Earnings Call Transcript - EXE Q4 2025

Operator, Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Expand Energy Corporation Fourth Quarter 2025 Earnings Conference Call. After the speakers' presentation, there will be a question and answer session. To ask a question, press 11 on your telephone keypad. If your question has been answered or you wish to remove yourself from your queue, press 11 again. As a reminder, this conference call is being recorded. At this time, I would like to turn the conference over to Mr. Colby Arnold. Sir, please begin.

Colby Arnold, CEO

Thank you, Howard. Good morning, everyone, and thank you for joining our call today to discuss Expand Energy Corporation’s 2025 fourth quarter and full-year financial and operating results. Hopefully, you have had a chance to review our press release and the updated investor presentation that we posted to our website yesterday. During this morning's call, we will be making forward-looking statements which consist of statements that cannot be confirmed by reference to existing information, including statements regarding our beliefs, goals, expectations, forecasts, projections, and future performance and the assumptions underlying such statements. 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 and in other SEC filings. Please recognize that, except as required by applicable law, we undertake no duty to update any forward-looking statements and you should not place undue reliance on such statements. We may also refer to some non-GAAP financial measures, which help facilitate comparisons across periods and with peers. For any non-GAAP measure, we use a reconciliation to the nearest corresponding GAAP measure that can be found on our website. With me on the call today are Mike Wistrich, Joshua J. Viets, Daniel F. Turco, and Brittany Raiford. Mike will give a brief overview of our results, and then we will open up the teleconference to Q&A. So with that, thank you again. I will now turn the teleconference over to Mike.

Mike Wistrich, CFO

Thanks, Colby, and good morning. I would like to start out by talking about 2025. I think we had a really phenomenal execution year. We have a 15% reduction in our breakevens in the Haynesville. That is very difficult to do. The team should be congratulated on that. It is phenomenal. It does not just help our reinvestment rate; it also helps our inventory. You will notice in the deck that we have moved locations over to the left, getting closer to lower breakevens. I think that is really a tribute to the team. We did the Southwestern merger; we focused on reducing debt, fulfilling that promise this year. We have reduced debt, but we also returned a lot of money to our shareholders. And we continue to think that is a good way for the company to continue. Look, we are seeing volatility in gas prices today. You have seen it all quarter. We believe in hedging, and our hedging program has been effective. We have $200 million in gains this year, and just look at today's prices. We are glad we have them. We are very active this quarter. What I like about the 15% breakevens in the Haynesville is they are real, and they know they are real because when we talk about 2026, we have reduced our maintenance capital. That is proof positive that the team is working and working well. In 2026, we will continue to do our buy down of debt. We will also consider shareholder returns as we always have. Big news, of course, is the change that we made last week. That is really a reflection of the changing natural gas business. We believe the world has fundamentally changed in natural gas. We are seeing tremendous growth in demand, 35% to 40% in the next five years. This move is absolutely trying to address that reality. Today, our marketing business, while we think about it, is in three buckets. The first bucket we consider is whether we get our gas to premium markets. This has been a goal for the company from the very beginning. We started in Chesapeake in 2021 with our goal of moving these numbers. It was at the time almost all in-basin sales. Today, we are close to 50%. We feel good progress has been made. The second leg of marketing is we need to take care of volatility. We live in a very volatile gas market. By hedging and doing storage transactions, this helps us capture, and helps us in low-price environments, which we are always concerned about. It is about discipline. Hedging is about that. Our third, which we have not made as much progress on and we are disappointed in, and we expect to do better, is we need to capture and facilitate new demand. We need to get our fair share of this market. Our team has done some good work. We saw the LCM deal this year, but we have not done enough. We are taking that challenge seriously, and that is really some of the fundamental reasons why we are moving to Houston. In order to participate in that market, you have to compete on our trading side of our business, or our marketing side. We are not the only ones saying this. You see wellhead to water. We have to think beyond the wellbore. We have to say, it is not good enough anymore to just drill great wells. We have to compete on the marketing side of our business. What is the size of the prize? I have been asked many times about that. I think the size of the prize we are chasing is $0.20. We are looking for improved realizations across our business. We think that will make us competitive and a better energy company. These changes, as all changes, have some unfortunate elements. Obviously, our senior leadership has changed, but that does not change our mission or our strategy. What you are seeing is a change in tactics and focus. We have a new business and have to spend time on that business. What is not changing? Our operations have been great. Look at the results. We are not changing our leadership. We are not changing even our location; we plan to stay in Oklahoma City with our operations team. Joshua is still leading that group, and we do not expect to have changes there because, frankly, it works. Our mantra is our foundation is in place. Our strategy is clear. The opportunity set is huge. It is time for us to act, and we are talking about urgency and competitiveness. All we need to do to be successful is execute. With that, we would like to turn it over to questions.

Operator, Operator

Ladies and gentlemen, if you have a question or comment at this time, please press 11 on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press 11 again. Please stand by while we compile the Q&A roster. Our first question or comment comes from the line of Neil Singhvi Mehta from Goldman Sachs. Your line is open.

Neil Singhvi Mehta, Analyst

Yes. Good morning, Mike. Good morning, team. Thanks for taking the time and Mike, appreciate some of the color that you provided around management change. Maybe you could talk about the characteristics you and the board are looking for in that next CEO and any thoughts on timing, how long you think the search could take?

Mike Wistrich, CFO

Sure. Thank you for the question. We are looking for a leader who has a bigger view of energy. He will be an energy person, but someone who is going to continue our mission to look beyond the wellhead. That is someone who thinks about the whole value chain and includes getting closer to customers, not just here in the U.S., but we need to get closer to customers in Europe. It is someone who has a bigger view of the energy industry as a whole. How long does it take? Well, we have done the search before for a CEO; it took about six months. This is a bigger, more complicated company, so I would not be surprised if it took nine months. But six is the goal. I am committed to find the right person and will be here until that occurs.

Neil Singhvi Mehta, Analyst

Okay. That is really helpful. And then as you talk about marketing, can you talk about the quantification of the uplift in cash flow or realizations that you think could happen if you optimize the commercial side of the business? A case study could be FERN. Did you capture all the upside that you think you could have in that event? And if you had a more robust marketing effort, do you feel like you would have done even better?

Mike Wistrich, CFO

Well, I think all energy companies and gas companies are moving towards more marketing because we can no longer give away margin to the marketers. So number one, our first goal is premium markets. We are starting to see a little bit of results this year on that. I expect that to be the near-term catalyst for us to increase our realizations across our portfolio. That will move into 2027. I think volatility; especially when prices are low, storage is phenomenal. Volatility is high; storage will be very helpful. Moving our gas to premium markets, whether it be Gillis or to Perryville, has been very helpful. Those are the near-term ways to help our margins right away. To get that $0.20 is a little bit longer; let us call it three to five years. We have to do more LCM deals, which generally has to do with building something, building a facility of some sort. They take a little bit longer, but that is really the future. We are really fighting for years three to five. Again, the goal is $0.20. A $0.20 improved realization is obviously very material to our margin, and we think we can make it there.

Neil Singhvi Mehta, Analyst

It is about $500 million in EBITDA, right?

Mike Wistrich, CFO

That is what we are talking about.

Neil Singhvi Mehta, Analyst

Yeah. Yeah. And then, Neil, hey. Just on you asked about Winter Storm FERN. I mean, I think your question around what you are going to be able to do with the integration of the operations that we have with the marketing commercial business. All those things have to work in tandem. But I think just talk about that entire value chain and start with the operations. Those operations have to hold up when you have these types of weather events. It really depends on the type of weather that we incur. In the Northeast, really across our entire Appalachian region, the operations held up incredibly well and performed incredibly strong through the weather events. In fact, in Northeast Pennsylvania, we were actually peaking out on our production levels as we headed into January. So, again, just thinking about the flexibility of our business there. In the Haynesville, that was a little bit different of a challenge. We had over an inch of ice accumulate on roads, which negatively impacted our power infrastructure as well as our ability to manage water across the asset. So definitely a little bit of a different situation there that had some impact on our volumes across that time period, but we absolutely know that in order for us to realize these aspirations, the entire value chain has to work, including our operations and our marketing commercial business. It also implies that we have to gain additional access to infrastructure, further down the value chain. Thank you.

Operator, Operator

Our next question or comment comes from the line of Matthew Portillo from TPH. Mr. Portillo, your line is open.

Matthew Portillo, Analyst

Good morning, all. Maybe just to follow up on the marketing front. It feels like, and I know you laid out in the slide deck, there has been a pretty significant shift in a constructive way in the supply-demand balances for natural gas on the Gulf Coast. I was curious if you might discuss at a high level how you think the demand dynamics have been changing and if there is any shift in your conversations for contract tenor, but also pricing dynamics for offtake agreements, whether it be LNG players, utilities, or industrial consumers around Louisiana and Texas?

Mike Wistrich, CFO

Yeah. I will start and let Daniel finish. Really high level, we are definitely seeing the Gulf Coast being very active. It is a unique area since it is where 50% of our production is. We are seeing gas-on-gas demand. End-use customers want to be closer to the wellhead, and so we think that is going to go in our favor. You could see others talking about this as well. We are not the only ones. In the Northeast, of course, that is a power market, and it is a little different. With Virginia and the data centers being built, it is a different market. Generally, we think there is more diversity in the Gulf Coast. But, Daniel, you should add additional color.

Daniel F. Turco, Strategy Director

Thanks, Matt. I think you have nailed it. The Gulf Coast is a place where we are seeing growing demand. If you look at the entire United States, we are seeing about 25 billion cubic feet a day of gas demand coming online. A lot of that, half of that is coming from LNG, and that sits right in our backyard and right where our Haynesville asset is and where our pipeline capacity gets down to Gillis. Somebody asked me the other day how I feel about this market, and I said, I've been around this for 25 years. For the first time, we are getting tons of inbounds from people looking for that security of supply that you referenced. The team is out there working all these deals, trying to do something better. As Mike pointed out, this opportunity set is huge, and we are accelerating what we are trying to do here to grow and further expand down the value chain. Where we are set up, our Haynesville asset, Gillis, and that demand is quite unique for us. Not only on the Louisiana side of the border but also the Texas side is growing. There is a unique aspect going on between Texas and Louisiana. With the amount of demand growth, people talk about the Permian a lot. The Permian will grow into these markets. Texas is growing substantially, as is Louisiana, and the ability to get from interstate pipelines across the border to meet that demand is also a little bit challenged. So we are set here to go and capture all this demand.

Matthew Portillo, Analyst

Great. And then maybe a question for Joshua. One thing we have noticed on the macro side is the industry has continued to accelerate the rig count in the Haynesville, but more of those rigs are making their way to East Texas. Some of your peers are starting to face degradation in their well results. I guess, Joshua, as we look at your well data and the slide you laid out on Page 12, I am curious how you think about Expand’s productivity trends in the Haynesville over the next few years and how that might contrast to the industry as a whole?

Joshua J. Viets, Operations Director

Yeah. Thanks for the question, Matt. The reality is the inventory that we carry in the Haynesville is simply unmatched. It is both in terms of depth and quality. You see that show up in a number of different spots. Combining that with what is a 15-plus year history of operating the basin leads to operational excellence. That is going to show up in the breakeven of our inventory. In just one year alone, we have been able to add five years of inventory below $3.50. Yes, we have seen roughly 10 rigs added to the Haynesville, but those 10 rigs being added do not compare to a rig that we might choose to add. In fact, if you reference slide 30, you will see we have characterized over a two-year time period what our rig generates relative to an average rig in the industry. The things we are continuing to be on, of course, is operational excellence, continuing to manage the way we drill our wells. That is primarily centered around how we manage temperature. Our other differentiator is how we source sand. Not only does lowering input costs allow us to optimize a better economic outcome by increasing proppant intensity, but it drives our well productivity higher. That is not about IPs; it is really about changing the decline parameters of the well, which translates to value at the end of the day.

Operator, Operator

Thank you. Just a sec. Our next question or comment comes from the line of Douglas Leggate from Wolfe Research. Mr. Leggate, your line is open.

Douglas Leggate, Analyst

You had me on pause there for a minute. Thanks so much. Good morning, guys. Mike, I wonder if I could ask two quick things to the extent you are able to answer them. There is a lot of focus obviously on your breakeven. When we have chatted, it has been almost like you have kind of laser-focused on how you get this breakeven down. Some of your peers have obviously taken different routes on this, whether it be greater liquids mix, introducing midstream, deleveraging. I am wondering to the extent you can share your vision for how Expand gets that breakeven down, given the proportion of dry gas you have as my first one. My second one is you have called the 2029 bonds a big nut, obviously. I am wondering if this is defining a different priority for the use of cash in terms of balance sheet over buybacks. I will leave it there. Thank you.

Mike Wistrich, CFO

Great. Thanks, Doug. A couple of things. I do think we focus a lot on breakevens, but also need to focus on our total financial picture, including earnings per share. We are making a big dent in our debt; we think that actually helps. That is one way to do it. But we are also thinking about marketing. It is the top line; we have to have a margin get better. I think we are trying to squeeze this number. We are fighting for pennies, and we know we are fighting for pennies as an industry. You have to use the whole tool chest to get that done. Between debt reductions and I think you have noticed we have made pretty good synergy adjustments in G&A, and we hope marketing will be the next leg of that. As far as paying down debt versus buyback shares, of course, we like to do both. We have done both this year and continue to do both. But we are in a volatile commodity business. Having a fantastic balance sheet comes first. That is why you are seeing our priority to pay down debt. I think we will lean into that. We would like to be less prescriptive on our buybacks. It is a terrible policy to tell the market exactly when we are buying back shares and when not. We want to be smart about it. But first is balance sheet, and that is why you will see us focus on that. That is also great for EPS, which is important.

Douglas Leggate, Analyst

If I could just add a quick follow-up there? I wonder, does M&A come into the picture here in terms of resetting that breakeven, again midstream and liquids is kind of what I am driving at here. What would you say to that?

Mike Wistrich, CFO

I would say we are actively looking at every potential party in the basins that we operate, some of which have liquids. The more important part of that question is you have to have discipline. This year, we looked at a lot of transactions and passed on a lot because it starts with our non-negotiables. Our non-negotiables are balance sheet and accretion. Sometimes, this year, gas prices were high, and deals were not that attractive. But if you are asking about liquids, is that a possible answer? It is.

Operator, Operator

Our next question or comment comes from the line of Kevin Moreland MacCurdy from Pickering Energy Partners. Mr. MacCurdy, your line is now open.

Kevin Moreland MacCurdy, Analyst

Sorry about that. Good morning, and thank you for taking my question. I wanted to ask about your maintenance CapEx and specifically slide six. It looks like there were some improvements to your maintenance capital compared to last quarter, although the guidance did not change, if I am reading that correctly. I also noticed that there are three production levels bolded on the left-hand side there, 7.25 Bcf to 7.75 Bcf, a range a little bit wider than your 2026 guidance. Is there anything to read into that as well?

Joshua J. Viets, Operations Director

Yes, Kevin. I mean, I think the first thing is to reemphasize the improvement we have seen in our maintenance CapEx. If you were to go back a year ago and look at this slide, it would have been $225 million higher to deliver the 7.5 Bcf a day. Acknowledging that the business has gotten stronger is reflected here. Our program does have the ability to be incredibly efficient from a free cash flow generation standpoint up to 7.75 Bcf a day. But one of the things that is important to recall is a view on mid-cycle price. That view remains unchanged from $3.50 to $4. $0.50 is a big range for us. We want to continue to maintain flexibility in how much we produce in any given month or across a given year based on how we see those prices trend. In certain instances, that might cause us to push volumes a little higher, but if we see the market turn a little bit bearish, we want to have the ability to flex those volumes.

Kevin Moreland MacCurdy, Analyst

For my second question, your budget outlines $75 million for the Western Haynesville this year. Can you talk a little about how that program progressed, when you will be drilling, and what you are looking for in results?

Joshua J. Viets, Operations Director

Yeah. Kevin, this is Joshua again. We have roughly two and a half wells scheduled. There is some carry-in and carry-out capital that will take place across the year. We have just finished drilling the first well, which was a horizontal well. Those operations went incredibly well. When we benchmark our performance both in terms of days and cost, we are at the very low end of what we have seen from some of the bigger competitors in the Western Haynesville, so we feel really good about that. That well is being completed as we speak, and we expect first production sometime in late Q1 or early Q2. We are really interested in longer-term decline parameters. We know the reservoir is there; we know it is highly saturated with overpressure gas. Understanding those decline characteristics will be really important. For the rest of the year, we have roughly two additional wells that we plan to drill, which will focus on helping us appraise the full extent of the acreage position we put together there.

Operator, Operator

Thanks, Joshua.

Brittany Raiford, CFO

Thank you.

Operator, Operator

Our next question or comment comes from the line of Scott Michael Hanold from RBC Capital Markets. Mr. Hanold, your line is open.

Scott Michael Hanold, Analyst

Yes, thanks. I would like to maybe key off something, Mike, you had said in your overview. One of the things you mentioned is that you want to look to, you know, just cannot give away margin to the middleman. As you step back and think about that, would that also contemplate looking at more integrated operation, such as going out and actually owning midstream to be more integrated? Does that help the effort? Is that a possible avenue you would be willing to look at?

Mike Wistrich, CFO

Yeah. Generally speaking, we are focused more on partnerships with midstream companies. We are looking at stuff like Momentum that we have done in the past. An LCM deal has a Momentum component. So I imagine this is more partnerships. We must get our gas to premium markets. It is unrealistic to think we are not going to have to deal with some midstream to achieve that. We would like to be part of that equation. So I think that is more than just going out and buying gathering systems. Going that route may not be really helpful for us. We have to get to end-use customers. So, yes, integrated, but more about partnerships.

Scott Michael Hanold, Analyst

Okay. Understood. Appreciate the context. And then if I could ask on cash taxes, surprised at the minimal cash tax you are looking at this year. Can you give us a sense of what drove that? Is that part of the OBDD from last year? And do you have any visibility over the next couple of years where that cash tax rate might go?

Brittany Raiford, CFO

Yes, Scott. This is Brittany. You are absolutely right. It is the benefit of the OBDD, and we saw that last year and are seeing the benefit of it this year. We expect to be a full cash taxpayer probably in the back part of the decade. I expect cash tax increases to stair-step throughout the next couple of years to reach a full cash taxpayer, probably closer to 2030. Thank you.

Operator, Operator

Thank you. Our next question or comment comes from the line of Benjamin Zachary Parham from JPMorgan. Mr. Parham, your line is open.

Benjamin Zachary Parham, Analyst

I wanted to follow up on Matt's question earlier. In the slide deck, you highlighted an increase in your first-year cumes that you expect from the Haynesville in 2026. Can you talk about that a little bit? What drove that expected increase? And if you see that as sustainable going forward?

Joshua J. Viets, Operations Director

Yeah. Good morning, Zach. Is it sustainable? Absolutely. To tie back to my earlier comments, we have reset the economics of the Haynesville with improvements in drilling efficiency and self-sourcing our own sand. We have been able to drive in higher productivity largely through enhancing the completion designs. At the time of the merger onset, we referenced the Gen 1 completion design. We are now progressing to our Gen 3 design and seeing really improved results from that. We expect this type of trend to continue forward. We have unmatched inventory quality and depth in the Haynesville, and that combined with our history in the basin is a good reason why we are delivering outsized results relative to peers.

Benjamin Zachary Parham, Analyst

Then my follow-up, just on D&C costs in the Haynesville. You have done a lot to bring down costs over the last several years. You have a slight reduction in your numbers for 2026. Can you talk about your ability to potentially drive that number even lower going forward?

Joshua J. Viets, Operations Director

My expectation is pretty high for the organization and our ability to do that. We continue to find opportunities to improve tool reliability. The bigger issues you face in the Haynesville are temperature, and we are continuing to partner with some of our service providers to increase tool reliability. In addition, we are seeing significant advancements with artificial intelligence to help us refine in a more optimal way our well designs and, more importantly, automate real-time optimization of drilling parameters. We think these two items are going to unlock further savings from a D&C standpoint.

Operator, Operator

Our next question or comment comes from the line of Joshua Ian Silverstein from UBS. Mr. Silverstein, your line is now open.

Joshua Ian Silverstein, Analyst

Yep. Hey, good morning, guys. Mike, it felt like a challenge to get Expand volumes to the demand growth areas. Just talk about what the biggest challenges are in doing so. Is it getting the customer to actually agree to supply? Is it price? Concerns over inventory duration? I am just curious.

Mike Wistrich, CFO

Yep. There are two challenges for our team. One is on us, and one is the facts of the world. Our team needs to be more aggressive reviewing transactions or potential transactions. We will build more generators and add to the team to be in the room more often. A big part of moving to Houston is to be in that room, so we need to get out of our own way. The other side is just real: you need to get your gas physically there. You are always thinking about transportation, how to service those clients, which gives advantages to companies like Williams, who have been connected to them for a generation. We must have assured production outside of just heating, and that is our competitive advantage, but we have to partner. That is why we want to partner with midstream companies because that is the biggest thing to overcome.

Joshua Ian Silverstein, Analyst

Got it. And then you talked about trying to get an incremental $0.20 of realizations or margins. What is the cost to get it there? Because you are going to have to start to build out a bit more. Is this going to cost you more upfront to have benefits later? Some sort of sense of that would be great, sir.

Mike Wistrich, CFO

I think that is a great question. The first thing is we talk about our culture of discipline and rate of return. We think of ourselves as how do you grow long-term shareholder value, which means you have to talk about cost as well. The lowest dollar change will be in trading to premium markets; those turn into commitments at feet. Everything else requires more capital or risks our balance sheet, and those have to have a higher rate of return. We are returns-focused. Will we spend some money over the next three to five years? Undoubtedly. We will put it in the context of our rate of return framework and maintain a decent ROCE in our program, and we will have discipline around that.

Operator, Operator

Our next question or comment comes from the line of John Christopher Freeman from Raymond James. Mr. Freeman, your line is now open.

John Christopher Freeman, Analyst

Good morning. It was nice to see the Haynesville productivity improvement continue, but it does look like the upside on production in the quarter was actually from the Appalachia region. It seems like quicker-turning lines, but any color you could provide on that relative to your guide for the quarter?

Joshua J. Viets, Operations Director

Yeah. John, this is Joshua. To address that, really, that is about returning our production from curtailments in the fourth quarter. Most of those curtailments would have taken place across Northeast Appalachia. In Q1, we would have had a bit more weather-related downtime in the Haynesville due to Winter Storm FERN, where we saw roughly an inch of ice at the end of January. That had some modest impacts. But across the full course of the year, we anticipate averaging in and around 7.5 Bcf a day.

John Christopher Freeman, Analyst

Got it. Thanks, Joshua. And then Mike, sorry to belabor the marketing topic, but it seems like, and I do not want to put words in your mouth, but you are a lot more focused, it appears, on LCM types of agreements as opposed to long-term LNG supply agreements. Is that a fair characterization?

Mike Wistrich, CFO

I do not think that is fair. We are looking at both. We are looking at both. We are chasing margin. We have to participate in the value chain downstream of us; that is definitely LNG, manufacturing, and power. It is all of the above. I just want to be more aggressive because to get in the room, we have to hustle in this competitive space.

Operator, Operator

Thank you. Our next question or comment comes from the line of Neil Dingmann from William Blair. Mr. Dingmann, your line is open.

Neil Dingmann, Analyst

Morning, Mike. Nice quarter. Mike, my question you guys talked about a bit last night was on your upstream position. Just looking at your share price, it certainly does not seem to me that you guys are getting credit for the massive, what, the 2,000,000-plus acres position on top of your material production. So I wonder, is there something you would consider doing with monetizing a bit of the inventory or drilling carry to something to unlock that value given it just seems your investors are not recognizing this.

Mike Wistrich, CFO

First, thank you for saying we are not getting full credit; we would love to get full credit. We hope you all are paying attention. We think we have a good business. Generally speaking, we are not actively looking to do what you are talking about, but it is always on the table. It has to be. Just to say no for the sake of no is not the right answer. If we see something that is attractive and someone wants to overpay, we are a public company. That could happen any day, so nothing is off the table, but we are not actively doing that right now.

Neil Dingmann, Analyst

Makes sense. And then just secondly, it looked like on the guide, you are going to run about the same rig count. I am just wondering if you are running, if you continue to have the efficiencies that you have recently seen, would you see yourself potentially pulling back on the rig count and just continue to bank that free cash flow?

Joshua J. Viets, Operations Director

I mean, I think, Neil, we would have to take a look at fundamentals and understanding where supply-demand balances sit. We maintain a high level of flexibility within our business. We have noted today that we see this business being efficient up to that 7.75 Bcf a day number. At this point in time, we are comfortable with the program laid out to deliver 7.5 Bcf a day at the $2,850,000,000 of CapEx. Until market fundamentals start to shore up, that is our plan to execute this year.

Operator, Operator

Thank you. Our next question or comment comes from the line of Charles Meade from Johnson Rice. Mr. Meade, your line is now open.

Charles Meade, Analyst

Yes. Good morning, Mike, to you and the whole Expand team there. I would like to ask a question about drilling down on one piece of your marketing push, and that is on storage. You guys, in your presentation, say you have 5 Bcf of storage that you own now. Can you talk about the nature of those assets and what the trajectory has been for building that position? Is storage an area that you expect to be competitive in acquiring more?

Daniel F. Turco, Strategy Director

Yeah. Hey, Charles. This is Daniel. This year, we added about 3.5 Bcf of storage in the last quarter to our existing 1.5 Bcf, so we like this storage for many reasons. Our M&C strategy prioritizes managing volatility. The market is highly volatile, as we have seen over the last few months. We are actively using that storage and have made money on it already. We plan on increasing that storage position, but it is a very competitive market. The total demand has grown substantially, and storage has not caught up, which is why you are seeing a lot of volatility. It is highly competitive to acquire more capacity, and we are looking at it, but back to our disciplined approach, we will only take capacity we see making us value and helping us manage that volatility to create more margin ultimately.

Charles Meade, Analyst

Got it. Thank you. And then, if I could ask a question about the West Virginia Utica. You guys, also in your presentation, talked about bringing some Ohio Utica development concepts towards West Virginia and a lot of upside there. Can you elaborate on what that is and how big the upside might be?

Joshua J. Viets, Operations Director

Yeah, Charles. I mean, we are pretty excited about our sup-location program. The reality is there has not been a lot of Utica development as you move across the Ohio River, and I can assure you the geology does not stop at the river. We think there is quite a bit of upside with that; the teams have been working on it for some time. It is just about getting into the right environment in which that inventory development makes sense. There will be some infrastructure requirements, but we think we can leverage what we have learned from drilling deeper gas wells in the Haynesville in the Utica, and we expect it to be a highly profitable part of the business going forward.

Operator, Operator

Next question or comment comes from the line of Mr. Phillip Jungwirth from BMO. Sir, your line is open.

Phillip Jungwirth, Analyst

Yeah. Thanks. Good morning. With the NG3 pipeline now flowing volumes, can you talk through how this will benefit Expand this year, also as Golden Pass starts up? Is there a benefit to maintaining ownership in the project long term or at least through a potential expansion?

Daniel F. Turco, Strategy Director

Yeah. Hi, Phillip. This is Daniel. NG3 came on in October, and that is providing us more market optionality. That is bringing our gas to Gillis, which over time will be a premium market. At the moment, we are getting about even on where we are, but the capacity payments we get are supportive. With the structural demand for LNG growing significantly, we see Gillis becoming more premium. It is providing us two things: it is getting us to a wholesale market and providing optionality to move between Gillis and Perryville on any given day.

Phillip Jungwirth, Analyst

Okay. Great. And then besides the capacity going to Gillis, you also have 2 Bcf a day going to Perryville. So it is further away from the LNG corridor. Can you talk about the advantages of selling gas at this hub? How would the go-forward marketing strategy be tailored here versus volumes going to Gillis?

Daniel F. Turco, Strategy Director

Yeah. Perryville is a great market, offering strong pull from utilities down in the Southeast. A lot of that is driven by the dynamics of Gillis, where more gas is being redirected for LNG demand. Historical gas that would have come from Perryville has decreased. Also, there is significant pipeline capacity coming online to the Southeast, so this market has its own premiums. Our advantage is we can sell to both markets and move molecules between the two, allowing us to capture that optionality value while optimizing our sales strategy.

Operator, Operator

Our next question or comment comes from the line of Betty Jiang from Barclays. Ms. Jiang, your line is open.

Betty Jiang, Analyst

Hello. Good morning. Mike, I am with you on the scale of the marketing opportunity and the need to think bolder. I am just curious about your $0.20 uplift that we talked about. Just how you came up with that target, and do you see that as a reasonably achievable number, or is it more of a stretch goal for the organization?

Mike Wistrich, CFO

I do not think it is a stretch. It is something that we will have to be aggressive to do. We will definitely have to pull all three of our levers: first, premium markets; second, we must work on our storage; and third, we have to participate in the value chain beyond the wellbore, meaning LNG or industrial. I do not think it is a stretch at all. I certainly hope we achieve that quickly so you all are comfortable and then hope to expand that over time.

Betty Jiang, Analyst

Great. No. That makes sense. And definitely a lot of opportunity to fill in the hopper. My follow-up is on M&A. A lot of talk on the Gulf Coast, but we have also seen rising deal-making in Appalachia. What is your appetite for M&A in the Northeast? Is there value to having more in-basin exposure to capture that growing power opportunity up north?

Mike Wistrich, CFO

M&A has been something we have done a lot over the past five years. Over $15 billion of transactions speak to that. We will look closely at everything, including Appalachia and the liquids concept you mentioned. The question is: can you do it with discipline? Can you protect the balance sheet and adhere to non-negotiables? This year, we passed on several deals because they were at prices we did not think were fair value. The answer is we will examine everything in our basins, as that is our job, but M&A is a tricky market; first, think about your base business.

Operator, Operator

Thank you. Our next question comes from the line of Kalei Akamine from Bank of America. Your line is open.

Kalei Akamine, Analyst

Mike, going back to your comments about marketing, you expressed this desire to be more commercial around your volumes. You look at your portfolio; I am curious how much gas you have committed to long-term sales agreements. Trying to get a sense of how much flexibility you have in the portfolio to ship gas to higher-value markets? Is it fair to think that more flexible molecules in that portfolio are in the Haynesville?

Mike Wistrich, CFO

I think you are right to point out that we make commitments every day, and some of those commitments would have to be rolled off. I do not have a specific number in my mind, but I think the Gulf Coast is where we can build. It is where we can grow, and to the extent we get more demand, we can increase production to fulfill that demand. The Gulf Coast is our competitive advantage. Our three basins give us more market area, and we must take advantage of it.

Daniel F. Turco, Strategy Director

We stage those commitments; you can see on page 19 a couple of sales we just made. We have commitments going up that extend to 15 years, but within a five-year frame is where we look at making a lot of our sales. We just added several sales to premium markets. These are not the big deals we are going to announce, but singles and doubles help us add more sales to end-users to capture that premium uplift. A sale becomes an asset—if markets move, we can fulfill that sale with other gas and move gas to higher-priced markets.

Kalei Akamine, Analyst

I appreciate that. This next question is on LNG exposure. Pre-filed, the desire was for exposure to be somewhere between 15% and 20%. Post-merger, that commentary has shifted a bit. What does desired exposure look like today? Is it a quarter of gas? Is it a third? And do you think it is necessary to match the molecules at the wellhead to the takeaway on the water, or is there some synthetic way to go about it?

Brittany Raiford, CFO

Kalei, great question. The commitment Chesapeake made before close of 15% to 20% LNG reflects how much the gas markets have changed since then. Back then, we were probably not considering power and industrial demand growth nearly as much. Really we are interested in tapping into premium markets, and we are agnostic about which those premium markets are. The opportunity is broad, and we will look for the highest-return way to diversify our sales exposure. We will not be prescriptive about exact amounts for LNG exposure.

Mike Wistrich, CFO

Got it. Okay.

Brittany Raiford, CFO

Appreciate that, Brittany. Thank you.

Operator, Operator

Our next question comes from the line of Leo Mariani from Roth. Mr. Mariani, your line is open.

Leo Mariani, Analyst

You guys talk about this a lot, but just on the goal of the $0.20 uplift on gas, is there a rough timeframe for that? You mentioned trying to get some deals over three to five years, just trying to get a sense if that is a five-year goal. If you could provide any color on that?

Mike Wistrich, CFO

I would say yes, it is three to five, giving us five for flexibility. I hope to achieve that in three to three and a half years. We want to be aggressive here.

Leo Mariani, Analyst

Okay. And then just following up on buyback, you spoke about this. I do not want to put words in your mouth, but it sounds as if there will be times of dislocation in the stock, and the priority is to make the balance sheet even more solid.

Mike Wistrich, CFO

Agreed. We totally agree with your statement right there.

Operator, Operator

Thank you. Our next question or comment comes from the line of John Annis from Texas Capital. Mr. Annis, your line is open.

John Annis, Analyst

Good morning, all, and thanks for taking my questions. For my first one, you noted around 20% of the 2025 TILs exceeded 1 Bcf per 1,000 feet, and you expect that to rise above 30% in 2026. I wanted to get a sense of what is different about those top-performing wells. Is it geology, lateral placement, completion intensity, or some combination? Is there a ceiling on how high that percentage can go, given your acreage mix?

Joshua J. Viets, Operations Director

It is definitely a mix, John. Completion design is the biggest driver for us moving forward, but where you drill matters as well. Typically, we see the best-performing wells in the southern part of our acreage position within NFE. There will be limits on the number of wells you can drill in one gathering system due to capacity constraints. To answer your question, there would be constraints, but we see continued upside across the acreage position. We have had success drilling three-mile laterals. We will continue to get better and see more of that in the future. I mentioned earlier; we do not think we have reached what we deem optimal from a completion design standpoint. We continue to reset those economics by accessing cheaper sand.

John Annis, Analyst

Makes sense. For my follow-up, you mentioned supplying microgrid solutions in Appalachia with flexible volume contracts. How large is this opportunity today? How does it compare in attractiveness of these smaller volume deals with some of the larger supply commitments announced in the basin?

Daniel F. Turco, Strategy Director

Hey, John. Thanks for the question. We went live with the microgrid solution, and while relatively small, we are excited because small deals add up, and these actually command a premium with reservation fees on our gathering system. This micro solution captures higher prices, which means we get a dual effect of reserving fees and higher prices. It may be small, but these singles will add up over time, and we will execute many more of these types of deals.

Mike Wistrich, CFO

Great. Thank everyone for their questions today. We want you to ask tough questions. We want to be responsive, so thank you. I would like to close with just a few big picture comments. Our execution has been solid; that is our foundation. We are not changing it and expect it to continue, and we continue to expect our teams to perform better in the future. We are thinking beyond the wellbore; we have to talk about marketing today. That is not a strategy change; we had that strategy. What is changing is urgency, attention, and discipline. We want to be more aggressive but always ready to return and build shareholder value. Third, the opportunity is huge. We see it. Gas has its moment and we want to take advantage of it. The demand is incredible. It is time for us to execute, not to just talk. That is our focus, and we will continue. I think that is the end of our call. Have a good day.

Operator, Operator

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day. Speakers, standby.