Expand Energy Q1 2025 Earnings Call Summary

Expand Energy’s Q1 2025 earnings call carried a constructive and cautiously optimistic tone. While the company posted a net loss on a GAAP basis, operational and financial highlights—including production exceeding 6.79 Bcfe/d, new S&P 500 inclusion, and investment grade credit rating upgrades—demonstrate resilience. There were no “surprise” business pivots, but strong progress in LNG positioning and infrastructure access suggest long-term strategic optionality is taking center stage.

Management Commentary Highlights

1. Production Levels – Historical and Forecast (Natural Gas Focus)

• Q1 2025 production: 6.79 Bcfe/d (92% natural gas)​.

• Full-year 2025 forecast: 7.0–7.2 Bcfe/d; exiting 2025 at ~7.2 Bcfe/d​.

• 2026 guidance implies ~7.5 Bcfe/d production, if market conditions warrant it​.

• Notably, the company is building ~300 MMcfe/d of incremental productive capacity by investing an additional $300M in 2H 2025.

• “We expect to exit 2025 at approximately 7.2 Bcfe per day, turning in line substantially all productive capacity built in 2024.” — CEO Domenic Dell’Osso​

2. Curtailments and Shut-ins

• No formal shut-ins were mentioned.

• Some deferred production was strategically turned in during the winter:

• “We and some others had some deferred activity that we brought online into the cold winter that we had this year, creating some flush production.” — CEO Domenic Dell’Osso​

3. TILs and DUCs

• Q1 2025: 89 wells turned in line, supporting the production ramp​.

• Most of the 2024 productive capacity (TIL and ~85% of DUCs) will be activated in 2025.

• Haynesville DUCs drove an increase in frac activity in early 2025.

• “Coming into the year carrying a higher level of ducks… really the expectation is across this quarter and maybe carry a month or so into Q3 that we'll run a fourth frac crew.” — COO Josh Viets

4. Rig and Frac Crew Activity

• Q1 2025: 11 rigs, average.

• FY2025 Guidance: ~12 rigs, with expansion to 15 rigs by YE 2025 for capacity build​.

• Frac crews:

  • Haynesville: Increased from 3 to 4 frac crews temporarily.

  • Average expected to normalize to 3–3.5 for FY25​.

5. Hedging, Realized Prices, and Break-even Costs

• New Hedges: 740 Bcf added YTD through Q1 2027.

  • Avg. floor: $3.75

  • Avg. ceiling: $5.10

• 2024 hedges delivered $1.6B in gains.

• Break-even cost: now below $3.00/MMBtu, expected to decline further due to synergy capture.
  “Our break evens today… have moved a little bit below $3. We think they're going to continue to drive lower.” — CEO Domenic Dell’Osso​

6. Politics, Economy, and Tariffs

• Minimal short-term tariff impact expected.

  • ~80% of casing sourced domestically.

  • Majority of casing contracted through Q3 2025.
    “Our exposure to those tariff-related impacts are somewhat muted.” — COO Josh Viets​

• Management continues to monitor regulatory and LNG export-related policy trends, especially in Appalachia.

7. Pipelines, LNG Projects, and Infrastructure

• LNG Deliverability:

  • ~2 Bcf/d sold to LNG facilities currently.

  • 2.5 Bcf/d of deliverability to LNG corridor (esp. Gillis)​.

• Momentum NG3 pipeline projected in-service: Q4 2025​.

• CEO and EVP of Marketing referenced strategic LNG conversations in Asia and Gulf Coast: “We’re in numerous conversations… to expand our value chain and look for more upside [in LNG].” — EVP Dan Turco​

• Constitution Pipeline discussed as a potential opportunity in NE Appalachia; still in early development.

8. Market Activity and Commodity Outlook

• Q1 commentary reflected acceptance of short-term volatility.

• Long-term macro backdrop is viewed as strong, driven by:

  • LNG export demand growth.

  • Data center power requirements.

  • “The macro fundamentals for natural gas remain very constructive, with growing LNG and data-centered demand setting up the market for a strong 2026.” — CEO Domenic Dell’Osso​

• Mid-cycle planning price: $3.50 to $4.00/MMBtu remains unchanged.

• Targeting free cash flow optimization at ~7.5 Bcfe/d production aligned to this range.

Q&A Commentary Summary

• Hedging: Management reiterated the strategy of layering hedges opportunistically. The current hedge book provides solid downside protection.

• LNG marketing: Management hinted at deeper LNG value chain involvement but remains cautious about commercial sensitivity.

• Break-even and Synergies: Below $3/MMBtu break-even affirmed. Ongoing synergy realization expected to lower this further.

• Tariff impact: Softened by contract coverage and domestic sourcing.

• DUC/TIL cadence: 1H 2025 is heavier with deferred turns; attention shifting to fresh DUCs in 2H.

• Appalachia Pipeline Opportunity: Constitution Pipeline is being evaluated. No firm commitment, but EXE is “encouraged” by recent federal and state engagement.

Key Numbers and Dates