Expand Energy Corporation
02/18/2026 | Press release | Distributed by Public on 02/18/2026 06:32
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
| Management's Discussion and Analysis of Financial Condition and Results of Operations |
This Management's Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with management's perspective on our financial condition, liquidity, results of operations and certain other factors that may affect our future results. This information is intended to provide investors with an understanding of our past performance, current financial condition and outlook for the future and should be read in conjunction with Item 8 of Part IIof this report.
| Introduction | ||
On October 1, 2024, we completed the Southwestern Merger, creating a premier energy company that we believe is underpinned by a leading natural gas portfolio adjacent to the highest demand markets, premium inventory, a resilient financial foundation and an investment grade balance sheet. We believe that this new company is uniquely positioned to deliver affordable, lower-carbon energy to meet growing domestic and international demand while creating sustainable value for stakeholders. In conjunction with the closing of the Southwestern Merger, Chesapeake Energy Corporation changed its name to Expand Energy Corporation.
Expand Energy is the largest independent natural gas producer in the U.S., based on net daily production, and is focused on responsibly developing an abundant supply of natural gas, oil and NGL to expand energy access for all. Our operations are located in Louisiana and Texas in the Haynesville and Bossier Shales ("Haynesville"), in Pennsylvania in the Marcellus Shale ("Northeast Appalachia") and in West Virginia and Ohio in the Marcellus and Utica Shales ("Southwest Appalachia").
Our strategy is to create resilient shareholder value through the responsible development of our significant resource plays while continuing to be a leading provider of natural gas to growing markets. We continue to focus on improving margins through operating efficiencies, marketing and commercial efforts and financial discipline and improving our safety and sustainability performance. To accomplish these goals, we plan to allocate our human resources and capital expenditures to projects we believe offer the highest cash return on capital invested, to deploy leading drilling and completion technology throughout our portfolio, and to take advantage of acquisition and divestiture opportunities to strengthen our portfolio. We also intend to continue to invest in projects designed to reduce the environmental impact of our production activities.
Additionally, we aim to be conscientious in our efforts and how they will shape our approach to sustainability for the future and have established the following goals:
•Net zero (Scope 1 and 2) greenhouse gas emissions by 2035.
•Maintain 100% responsibly sourced gas (RSG) certification across our portfolio.
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| Recent and Significant Developments | ||
Southwestern Merger
On October 1, 2024, we completed the Southwestern Merger and issued approximately 95.7 million shares of our common stock to Southwestern's shareholders in connection with the Merger Agreement. Under the terms of the Merger Agreement, subject to certain exceptions, each share of Southwestern common stock was converted into the right to receive 0.0867 of a share of the Company's common stock. Based on the closing price of our common stock, the total value of such shares of our common stock issued to Southwestern's shareholders was approximately $7.9 billion. See Note 2of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
Investment Grade Rating
On October 1, 2024, we received an investment grade rating from S&P Global Ratings ("S&P"). S&P assigned an issuer-level rating of 'BBB-' on our unsecured debt and raised our issuer credit rating to 'BBB-', with a stable outlook. Additionally, on October 2, 2024, we received an investment grade rating from Fitch Ratings ("Fitch"). Fitch affirmed our revolver credit rating at 'BBB-' and upgraded the rating on our senior notes to 'BBB-', with a stable outlook. Additionally, on April 16, 2025, we received an investment grade rating from Moody's Ratings ("Moody's"). Moody's upgraded the rating on our senior unsecured notes from Ba1 to Baa3, with a stable outlook.
Addition to the S&P 500 Index
In March 2025, following the close of the Southwestern Merger and the receipt of investment grade ratings, our common stock was added to the S&P 500.
Credit Facility
On September 30, 2025, the Company entered into an Amended and Restated Credit Agreement that, among other things, extended the 2025 Credit Facility's maturity date from December 2027 to September 2030, with two one-year extension options available, each subject to the Lenders' consent, increased the aggregate commitments under the 2025 Credit Facility from $2.5 billion to $3.5 billion with incremental capacity for additional commitments in an amount up to $1.0 billion, subject to the receipt of commitments thereto and certain customary conditions. The Credit Agreement also increased the sublimit available for the issuance of letters of credit from $500 million to $1.0 billion and increased the sublimit available for swingline loans from $50 million to $100 million. See Note 4of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
Issuance of Senior Notes and Senior Notes Repayment
In December 2024, we completed our underwritten public offering of $750 million aggregate principal amount of our 5.70% Senior Notes due 2035 (the "2035 Notes"). Additionally, we announced an offer to purchase for cash, any and all of our outstanding 2026 Notes (the "Tender Offer"). Upon expiration of the Tender Offer, approximately 91%, or $453 million, of the 2026 Notes were validly tendered and not validly withdrawn. In a separate transaction during the fourth quarter of 2024, we redeemed all of the $304 million aggregate principal of the SWN 2028 Notes for approximately $312 million, which included an $8 million premium to call the notes.
In January 2025, the $389 million aggregate principal of the SWN 2025 Notes was repaid and terminated with cash on hand and borrowings on the Prior Credit Facility. Additionally, in March 2025, we redeemed the remaining $47 million aggregate principal of the 2026 Notes with cash on hand. During 2025, we also redeemed approximately $103 million of our 6.750% Senior Notes due 2029, approximately $60 million of our 5.875% Senior Notes due 2029 and approximately $62 million of our 5.375% Senior Notes due 2029 through open market repurchases using cash on hand. See Note 4of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
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Shareholder Returns
In October 2024, our Board of Directors authorized the Company to repurchase up to $1.0 billion, in aggregate, of the Company's common stock and/or warrants. In 2025, we prioritized paying the base dividend of $2.30 per share and $1.0 billion of annual net debt reduction, with 75% of the remaining free cash flow distributed, as market conditions warranted, through share repurchases and additional dividend payments. During 2025, we made dividend payments of $765 million, repurchased 0.9 million shares for an aggregate price of $100 million, reduced the principal amount of our debt through senior notes repayments as noted above, and increased our cash on hand. See Note 10of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion on our dividend payments and share repurchases. In 2026, the Company will continue to prioritize debt reduction while continuing to effectively return cash to shareholders.
Economic and Market Conditions
Geopolitical risk and policy uncertainty continue to drive volatility in natural gas, oil and NGL prices, while macroeconomic headwinds in key consuming countries could impact global growth prospects, potentially affecting supply and demand for energy commodities. Domestically, the natural gas market balance has tightened through 2027 as robust demand, primarily driven by seasonal weather-driven consumption patterns and increasing structural demand gains from LNG, power generation, and industrials, has put upward pressure and additional volatility on near-term pricing. Our future estimated cash flow is partially protected from commodity price volatility due to our current hedge positions that provide a floor price on over 60% of our projected gas volumes through the end of 2026 with significant upside participation via costless collars and three-way collars. For the foreseeable future, we believe our operational flexibility, cost structure and liquidity position will enable us to successfully navigate continued price volatility.
We continue to monitor factors impacting commodity supply and demand situations, including tariffs on steel, and assess their impact on our business, including business partners and customers. As part of the Southwestern Merger, we assumed Southwestern's oilfield service business that will allow for some vertical integration of our exploration and production operations, which may help to control costs and secure inputs for our operations. For additional discussion regarding risk associated with price volatility and economic uncertainty, see Item 1A Risk Factors in this report.
Management Changes
On February 6, 2026, the Board of Directors of the Company appointed Mr. Wichterich, Chairman of the Board, as Interim President and Chief Executive Officer, replacing Domenic J. Dell'Osso, Jr., effective immediately. In connection with his separation, Mr. Dell'Osso also resigned from the Board of Directors, effective immediately. Mr. Dell'Osso will serve as an external advisor for a period of time.
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| Liquidity and Capital Resources | ||
Liquidity Overview
Our primary sources of capital resources and liquidity are internally generated cash flows from operations and borrowings under our 2025 Credit Facility, and our primary uses of cash are for the development of our natural gas and oil properties, acquisitions of additional natural gas and oil properties, repayments of debt and return of value to stockholders through dividends and equity repurchases. If needed, we also have the ability to issue equity or debt securities through public offerings or private placements. We believe our cash flow from operations, cash on hand and unused borrowing capacity under the 2025 Credit Facility, as discussed below, will provide sufficient liquidity during the next 12 months and the foreseeable future. As of December 31, 2025, we had $4.1 billion of liquidity available, including $616 million of cash on hand and $3.5 billion of aggregate unused borrowing capacity available under the 2025 Credit Facility. As of December 31, 2025, we had no outstanding borrowings under our 2025 Credit Facility.
Further, we may from time to time seek to retire, refinance or amend some or all of our outstanding debt or debt agreements through exchanges, open market purchases, privately negotiated transactions, tender offers or otherwise. Such transactions, if any, and the terms thereof, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved in such financing transactions may be material. See Note 4of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion of our debt obligations, including principal and carrying amounts of our senior notes.
Dividends
On February 17, 2026, we declared a base quarterly dividend payable of $0.575 per share, which will be paid on March 26, 2026 to stockholders of record at the close of business on March 5, 2026. See Note 10of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
The declaration and payment of any future dividend, whether fixed or variable, will remain at the full discretion of the Board of Directors and will depend on the Company's financial results, cash requirements, future prospects and other relevant factors. The Company's ability to pay dividends to its stockholders is restricted by (i) Oklahoma corporate law, (ii) its Certificate of Incorporation, (iii) the terms and provisions of the Credit Agreement and (iv) the terms and provisions of the Indentures governing our senior notes. See Note 4of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion of our debt obligations.
Derivative and Hedging Activities
Our results of operations and cash flows are impacted by changes in market prices for natural gas, oil and NGL. We enter into various derivative instruments to mitigate a portion of our exposure to commodity price declines, but these transactions may also limit our cash flows in periods of rising commodity prices. Our natural gas, oil and NGL derivative activities, when combined with our sales of natural gas, oil and NGL, allow us to better predict the total revenue we expect to receive. See Item 7A.Quantitative and Qualitative Disclosures About Market Risk included in Part II of this report for further discussion on the impact of commodity price risk on our financial position.
Shelf Registration
We have a universal shelf registration statement on file with the SEC, as a "well-known seasoned issuer" as defined in Rule 405 under the Securities Act of 1933, as amended (the "Securities Act"), under which we have the ability to issue and sell an indeterminate amount of various types of debt and equity securities. The specific terms of any securities to be sold will be described in supplemental filings with the SEC. There were no sales of such securities during the year ended December 31, 2025. Our shelf registration statement will expire in November 2027.
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Contractual Obligations and Off-Balance Sheet Arrangements
As of December 31, 2025, our material contractual obligations include repayment of senior notes, derivative obligations, asset retirement obligations, lease obligations, undrawn letters of credit and various other commitments we enter into in the ordinary course of business that could result in future cash obligations. In addition, we have contractual commitments with midstream companies and pipeline carriers for future gathering, processing and transportation of natural gas to move certain of our production to market. The estimated gross undiscounted future commitments under these agreements were approximately $9.6 billion as of December 31, 2025. As discussed above, we believe our existing sources of liquidity will be sufficient to fund our near and long-term contractual obligations. See Notes 4, 5, 7, 13and 16of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
Credit Facility
On September 30, 2025, we entered into the Credit Agreement, which matures in September 2030. The 2025 Credit Facility provides for aggregate commitments of $3.5 billion, with a $1.0 billion sublimit available for the issuance of letters of credit and a $100 million sublimit available for swingline loans. Borrowings under the Credit Agreement may be alternate base rate loans or term SOFR loans, at the Company's election. As of December 31, 2025, we had $3.5 billion available for borrowings under the 2025 Credit Facility. See Note 4of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
Assumption of Southwestern's Senior Notes and Southwestern Credit Facility Extinguishment
On October 1, 2024, the Southwestern Merger was completed, and we assumed approximately $3.7 billion of Southwestern's senior notes. On October 1, 2024, Southwestern's existing credit facility was terminated, with all loan amounts and other obligations outstanding thereunder repaid in full and all commitments thereunder extinguished, for approximately $585 million, which included all outstanding borrowings, accrued interest and transaction fees. See Note 4of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
Capital Expenditures
For the year ending December 31, 2026, we currently expect to complete and turn in line 205 to 235 gross wells utilizing approximately 11 to 12 rigs and plan to invest between approximately $2.75 - $2.95 billion in capital expenditures. We currently plan to fund our 2026 capital program through cash on hand, expected cash flow from our operations and borrowings under our 2025 Credit Facility. We may alter or change our plans with respect to our capital program and expected capital expenditures based on developments in our business, our financial position, our industry or any of the markets in which we operate.
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Sources and (Uses) of Cash and Cash Equivalents
The following table presents the sources and uses of our cash and cash equivalents for the periods presented:
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Cash provided by operating activities | $ | 4,575 | $ | 1,565 | $ | 2,380 | ||||||||||||||
| Proceeds from divestitures of property and equipment | 70 | 21 | 2,533 | |||||||||||||||||
| Receipts of deferred consideration | 116 | 166 | - | |||||||||||||||||
| Proceeds from issuance of senior notes, net | - | 747 | - | |||||||||||||||||
| Proceeds from warrant exercise | 24 | 3 | - | |||||||||||||||||
| Capital expenditures | (2,736) | (1,557) | (1,829) | |||||||||||||||||
| Contributions to investments | (14) | (75) | (231) | |||||||||||||||||
| Payments on Prior Credit Facility, net | - | - | (1,050) | |||||||||||||||||
| Business combination, net | - | (459) | - | |||||||||||||||||
| Property acquisitions | (195) | - | - | |||||||||||||||||
| Cash paid to purchase debt | (663) | (767) | - | |||||||||||||||||
| Debt issuance and other financing costs | (11) | (11) | - | |||||||||||||||||
| Cash paid to repurchase and retire common stock | (100) | - | (355) | |||||||||||||||||
| Cash paid for common stock dividends | (765) | (388) | (487) | |||||||||||||||||
| Other | - | (3) | - | |||||||||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 301 | $ | (758) | $ | 961 | ||||||||||||||
Cash Flow from Operating Activities
Cash provided by operating activities was $4.58 billion, $1.57 billion and $2.38 billion during the years ended December 31, 2025, 2024 and 2023, respectively. The increase in 2025 is primarily due to increased sales volumes, including those related to the Southwestern Merger, as well as higher prices for the natural gas we sold. The decrease in 2024 is primarily due to lower prices for the natural gas, oil and NGL we sold. Cash flows from operations are largely affected by the same factors that affect our net income, excluding various non-cash items, such as depreciation, depletion and amortization, certain impairments, gains or losses on sales of assets, deferred income taxes and mark-to-market changes in our open derivative instruments. See further discussion below under Results of Operations.
Proceeds from Divestitures of Property and Equipment
In 2025, we sold a portion of our Oklahoma City campus as well as certain minor leasehold positions. In 2023, we sold our Eagle Ford assets through three separate transactions resulting in total cash proceeds of $2.5 billion after customary post-closing adjustments. See Note 2of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
Receipts of Deferred Consideration
During the years ended December 31, 2025 and 2024, we received $116 million and $166 million, respectively, in deferred consideration associated with our Eagle Ford divestiture transactions. See Note 2of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
Proceeds from Issuance of Senior Notes, net
In 2024, we completed our underwritten public offering of $750 million aggregate principal amount of our 5.70% Senior Notes due 2035. See Note 4of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
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Capital Expenditures
Our capital expenditures during the year ended December 31, 2025 increased compared to the year ended December 31, 2024, primarily as a result of increased drilling and completion activity within our operating areas, including those related to the Southwestern Merger. Our capital expenditures during the year ended December 31, 2024 decreased compared to the year ended December 31, 2023, primarily as a result of decreased drilling and completion activity within our Northeast Appalachia and Haynesville operating areas, as well as reduced activity in Eagle Ford due to our Eagle Ford divestitures. During the year ended December 31, 2025, our average operated rig count was 11 rigs and 188 spud wells, compared to an average operated rig count of 9 rigs and 133 spud wells in the year ended December 31, 2024 and 11 rigs and 193 spud wells in the year ended December 31, 2023. We completed 272 operated wells in the year ended December 31, 2025 compared to 81 in the year ended December 31, 2024 and 166 in the year ended December 31, 2023.
Contributions to Investments
During the year ended December 31, 2025, contributions to investments primarily related to capitalized interest on our investment with Momentum Sustainable Ventures LLC. During the years ended December 31, 2024 and 2023, contributions to investments primarily consisted of contributions to our investment with Momentum Sustainable Ventures LLC to build a new natural gas gathering pipeline and carbon capture project, the NG3 pipeline. In October 2025, the NG3 pipeline was placed in service and began gathering operations. See Note 15of the notes to our consolidated financial statements included in Item 8 of Part II of this report for additional information.
Payments on Prior Credit Facility, net
During the year ended December 31, 2023, we made net repayments of $1.05 billion on the Prior Credit Facility, utilizing a portion of the proceeds from the Eagle Ford divestitures and internally generated cash provided by operating activities.
Business Combination, net
In connection with the completion of the Southwestern Merger during 2024, we terminated Southwestern's existing credit facility, with all loan amounts and other obligations outstanding thereunder repaid in full and all commitments thereunder extinguished, for approximately $585 million utilizing cash on hand as well as the cash assumed from Southwestern. See Note 2of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion of this acquisition.
Property Acquisitions
Property acquisitions during the year ended December 31, 2025 primarily related to undeveloped leasehold acquired in Haynesville and Southwest Appalachia.
Cash Paid to Purchase Debt
In 2025, the $389 million aggregate principal of the SWN 2025 Notes was repaid and terminated upon maturity with cash on hand and borrowings under the Prior Credit Facility, of which the Prior Credit Facility borrowings were subsequently repaid. Additionally, we redeemed the remaining $47 million aggregate principal of the 2026 Notes using cash on hand. We also redeemed approximately $103 million of our 6.750% Senior Notes due 2029, approximately $60 million of our 5.875% Senior Notes due 2029 and approximately $62 million of our 5.375% Senior Notes due 2029 through open market repurchases using cash on hand.
In 2024, we announced an offer to purchase for cash, any and all of our outstanding 2026 Notes, the "Tender Offer". Upon expiration of the Tender Offer, approximately 91%, or $453 million, of the 2026 Notes were validly tendered and not validly withdrawn. In a separate transaction during the fourth quarter of 2024, we redeemed all of the $304 million aggregate principal of the 2028 Notes assumed in the Southwestern Merger for approximately $312 million, which included an $8 million premium to call the notes. See Note 4of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
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Cash Paid to Repurchase and Retire Common Stock
On October 22, 2024, our Board of Directors authorized repurchases of up to $1.0 billion, in aggregate, of the Company's common stock and/or warrants under a share repurchase program. During 2025, we repurchased 0.9 million shares for an aggregate price of $100 million. We did not repurchase any shares during 2024. During 2023, we repurchased 4.4 million shares of our common stock for an aggregate cost of approximately $355 million. The repurchased shares of common stock were retired and recorded as a reduction to common stock and retained earnings. See Note 10of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
Cash Paid for Common Stock Dividends
As part of our dividend program, we paid common stock dividends of $765 million, $388 million and $487 million during the years ended December 31, 2025, 2024 and 2023, respectively. See Note 10of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
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| Results of Operations | |||||
Year ended December 31, 2025 compared to the year ended December 31, 2024
Below is a discussion of changes in our results of operations for 2025 compared to 2024. The results of operations discussed below include amounts pertaining to Southwestern after the merger closed on October 1, 2024. A discussion of changes in our results of operations for 2024 compared to 2023 has been omitted from this Form 10-K, but may be found in Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operationsof our Form 10-K for the year ended December 31, 2024 as filed with the SEC on February 26, 2025.
Natural Gas, Oil and NGL Production and Average Sales Prices
| Year Ended December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Natural Gas | Oil | NGL | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| MMcf per day | $/Mcf | MBbl per day | $/Bbl | MBbl per day | $/Bbl | MMcfe per day | $/Mcfe | |||||||||||||||||||||||||||||||||||||||||||
| Haynesville | 3,000 | 3.17 | - | - | - | - | 3,000 | 3.17 | ||||||||||||||||||||||||||||||||||||||||||
| Northeast Appalachia | 2,624 | 2.99 | - | - | - | - | 2,624 | 2.99 | ||||||||||||||||||||||||||||||||||||||||||
| Southwest Appalachia | 976 | 3.08 | 16 | 54.47 | 81 | 24.48 | 1,559 | 3.76 | ||||||||||||||||||||||||||||||||||||||||||
| Total | 6,600 | 3.08 | 16 | 54.47 | 81 | 24.48 | 7,183 | 3.23 | ||||||||||||||||||||||||||||||||||||||||||
| Average NYMEX Price | 3.43 | 64.81 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Average Realized Price (including realized derivatives) | 3.16 | 55.60 | 24.30 | 3.30 | ||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Natural Gas | Oil | NGL | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| MMcf per day | $/Mcf | MBbl per day | $/Bbl | MBbl per day | $/Bbl | MMcfe per day | $/Mcfe | |||||||||||||||||||||||||||||||||||||||||||
| Haynesville | 1,532 | 2.14 | - | - | - | - | 1,532 | 2.14 | ||||||||||||||||||||||||||||||||||||||||||
| Northeast Appalachia | 1,809 | 1.88 | - | - | - | - | 1,809 | 1.88 | ||||||||||||||||||||||||||||||||||||||||||
| Southwest Appalachia | 270 | 2.42 | 3 | 60.41 | 21 | 27.44 | 417 | 3.42 | ||||||||||||||||||||||||||||||||||||||||||
| Total | 3,611 | 2.03 | 3 | 60.41 | 21 | 27.44 | 3,758 | 2.16 | ||||||||||||||||||||||||||||||||||||||||||
| Average NYMEX Price | 2.27 | 75.72 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Average Realized Price (including realized derivatives) | 2.75 | 61.04 | 26.91 | 2.84 | ||||||||||||||||||||||||||||||||||||||||||||||
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Natural Gas, Oil and NGL Sales
| Year Ended December 31, 2025 | ||||||||||||||||||||||||||
| Natural Gas | Oil | NGL | Total | |||||||||||||||||||||||
| Haynesville | $ | 3,477 | $ | - | $ | - | $ | 3,477 | ||||||||||||||||||
| Northeast Appalachia | 2,860 | - | - | 2,860 | ||||||||||||||||||||||
| Southwest Appalachia | 1,096 | 319 | 724 | 2,139 | ||||||||||||||||||||||
| Total natural gas, oil and NGL sales | $ | 7,433 | $ | 319 | $ | 724 | $ | 8,476 | ||||||||||||||||||
| Year Ended December 31, 2024 | ||||||||||||||||||||||||||
| Natural Gas | Oil | NGL | Total | |||||||||||||||||||||||
| Haynesville | $ | 1,205 | $ | - | $ | - | $ | 1,205 | ||||||||||||||||||
| Northeast Appalachia | 1,242 | - | - | 1,242 | ||||||||||||||||||||||
| Southwest Appalachia | 239 | 69 | 214 | 522 | ||||||||||||||||||||||
| Total natural gas, oil and NGL sales | $ | 2,686 | $ | 69 | $ | 214 | $ | 2,969 | ||||||||||||||||||
Natural gas, oil and NGL sales in 2025 increased $5,507 million compared to 2024. Increased volumes across all of our operating areas, which were primarily driven by the Southwestern Merger, resulted in a $3,476 million increase. Higher average natural gas prices also drove a $2,031 million increase in 2025.
Production Expenses
| Years Ended December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
| $/Mcfe | $/Mcfe | |||||||||||||||||||||||||
| Haynesville | $ | 297 | 0.27 | $ | 170 | 0.30 | ||||||||||||||||||||
| Northeast Appalachia | 163 | 0.17 | 97 | 0.15 | ||||||||||||||||||||||
| Southwest Appalachia | 175 | 0.31 | 49 | 0.32 | ||||||||||||||||||||||
| Total production expenses | $ | 635 | 0.24 | $ | 316 | 0.23 | ||||||||||||||||||||
Production expenses in 2025 increased $319 million compared to 2024. The increases were primarily related to the Southwestern Merger and increased volumes across all of our operating areas.
Gathering, Processing and Transportation Expenses ("GP&T")
| Years Ended December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
| $/Mcfe | $/Mcfe | |||||||||||||||||||||||||
| Haynesville | $ | 800 | 0.73 | $ | 326 | 0.58 | ||||||||||||||||||||
| Northeast Appalachia | 838 | 0.87 | 507 | 0.77 | ||||||||||||||||||||||
| Southwest Appalachia | 738 | 1.30 | 202 | 1.33 | ||||||||||||||||||||||
| Total GP&T | $ | 2,376 | 0.91 | $ | 1,035 | 0.75 | ||||||||||||||||||||
Gathering, processing and transportation expenses in 2025 increased $1,341 million compared to 2024. These increases were primarily related to the Southwestern Merger and increased volumes and rates across all of our operating areas.
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Severance and Ad Valorem Taxes
| Years Ended December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||
| $/Mcfe | $/Mcfe | |||||||||||||||||||||||||
| Haynesville | $ | 69 | 0.06 | $ | 60 | 0.11 | ||||||||||||||||||||
| Northeast Appalachia | 32 | 0.03 | 15 | 0.02 | ||||||||||||||||||||||
| Southwest Appalachia | 92 | 0.16 | 22 | 0.14 | ||||||||||||||||||||||
| Total severance and ad valorem taxes | $ | 193 | 0.07 | $ | 97 | 0.07 | ||||||||||||||||||||
Severance and ad valorem taxes in 2025 increased $96 million compared to 2024. The increase was primarily related to a $103 million increase due to the Southwestern Merger, which impacted each of our operating areas. The increase due to the Southwestern Merger was partially offset by a decrease in the Haynesville statutory severance tax rate, which resulted in a per unit decrease.
Gain (Loss) on Derivatives
| Years Ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Natural gas derivatives - realized gains | $ | 188 | $ | 919 | ||||||||||
| Natural gas derivatives - unrealized gains (losses) | 354 | (951) | ||||||||||||
| Total gains (losses) on natural gas derivatives | $ | 542 | $ | (32) | ||||||||||
| Oil derivatives - realized gains | $ | 6 | $ | 1 | ||||||||||
| Oil derivatives - unrealized losses | (2) | (3) | ||||||||||||
| Total gains (losses) on oil derivatives | $ | 4 | $ | (2) | ||||||||||
| NGL derivatives - realized losses | $ | (5) | $ | (4) | ||||||||||
| NGL derivatives - unrealized gains (losses) | 9 | (13) | ||||||||||||
| Total gains (losses) on NGL derivatives | $ | 4 | $ | (17) | ||||||||||
| Contingent consideration - realized gains | $ | - | $ | 25 | ||||||||||
| Contingent consideration - unrealized losses | - | (12) | ||||||||||||
| Total gains on contingent consideration | $ | - | $ | 13 | ||||||||||
| Total gains (losses) on derivatives | $ | 550 | $ | (38) | ||||||||||
See Note 13of the notes to our consolidated financial statements included in Item 8 of Part II of this report for a complete discussion of our derivative activity.
Marketing Revenues and Expenses
| Years Ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Marketing revenues | $ | 3,163 | $ | 1,290 | ||||||||||
| Marketing expenses | 3,160 | 1,310 | ||||||||||||
| Marketing margin | $ | 3 | $ | (20) | ||||||||||
Marketing revenues and expenses increased in 2025 compared to 2024 as a result of increased marketing activities primarily driven by our increased production volumes across all of our operating areas as a result of the Southwestern Merger as well as an increase in natural gas prices.
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Exploration Expenses
During 2025, exploration expense of $46 million was primarily the result of $16 million of lease extension payments, $15 million of non-cash impairment charges related to expirations of unproved properties and $14 million of geological and geophysical expense. During 2024, exploration expense of $10 million was primarily the result of $6 million of non-cash impairment charges related to expirations of unproved properties and $3 million of geological and geophysical expense.
General and Administrative Expenses
| Years Ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Total G&A, net | $ | 181 | $ | 186 | ||||||||||
| G&A, net per Mcfe | $ | 0.07 | $ | 0.14 | ||||||||||
Total general and administrative expenses, net during 2025 decreased $5 million compared to 2024 as the increase in employee compensation and benefits as a result of the Southwestern Merger was offset by a corresponding increase in allocations and reimbursements due to increased drilling and production activity. The per unit decrease in total general and administrative, net during 2025 compared to 2024 was due to increased production volumes as a result of the Southwestern Merger.
Separation and Other Termination Costs
During 2025 and 2024, we recognized $5 million and $23 million, respectively, of separation and other termination costs related to one-time termination benefits for certain employees.
Depreciation, Depletion and Amortization
| Years Ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| DD&A | $ | 2,980 | $ | 1,729 | ||||||||||
| DD&A per Mcfe | $ | 1.13 | $ | 1.26 | ||||||||||
The absolute increase in depreciation, depletion and amortization for 2025 compared to 2024 is primarily related to the Southwestern Merger. Depreciation, depletion and amortization per Mcfe decreased for 2025 compared to 2024 primarily due to lower depletion rates on wells acquired in the Southwestern Merger.
Other Operating Expense, Net
| Years Ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Other operating expense, net | $ | 40 | $ | 332 | ||||||||||
During 2025 and 2024, we recognized approximately $57 million and $312 million, respectively, of costs related to the Southwestern Merger, which included employee expenses, legal fees, consulting fees and financial advisory fees. In 2025, the costs related to the Southwestern Merger were partially offset by favorable legal settlements. In 2024, approximately $148 million of the Southwestern Merger costs were related to employee expenses.
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Interest Expense
| Years Ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Interest expense on debt | $ | 295 | $ | 181 | ||||||||||
| Amortization of premium, discount, issuance costs and other | 4 | (7) | ||||||||||||
| Capitalized interest | (64) | (51) | ||||||||||||
| Total interest expense | $ | 235 | $ | 123 | ||||||||||
The increase in total interest expense for 2025 compared to 2024, was primarily due to our assumption of Southwestern's Senior Notes as a result of the Southwestern Merger. Capitalized interest increased during 2025 compared to 2024 primarily as a result of increased capital activity following the completion of the Southwestern Merger. See Note 4of the notes to our consolidated financial statements included in Item 8 of Part II of this report for additional discussion.
Income Tax Expense (Benefit)
We recorded income tax expense of $463 million in 2025. Of this amount, $15 million is related to current federal and state income taxes, and the remainder is related to deferred federal and state income taxes. We recorded an income tax benefit of $127 million in 2024. Of this amount, $4 million is related to current federal and state income taxes, and the remainder is related to deferred federal and state income taxes. See Note 9of the notes to our consolidated financial statements included in Item 8 of Part II of this report for a discussion of income tax expense (benefit).
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| Critical Accounting Estimates | ||
The preparation of financial statements in accordance with accounting principles generally accepted in the United States require us to make estimates and assumptions. The accounting estimates and assumptions that involve a significant level of estimation uncertainty and have or are reasonably likely to have a material impact on our financial condition or results of operations are discussed below. Our management has discussed each critical accounting estimate with the Audit Committee of our Board of Directors.
Natural Gas and Oil Reserves. Estimates of natural gas and oil reserves and their values, future production rates, future development costs and commodity pricing differentials are the most significant of our estimates. The accuracy of any reserve estimate is a function of the quality of data available and of engineering and geological interpretation and judgment. In addition, estimates of reserves may be revised based on actual production, results of subsequent exploration and development activities, recent commodity prices, operating costs and other factors. These revisions could materially affect our financial statements. The volatility of commodity prices results in increased uncertainty inherent in these estimates and assumptions. Changes in natural gas, oil or NGL prices could result in actual results differing significantly from our estimates. See Supplemental Disclosures About Natural Gas, Oil and NGL Producing Activitiesincluded in Item 8 of Part IIof this report for further information.
Accounting for Business Combinations.We account for business combinations using the acquisition method, which is the only method permitted under FASB ASC Topic 805 - Business Combinations and involves the use of significant judgment. Under the acquisition method of accounting, a business combination is accounted for at a purchase price based on the fair value of the consideration given. The assets and liabilities acquired are measured at their fair values, and the purchase price is allocated to the assets and liabilities based upon these fair values. The excess, if any, of the consideration given to acquire an entity over the net amounts assigned to its assets acquired and liabilities assumed is recognized as goodwill. The excess, if any, of the fair value of assets acquired and liabilities assumed over the cost of an acquired entity is recognized immediately to earnings as a gain from bargain purchase.
The Company's principal assets are its natural gas and oil properties, which are accounted for under the successful efforts accounting method. The Company determines the fair value of acquired natural gas and oil properties based on the discounted future net cash flows expected to be generated from these assets. Discounted cash flow models by operating area are prepared using the estimated future revenues and operating costs for all proved developed properties and undeveloped properties comprising the proved and unproved reserves. Significant inputs associated with the calculation of discounted future net cash flows include estimates of (i) future production volumes based on estimated reserves, (ii) future operating and development costs, (iii) future commodity prices escalated by an inflationary rate after three years, adjusted for differentials, and (iv) a market-based weighted average cost of capital by operating area. The Company utilizes NYMEX strip pricing, adjusted for differentials, to value the reserves. The NYMEX strip pricing inputs used are classified as Level 1 fair value assumptions and all other inputs are classified as Level 3 fair value assumptions. The discount rates utilized are derived using a weighted average cost of capital computation, which includes an estimated cost of debt and equity for market participants with similar geographies and asset development type by operating area.
See Note 2of the notes to our consolidated financial statements included in Item 8 of Part II of this report for additional information on our business combinations, including the Southwestern Merger, which was completed on October 1, 2024.
Income Taxes.Income taxes are accounted for using the asset and liability method as required by GAAP. Deferred tax assets and liabilities arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets for tax attributes such as NOL carryforwards and disallowed business interest carryforwards are also recognized. Deferred tax assets represent potential future tax benefits and are reduced by a valuation allowance if it is more likely than not that such benefits will not be realized.
In assessing the need for a valuation allowance or adjustments to existing valuation allowances, one source of evidence is a projection of income exclusive of existing timing differences. Our judgement regarding the realizability of deferred tax assets is thus partially affected by estimates of future financial condition.
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We also routinely assess potential uncertain tax positions and, if required, establish accruals for such positions. Accounting guidance for recognizing and measuring uncertain tax positions requires that a more likely than not threshold condition be met on a tax position, based solely on its technical merits of being sustained, before any benefit of the uncertain tax position can be recognized in the financial statements. If it is more likely than not a tax position will be sustained, we measure and recognize the position following a cumulative probability estimate.
Impairments. Long-lived assets used in operations, including proved gas and oil properties, are assessed for impairment whenever changes in facts and circumstances indicate a possible significant deterioration in future cash flows expected to be generated by an asset group. Individual assets are grouped for impairment purposes based on a judgmental assessment of the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. If there is an indication the carrying amount of an asset may not be recovered, the asset is assessed by management through an established process in which changes to significant assumptions such as prices, volumes, and future development plans are reviewed. If, upon review, the sum of the undiscounted pre-tax cash flows is less than the carrying value of the asset group, the carrying value is written down to estimated fair value by discounting using a weighted average cost of capital. Because there usually is a lack of quoted market prices for long-lived assets, the fair value of impaired assets is assessed by management using the income approach. Level 3 inputs associated with the calculation of discounted cash flows used in the impairment analysis include our estimate of future natural gas and crude oil prices, production costs, development expenditures, anticipated production of proved reserves and other relevant data. Additionally, we utilize NYMEX strip pricing, adjusted for differentials, to value the reserves.
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Expand Energy Corporation published this content on February 18, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 18, 2026 at 12:34 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]