Expand Energy Q3 Adjusted EBITDAX Rises as Twin Eagle Deal Expands Marketing

Expand Energy reported higher third-quarter adjusted earnings as strong production and hedge gains supported cash generation, while the company completed its acquisition of Twin Eagle and expanded its natural-gas marketing platform. Adjusted free cash flow declined from a year earlier, however, as cash capital expenditures increased.

The natural-gas producer, which trades under the ticker EXE, generated third-quarter 2026 net income of $519 million, compared with $547 million a year earlier. Adjusted EBITDAX rose to $1.23 billion from $1.08 billion, while net cash provided by operating activities slipped to $1.18 billion from $1.20 billion.

Adjusted free cash flow was $354 million, down from $423 million in the prior-year period. Cash capital expenditures increased to $838 million from $775 million, while total capital expenditures reported for the quarter were $794 million. The company recorded $311 million of realized hedge gains, providing protection against weaker commodity pricing.

Production holds near 7.5 Bcfe per day

Total production averaged 7.54 Bcfe per day in the quarter. Haynesville contributed 3.18 Bcfe per day, Northeast Appalachia produced 2.59 Bcfe per day and Southwest Appalachia delivered 1.77 Bcfe per day.

Expand Energy said new-well outperformance in Southwest Appalachia drove production growth and increased exposure to liquids pricing. The region produced 17,000 barrels per day of oil and 87,000 barrels per day of natural gas liquids during the quarter. Weaker in-basin pricing in Appalachia resulted in some curtailments, with management indicating that production remains responsive to market conditions.

The company expects fourth-quarter production of 7.4 Bcfe to 7.6 Bcfe per day and full-year 2026 output of 7.45 Bcfe to 7.55 Bcfe per day. Its 2026 outlook calls for approximately 3.18 Bcfe per day from Haynesville, 2.66 Bcfe per day from Northeast Appalachia and 1.67 Bcfe per day from Southwest Appalachia.

Full-year capital expenditures are expected to total about $3 billion, including $2.4 billion of drilling and completion spending. Fourth-quarter capital expenditures are projected at $640 million.

Twin Eagle expands marketing reach

Expand Energy closed the Twin Eagle acquisition during the quarter, with the acquired business contributing to results from Sept. 16. The company said integration was progressing on track and described the combined operation as an integrated natural-gas business connecting production with customers across the United States and Canada.

The platform markets about 14 Bcf per day of natural gas, has 49 Bcf of storage capacity, 9 Bcf per day of contracted transportation capacity and approximately 1,350 active counterparties. Marketing Adjusted EBITDA was $35 million in the third quarter, up from $7 million a year earlier, and reached $150 million for the first nine months of 2026. Fourth-quarter marketing EBITDA guidance is $80 million, with $230 million projected for the full year.

Management outlined a path toward a $750 million annual marketing and commercial EBITDA run rate by the end of 2028. That target includes $200 million of projected annual EBITDA from Twin Eagle’s existing business and $150 million of announced synergies. The company also identified a longer-term target of another $500 million in incremental EBITDA, primarily related to LNG opportunities.

The company expects U.S. natural-gas demand to increase by more than 10% by the end of 2028 relative to the third-quarter 2026 level, based on its estimates and external industry data. Expand Energy views LNG feed gas, power generation and industrial consumption as the principal sources of structural demand growth. Its outlook supports a mid-cycle natural-gas price view of $3.50 to $4.00 per MMBtu, though the projections remain subject to the timing of new demand and supply additions.

Balance sheet and shareholder returns

Expand Energy ended September with $4.66 billion of net debt and a net-debt-to-trailing-12-month Adjusted EBITDAX ratio of 0.8 times following the Twin Eagle acquisition. Quarter-end liquidity exceeded $3 billion, and the company extended the maturity of its $3.5 billion credit facility to 2031. Its credit ratings were BBB- from S&P, Baa3 from Moody’s and BBB from Fitch.

The company repurchased $305 million of shares during the third quarter, bringing year-to-date repurchases to $900 million and reducing shares outstanding by about 4%. It had $1 billion remaining under its repurchase authorization as of Sept. 30. Expand Energy also maintained its annual base dividend at $2.30 per share, including a third-quarter dividend of $0.575 per share scheduled for payment in December.

Before the Twin Eagle acquisition, the company allocated approximately $1.3 billion to gross debt reduction during 2026. Management said it intends to balance further debt reduction with shareholder returns, with repurchases concentrated opportunistically during periods of share-price weakness.

Expand Energy had 67% of projected fourth-quarter natural-gas production hedged and approximately 55% of projected 2027 production hedged. Based on the Oct. 20 futures strip and current positions, it estimated natural-gas hedge realizations of about $545 million for 2026 and $750 million for 2027.

Danny Brown was appointed president and chief executive officer during the quarter.

The company identified commodity-price volatility, weaker natural-gas demand, pipeline and gathering constraints, capital requirements, reserve replacement, drilling risks and acquisition integration as material uncertainties. It also cited geopolitical instability, inflation, cybersecurity threats, access to capital and environmental regulation among the factors that could affect operations, cash flow and its ability to maintain dividends or other shareholder returns.