Expand Energy: 2Q26 Post Mortem and Model Update: A More Integrated Model Meets More Disciplined Messaging

Research evidence excerpt

Expand Energy: 2Q26 Post Mortem and Model Update: A More Integrated Model Meets More Disciplined Messaging

d power supply deals well beyond its Appalachia position, which should help 2025A 2026E 2027E

differentiate EXE from peers as the data center build out continues across the Q1 2.05 3.83A 3.00

Q2 1.10 1.33A 1.02

country. Founded in 2010, Twin Eagle markets >5 Bcf/d of natural gas and Q3 0.98 0.85 1.13

manages ~44 Bcf of storage capacity and ~2 Bcf/d of FT. The company’s earnings Q4 2.00 1.72 1.88

are primarily underpinned by recurring physical supply and delivery relationships, FY 6.12 7.78 7.04

asset-backed portfolio optimization, and its commercial, logistics, and operating

Style Exposure

capabilities. On a pro forma basis, the portfolio will have ~14 Bcf/d of marketed

volume supported by ~9 Bcf/d of FT and 49 Bcf of storage capacity. Overall, we

view this deal not as a strategic shift toward a trading business that would introduce

unwelcome volatility to the earnings stream, but rather as a means to enhance

EXE’s marketing capabilities by mitigating localized risks and monetizing

regional volatility. As a reminder, EXE had already set a marketing and

commercial (M&C) FCF target of $500mm prior to the deal announcement, which

the company has now increased by $250mm to $750mm pro forma for Twin Eagle.

After updating our model, we now estimate FY26 production of ~7.51 Bcfe/d

driven by $2.95bn of capex, roughly unchanged vs. our prior model at 7.51 Bcfe/d

and $2.88bn, with the step-up in capex largely reflecting higher 2Q26 lease

acquisition activity and commodity-linked cost inflation. We note that our FY26

capex estimate is now at the high-end of EXE’s $2.75 – $2.95bn guide. At recent

strip pricing of $3.49 per Mcf for FY26, we now model ~$2.5bn of FCF this year,