Expand Earnings Fell as Cash Flow Slowed
The natural-gas producer repurchased about $530 million of stock during the quarter.
Expand Energy Corporation (EXE), the natural-gas producer, reported lower second-quarter earnings as adjusted profit fell sharply from the preceding quarter despite remaining above year-earlier levels.
Net income fell 55% sequentially to $522 million, or $2.19 a diluted share, and declined 46% from a year earlier. Adjusted earnings dropped to $317 million, or $1.33 a share, from $923 million, or $3.83 a share, in the first quarter, though both measures rose about 20% from a year earlier.
The earnings decline accompanied weaker cash generation. Net cash from operating activities fell 54% from the first quarter to $1.096 billion, while adjusted EBITDAX declined 40% to $1.183 billion. Operating cash flow remained 15% above its fourth-quarter 2024 level.
Production continued to edge higher, reaching about 7.48 billion cubic feet equivalent a day from 7.44 Bcfe/d in the first quarter. Expand reduced activity to an average of 12 rigs and drilled 55 wells, compared with 13 rigs and 60 wells in the preceding quarter.
Capital expenditures rose 17% from a year earlier to $851 million. Drilling-and-completion spending increased 9% to $656 million, while non-drilling field spending climbed 77% to $152 million.
Expand reaffirmed the midpoint of its 2025 outlook while widening the ranges around it. The company now expects production of 7.4 to 7.6 Bcfe/d and capital spending of $2.75 billion to $2.95 billion, compared with its previous targets of about 7.5 Bcfe/d and $2.85 billion.
The company also agreed to acquire energy marketer Twin Eagle for $1.25 billion, with closing expected in the third quarter. Expand expects the business to contribute more than $200 million of annual EBITDA initially and is targeting $150 million of annual synergies by the end of 2028.
The acquisition increased Expand's targeted annual incremental free cash flow from its marketing and commercial strategy to $750 million. The combined platform is expected to market about 14 billion cubic feet a day, supported by roughly 9 Bcf/d of firm transportation and 49 Bcf of storage. Expand also added about $1 billion of repurchase authorization after buybacks accelerated through July, while total debt fell $1.3 billion during the quarter following a senior-note redemption.