EXE Q3 2026 earnings call transcript, October 28, 2026

Thank you for standing by and welcome to Expand Energy's Third Quarter 2026 Earnings Conference Call.

Good morning and thanks for joining our call. So last quarter, I discussed my optimism about the future of Expand. Today, that optimism continues.

With our foundation, this year we're focused on strengthening our commercial capabilities by adding key leaders in both the C-suite and across the organization. We've expanded our

With the transaction now closed, the Twin Eagle and Xpand teams are working side-by-side in one office to deliver the synergies we promised. We see significant

difference. The combined Xpand and Twin Eagle marketing profits are expected to add $0.12 per MCFE to our fourth quarter margin. This is particularly important

continued to deliver strong operational results, producing approximately 7.5 BCFE per day this quarter, and extended our drilling inventory through organic leasing, which remains

And importantly, our balance sheet remains strong, with net debt of $4.7 billion and leverage of 0.8 times. Finally, we said we would

long-term shareholder value. Given our $3 billion annual capital plan, we wanted an upstream expert who has experience managing a large portfolio of assets and

business, a coast-to-coast marketing platform, a strong balance sheet, and the team that plays to win. We have tacked opportunities to improve our business with urgency while maintaining

our company. Thank you, Mike, and thank you as well for the confidence you and the board have placed in me to lead this organization.

Holders in a differentiated fashion. First, we have meaningful scale, which is tremendously important in any commodity business, and particularly one that is as dynamic.

...to customers, which should allow EXPAND to capture incremental margin along the value chain. And all of this set against the precipice of a structural increase in natural gas demand.

...in all aspects of our business, which is critical to sustainable value creation in this industry. I'm honored to be a member of this talented team, and I'm excited to be getting started.

Good morning, everyone, and thanks for joining our call this morning to discuss Expand Energy's 2026 third quarter financial and operating results. Hopefully, you've had a chance to review our press release.

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.

For any non-GAAP measure we use, a reconciliation to the nearest corresponding GAAP measure that can be found on our website. With me today on the call are Mike Wisterich and Danny.

We ask that you please limit yourself to one question and one follow-up to allow everyone the opportunity to participate. Please stand by while we compile.

Just maybe you can provide some perspective of what attracted you to the opportunity. What have your past experiences, whether at Anadarko or Cordova,

against the backdrop of something that could be really special. So I think it's set up with the right assets and the right places to just benefit from this structural increase in demand.

Capital against projects with very different cash flow streams and risk profiles. And so that's something that I'm comfortable with. And over at Cord, I would say...

And I'm very, very eager to dig in and work with the team to deliver on what we see as amazing potential within this organization. Congratulations, Danny.

What areas or customers are you most focused on right now? Is it LNG? Is it data centers? Is it industrial customers like steel? Just help us get in.

The team from Twin Eagle has moved into our offices, which is a great start. The organizations have been aligned, and we're doing some of the work in the back office, as you can imagine.

Low kind of volatility environment for our combined marketing and commercial business, including Twin Eagle. That translates to about 12 cents per MCF. What we've also laid out...

...get the right opportunities, first in liquefaction, but also how we structure our sales portfolio. You know, that will come a little bit after 2028, and that ultimately gets us...

Marcelo, on that question about the logical end customers, LNG, data centers, or industrials, is there one that you're leaning into? Yeah, no, what kind of all of...

There's numerous conversations with data centers, and they're not just in Appalachia. They are throughout the country. We see them in the Midwest. We see them in Texas. We see them in Louisiana.

Some of these commercial and industrial customers, they just pay more because they're often not off the beaten path. They're not on a main pipeline.

of Doug Leggett of Woof Research. Your line is open, Doug. Thank you. Good morning, everyone. Danny, it's great to get you back.

for all the things that can be more of a commercial endeavor. How did, how did, why did Danny the right fit to lead?

Sure. This is Mike and I'll start. So, you know, why Danny? I think you have to think about the journey at Expand. We started in, in February, looking to expand.

So once you have the commercial side set and organization built to get deal flow, then it started to think about our base business. Our base business is a $3 billion capital business.

He's not learning the job of CEO. He learned the job of executing, creating shareholder value. So when you put those together, it seemed like a great, great fit for us. And we're super pleased.

Maybe the other way to also talk about the resiliency of that marketing and commercial cash flow. So if you look back over the last four quarters, our free cash flow.

Sorry, Marcel. So where do you see the break-even when you're fully integrated in terms of the synergies? Yeah, so we go to 250, 260.

It comes from the lineup of room, J.R.M., of J.P. Morgan Securities. Your line is open, the room. Yeah, good morning, Danny.

Headwinds from Super El Nino, some of the Permian supply trends, as well as the fact of the LNG.

Fundamentals in the market is pretty well supplied right now, despite seeing record levels of demand. LNG flows are at all-time highs.

And so that obviously, combined with the outlook on winter, is suppressing the 2027 curve. And so we've definitely been mindful of that.

with how we manage our production volumes. That's shown up in the third quarter. It's showing up again here in the fourth quarter with how we manage curtailments. We pushed out.

And so the demand is coming and there's going to need to be a supply push in order to match that. And that should lead to higher prices. And so we'll continue to be flexible. We really pride ourselves.

Plan for capital in calendar 26 at $3 billion or $750 million per quarter. I was wondering if you could comment on some of the inflationary pressures you're seeing.

Yeah, sure. I mean, you know, clearly for 2026, the majority of inflation has been centered around diesel for us.

So that definitely has added to some of the capital pressures this year. As we think about 2027, we do start to see a little bit of shift and where we see inflation.

With the movement in oil prices, you see U.S. oil rate counts up around 10% to 12%. And so we do expect to see with that activity some tightening in the pressure pump.

Thank you. Our next question comes from the line of...

At the same time that we're seeing a ramp in LNG demand and potentially upside to LNG forecasts on the Gulf Coast over the next few years.

What's occurring in the U.S. Gulf Coast. And so people especially get into the southeastern markets are starting to think about supply security. And I think that's what you're seeing with.

Perfect. And then for my follow-up question, I just wanted to get your latest thoughts on the Western Hainesville.

Thoughts on your capital program as you head into 2027 and the long-term resource potential here, obviously, you're in at a very low entry price. So just wanted to wrap up.

A lot of the characteristics you would look for in a shale reservoir in terms of it being significantly overpressured at a really thick interval, but it's deep. And when it's deep, it means it's, you know,

given the strength of our inventory in Louisiana and really across the entire portfolio for that matter, you know, in terms of, you know, how you might kind of peg a break even.

It's data centers, industrial demand. We think there's going to be a call on gas for it. And so we'll be methodical. We expect, you know, to drill probably two wells in 2020.

Next question comes from the line of Josh Silverstein of UBS. Your line is open, Josh.

I was curious what the early discussions have been. Yeah, Josh, this is Josh. You know, the great thing about the Twingle platform,

one basin or another. Twin Eagle has built a great origination team. They have longstanding relationships with over 1,000 customers. And so we're continuing.

And we're having new customers show up. And these are larger name customers that see the strength of our combined platform that we built. And so just to respond to your question.

We want to go and start working that down. But the talk is also, you know, how do you balance, you know, buybacks?

Value in debt. What we said on the second quarter call that after the Twineo acquisition, which put some additional debt on the balance sheet, we take a more balanced approach. We want to get our leverage.

Thank you. Our next question comes from the line of Devin McDermott of Morgan Stanley. Your line is open, Devin.

Mike, you can take this or Danny Marcel, feel free to chime in as well. Perspectives on the M&A landscape, both in terms of upstream consolidation or how you would evaluate further opportunities beyond the.

We've got a great portfolio of assets and opportunities in front of us and really a reach across all of North America. And so I don't think the transaction announced yesterday.

I'm a big continuous improvement guy. And that includes improving all aspects of the business, including the portfolio. And so I am sure along those lines, we will.

Clearing price, it's clearly going to have to be something that has a lot of synergies that we're very, very confident that we can capture. So I think that's how we'll think about that. Great portfolio. We've got a lot of things to do.

Maybe this one's for Josh. Can you talk about some of the items you're exploring to potentially offset some of those pressures, outlook of further efficiency gains, and maybe comment on some of the...

We've really doubled down on our continuous improvement efforts across our Appalachia business. In fact, when you look at our Southwest Appalachia drilling performance...

...on the more traditional methods, drilling wells faster, completing wells more efficiently, we continue to dial in our completion designs in the Hainesville as well.

...on our overall wells. I would continue to find opportunities to exploit artificial intelligence within the business as well, and we see that unlocking additional value in...

Yeah, thanks. If I could, you know, maybe play a little bit off the M&A theme and talk about just sort of your, we'll call it Ground Game Organic Land Act.

You know, this past year in 2026, you'll spend about $250 million on organic lease acquisitions. We've had a lot of success and, you know,

some of our most competitive locations that we'll add. We spent around $15 million acquiring those leases. We had a rig sitting on the lease within a couple months.

It's something that we expect to carry on into next year. And what we love about our financial position and the strength of the balance sheet that we have is we can be opportunistic when others are

Yeah, but, you know, again, those can come and go. You know, just as an example, in the fourth quarter of this year, we don't expect to close any material transactions. And so, you know, again,

or industrial or whatnot, like, you know, if you can give us a sense of like with Twin Eagle, you know, and your new platform, you know, where

with the integration, right? But we already see some early signs. So we can give you a more holistic update after we have done the fourth quarter, right? The Twin Eagle business, of course,

that we'll continue to work at. But the integration value is already pretty obvious to us. We said for the fourth quarter, $80 million of EBITDA.

An Eagle side, you know, and with the footprint that we have both in storage and transportation, just to capture more value from volatility when it occurs.

Pickering Energy Partners. Your line is open, Kevin. Hey, good morning. Maybe we can start with an update on that.

It's a great question. So I think just on the purpose of our hedge strategy, right, we're really trying to protect against the downside while we leave ourselves open to participate in the upside. And that's been...

Prices on the Strip have been weak, you know, and a hedge program paid over $300 million relative to that. And that's kind of the sign of that protection. Then you look into 2027.

And three ways to kind of roll that in. And we roll those in progressively so that we don't pick a price point at any particular point in time and kind of bet that the market won't move.

I know we've hit the marketing questions quite a few times here, but maybe I'll just try another one on, you know, what line of sight do you have on the $150 million?

During due diligence, as we are kind of, you know, we're framing the acquisition itself, as well as the first couple of weeks, give us a lot of confidence just from customer feedback from the team.

We're going through over the next two years without a doubt. The conversation in deal flow is high. And so, you know, to Marcel's point, our origination team,

Thank you. Our next question comes from the line of Charles Mead of Johnson Rice.

Philosophies that you developed and found useful at at in the Bakken that would be new or different for the expanding.

You know, just foundationally challenging assumptions on on how you do business and looking to improve. And so I think about, you know, what we did over my time at core.

Both organizations are producing a commodity. Now, there's different macro associated with that with that commodity. But in a commodity business, I think there's lots of similarities. And so I think I'll bring those.

Are there any things you're looking at beyond, I'd say, the two big ones, which are weather and pipeline maintenance to, you know, that could affect how that.

range of production expectations from 7.4 to 7.6 BCF a day for Q4. And really what that's implying is that, you know, we're going to retain a significant amount of flexibility.

constructive price environment. You know, clearly, you know, weather is, you know, an overhang on the markets right now. Production, we typically.

The other thing, if you think about the longer term, you know, I think really the market's going to be watching for where storage ends up. And this is by region across the U.S. And if we.

of 2027 B1 of transition, we're going to be flexible with our business and put ourselves in a position to respond when the demand shows up. That is helpful detail. Thank you, Josh.

In the slide, you guys talked about the $250 million that's tied to new demand growth, particularly LNG. So, can you just…

We really see that as an international gas market. And so, our strategy around LNG is to tie our domestic kind of production to international pricing.

Customers that take that LNG as we go in. We have signed the Delphin Agreement earlier this year, which is for 1.15 million tons of LNG offtake.

Got it. That makes sense. And then maybe just follow up on how you guys think about the production management.

Yeah, Betty, I think the answer to that is just yes. You know, I think we've proven an ability to go create value to our productive capacity strategy.

Thank you. Thank you. Our final question comes from the line of Phyllis.

You know, with TwinEagle and our own capability, right? So that comes in two forms. One is where we have equity gas, obviously, you know, there's a lot there. But in some of those areas.

The capability that came with TwinEagle to connect really coast to coast allows us to kind of go after those projects. Gas in some of those areas needs to come from far. Some of it needs to come from the north.

Permian gas, the bottlenecking has obviously been a headwind for price, but a lot of this gas does get stuck around Houston. We do have three pipes, though.

Or do you think there's enough LNG demand pull between now and then to largely offset incremental supply? Yeah, Philip, I think, you know, the

fundamentals. What we see is that, you know, Permian gas, you know, though there is a significant amount, will not be able to meet the upcoming demand. It will periodically.

And so that's why we remain highly constructive on our broader portfolio, the gas markets in general, and the option that we've created in a place like the Western Hainesville for ourselves.

The EXPAND team, I look forward to working with you to deliver the full potential of EXPAND for our shareholders and to our investors. I look forward to listening to and engaging with you along the way. Thanks again.