Expand Energy Corporation

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Expand Energy Corporation's second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's opening remarks, we will have a question and answer session. If you would like to ask a question, you will need to press star 1-1 on your telephone keypad. As a reminder, this conference call is being recorded. At this time, I would like to turn the conference over to Ms. Brittany Raiford. Ma'am, please begin.

Thank you, Howard. Good morning, everyone, and thank you for joining our call today to discuss Expand Energy's 2026 second quarter financial and operating results. Hopefully, you've had a chance to review our press release and updated investor presentation that we posted to our website yesterday. During this morning's call, we will make forward-looking statements, which consist of statements that cannot be confirmed by reference to existing information, including statements regarding our beliefs, goals, expectations, forecasts, projections, and future performance, and the assumptions underlying such statements. Please note that there are a number of factors that will cause actual results to differ materially from our forward-looking statements, including the factors identified and discussed in our press release yesterday and on other SEC filings. Please recognize that, except as 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 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 that can be found on our website. With me on the call today are Mike Wisterich, Josh Viets, Marcel Tunison, and Dan Turco. Mike will give a brief overview of our results and then we'll open up the line for Q&A. So with that, thank you again. I'll now turn over the conference to Mike.

Thanks Brittany. Good morning and thank you for joining our call. It's now been six months since taking the role of interim CEO. I told you last quarter that I couldn't be more optimistic about the future of Xpand. Today's quarterly results are a testament to why I was optimistic then and why my optimism today continues to grow. Let's talk about why. First, the Xpand team has earned a well-deserved reputation for operational excellence and execution. This quarter was no exception. Our Southwest App team had a particularly good quarter. The team has consistently delivered tremendous operating results conducted with a safety-first mindset. Our employee and contractor safety is job number one. Second, we embrace that to be a great company, we need to be a disciplined allocator of capital. This year has been a clear reflection of that commitment. In the first quarter, our free cash flow surged as a result of high natural gas prices. We were able to capture this volatility and prudently chose to pay down $1.3 billion in gross debt. This was intentionally done to put us in a position to capitalize on times when commodity prices are soft. Prompt month natural gas prices dipped after the first quarter and we were prepared to act decisively when our stock price dislocated from our mid-cycle price view of $3.50 to $4.00. As our peer companies focused on paying off low-interest debt, we repurchased $850 million, or 4% of our outstanding shares. This is a great example of how we allocate capital to generate superior returns through the cycle. Our board also sees the value of this type of thinking and has authorized an additional $1 billion for future buybacks so that we can continue to act decisively when market conditions dictate. Third, we believe an upstream company must replace and build its drilling inventory to be successful over the long term. Organic leasing, when done well, is the most accretive and effective way to extend inventory. This year, we have been active in each of our operating areas, adding high-quality locations that are either accretive to our near-term drilling plans or give us the ability to grow production when natural gas prices rise. We also believe in inorganic transactions. However, I will remind you our bar is high. Any transaction must do more than add scale. It must create long-term strategic value and position the company to become something stronger and more impactful over time. These opportunities are rare and must meet our non-negotiables. Fourth, will your position expand? For the long term as North America's leading integrated natural gas company. In February, I mentioned on our earnings call that we had a renewed focus on our marketing commercial efforts. We laid out a three-part framework. One, facilitating and capturing new demand. Two, reaching premium markets. And three, monetizing volatility. In the first quarter, we announced the LNG transaction with Delfin, Extending our reach globally and advancing our goals on both capturing new demand and reaching premium markets. The team is hard at work on additional transactions. We look forward to sharing details as they're finalized. On Monday, we announced the purchase of Twin Eagle, which immediately accelerates our marketing commercial strategy and puts us in the driver's seat to reach premium markets and monetize volatility. Before I talk how Twin Eagle is a game-changer for Xpand, I would like to welcome the Twin Eagle employees to the Xpand team. Jeremy Davis, CEO of Twin Eagle and his team have built an incredible business and brand over the past 15 years plus. We believe this acquisition is a transformational opportunity to unite Xpand's industry-leading, diverse supply and financial strength with Twin Eagle's premier physical marketing platform. creating the leading integrated natural gas company. We will soon be the undisputed largest independent natural gas producer and leading gas marketer, scaling our business from a regional player to a coast to coast heavyweight across the United States and Canada, reaching customers that none of our domestic peers can touch. Rather than relying on directional commodity price exposure, Twin Eagle's business is built around linking customers to physical supply Thank you for joining us. This repeatability, which starts with deep customer relationships, is why they have been profitable every year since inception. Together, we are strategically positioned to benefit from a new era of demand pulled from power, industrial, and LNG consumers across North America. We will more effectively monetize regional volatility and reach high-value markets, providing us with a unique value creation opportunity that will differentiate us from our peers. We expect Twin Eagle will contribute more than $200 million of EBITDA in year one and grow to $350 million per year as we capture synergies over the next two years. Important to note, our estimates assume normal market conditions and do not reflect the potential upside associated with periods of elevated volatility. With our confidence in this deal, we are raising our incremental marketing commercial free cash flow target to $750 million. We look forward to working with Jeremy and the entire Twin Eagle team to maximize the value of every molecule. Finally, before taking your questions, a quick update on the CEO search. We originally said that we expect the process to take six to nine months. We're at the six-month mark, and we will meet our goal. With that said, in the last earnings call, we told you that Expand Team would not stop focusing on creating long-term value for our shareholders during the CEO's transition. I hope today you will see that we were serious. If there is one thing I have learned about the Expand Team, it's that it plays to win. We attack our business with urgency, maintain our disciplined approach to value creation, and keep our promises. I could not be more impressed with the enthusiasm and professionalism of this team nor optimistic for the company's future. With that, we welcome your questions. Operator, please open the line.