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EXPAND ENERGY Corp (EXE)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered strong operational and cash flow performance: net cash from operating activities of $1.10B, Adjusted EPS of $2.02, and Adjusted EBITDAX of $1.40B, while GAAP EPS was a loss of $1.06 driven by unrealized hedge losses .
  • Revenue (sales excluding hedge mark-to-market) was $3.21B, a significant beat versus consensus; Adjusted EPS also beat Street estimates. GAAP revenue (including derivatives) was $2.20B . Consensus comparisons detailed below (Values retrieved from S&P Global)*.
  • Production averaged 6.79 Bcfe/d (92% natural gas). Management reaffirmed synergy capture (~$400M in 2025; $500M by YE 2026) and base dividend ($0.575), and highlighted S&P 500 inclusion and IG ratings across agencies as balance sheet catalysts .
  • Key stock-relevant narrative: optionality to increase or defer volumes via “productive capacity” strategy, disciplined hedging (added ~740 Bcf floors/ceilings), and proximity to LNG ramp via NG3/LEAP into Gillis positioning realizations/margins constructively for 2025–2026 .

What Went Well and What Went Wrong

What Went Well

  • Strong free cash flow and Adjusted EPS: $1.10B CFO and $2.02 Adjusted EPS underscore robust cash generation despite volatile gas markets; Adjusted EBITDAX reached $1.395B .
  • Operational execution: 11 rigs, 46 wells drilled, 89 TILs; the team delivered record drilling footage/day across all business units and achieved 6.79 Bcfe/d net production (92% gas) .
  • Strategic positioning and synergy trajectory: On track for ~$400M synergies in 2025 and $500M by YE 2026; S&P 500 addition and uniform IG ratings enhance capital access. CEO: “Overcoming market volatility requires a resilient financial foundation… and low cost, efficient operations, all hallmarks of our strategy” .

What Went Wrong

  • GAAP loss driven by hedge marks: Unrealized derivative losses of $1.014B pushed GAAP net loss to $249M (–$1.06 diluted EPS) despite strong operating outcomes .
  • Elevated DD&A and gathering/processing costs: DD&A of $711M and GP&T of $563M impacted GAAP profitability; marketing expenses were $919M given portfolio scale .
  • Tariff risk to 2026 OCTG costs: Management expects muted near-term impact due to domestic sourcing and contracting through Q3, but notes potential 2026 reset if tariffs persist, prompting continued cost mitigation focus .

Financial Results

Core P&L and Cash Metrics vs Prior Quarter and Prior Year

MetricQ1 2024Q4 2024Q1 2025
Sales ex derivatives ($USD Billions)$0.90 $2.24 $3.21
Total Revenues and Other ($USD Billions)$1.08 $2.00 $2.20
Diluted EPS (GAAP) ($)$0.18 $(1.72) $(1.06)
Adjusted Diluted EPS ($)$0.56 $0.55 $2.02
Adjusted EBITDAX ($USD Billions)$0.51 $0.96 $1.40
Net Cash from Operating Activities ($USD Billions)$0.55 $0.38 $1.10
Net Income (Loss) ($USD Millions)$26 $(399) $(249)

Notes:

  • “Sales ex derivatives” = Natural gas, oil & NGL revenue + Marketing revenue to align with Street “revenue” definition .

Estimates vs Actuals (S&P Global)

MetricQ4 2024 ConsensusQ4 2024 ActualQ1 2025 ConsensusQ1 2025 Actual
Revenue ($USD Billions)$1.77*$2.24 $2.24*$3.21
Primary EPS ($)$0.47*$0.55 $1.87*$2.02
  • Results vs estimates: Both revenue and Adjusted EPS were above consensus; revenue outperformance reflects larger scale portfolio and marketing contribution while EPS benefited from strong operations and synergy capture. Values retrieved from S&P Global*.

Segment Production and Realized Prices

SegmentProduction (MMcfe/d) Q1 2024Production (MMcfe/d) Q4 2024Production (MMcfe/d) Q1 2025Realized Price ($/Mcfe) Q1 2025
Haynesville1,478 2,338 2,617 3.48 (gas)
Northeast Appalachia1,720 2,425 2,668 3.75 (gas)
Southwest Appalachia—1,649 1,503 4.28 (total); gas 3.38, oil $63.40/bbl, NGL $30.54/bbl
Total3,198 6,412 6,788 3.76 (total)

KPIs and Activity

KPIQ3 2024Q4 2024Q1 2025
Rigs Operated (avg)12 12 11
Wells Drilled30 44 46
Wells Turned In Line7 41 89
Base Dividend per Share ($)$0.575 (Dec-24 pay) $0.575 (Mar-25 pay) $0.575 (Jun-25 pay)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Capital Expenditures ($USD Billions)FY 2025~$2.7B (run ~12 rigs) ~$2.7B (run ~12 rigs) Maintained
Production (Bcfe/d, avg)FY 2025~7.1 ~7.1 Maintained
Exit Rate (Bcfe/d)YE 2025~7.2 ~7.2 Maintained
Productive Capacity Capex ($USD Millions)2H 2025~$300 (to ~15 rigs by YE) ~$300 (to ~15 rigs by YE) Maintained
Annual Synergies ($USD Millions)FY 2025 / FY 2026~$400 (2025); $500 by YE 2026 On track: ~$400 (2025); $500 by YE 2026 Maintained/on track
Net Debt Reduction ($USD Millions)FY 2025~$500 ~$500 Maintained
Base DividendOngoing$0.575/qtr $0.575/qtr Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Current Period (Q1 2025)Trend
Hedging disciplineFramework: ~50–60% year-1, leg into curve; offset 2024 low prices Added ~740 Bcf into Q1’27, avg floor ~$3.75, ceiling ~$5.10; recognized ~$1.6B hedge gains last year Strengthening risk management
Breakeven trajectoryMid-cycle philosophy; optimize FCF at 7.5 Bcfe/d in a $3.5–$4 world Breakeven “a little below $3,” expected to continue lower via synergies/efficiencies Improving cost position
LNG & NG3 pipeline2.5 Bcf/d capacity to Gillis by YE; marketing build-out Reiterate Gillis/Perryville optionality; redirect volumes as NG3 comes online Increasing market access
Tariffs / OFS costsGeneral watch on inflation/costs Tariffs mainly casing; ~80% domestic sourcing, contracted through Q3; expect flat-to-down 2024→2025 costs Manageable near term; watch 2026 reset
Power/data center demandEarly positioning; marketing EVP hired Active discussions in Appalachia; long-term sticky demand favored Building commercial pipeline
Marketing optimizationIntegrate portfolio; add pennies via optimization; build systems/controls Early wins connecting portfolio across pipes; expand capacity/capabilities Executing ramp
Productive capacityBuild $300M capacity for 2026 growth if warranted Clear cadence: DUC activation early 2025; add rigs in 2H; optionality to defer TILs if near-term weak On track; flexible execution

Management Commentary

  • CEO framing: “Overcoming market volatility requires a resilient financial foundation, a deep market-connected portfolio, and low cost, efficient operations…” .
  • CEO on macro & optionality: “We expect to exit 2025 at ~7.2 Bcfe/d… well positioned to deliver returns… significant inflection in free cash flow next year… growing production to 7.5 Bcf/d” .
  • CFO on hedging: “Added about 740 Bcf… avg floor $3.75 and avg ceiling $5.1… recognized $1.6B hedge gains last year… program works” .
  • COO on costs/tariffs: “Expect costs from ’24 to ’25 to be flat to slightly down… majority of casing contracted through Q3; exposure muted” .
  • EVP Marketing on LNG/pipes: “Capacity to Gillis and Perryville provides daily optionality… expect premium basis with LNG ramp” .

Q&A Highlights

  • Hedging breadth and rationale: Layered collars/swaps to lock favorable floors with upside participation; higher hedge levels when strip is above marginal breakevens .
  • Breakeven and capital allocation: Breakeven “a little below $3”; capital plan targets mid-cycle $3.5–$4, with flexibility to curtail or defer TILs if near-term prices weaken .
  • Haynesville operational cadence: Temporary 4th frac crew to work down DUCs; exit Q2 plateau, no incremental growth until 2026; redirect volumes into NG3 .
  • OFS/tariff impacts: Domestic sourcing/contracting mitigates near-term casing tariff impacts; potential 2026 OCTG reset offset by service cost deflation and in-house sand/water infrastructure .
  • Returns framework: Tranche structure supports base dividend, debt reduction, and variable/buybacks; management intends active deployment if valuation is attractive .

Estimates Context

  • Q1 2025 revenue (sales ex derivatives) and Adjusted EPS both beat consensus materially, reflecting scale, improved realizations, and synergy capture. This likely supports upward revisions to 2025 free cash flow trajectories and confidence in the 7.1 Bcfe/d run-rate with optionality into LNG-linked markets. Values retrieved from S&P Global*.
  • EBITDA comparisons are definition-sensitive (GAAP EBITDA vs Adjusted EBITDAX). Street often anchors to adjusted figures; company-reported Adjusted EBITDAX was $1.395B .

Key Takeaways for Investors

  • Strong operational quarter with robust CFO ($1.10B) and Adjusted EPS ($2.02), despite GAAP loss from hedge marks; cash generation and execution remain the focus .
  • Revenue meaningfully outpaced consensus on a sales ex derivatives basis, aided by marketing optimization and scale; EPS beat driven by operations and early synergy capture (on track for ~$400M in 2025) .
  • Flexible “productive capacity” strategy provides volume optionality without over-committing capital; LNG corridor access (Gillis/Perryville, NG3) is a pricing/margin catalyst into 2026 .
  • Hedging program is disciplined and opportunistic (floors ~$3.75; ceilings ~$5.10), reducing downside while retaining upside; consider implication for estimate volatility vs spot swings .
  • Cost trajectory constructive: breakeven “a little below $3” with further room to improve via synergy and drilling/completion efficiencies; tariffs watched but near-term impacts muted .
  • Balance sheet strength (uniform IG, S&P 500 addition) plus debt paydown ($500M target) enhances capacity for variable dividends/buybacks under Tranche 3, tied to FCF .
  • Near-term trading: stock narrative likely sensitive to LNG progress, Gillis basis, tariff headlines, and hedge disclosures; medium-term thesis rests on synergy realization, cost curve positioning, and disciplined volume ramps into 2026 .

Appendix: Additional Data

Detailed Components (Q1 2025)

  • Natural gas, oil & NGL revenue: $2,300M; Marketing: $910M; Derivatives: $(1,014)M; Total revenues and other: $2,196M .
  • Operating expenses: Production $147M; GP&T $563M; Marketing $919M; DD&A $711M; Total opex $2,464M .
  • Net income (loss): $(249)M; Diluted EPS: $(1.06); Adjusted net income: $487M; Adjusted diluted EPS: $2.02 .
  • CFO: $1,096M; Capex (cash): $563M; Free cash flow (Non-GAAP): $533M .
  • Net debt (Non-GAAP): $4,901M at 3/31/25 .

Estimates Footnote

All consensus figures marked with an asterisk are Values retrieved from S&P Global*.