Expand Energy expects year-end 2025 production of 7.2 bcfed
The leaders of Expand Energy Corp., Oklahoma City, plan to produce an average of 7 billion cu ft equivalent per day (bcfed) in 2025, which would be an increase of nearly 4% from the combined third-quarter production of Chesapeake Energy Corp. and Southwestern Energy Co., which merged at the beginning of October (OGJ Online, Feb. 13, 2024). Growth from the end of this year to late 2025 is forecast to be more than 12%.
Expand’s executives, led by former Chesapeake executive Nick Dell’Osso, also have increased their 3-year cost-savings target for the combined organization to $500 million from $400 million and said they expect to generate $225 million of that amount next year.
The new Expand has operations in about 650,000 net acres in both the Haynesville and Northeast Appalachia regions and another 530,000 net acres in Southwest Appalachia. Combined, the assets produced 6.75 bcfed in the 3 months ended Sept. 30.
Natural gas production plans
For fourth-quarter 2024, Expand Energy is targeting total production of about 6.4 bcfed as operations integration continues, a process that will include dropping two rigs in the Haynesville and one in Pennsylvania while adding a rig in Southwest Appalachia. Plans call for two more rigs to be dropped in early 2025.
Production will then grow into 2025 as the operator brings on some of the deferred completions (estimated to be roughly 60 by year’s end) and deferred turn-in-lines (forecast to be around 80). By end-2025, executives are targeting 7.2 bcfed of production, which would be nearly 13% higher than this quarter’s.
The trend that we believe we’re observing is that supply is going to be flat to down and probably remain that way until you see a rig count change—which then has quite a lag time to it.
Speaking to analysts after reporting third-quarter results, Dell’Osso—who has been among the most vocal industry players when it comes to limiting production in the face of low prices—said Expand executives will limit production increases if natural gas prices dip or if midstream capacity gets tight. More broadly, he said the industry’s fundamentals are improving as operators show better investment discipline and demand rises for gas used in power generation.
“The trend that we believe we’re observing is that supply is going to be flat to down and probably remain that way until you see a rig count change—which then has quite a lag time to it,” Dell’Osso said. “The dynamics for supply-and-demand fundamentals for gas are very strong. We are terrible predictors about when that shows up. Winter weather will have a huge impact on the timing of when supply and demand come together … We definitely see [pricing] changing sometime in the relatively near future.”
At this point, the company’s plans call for total capital spending of $2.7 billion in 2025. Those investments will include adding back several rigs across the company’s footprint. Dell’Osso noted that the combined Chesapeake and Southwestern have a total production capacity of about 8 bcfed and that the 2025 production target is “a choice” helped by the flexibility that Expand’s broader portfolio provides.
Shares of Expand (Ticker: EXE) were up nearly 3% to $88 in midday trading Oct. 30. At that level, the company’s market capitalization now tops $20 billion.
Geert De Lombaerde | Senior Editor
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications Healthcare Innovation, IndustryWeek, FleetOwner, Oil & Gas Journal and T&D World. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.