thank you. Thank you. Our next question or comment comes from the line of Kalei Akamini from Bank of America. Your line is open.

Hey, good morning, guys. Thank you for taking my question. Mike, going back to your comments about marketing, you expressed a desire to be more commercial around your volumes. When you look at your portfolio, I'm curious how much gas you have committed to long-term sales agreements, trying to get a sense of how much flexibility you have in the portfolio to ship gas to higher value markets. And is it fair to think that the more flexible molecules in that portfolio is in the Hainesville?

I think it's two things. You're right to point out, of course, that we make commitments every day, and some of those commitments would have to be rolled off. I don't think we have a set number in my mind exactly, and Dan may be able to answer that question. But I do think the Gulf Coast is where we can build. It's where we can grow. We can add volumes to there. And so to the extent we get demand, more demand, we can increase production. to fulfill that demand, and so I think that's always a great answer. In Appalachia, you have less ability to do that, and we were talking about growing there, but the Gulf Coast is where it is, and we feel it's our competitive advantage. I mean, we have three basins. Everyone else has one. We have a bigger market area. We have to take advantage of it, but the ability to grow and, frankly, shrink the Haynesville gives us a lot of marketing opportunities.

I would just add that we do stage those commitments. And on page 19, we laid out a couple of commitments we just made, right? And over a five-year time, we have commitments that go out 15 years, but over a five-year time frame is really we're looking at doing a lot of our sales. And we just added a couple of sales to premium markets here. So these aren't the big deals that we're going to announce, but these are the singles and doubles that we're doing every day, adding more sales to end users and just getting that premium uplift. And a sale becomes an asset as well, as I pointed out in the last point here, is you make a sale and markets move. you can still fulfill that sale with other gas and move your molecule to higher price markets. So there's a double combination here of premium market and capturing the volatility.

I appreciate that. This next question is on the LNG exposure. Pre-South Western, the desire was for exposure to be somewhere between 50% and 20%. Post-marker, that commentary shifted a bit. What does desired exposure look like today? Is it a quarter of gas? Is it a third? And do you think it's necessary to physically match the molecule at the wellhead to take away on the water, or is there some synthetic way that you could go about it?

Yeah, Clay, great question. And, you know, I'll start and Dan can jump in here as well. You know, that commitment that Chesapeake had made prior to close the 15 to 20% on LNG. If you think about it, really the gas markets have changed quite a bit since then. You know, back then we probably weren't talking near as much about, you know, power and industrial demand growth. And so really when you think about it, and we've mentioned this several times, we're interested in reaching premium markets. We're agnostic. really to exactly what those premium markets are, we think the opportunity set is broad. And so we're going to look for the highest return way for us to diversify our sales exposure. So we're not going to be overly prescriptive on exactly how much we want to go to LNG.

Got it. I appreciate that, Brittany. Thank you.

Thank you. Our next question comes from the line of Leo Mariani from Roth. Mr. Mariani, your line is open.

You guys talk about this a lot, but just on the goal of the $0.20 uplift on gas, is there kind of a rough timeframe for that? You kind of mentioned trying to get some deals kind of over three to five years, which is trying to get a sense that that's kind of like a five-year goal. Any other color on that?

I would say, yes, it's three to five, and I'm giving five to give us some room. I certainly hope to make that in three, three and a half, and so we want to be aggressive here.

Okay. Okay. And then just following up on the buyback, you guys kind of spoke about this. I don't want to put words in your mouth, but it sounds as if it's really going to be times of dislocation in the stock, and the priority is really going to be just to make this balance sheet even more rock solid here.

Agreed.

We totally agree with your statement right there.

Okay, thanks.

Thank you. Our next question to comment comes from the line of John Anise from Texas Capital. Mr. Anise, your line is open.

Good morning, all, and thanks for taking my questions. For my first one, you noted around 20% of the 2025 tills exceeded one BCF per 1,000 foot, and you expect that to rise above 30% in 2026. I wanted to get a sense of what's different about those top performing wells. Is it geology, lateral placement, completion intensity, or some combination? And then is there a ceiling on how high that percentage can go given your acreage mix?

Yeah, I mean, it's definitely a mix, John. You know, completion design is really going to be the biggest driver for us, you know, moving forward. But, you know, clearly where you drill is going to matter as well. So typically we see the best performing wells in the southern part of our, you know, acreage position within the NFC. And so you are going to be limited in the number of wells you can drill in any one gathering system. You'll just simply hit capacity constraints. So yes, to answer your question, there would be some constraints. But we just see continued upside across the entire acreage position. We've had a lot of success this year drilling three-mile laterals. We're going to continue to get better and see a bigger portion of that showing up going forward. And as I mentioned earlier in the call, I don't think we've reached what we really deem to be optimal from a completion design standpoint. And again, we continue to reset those economics as a result of having access to a cheaper sand source. Makes sense.

For my follow-up, you mentioned supplying microgrid solutions in Appalachia with flexible volume contracts. How large is this opportunity today, and how would you compare the attractiveness of these smaller volume deals with some of the larger supply commitments announced in the basin?

Hey, John. Thanks for the question. Yeah, we went live with this microgrid solution. It's relatively small, to be fair, but we're excited about these because a bunch of these small deals adds up, and this actually commands quite a premium by having a reservation fee behind our gathering system where this microgrid solution can pull volume for us and capturing a higher price. So we're getting to dual effect here of a reservation fee and a higher price. It's small, but these singles are going to add up over time. We're going to do a lot more of these types of deals. Thanks, guys.

Great. Thank everyone for their questions today. We want you to ask tough questions. We want to be responsive to it. So thank you for them. I'd like to close with just a few sort of big picture comments. Number one, our execution has been amazingly solid. That is our foundation. We are not changing it. We expect it to continue, and we continue to expect our teams to perform better in the future. Two, we are definitely thinking beyond the wellbore. Obviously, we've talked a lot about marketing today. That is actually not a strategy change. We had that strategy. What we're talking about changing today is urgency, attention, discipline. We want to be more aggressive, but always know that we are ready to return and build charitable value. You have to have that. Third, the opportunity is huge. We see it. We finally feel like gas has got its moment. We want to take advantage of it. The demand is amazing. And now it's just time for us to sort of not talk and execute. And so that is our focus here at the company, and we'll continue. So with that, I think that's the end of our call. And I hope you have a good day.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day. Speakers, stand by.