Expand Energy Corporation · NASDAQ:EXE
Expand Energy — Q3 2024 Earnings Presentation
30 slides from Expand Energy's earnings presentation, Oct 29, 2024
Slide 1: 3Q 2024 Earnings
3Q 2024 Earnings OCTOBER 29, 2024
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include our current ex
Slide 3: Expand Energy Today
Expand Energy Today Largest Domestic Increasing Annual Synergy Upgraded to Investment Natural Gas Producer Target to ~$500mm Grade Credit Rating 3Q24 production of ~6.75 bcfe/d net ~$225mm of total synergies expected in 2025 BBB- from S&P BBB- from Fitch Ba1 from Moody’s (positive outlook) 2025 Prel
Slide 4: 3Q24 Operational and Financial Highlights
3Q24 Operational and Financial Highlights CHK 3QA SWN 3QA COMBINED(3) ▪ Advancing operational efficiencies Total Production (mmcfe/d, 6:1) 2,647 4,101 6,748 • HSVL – Record quarterly average Natural Gas (mmcf/d) 2,647 3,475 6,122 drilling performance (ft/d) NGLs (mbo/d) – 89.4 89.4 • SW App – Record
Slide 5: Haynesville: Premium Markets with Scalable Growth
Haynesville: Premium Markets with Scalable Growth Haynesville Quarterly Production mmcfe/d (1) Legacy SWN Legacy CHK Expand Energy 2,998 4Q24 Guidance 2,640 2,452 1,520 1,449 1,336 ~2,400 1,478 1,191 1,116 Legacy SWN Legacy CHK 1Q24 2Q24 3Q24 4Q24 Net Acreage ~650,000 Rig 13 12 10 8 Count Avg. WI /
Slide 6: Northeast Appalachia: Low Breakeven, Cash Flow Machine
Northeast Appalachia: Low Breakeven, Cash Flow Machine Northeast Appalachia Quarterly Production mmcfe/d (1) Legacy SWN Legacy CHK Expand Energy 2,761 4Q24 Guidance 2,566 2,507 1,041 1,012 976 ~2,350 1,720 1,554 1,531 Legacy SWN Legacy CHK 1Q24 2Q24 3Q24 4Q24 Net Acreage ~650,000 Rig 5 4 3 2 Count A
Slide 7: Southwest Appalachia: Liquid Exposure with Upside Potential
Southwest Appalachia: Liquid Exposure with Upside Potential Southwest Appalachia Quarterly Production mmcfe/d (1) Legacy SWN Expand Energy 4Q24 Guidance 65% Gas 1,706 1,789 ~1,650 30% NGLs 1,568 5% Oil Legacy SWN 1Q24 2Q24 3Q24 4Q24 Net Acreage ~530,000 Rig 3 2 1 2 Count Avg. WI / NRI ~83% / ~68% ▪
Slide 8: Enhancing Synergy Outlook
Enhancing Synergy Outlook Increasing Annual Synergy Outlook 25% Per Annum $ millions ~$500/yr $100 expected by YE27 $70 ~$400/yr $130 ~$225 expected in 2025 $200 Corporate & D&C Other Operating Initial Synergy Additional Identified Updated Regional Costs Cost Savings & Capital Target @ 1/11/24 Syner
Slide 9: Maintaining Productive Capacity Strategy
Maintaining Productive Capacity Strategy ▪ Legacy CHK brought online 7 wells in 3Q24 Building DUCs and DTILs Throughout 2024 Cumulative DUC(2) and DTIL count, gross ▪ Well positioned to deliver ~80 deferred TILs Deferred Completions (DUCs) and up to 1.0 bcf/d(1) of short cycle capacity Up to 1.0 bcf
Slide 10: Preliminary 2025 Production Plan
Preliminary 2025 Production Plan Production Grows with Flexibility 2025 Preliminary Plan: to Accelerate / Decelerate from DTILs ~7 bcfe/d Base + Wedge Production (10 – 12 rig program)(1) DTIL Production (assuming ratable TILs) ▪ Generating attractive free cash flow from productive ~7 bcfe/d capacity
Slide 11: Preliminary 2025 Capital Plan
Preliminary 2025 Capital Plan 2025 Preliminary Plan: Sustaining Capital Benefits from DTILs and Synergies ~$2.7B Capex $ millions • Includes all future capital ▪ Expect to maintain current activity levels of 10 – 12 • Includes year synergies one capital rigs and 5 – 6 frac crews in 2025 synergies •
Slide 12: Ready to Answer the Call for Growing Demand
Ready to Answer the Call for Growing Demand APP: Greater Appalachia ~30% ▪ Advantaged transportation portfolio expected to provide: APP: Canada ~1% • Deliverability • Diversification APP: Northeast/ • Flexibility Citygate ~10% ▪ Established supplier of choice to global LNG exporters and domestic end
Slide 13: Enhanced Capital Returns Framework
Enhanced Capital Returns Framework Program designed to return cash to shareholders and reduce net debt $2.30/ Annual Base Dividend share ▪ Tranche 1 – Annual Base Dividend EXCESS FCF • $2.30/share • Remains priority and is paid through-cycle Net Debt Reduction $500mm ▪ Tranche 2 – Net Debt Reduction
Slide 14: Investment Grade Rating Demonstrates Resilient Financial Foundation
Investment Grade Rating Demonstrates Resilient Financial Foundation Expand Energy Pro Forma Debt Maturity Profile ▪ Investment Grade Ratings $ millions • BBB- from S&P 6.38%(2) SWN • BBB- from Fitch CHK ~6.1% • Ba1 from Moody’s RBL Capacity (positive outlook) $700 5.375% ▪ Financial Policy Targets 5
Slide 15: Continuing the Hedge-the-Wedge Strategy
Continuing the Hedge-the-Wedge Strategy Legacy CHK (bcf) Hedged Natural Gas Volumes HEDGE-THE-WEDGE STRATEGY Legacy SWN (bcf) EXE added since ~ 4 5 % o f p ro d uc t i o n he d g e d ▪ De-risk return on capital investment 0 10/1/24 (bcf) ▪ Rolling eight quarter hedging 3 ▪ Collar weighted with oppor
Slide 16: Appendix
Appendix expand 3Q 2024 EARNINGS
Slide 17: Management's Guidance as of October 29, 2024
Management’s Guidance as of October 29, 2024 Production 3Q24A (CHK Only) 4Q24E (EXE) Operating Costs (per mcfe of Projected Production) 3Q24A (CHK Only) 4Q24E (EXE) Total Production (mmcfe/d) 2,647 6,350 – 6,450 Production Expense $0.21 $0.25 – $0.30 Haynesville 1,116 ~37% Gathering, Processing and
Slide 18: 3Q24 Legacy CHK Business Unit Results
3Q24 Legacy CHK Business Unit Results Marcellus Haynesville Production (mmcf/d) 1,531 1,116 Production Expense ($/mcf) $0.13 $0.32 Differential to NYMEX ($/mcf) ($0.65) ($0.28) GP&T ($/mcf) $0.73 $0.48 Rigs 3 4 Spuds (by zone) Lower 10 Upper 6 HV 9 BSSR 5 TILs (by zone) Lower 4 Upper 0 HV 3 BSSR 0 D
Slide 19: Haynesville, Northeast and Southwest Appalachia Sales Points
Haynesville, Northeast and Southwest Appalachia Sales Points Haynesville Sales Points Northeast Appalachia Sales Points Southwest Appalachia Sales Points DEDUCT FROM NYMEX ($)(1) DEDUCT FROM NYMEX ($)(1) DEDUCT FROM NYMEX ($)(1) Historical Avg Current Historical Avg Current Historical Avg Current CG
Slide 20: Return Framework Mechanics
Return Framework Mechanics ▪ New return framework expected to become effective on 1/1/25 ▪ Tranche 2 and Tranche 3 are filled based on how much FCF is generated above the base dividend within a six-month evaluation period ▪ Tranche 2 target is set at $500mm annually ($250mm per evaluation period) ▪
Slide 21: GP&T Reconciliation
GP&T Reconciliation 1. 1 Legacy SWN included transportation expenses in differentials 3Q24 RESULTS 4Q24 GUIDE 4 Weighted Cost SWN CHK EXE(1) EXE 2. 2 Legacy SWN reported Average Reclass LOE, gathering and NYMEX HH $2.16 $2.16 $2.16 – $2.16 processing together 1 Basis Differentials ($/mcf) ($0.72) ($
Slide 22: Fully Diluted Share Count Breakdown
Fully Diluted Share Count Breakdown As of 10/24/24 8.7 8.7 95.9 231.0 135.1 CHK Shares SWN Shares CHK Warrants EXE FDSO 22 3Q 2024 Earnings
Slide 23: Reducing Risk, Protecting Returns Through Hedge Program
Reducing Risk, Protecting Returns Through Hedge Program NATURAL GAS ESTIMATED NYMEX GAS SETTLEMENT ($mm) SWAPS COSTLESS COLLARS THREE-WAY COLLARS $2.00 $2.50 $3.00 $3.50 Date Bought Bought Date Volume Price Volume Sold Call Volume Sold Call Sold Put NYMEX NYMEX NYMEX NYMEX Put Put bcf $/mcf bcf $/mc
Slide 24: Reducing Risk, Protecting Returns Through Hedge Program
Reducing Risk, Protecting Returns Through Hedge Program NATURAL GAS LIQUIDS ESTIMATED NGL SETTLEMENT ($mm) C2 SWAPS C3 SWAPS C4 SWAPS C5 SWAPS Date Date $0.25 $0.50 $1.00 $1.50 Volume Price Volume Price Volume Price Volume Price mbbl $/gal mbbl $/gal mbbl $/gal mbbl $/gal 4Q 2024 2,015 $0.23 1,564 $
Slide 25: Reducing Risk, Protecting Returns Through Hedge Program
Reducing Risk, Protecting Returns Through Hedge Program CRUDE OIL ESTIMATED NYMEX WTI SETTLEMENT ($mm) SWAPS COSTLESS COLLARS THREE-WAY COLLARS $60.00 $70.00 $80.00 $90.00 Date Bought Bought Date Volume Price Volume Sold Call Volume Sold Call Sold Put WTI WTI WTI WTI Put Put mbbl $/bbl mbbl $/bbl mb
Slide 26: Hedged Financial Basis
Hedged Financial Basis HAYNESVILLE NORTHEAST APPALACHIA SW APPALACHIA CGT MAINLINE TETCO WLA TGT Z1 TETCO M3 TGP Z4 300L LEIDY TCO Date Volume Avg. Price Volume Avg. Price Volume Avg. Price Volume Avg. Price Volume Avg. Price Volume Avg. Price Volume Avg Price bcf $/mcf bcf $/mcf bcf $/mcf bcf $/mcf
Slide 27: Non-GAAP Financial Measures
Non-GAAP Financial Measures As a supplement to the financial results prepared in accordance with U.S. GAAP, Expand Energy’s quarterly earnings presentations contain certain financial measures that are not prepared or presented in accordance with U.S. GAAP. These non-GAAP financial measures for Legac
Slide 28: Reconciliation of Net Income (Loss) to Adjusted EBITDAX (Unaudited)
Reconciliation of Net Income (Loss) to Adjusted EBITDAX (Unaudited) Three Months Three Months Three Months Three Months Three Months Ended Ended Ended Ended Trailing Ended September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 Twelve Months September 30, 2023 ($ in millions) Net Income (L
Slide 29: Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow
Reconciliation of Net Cash Provided by Operating Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow (Unaudited) Activities to Adjusted EBITDAX (Unaudited) Three Months Ended Three Months Ended Three Months Ended Three Months Ended September 30, 2024 September 30,
Slide 30: Reconciliation of Net Loss to Adjusted EBITDA – Legacy Southwestern
Reconciliation of Net Loss to Adjusted EBITDA (Unaudited) – Legacy Southwestern Three Months Ended September 30, 2024 ($ in millions) Net Loss (GAAP) $ (280) Adjustments: Interest expense 41 Income tax benefit (75) Depreciation, depletion and amortization 208 Merger-related expenses 20 Impairments 4