SEC Form 10-Q filed by Expand Energy Corporation

4/29/25 4:03:36 PM ET

Oil & Gas Production

Energy

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-13726

EXPAND ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

Oklahoma

73-1395733

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

6100 North Western Avenue,

Oklahoma City,

Oklahoma

73118

(Address of principal executive offices)

(Zip Code)

(405)

848-8000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.01 par value per share

EXE

The Nasdaq Stock Market LLC

Class A Warrants to purchase Common Stock

EXEEW

The Nasdaq Stock Market LLC

Class B Warrants to purchase Common Stock

EXEEZ

The Nasdaq Stock Market LLC

Class C Warrants to purchase Common Stock

EXEEL

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒ Accelerated Filer ☐ Non-accelerated Filer ☐

Smaller Reporting Company ☐ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of April 24, 2025, there were 237,979,439 shares of our $0.01 par value common stock outstanding.

EXPAND ENERGY CORPORATION AND SUBSIDIARIES

INDEX TO FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2025


	PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations	6
	Condensed Consolidated Statements of Cash Flows	7
	Condensed Consolidated Statements of Stockholders’ Equity	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)
	Note 1. Basis of Presentation and Summary of Significant Accounting Policies	9
	Note 2. Natural Gas and Oil Property Transactions	10
	Note 3. Earnings Per Share	13
	Note 4. Debt	14
	Note 5. Contingencies and Commitments	15
	Note 6. Other Current Liabilities	16
	Note 7. Revenue	16
	Note 8. Income Taxes	17
	Note 9. Equity	18
	Note 10. Share-Based Compensation	19
	Note 11. Derivative and Hedging Activities	20
	Note 12. Investments	22
	Note 13. Supplemental Cash Flow Information	23
	Note 14. Segment Information	23
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
	Liquidity and Capital Resources	26
	Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	36
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	38
Signatures		40


Explanatory Note and Definitions

On October 1, 2024, Chesapeake Energy Corporation completed its previously announced merger with Southwestern Energy Company. In connection with the Southwestern Merger (as defined below), Chesapeake Energy Corporation changed its name to Expand Energy Corporation.

Unless the context otherwise indicates, references to “us,” “we,” “our,” “ours,” “Expand Energy,” the “Company” and “Registrant” refer to Expand Energy Corporation and its consolidated subsidiaries. All monetary values, other than per unit and per share amounts, are stated in millions of U.S. dollars unless otherwise specified. The following are other abbreviations and definitions of certain terms used within this Quarterly Report on Form 10-Q:

“ASU” means Accounting Standards Update.

“Bankruptcy Code” means Title 11 of the United States Code, 11 U.S.C. §§ 101–1532, as amended.

“Bankruptcy Court” means the United States Bankruptcy Court for the Southern District of Texas.

“Bbl” or “Bbls” means one stock tank barrel, or 42 U.S. gallons liquid volume, used in reference to oil or other liquid hydrocarbons.

“Bcf” means billion cubic feet.

“Bcfe” means billion cubic feet of natural gas equivalent.

“Chapter 11 Cases” means, when used with reference to a particular Debtor, the case pending for that Debtor under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court, and when used with reference to all the Debtors, the procedurally consolidated Chapter 11 cases pending for the Debtors in the Bankruptcy Court.

“Chesapeake” means Chesapeake Energy Corporation, prior to the Southwestern Merger.

“Class A Warrants” means warrants to purchase 10 percent of the common stock (after giving effect to the Rights Offering, but subject to dilution by the Management Incentive Plan, the Class B Warrants, and the Class C Warrants), at an initial exercise price per share of $27.63. The Class A Warrants are exercisable from the Effective Date until February 9, 2026.

“Class B Warrants” means warrants to purchase 10 percent of the common stock (after giving effect to the Rights Offering, but subject to dilution by the Management Incentive Plan and the Class C Warrants), at an initial exercise price per share of $32.13. The Class B Warrants are exercisable from the Effective Date until February 9, 2026.

“Class C Warrants” means warrants to purchase 10 percent of the common stock (after giving effect to the Rights Offering, but subject to dilution by the Management Incentive Plan), at an initial exercise price per share of $36.18. The Class C Warrants are exercisable from the Effective Date until February 9, 2026.

“Confirmation Order” means the order confirming the Fifth Amended Joint Chapter 11 Plan of Reorganization of Chesapeake Energy Corporation and its Debtor Affiliates, Docket No. 2915, entered by the Bankruptcy Court on January 16, 2021.

“Credit Facility” means the reserve-based credit facility entered into on December 9, 2022.

“Current Quarter” means the three months ended March 31, 2025.

“DD&A” means depreciation, depletion and amortization.

“Debtors” means Chesapeake Energy Corporation prior to the Southwestern Merger, together with all of its direct and indirect subsidiaries that have filed the Chapter 11 Cases.

“Effective Date” means February 9, 2021.

“ESG” means environmental, social and governance.

“FASB” means the Financial Accounting Standards Board.

“G&A” means general and administrative expenses.

“GAAP” means U.S. generally accepted accounting principles.

“General Unsecured Claim” means any Claim against any Debtor that is not otherwise paid in full during the Chapter 11 Cases pursuant to an order of the Bankruptcy Court and is not an Administrative Claim, a Priority Tax Claim, an Other Priority Claim, an Other Secured Claim, a Revolving Credit Facility Claim, a FLLO Term Loan Facility Claim, a Second Lien Notes Claim, an Unsecured Notes Claim, an Intercompany Claim, or a Section 510(b) Claim.

“LNG” means liquefied natural gas.

“LTIP” means the Expand Energy Corporation 2021 Long Term Incentive Plan.

“MBbls” means one thousand barrels of oil or other liquid hydrocarbons.

“MMBbls” means one million barrels of oil or other liquid hydrocarbons.

“Mcf” means thousand cubic feet.

“Mcfe” means one thousand cubic feet of natural gas equivalent, with one barrel of oil or NGL converted to an equivalent volume of natural gas using the ratio of one barrel of oil or NGL to six Mcf of natural gas.

“MMcf” means million cubic feet.

“MMcfe” means million cubic feet of natural gas equivalent.

“NGL” means natural gas liquids.

“NYMEX” means New York Mercantile Exchange.

“OPEC+” means the Organization of the Petroleum Exporting Countries Plus.

“Petition Date” means June 28, 2020, the date on which the Debtors commenced the Chapter 11 Cases.

“Plan” means the Fifth Amended Joint Chapter 11 Plan of Reorganization of Chesapeake Energy Corporation and its Debtor Affiliates, attached as Exhibit A to the Confirmation Order.

“Prior Quarter” means the three months ended March 31, 2024.

“Rights Offering” means the common stock rights offering for the Rights Offering Amount consummated by the Debtors on the Effective Date.

“SEC” means United States Securities and Exchange Commission.

“SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator, the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).

“Southwestern” means Southwestern Energy Company.

“Southwestern Merger” means Chesapeake’s merger with Southwestern, which closed on October 1, 2024.

“Warrants” means, collectively, the Class A Warrants, Class B Warrants and Class C Warrants.

“WTI” means West Texas Intermediate.

“/Bbl” means per barrel.

“/Mcf” means per Mcf.

“/Mcfe” means per Mcfe.


($ in millions, except per share data)	March 31, 2025		December 31, 2024
Assets
Current assets:
Cash and cash equivalents	$	349	$	317
Restricted cash	78		78
Accounts receivable, net	1,361		1,226
Derivative assets	—		84

Other current assets	325		292
Total current assets	2,113		1,997
Property and equipment:
Natural gas and oil properties, successful efforts method
Proved natural gas and oil properties	23,874		23,093
Unproved properties	5,774		5,897
Other property and equipment	678		654
Total property and equipment	30,326		29,644
Less: accumulated depreciation, depletion and amortization	(6,066)		(5,362)

Total property and equipment, net	24,260		24,282
Long-term derivative assets	2		1
Deferred income tax assets	626		589
Other long-term assets	933		1,025
Total assets	$	27,934	$	27,894

Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	654	$	777
Current maturities of long-term debt, net	—		389
Accrued interest	68		100
Derivative liabilities	896		71
Other current liabilities	1,971		1,786
Total current liabilities	3,589		3,123
Long-term debt, net	5,243		5,291
Long-term derivative liabilities	129		68
Asset retirement obligations, net of current portion	506		499
Long-term contract liabilities	1,159		1,227
Other long-term liabilities	117		121
Total liabilities	10,743		10,329
Contingencies and commitments (Note 5)
Stockholders' equity:
Common stock, $0.01 par value, 450,000,000 shares authorized: 237,476,127 and 231,769,886 shares issued	2		2
Additional paid-in capital	13,700		13,687
Retained earnings	3,489		3,876
Total stockholders' equity	17,191		17,565
Total liabilities and stockholders' equity	$	27,934	$	27,894


	Three Months Ended March 31,
($ in millions, except per share data)	2025		2024
Revenues and other:
Natural gas, oil and NGL	$	2,300	$	589
Marketing	910		312
Natural gas, oil and NGL derivatives	(1,014)		172
Gains on sales of assets	—		8
Total revenues and other	2,196		1,081
Operating expenses:
Production	147		59
Gathering, processing and transportation	563		173
Severance and ad valorem taxes	48		29
Exploration	7		2
Marketing	919		323
General and administrative	47		47

Depreciation, depletion and amortization	711		399

Other operating expense, net	22		17
Total operating expenses	2,464		1,049
Income (loss) from operations	(268)		32
Other income (expense):
Interest expense	(59)		(19)

Other income, net	8		20
Total other income (expense)	(51)		1
Income (loss) before income taxes	(319)		33
Income tax expense (benefit)	(70)		7
Net income (loss)	$	(249)	$	26


Earnings (loss) per common share:
Basic	$	(1.06)	$	0.20
Diluted	$	(1.06)	$	0.18
Weighted average common shares outstanding (in thousands):
Basic	234,434		130,893
Diluted	234,434		141,752


	Three Months Ended March 31,
($ in millions)	2025		2024
Cash flows from operating activities:
Net income (loss)	$	(249)	$	26
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization	711		399
Deferred income tax expense (benefit)	(37)		7
Derivative (gains) losses, net	1,014		(172)
Cash receipts (payments) on derivative settlements, net	(45)		228
Share-based compensation	9		9
Gains on sales of assets	—		(8)
Contract amortization	(52)		—


Other	(4)		(13)
Changes in assets and liabilities	(251)		76
Net cash provided by operating activities	1,096		552
Cash flows from investing activities:
Capital expenditures	(563)		(421)

Receipts of deferred consideration	60		60
Contributions to investments	(4)		(19)
Proceeds from divestitures of property and equipment	—		6
Net cash used in investing activities	(507)		(374)
Cash flows from financing activities:
Proceeds from Credit Facility	725		—
Payments on Credit Facility	(725)		—

Proceeds from warrant exercise	21		—


Cash paid to purchase debt	(436)		—
Cash paid for common stock dividends	(142)		(77)
Net cash used in financing activities	(557)		(77)
Net increase in cash, cash equivalents and restricted cash	32		101
Cash, cash equivalents and restricted cash, beginning of period	395		1,153
Cash, cash equivalents and restricted cash, end of period	$	427	$	1,254

Cash and cash equivalents	$	349	$	1,179
Restricted cash	78		75
Total cash, cash equivalents and restricted cash	$	427	$	1,254


	Common Stock
($ in millions)	Shares	Amount		Additional Paid-in Capital		Retained Earnings		Total Stockholders' Equity
Balance as of December 31, 2023	130,789,936	$	1	$	5,754	$	4,974	$	10,729
Share-based compensation	168,538	—		4		—		4
Issuance of common stock for warrant exercise	201	—		—		—		—


Net income	—	—		—		26		26
Dividends on common stock	—	—		—		(77)		(77)
Balance as of March 31, 2024	130,958,675	$	1	$	5,758	$	4,923	$	10,682

Balance as of December 31, 2024	231,769,886	$	2	$	13,687	$	3,876	$	17,565
Share-based compensation	386,025	—		(8)		—		(8)
Issuance of common stock for warrant exercise	5,320,216	—		21		—		21

Net loss	—	—		—		(249)		(249)
Dividends on common stock	—	—		—		(138)		(138)
Balance as of March 31, 2025	237,476,127	$	2	$	13,700	$	3,489	$	17,191


1.			Basis of Presentation and Summary of Significant Accounting Policies


	Preliminary Purchase Price Allocation
Consideration:
Cash(a)	$	585
Fair value of Expand Energy common stock issued(b)	7,871
Restricted stock unit and performance stock unit replacement awards	17
Total consideration	$	8,473

Fair Value of Assets Acquired:
Cash and cash equivalents and restricted cash	$	126
Other current assets	828
Proved natural gas and oil properties	10,002
Unproved properties	4,270
Other property and equipment	128
Other long-term assets	496
Amounts attributable to assets acquired	$	15,850

Fair Value of Liabilities Assumed:
Current liabilities	$	1,955
Long-term debt	3,305
Deferred tax liabilities	479
Long-term contract liabilities	1,287
Other long-term liabilities	351
Amounts attributable to liabilities assumed	$	7,377

Total identifiable net assets	$	8,473


	Three Months Ended March 31, 2024
Revenues	$	2,750
Net income available to common stockholders	$	83
Earnings per common share:
Basic	$	0.36
Diluted	$	0.35


	March 31, 2025				December 31, 2024
	Carrying Amount		Fair Value(a)		Carrying Amount		Fair Value(a)
Credit Facility	$	—	$	—	$	—	$	—
4.95% senior notes due 2025	—		—		389		389
5.50% senior notes due 2026	—		—		47		47
5.375% senior notes due 2029	700		697		700		684
5.875% senior notes due 2029	500		500		500		494
6.75% senior notes due 2029	950		965		950		959
5.375% senior notes due 2030	1,200		1,192		1,200		1,174
4.75% senior notes due 2032	1,150		1,089		1,150		1,067
5.70% senior notes due 2035	750		750		750		734
Premiums on senior notes, net	2		—		4		—
Debt issuance costs	(9)		—		(10)		—
Total debt, net	$	5,243	$	5,193	$	5,680	$	5,548
Less current maturities of long-term debt, net	—		—		(389)		(389)
Total long-term debt, net	$	5,243	$	5,193	$	5,291	$	5,159


	March 31, 2025
Remainder of 2025	$	1,071
2026	1,372
2027	1,260
2028	1,192
2029	1,011
Thereafter	4,609
Total	$	10,515


	March 31, 2025		December 31, 2024
Revenues and royalties due to others	$	892	$	734
Accrued drilling and production costs	466		296
Contract liabilities	274		284
Accrued compensation and benefits	48		124
Taxes payable	104		142
Operating leases	71		71
Joint interest prepayments received	14		13

Other	102		122
Total other current liabilities	$	1,971	$	1,786


	Class A Warrants	Class B Warrants	Class C Warrants(a)
Outstanding as of December 31, 2024	1,254,479	3,073,194	4,383,634
Converted into common stock(b)	(1,186,019)	(2,823,724)	(1,600,930)


Outstanding as of March 31, 2025	68,460	249,470	2,782,704


	Unvested Restricted Stock Units	Weighted Average Grant Date Fair Value Per Share
	(in thousands)
Unvested as of December 31, 2024	957	$	81.99
Granted	524	$	102.96
Vested	(410)	$	77.57
Forfeited	(5)	$	94.77
Unvested as of March 31, 2025	1,066	$	93.95


Assumption	TSR, rTSR
Risk-free interest rate	4.00	%
Volatility	33.40	%


	Unvested Performance Share Units	Weighted Average Grant Date Fair Value Per Share
	(in thousands)
Unvested as of December 31, 2024	376	$	94.67
Granted	250	$	125.64
Vested	(124)	$	109.71
Forfeited	(1)	$	125.64
Unvested as of March 31, 2025	501	$	106.32


	Three Months Ended March 31, 2025
	Natural Gas		Oil		NGL		Total
Haynesville	$	821	$	—	$	—	$	821
Northeast Appalachia	900		—		—		900
Southwest Appalachia	294		78		207		579
Natural gas, oil and NGL revenue	$	2,015	$	78	$	207	$	2,300

Marketing revenue	$	837	$	34	$	39	$	910


	March 31, 2025		December 31, 2024
Natural gas, oil and NGL sales	$	1,137	$	1,028
Joint interest	228		191
Other	12		18
Allowance for doubtful accounts	(16)		(11)
Total accounts receivable, net	$	1,361	$	1,226


	March 31, 2025			December 31, 2024
	Notional Volume	Fair Value		Notional Volume	Fair Value
Natural gas (Bcf):
Fixed-price swaps	391	$	(279)	369	$	(28)
Collars	1,499	(695)		1,098	(27)
Three-way collars	121	(9)		161	60
Call options (purchased)	55	7		73	1
Call options (sold)	183	(49)		219	(16)
Basis protection swaps	237	14		279	(39)
Total natural gas	2,486	(1,011)		2,199	(49)
Oil (MMBbls):
Three-way collars	1	$	4	2	$	4
Total oil	1	4		2	4
NGLs (MMBbls):
Fixed-price swaps	5	$	(16)	7	$	(9)
Total NGL	5	(16)		7	(9)


Total estimated fair value		$	(1,023)		$	(54)


	Gross Fair Value(a)		Amounts Netted in the Condensed Consolidated Balance Sheets		Net Fair Value Presented in the Condensed Consolidated Balance Sheets

As of March 31, 2025
Commodity Contracts:
Short-term derivative asset	$	39	$	(39)	$	—
Long-term derivative asset	18		(16)		2
Short-term derivative liability	(935)		39		(896)
Long-term derivative liability	(145)		16		(129)


Total derivatives	$	(1,023)	$	—	$	(1,023)

As of December 31, 2024
Commodity Contracts:
Short-term derivative asset	$	191	$	(107)	$	84
Long-term derivative asset	6		(5)		1
Short-term derivative liability	(178)		107		(71)
Long-term derivative liability	(73)		5		(68)


Total derivatives	$	(54)	$	—	$	(54)


	EXPAND ENERGY CORPORATION

Date: April 29, 2025	By:	/s/ DOMENIC J. DELL’OSSO, JR.
		Domenic J. Dell’Osso, Jr. President and Chief Executive Officer

Date: April 29, 2025	By:	/s/ MOHIT SINGH
		Mohit Singh Executive Vice President and Chief Financial Officer

Date	Price Target	Rating	Analyst
4/21/2025	$130.00	Sector Weight → Overweight	KeyBanc Capital Markets
4/15/2025	$122.00	Equal Weight → Overweight	Barclays
4/8/2025		Hold → Buy	TD Cowen
3/18/2025	$86.00 → $123.00	Equal-Weight → Overweight	Stephens
2/27/2025	$128.00 → $132.00	Outperform	Mizuho
2/4/2025	$135.00	Strong Buy	Raymond James
1/31/2025	$121.00	Buy	Goldman
1/28/2025	$96.00	Neutral	Piper Sandler

SEC Form 10-Q filed by Expand Energy Corporation

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