Expand Energy (EXE) 2026年第三季法說會：Twin Eagle 上調銷售展望

重點摘要

• Expand Energy 在 2026 年第三季產量約為每日 75 億立方英呎當量 (7.5 Bcfe/d)。 管理層表示，為因應天然氣市場環境趨弱，公司在進入第四季時將鑽井機數量由約 12 座降至 10 座。
• 該公司在該季度實施了 3.05 億美元的股票回購， 同時報告淨債務為 47 億美元，槓桿率為 0.8 倍。
• Expand 的避險計畫使每千立方英呎當量 (Mcfe) 的實際銷售價格提升了 0.46 美元。 管理層表示，相較於第三季的市場價格，該計畫創造了超過 3 億美元的效益。
• Twin Eagle 收購案已於 9 月 16 日完成。儘管預估市場將處於低氣價、低波動的環境，Expand 仍預計其合併後的行銷與商業業務在第四季將產生 8,000 萬美元的 EBITDA，相當於每千立方英呎 (Mcf) 約 0.12 美元。
• 管理層目標到 2028 年實現每年 5 億美元的行銷與商業 EBITDA，以目前產量計算約為每 Mcf 0.20 美元。長遠目標為 7.5 億美元（約每 Mcf 0.30 美元），這部分取決於 2028 年後液化天然氣 (LNG) 的進一步發展。
• Daniel Brown 加入並出任執行長。董事會強調他在上游探勘開發的營運經驗、上市公司領導能力及資本配置背景，這將有助於 Expand 發展其整合型天然氣平台。

關鍵財務數據

業務與營運表現

Twin Eagle 對於 Expand 從上游生產商轉型為整合型天然氣公司至關重要。被收購的團隊提供了運輸管道、儲存能力，以及與全北美 1,000 多家客戶的合作關係。

管理層表示，早期的客戶回饋支持了此收購案的論點。Expand 正尋求簽訂更長期合約、增加現有客戶的供貨量，並與更大規模的新客戶建立合作關係。目標市場包括 LNG 設施、資料中心、發電廠以及工商用電戶。

Expand 繼續根據氣價狀況調整產量。該公司將第三季的 9 個接管上線 (turn-in-line) 井延後，並正在評估何時讓這些氣井上線。同時在進入第四季時，東北阿帕拉契 (Northeast Appalachia) 地區持續進行減產。

營運效率的提升仍是焦點。西南阿帕拉契地區在 2025 年至 2026 年間的每日鑽井英呎數提高了 20%，同時每英呎鑽井成本下降了約 10%。在海恩斯維爾 (Haynesville)，管理層預計氣井生產力將年增 2% 至 3%，部分得益於自有的支撐砂供應，其成本僅為商業支撐砂的三分之一左右。

Expand 預計在 2026 年花費約 2.5 億美元用於有機租賃地收購。這包括以大約 1,500 萬美元收購位於賓州布拉德福德郡 (Bradford County, Pennsylvania) 約 3,000 英畝的土地。管理層預計該地塊上的氣井將於 2027 年初開始投產。

管理層業績展望

Expand 預估到 2028 年底，天然氣新增需求每日將達到約 130 億立方英呎 (13 Bcf/d)。管理層將 2027 年視為轉型年，並打算利用減產、延後接管上線及已鑽未完井 (DUC) 來保留產能，以迎接需求轉強的時機。

該公司的 LNG 策略旨在將國內生產與國際定價連結。Expand 已與 Delfin 簽署協議，涵蓋自 2031 年至 2032 年底開始的 150 萬噸 LNG 提貨權，管理層預計未來將進一步增加 LNG 領域的參與度。

風險與值得關注的領域

據管理層表示，儘管 LNG 出口流量與發電用氣量創下新高，目前天然氣供應量依然偏高。二疊紀盆地 (Permian) 額外的外輸運能、季節性產量增加以及不確定的冬季天氣，正在拖累 2027 年的期貨遠期曲線。

庫存水準是另一個關鍵變數。管理層警告，進入春季與夏季的高庫存可能會對市場造成額外壓力。

成本通膨正在發生變化。Expand 預計隨著更多電動壓裂機組投入運作，2027 年柴油使用量將減少約 50%，但壓力泵送運能吃緊以及石油專用管材 (OCTG) 成本上漲可能會抵消部分效益。

西海恩斯維爾仍屬於長期選擇，而非近期核心開發資產。其地層資源豐富且具高壓特性，但深度與技術複雜性使其在目前條件下成本偏高。

Twin Eagle 綜效發揮的時間點也非絕對精確。管理層對未來兩年實現目標新增 EBITDA 充滿信心，但表示各季度的具體進展仍存在不確定性。

分析師問答亮點

• 資本配置： Expand 優先安排鑽井與完井資本、股利發放及鞏固資產負債表。當管理層看到足夠價值時，剩餘資金可用於資助成長機會或實施股票回購。
• 併購策略： Daniel Brown 表示，Expand 對非有機成長機會持開放態度，但要求具備強勁的經風險調整後全週期價值與明確可辨識的綜效。公司目前仍專注於從現有資產組合中釋放價值。
• 天然氣需求： 管理層預計 LNG 將推動結構性需求成長的主要部分，並輔以資料中心、工業專案與電氣化需求。Twin Eagle 使 Expand 能服務其核心生產盆地之外的客戶。
• 海恩斯維爾展望： Expand 預計未來四到六年海恩斯維爾地區的日產量將增加約 50 億立方英呎 (5 Bcf/d) 以滿足需求。管理層認為該盆地的邊際供應將在決定價格方面發揮重要作用。
• 產量彈性： 該公司可能會重複其 2024 年的策略，利用減產、已鑽未完井及延後接管上線，以避免在氣價低迷時期售出產量。
• 資本效率： 持續改進鑽井與完井技術、低成本的內部支撐砂供應，以及擴大人工智慧的應用，都是管理層預計用來對抗通膨壓力的工具。

法說會完整逐字稿

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完整財報電話會議逐字稿

管理層陳述

Operator

Thank you for standing by, and welcome to Expand Energy's Third Quarter 2026 Earnings Conference Call. [Operator Instructions]. I would now like to hand the call over to Brittany Raiford, Vice President, Treasurer and Investor Relations. Please go ahead.

Brittany Raiford

Thank you. Good morning to everyone.

Michael Wichterich

Good morning, and thanks for joining our call. So last quarter, I discussed my optimism about the future of Expand. Today, that optimism continues to grow and is stronger than ever. You can feel momentum building across our organization. Over the past 9 months, we have transformed Expand from an upstream gas producer into an integrated gas company that is a leading producer and marketer of gas coast to coast across North America. While our Upstream business remains our foundation, this year, we're focused on strengthening our commercial capabilities by adding key leaders in both the C-suite and across the organization.

We have expanded our corporate and business development efforts that consider opportunities across the whole gas value chain to include upstream marketing and LNG. That decision proved to be a good one as last quarter, the team delivered Twin Eagle acquisition, bringing exceptional talent and valuable customer relationships to Expand. With the transaction now closed, the Twin Eagle and Expand teams are working side-by-side in one office to deliver the synergies we promised. We see significant opportunities ahead and look forward to sharing our progress and successes over the coming quarters.

Today, we are demonstrating exactly why integrated gas company matters. Low commodity prices are pressuring free cash flow margins for many of our peers. However, Expand, our marketing business is already making a difference. The combined Expand and Twin Eagle marketing profits are expected to add $0.12 per Mcfe to our fourth quarter margin. This is particularly impressive because the team is expected to generate solid profits and an anticipated low price low volatility period. As prices rise and volatility returns, we are well positioned to capture even more value. Through all this change, our team never took its eye of creating long-term shareholder value. We continue to deliver strong operational results, producing approximately 7.5 Bcfe per day this quarter and extended our drilling inventory through organic leasing, which remains one of the most accretive ways to add high-quality locations. We have allocated more to share repurchases this year than any of our peers, including $305 million in the third quarter.

Our hedging program, which we see as a critical risk management tool improved our realized prices by $0.46 per Mcfe. And importantly, our balance sheet remains strong with net debt of $4.7 billion and leverage of 0.8x. Finally, we said we would name a permanent CEO within 9 months, and we kept our promise. I'm excited to be joined today with our new CEO, Danny Brown. The Board was deliberate in its choice, focused on finding the right leader to continue our momentum. First and foremost, we wanted the leader with a proven record of building a team-oriented culture that focuses on creating long-term shareholder value. Given our $3 billion annual capital plan, we wanted an upstream expert who has experienced managing a large portfolio of assets, and we wanted a former public CEO who understands our shareholders' perspective and is a great allocator of capital and can consistently deliver.

We found all that in Danny, and we believe our patience was rewarded. We do not consider our mission accomplished, but we have built the foundation. We now have a premier upstream business, a coast-to-coast marketing platform, a strong balance sheet and a team that plays to win. We have opportunities to improve our business with urgency while maintaining our disciplined approach to value creation and above all else, we keep our promises. I cannot be more impressed with this team or more optimistic about expands future. I'm excited to watch Danny and the team build on this momentum. With that, I'm pleased to turn the call over to Danny for a few brief remarks on what is the start of his third day leading our company.

Daniel Brown

Thank you, Mike, and thank you as well for the confidence you and the board have placed in me to lead this organization. I'd also like to take a moment and thank the Cord Energy team. I'm proud of what we built and accomplished there together and have full expectation that Cord will continue delivering for its stakeholders. As I turn my full attention to Expand, I will say that I was drawn to this opportunity because I believe Expand has built something that's unique and it is very well suited to deliver value for its shareholders in a differentiated fashion.

First, we have meaningful scale, which is tremendously important in any commodity business, and particularly one that is as dynamic as natural gas. Second, we had inventory-rich assets, which are diversified and adjacent to key demand centers. Third, we have resiliency with an investment-grade balance sheet, low breakevens, operational flexibility and a disciplined hedging strategy. And now with Twin Eagle, we have a direct line to customers, which should allow Expand to capture incremental margin along the value chain and all of this set against the precipice of a structural increase in natural gas demand with rising needs for LNG, data centers, industrial projects and broad-scale electrification. The foundation is set.

Now it's time to execute and leverage the platform that has been created to deliver differentiated value for our shareholders. And while I've only been here for a few short days, it's clear to me that this team shares the commitment to excellence in all aspects of our business, which is critical to sustainable value creation in this industry. I'm honored to be a member of this talented team, and I'm excited to be getting started. And as I do, I look forward to connecting with all of you. And now, operator, we're ready for questions.

Operator

And before we go into questions, I'd like to turn the call over to Brittany Raiford, Vice President, Treasurer and Investor Relations with forward-looking statements. Madam?

Brittany Raiford

Good morning, everyone, and thanks for joining our call this morning to discuss Expand Energy's 2026 third quarter financial and operating results. Hopefully, you've had a chance to review our press release and updated investor presentation that we posted to our website yesterday. During this morning's call, we will be making forward-looking statements, which consist of statements that cannot be confirmed by reference to existing information, including statements regarding our beliefs, goals, expectations, forecasts, projections and future performance and the assumptions underlying such statements.

Please note that there are a number of factors that will cause actual results to differ materially from our forward-looking statements, including the factors identified and discussed in our press release yesterday and other SEC filings. Please recognize that except as required by law, we undertake no duty to update any forward-looking statements, and you should not place undue reliance on such statements. We may also refer to some non-GAAP financial measures, which help facilitate comparisons across periods and with peers. For any non-GAAP measure we use, a reconciliation to the nearest corresponding GAAP measure that can be found on our website.

With me today on the call are Mike Wichterich and Danny Brown, who you've already heard prepared remarks from. As well as Josh Viets and Marcel Teunissen.

Operator, with that, you can please turn the line over for questions.

Operator

[Operator Instructions]. Our first question comes from the line of Neil Mehta of Goldman Sachs & Company.

分析師問答

Neil Mehta

Danny, congratulations on the role. And Mike, congratulations on completing the process. So Danny, just maybe you can provide some perspective of what attracted you to the opportunity? What of your past experiences, whether at Anadarko or Cord, over the years, do you think it's most transferable over to the Expand opportunity set? And how are you approaching the first 100 days on the job?

Daniel Brown

Well, thanks, Neil. It's -- I'm super excited to be here. I'd say as I indicated in my prepared remarks, I really see that Expand has built an amazing platform over here and against the backdrop of something that could be really special. So I think it's set up with the right assets in the right places to just benefit from the structural increase in demand that we see coming. And that was something that I think is very, very exciting, and I'm very excited to be a part of it.

So really, that's why I'm here. With respect to my background and the skills I've got, I'd say, over many years, I gain skills in capital allocation, allocating capital against multiple different basins, allocating capital against projects with very different cash flow streams and risk profiles. And so that's something that I'm comfortable with. And over Cord, I would say we focused a lot on delivering value every day for our shareholders. And clearly, I learned a lot of skills around leadership writ large and leading larger public organizations. And so all of that, I think, combines well for the place that expands at right now and the opportunities we see in front of us.

So I just couldn't be more excited to be here, and I'm very, very eager to dig in and work with the team to deliver on what we see as amazing potential within this organization.

Neil Mehta

Congratulations, Danny. And then the follow-up, this one might be for Marcel. Just on the commercial mandate that the team has is set out here, whether it's the $0.20 NIM or trying to get more aggressive around marketing and commercial deals. Where do you think you are in the journey? And what areas or customers are you most focused on right now? Is it LNG? Is it data centers? Is it industrial customers like steel? Just help us get into your thought process around this.

Marcel Teunissen

Yes. Thanks, Neil, for the question. So we closed the Twin Eagle acquisition September 16. So we had 2 weeks of that under our belt by the end of the quarter. Of course, we're a couple of weeks further down and very much focused on integrating the plumbing of that business with ours. As Mike already mentioned, the team from Twin Eagle has moved into our offices, which is a great start. Your organizations have been aligned, and we're doing some of the work in the back office, as you can imagine. The early opportunities there are really kind of pretty evident from customer feedback, whether they're on our side or on the original the Twin Eagle side, we see lots of opportunities, and that kind of supports the thesis that we've had and the synergies and the integration value.

We've guided for Q4 to $80 million kind of in a low kind of volatility environment for our combined marketing and commercial business, including Twin Eagle, that translates to about $0.12 per Mcf. What we've also laid out is with the synergies, we have good line of sight to get that -- the total number for marketing commercial up to 500 million by 2028. That translates to about $0.20 per Mcf. And as we continue to kind of look at the LNG opportunity, we're very active in that. As we said before, we will be thoughtful about making sure that we get the right opportunities in liquefaction, but also how we structure our sales portfolio.

That will come a little bit after 2028 and that ultimately gets us to $750 million of additional EBITDA for our marketing and commercial business, and that translates to about $0.30 per Mcf on our current production. So we feel good about the progress we've made. The Twin Eagle integration is going well. We'll provide more details wells we have a real quarter on our belt after.

Neil Mehta

Thanks, Marcel. On that question about the logical end customers, LNG, data centers or industrial the 1 that you're leaning into?

Marcel Teunissen

Yes. No, kind of all of the above. Of course, LNG, and we've laid it out that is kind of really where the demand step-up is coming from, and we're already supplying a lot of LNG, particularly out of our Haynesville assets, of course, today, that is going to continue to grow as we get to the back end of '27 into '28 and up to the 2030s, that's kind of providing the structural demand. Data centers, numerous conversations with data centers and they're not just in Appalachia, they are throughout the country. We see them in the Midwest. We see them in Texas. We see them in Louisiana and we have conversations with all of those as we go. And there's this piece around where we talked about industrial demand is ongoing.

The Twin Eagle team has given us great access to it. They already have a pretty big C&I book where they have those relationships. And it is really a characteristic of a premium market, right? They pay some of these commercial and industrial customers, they just pay more because they're often not on the beaten part -- of the beaten part. They're not on the main pipeline to them, gas is just one factor into their overall production cost, and it's a relationship business, and that's what we have acquired with Twin Eagle and they're good at it.

Operator

Our next question comes from the line of Doug Leggate of Wolf Research.

Douglas George Blyth Leggate

Thank you. Good morning, everyone. Danny, it's great to get you back. So congratulations on joining Expand. I'm going to answer this question as delicately as I can, and it's probably to Mike. But Mike, you had talked about -- you emphasized the need to be in the flow for trading for AI, for LNG for all the things that can be more of a commercial endeavor. How did -- why is Danny the right fit to lead that? And then whoever wants to offer their perspective, I appreciate that.

My follow-up is related, if I may. And it really relates to the Twin Eagle organization and the contrary to Neil's question to the breakeven, where is it now? Where do you think it can get to with Twin Eagle as part of the portfolio? I'll leave it there.

Michael Wichterich

Sure. This is Mike, and I'll start. So why Danny? I think you have to think about the journey at Expand. We started in February looking to Expand our commercial capabilities. We always said from the very beginning, we were thinking about it in a team perspective and not an individual perspective. So we went at that. We ended up adding Marcel. Of course, that integrated gas experience with Shell, then we ended up with the Twin Eagle team who has tremendous commercial capabilities. So once you have the commercial side set an organization built to get deal flow, then started to think about our base business.

Our base business is a $3 billion capital business. We wanted an expert to who understood that business. Danny filled that role. We wanted someone who is a team builder, Danny already built teams successfully and has a great following. And then we wanted the CEO to continue our momentum. And the person who can do that is a person who is already a CEO. Danny is not learning the job as CEO. He learned the job of executing and creating shareholder value. So when you put those together, it seemed like a great fit for us, and we're super pleased. Marcel, do you want to take the second?

Marcel Teunissen

Yes. Let me follow your question on breakeven. So including dividends, right, our cash breakeven is about $2.80 or so per mcf. The $0.20 up to $0.30 as we kind of develop our marketing and commercial business will bring that number down. I think maybe the other way to also talk about the resiliency of that marketing and commercial cash flow. So if you look back over the last 4 quarters, our free cash flow -- adjusted free cash flow per mcf was about $1. So think of that $0.20 to $0.30 as an addition to that ratable addition to that, and that makes that cash flow that we generate as a business a lot more resilient. So one it is reducing the breakeven and the other is it make our free cash flow and our delivery just more resilient as well.

Douglas George Blyth Leggate

So -- sorry, Marcel. So where do you see the breakeven when you fully integrated Twin Eagle in terms of the synergies?

Marcel Teunissen

So we go to 250 to 260, so the 250 is out when we delivered a 750 run rate on our marketing and commercial and then the intermediate stop in 2028 will be around 260, and that includes dividend.

Operator

Our next question comes from the line of Arun Jayaram of JPMorgan Securities.

Arun Jayaram

Danny, congratulations on your new role. I wanted to -- maybe with my first question, is follow-up on Expand strategy kind of managing your upstream volumes and capital allocation in an environment where 2027 could have some headwinds from super El Nino, some of the Permian supply trends as well as the fact start-ups are a little bit more levered to the back end of the year versus what looks to be a much more robust demand picture between '28 and 2030?

Josh Viets

This is Josh. Yes, we would definitely agree with the sentiment around the supply-demand fundamentals in the market is pretty well supplied right now despite seeing record levels of demand. LNG flows are at all-time highs. Power burn through the summer was at record levels despite record levels of renewable generation. So the demand is showing up. It's just -- there's additional supply that came on to the market late last year. And then, of course, you had a new Permian egress coming up through the summer, and that is expected to continue to grow. And so that obviously, combined with the outlook on winter is suppressing the 2027 curve.

And so we've definitely been mindful of that. In fact, as we've come into the fourth quarter, we've ended up reducing some of our activity. That activity reduction moving from around 12 rigs down to 10 is indirect acknowledgment that the market is weakening. In addition to that, we've proven in the past to be highly flexible with how we manage our production volumes that's shown up in the third quarter. It's showing up again here in the fourth quarter with how we manage curtailments. We pushed out about 9 turn-in lines out of Q3. We're waiting on those still to think about the optimal time to bring them online. And as we get into 2027, we will also maintain that same level of flexibility through the year.

There's around 13 Bcf a day of new incremental demand that will show up by year-end 2028. And so the demand is coming, and there's going to need to be a supply push in order to match that. and that should lead to higher prices. And so we'll continue to be flexible. We really pride ourselves of better aligning production with price, and we're going to be well positioned to take advantage of that opportunity again.

Arun Jayaram

Yes. And my follow-up is just starting to think about 2027. Your updated guidance outlines, call it, maybe a baseline for capital in calendar '26 at $3 billion or $750 million per quarter. I was wondering if you could comment on some of the inflationary pressures you're seeing in the Haynesville, obviously, where you compete maybe for OFS service capacity relative to the Permian and the Appalachia Basin. And do you have any maybe soft commentary that you provide on 2027 as we start to dial in some of these inflationary pressures, such as diesel and OCTG.

Josh Viets

Yes, sure. I mean, clearly, for 2026, the majority of the inflation has been centered around diesel for us. We run a pretty large program. We've averaged around 12 rigs for the year, running 5 to 6 frac crews A lot of that activity course gets centered in the Haynesville. Just as a point of reference, we end up burning about 25 million gallons of diesel each year. And so that definitely has added to some of the capital pressures this year. As we think about 2027, we do start to see a little bit of shift in where we see inflationary pressures we'll actually see about a 50% reduction in our diesel usage heading into 2027 as we have more e-fleets coming into the program.

But the inflation does start to move around a little bit. Haynesville per accounts are up about 35% year-over-year. With the movement in oil prices, you see, U.S. oil rig counts up around 10% to 12%. And so we do expect to see with that activity, some tightening in the pressure pumping market as well as OCTG. And so we think those are probably two of the factors that we're paying the most attention to. And based upon some of our early outlook for 2027, we could anticipate kind of a low- to mid- singledigit inflationary factor from heading from 2026 into 2027.

Operator

Our next question comes from the line of Matthew Portillo of TPH Research.

Matthew Portillo

I just wanted to kick it off on the marketing side of the portfolio, saw an interesting project announcement from KMI, where they'll be taking Northeast and Haynesville gas into the Southeast. At the same time that we're seeing a ramp in LNG demand and potentially upside to LNG forecasts on the Gulf Coast over the next few years. I was just curious if you might be able to comment on how the market has continued to evolve over the past year as it relates to long-term gas supply agreements on the Gulf Coast?

Josh Viets

Yes. Hey, Matt. I mean, I think what you're starting to see is the market is responding to the large LNG pool that's occurring in the U.S. Gulf Coast. And so people, especially get into the Southeastern markets are starting to think about supply security. And I think that's what you're seeing with the most recent announcement from Kinder to move gas into the Georgia and Florida markets. And so this is just, I think, a good sign of the strength and demand signals that we're seeing. And I think our presence in the U.S. Gulf Coast really positions us to take advantage of the demand pool that we see coming in front of us.

Matthew Portillo

Perfect. And then for my follow-up question, just wanted to get your latest thoughts on the Western Haynesville. As we look at some of the state data, it appears that the industry is trending to around a 2 Bcf per 1,000 lateral foot EUR for some of the more recent vintages of wells. But I'm curious how you all are seeing early time productivity trends in the basin how you're thinking about breakevens for the asset? And then maybe any thoughts on your capital program as you head into 2027. And the long-term resource potential here, obviously, you're in at a very low entry price. So I just wanted to wrap all those things together for the Western Haynesville.

Josh Viets

Yes, Matt, thanks for the question. So if I just kind of recap what we've done this year, we have one horizontal production well online. We drilled a second appraisal well, about 15 miles to the north. What we have is a resource dense reservoir. It has a lot of the characteristics you would look for in a shale reservoir. In terms of it being significantly overpressured at a really thick interval, but it's deep. And when it is deep, it means it's going to be more complex to develop. And so I still think there's a lot to be learned. And I think we've proven through the years with our experience in the Haynesville, the ability to go unlock value from these highly complex reservoirs. It is a high-cost reservoir today. It does not compete within our portfolio in the near term just given the strength of our inventory in Louisiana and really across the entire portfolio for that matter in terms of how you might kind of peg a breakeven, I think we think about it as this place is going to need greater than $4 gas right now in order to compete.

And so we're happy to be very methodical about how we appraise it. We like the call option that it creates for us, especially in light of the growing demand that we see across the U.S. Gulf Coast, East Texas, whether that's LNG, it's data centers, industrial demand. we think there's going to be a call on gas for it. And so we'll be methodical. We expect to drill probably two wells in 2027 there. The fact that we have the depth of inventory that we do really affords us the flexibility to appraise it. and be smart with how we allocate capital in the business over the next couple of years.

Operator

Our next question comes from the line of Josh Silverstein of UBS.

Joshua Silverstein

Thanks. Good morning, guys. And welcome on board, Danny. Marcel, you had mentioned you were talking to customers kind of across the natural gas value chain. I was curious how those conversations may differ in the Gulf Coast versus Appalachia and how, with you guys having access to both basins, how those conversations may be evolving? Is it across them? Or are they separate? I was curious what the early discussions have been there.

Josh Viets

Yes, Josh, this is Josh. The great thing about the Twin Eagle platform is we have access to transportation, supply customers across the entire North America. That really is a differentiator. And so it's all about creating an advantaged supply position and accessing premium markets. And so what I would say is really falling where the demand as opposed focused on one basin or another. Twin Eagle has built a great origination team that have long-standing relationships with over 1,000 customers. And so we're continuing to leverage those relationships. We've definitely seen a dynamic shift in how those conversations are going. I think existing customers it's really about longer-dated contracts with more volumes.

I think that's what Expand has brought credit and credibility as they're engaging in these new conversations. And then in addition, we're having new customers show up. And these are larger name customers that see the strength of our combined platform that we built. And so just to respond to your question, this is about accessing new supply and demand across all of North America as opposed to being focused on one particular basin.

Joshua Silverstein

Got it. And then I was just curious on capital allocation for fourth quarter and into next year, post the Twin Eagle acquisition, obviously, debt went up, and it seems like you want to go and start working that down. But the stock has also -- has been weak this year and closer towards 52-week low. How do you balance buybacks, shareholder returns and debt reduction going this year?

Marcel Teunissen

Thanks, Josh. So our capital allocation priorities are: Number one, our D&C capital; number two, our dividend; number three, our balance sheet; and number four, what we have left goes to growth opportunities, which could include share buybacks if we see value in that. What we said on the second quarter call that after the Twin Eagle acquisition, which put some additional debt on the balance sheet, we take a more balanced approach. We want to get our leverage down from where it is now. But at the same time, we keep the option open to be opportunistic in share buybacks if we see good value there. So you should expect us to continue doing that as we go to Q4 and into the early parts of next year

Operator

Our next question comes from the line of Devin McDermott of Morgan Stanley.

Devin McDermott

Thanks for taking my question and echo my congrats to Danny. So, they were, as I'm sure you're aware, a sizable transaction announced between two of your peers earlier this week. And now that you have the management team set at Expand. I was long would love to hear just your perspectives. Mike, you can take this or Danny, Marcel, free to chime in as well. Perspectives on the M&A landscape, both in terms of upstream consolidation or how you would evaluate further opportunities beyond the wellhead like Twin Eagle? Just to contextualize with how you're thinking about the Expand portfolio today and anything else you think you might need to strengthen the integrated platform.

Daniel Brown

So thanks for the question, Devin. This is Danny. And first, I'll say, congrats to EQT and Range on their deal. As I look at Expand, I think we've got a great portfolio of assets and opportunities in front of us and really a reach across all of North America. And so I don't think the transaction announced yesterday really impacts our plans internally. So we're going to stay focused on what we're doing over here to deliver value for our shareholders. More broadly, I would say that while we're happy with the existing portfolio of assets and opportunities we've got and we'll be working hard to realize value from that.

I'm a big continuous improvement guy. And that includes improving all aspects of the business, including the portfolio. And so I am sure along those lines, we'll be open to inorganic opportunities to do that, but we'll be very disciplined in our focus on that. And when you think about that, anything we do has to make the company -- has to make the company better and deliver strong risk-adjusted full-cycle value. And in order for us to do those things and to hit a market clearing price, it's clearly going to have to be something that has a lot of synergies that we're very, very confident that we can capture. So I think that's how we'll think about that. Great portfolio. We've got a lot of things to do internally, but we'll say we'll stay open to opportunities to improve the business.

Devin McDermott

Got it. Makes a lot of sense. And maybe sticking with the theme on continuous improvement for my follow-up. You all have a track record in driving efficiency gains, pushing down breakeven of the business in the context of a little bit of inflationary pressure into 2027, and maybe this one is for Josh. Can you talk about some of the items you're exploring to potentially offset some of those pressures, outlook or further efficiency gains and maybe comment on some of the outperformance in well productivity in Southwest PA or Appalachia as well?

Josh Viets

Yes, sure. The way we like to talk about it inside the organization is round 1 of the integration between Chesapeake and Southwestern was really centered around the Haynesville, and we made a ton of progress. So if you think about our results from '24 and into '25. We've really doubled down on our continuous improvement efforts across our Appalachia business. In fact, when you look at our Southwest Appalachia drilling performance from '25 to '26, we've seen a 20% improvement in our footage per day, it's about a 10% improvement in our cost per foot in our drilling performance. And it's really just about leveraging the learnings across the entire portfolio and sticking it into that asset.

And so I think you'll continue to see those continuous improvement efforts on the more traditional methods, drilling wells faster, completing wells more efficiently. We continue to dial in our completion designs in the Haynesville as well. We expect to see about a 2% to 3% improvement in well productivity year-over-year. That's really taking advantage of the investment that we made in our own sand supply, which again, comes with a cost at about 1/3 of what you pay for a commercial ton of sand. And so we think that is continued to open up opportunities and improve returns on our overall wells. We continue to find opportunities to exploit artificial intelligence within the business as well, and we see that unlocking additional value in the year to come. So we'll be excited to talk about that more in the future.

Operator

Our next question comes from the line of Scott Hanold of RBC.

Scott Hanold

Yes. Thanks. If I could maybe play a little bit off the M&A theme and talk about just sort of your -- we'll call it [ brown game ] organic land acquisition activity. It's been a little bit more robust this year. And can you talk about the opportunity set with that you see next year and especially as it relates to how you think about like the budget overall and where you want to be given the macro backdrop?

Josh Viets

Yes. Sure, Scott. This is Josh. This past year, in 2026, you'll spend about $250 million on organic lease acquisitions. We've had a lot of success. And what I love about it is we're seeing success across all of our operating units, Haynesville, Appalachia like, we've added some incredibly valuable locations this year, highlighting roughly 3,000 acres that we were able to acquire in the state of Pennsylvania up and Bradford County. Those are some of our most competitive locations that we'll add. We spent around $15 million acquiring those leases. We had a rig sitting on the lease within a couple of months of taking it. And those wells will come online likely early next year and we'll end up delivering about 1 million cubic feet per foot of lateral productivity, some of the most productive wells in the region that we will probably see over the next several years.

So highly, highly valuable and accretive locations that we brought in. That ground game is ingrained in us. It's something that we expect to carry on into next year. And what we love about our financial position and the strength of the balance sheet that we have is we can be opportunistic when others are struggling to find capital to support their development programs. And so we see that as a competitive advantage. The cross-basin reach that we have is the other advantage that we see. And so we'll be opportunistic as we head into 2027 without leasing program.

Scott Hanold

Okay. So it sounds like a very similar run rate maybe next year is a good starting point for us.

Josh Viets

Yes. But again, those can come and go. Just as an example, in the fourth quarter of this year. We don't expect to close any material transactions. And so again, that's a goal right now and something we'll like to update the market on when we come back in February.

Scott Hanold

Okay. My second follow-up question -- or my follow-up question is just going to Twin Eagle and just thinking about like some of the larger, we'll say, more headline type of commercial type of announcements, whether it's LNG or industrial or whatnot. Like if you can give us a sense of like with Twin Eagle and your new platform, when should we expect to see some larger, more impactful announcements that you guys got put in place for maybe the longer-term demand growth in gas?

Marcel Teunissen

Yes. So as I kind of said, Scott, we are 2 weeks in at the end of the quarter with the integration, right? But we already see some early signs, so we can give you a more holistic update after we have done the fourth. The Twin Eagle business, of course, is there's a lot of blocking and tackling and small wins there. So we won't announce every single deal as we go in there. But there's a portfolio with power customers portfolio with C&I customers, as I already talked about it, you add that to the portfolio that we already had as Expand with LNG, power and other portfolios.

So all of that will continue to work that. But the integration value is already pretty obvious to us. We said for the fourth quarter. $80 million of EBITDA of the combined marketing and commercial business, which was our kind of business with the Twin Eagle business and then in '27 and '28, that synergy that we've talked about is primarily on the top line kind of growing business, both getting more money for our molecules out of the Expand system, extending customer relationships on the Twin Eagle side and with the footprint that we have, both in storage and transportation, just to capture more value from volatility when it occurs. And so that's what's driving that number ultimately and you should see that kind of rolling in as we are progressing.

Operator

Our next question comes from the line of Kevin MacCurdy of Pickering Energy Partners.

Kevin MacCurdy

Maybe we can start with an update on the head strategy, which has been very successful this year. With the potential for demand to pick up in late 2027 and 2028, how do you guys kind of think about adding on hedges for that part for those out quarters. And are you done hedging for the early part of 2027?

Marcel Teunissen

It's a great question. So I think just on the purpose of our hedge strategy, right? We're really bring to protect against the downside while we leave ourselves open to participate in the upside, and that's been our consistent hedging strategy. The way that we have looked at the market earlier in 2026, where we saw the fundamentals kind of being misaligned with the forward strip. We decided to hedge more aggressively both in '26 as well as into 2027. And you kind of see the result of that in Q3 where prices on the strip have been weak. In a hedge program paid over $300 million relative to that, and that's kind of the sign of that protection.

Then you look into 2027, we're already 55% hedged for all of 2027 with 3.65 kind of price on average. So that gives us a downside protection, and it gives us the option to choose what we do with production during that year. The way that we roll in the hedges, that's a bit more tactical. We take a combination of swaps and collars and three ways to kind of roll that in and we roll those in progressively so that we don't pick a price point at any particular point in time and kind of bet that the market won't move. So we continue to kind of roll that in and align our view of hedging relative to our view on the fundamentals, but always kind of with an eye on protecting against the downside and leaving the upside open.

Kevin MacCurdy

Great. I appreciate that was a good answer. And as a follow-up, I know we've hit the marketing questions quite a few times here, but maybe I'll just try another one on what line of sight do you have on the $150 million of incremental EBITDA by year-end 2028? And any thoughts on exactly how that progresses between now and in the '28?

Marcel Teunissen

Yes. No, let me start with that, and I'll ask Josh to maybe add, like, so we have a good line of sight and that just comes from kind of obviously, the work that we did during due diligence as we kind of we're framing the acquisition itself as well as the first couple of weeks, give us a lot of confidence just from customer feedback from the teams on the ground that are kind of hearing that and as well as what we see. So we feel confident about that number. Maybe, Josh, it's good to get some additional color from your side.

Josh Viets

Yes. I mean I would just kind of reiterate, I mean I think there's a high level confidence in our ability to deliver that. And the time -- exact timing of it, I think, is a little bit uncertain, but it will roll through over the next 2 years without a doubt. The conversation in deal flow is high. And so to Marcel's point, our origination teams are incredibly busy. Try to identify new customers and add duration and volume to existing contracts. And so again, we expect the team to be successful and exceed this target is the ultimate goal.

Operator

Our next question comes from the line of Charles Meade of Johnson Rice.

Charles Meade

Yes. Good morning, Danny and Mike and to the rest of the Expand team there. Danny, I want to kind of go back to, I think, the first question you fielded. And I recognize that this is day 3 on the job, but I'm thinking about -- you've had a window, a non-op window in to look in on Marcel's operations for at least the last 2 years, as your former seats. So when I think about your assets and your former seat and Expand assets, obviously, the both U.S. onshore unconventional, but within that framework, they seem to me like they're opposite into the spectrum on maturity runway, macro dynamics, that sort of thing. So I'm curious, are there any -- or can you identify any kind of practices or philosophies that you developed have found useful at -- in the Bakken that would be new or different for the Expand team?

Daniel Brown

Well, it's good to hear from you, Charles, and thanks for the question. I'd say as I think about my experience over at Cord and what might be transferable from there and my time at that organization over here, I'd say there's lots of things. Maybe the most significant of which is just foundationally challenging assumptions on how you do business and looking to improve. And so I think about what we did over my time at Cord, challenging our development assumptions, challenging our assumptions on where inventory was and where it could be. And then and then certainly leveraging the advantage of the platform that we created for the benefit of our organization and shareholders.

And so all of that, I think, is really a bit irrespective of what basin you're in. foundationally, both organizations are producing a commodity. Now there's different macro associated with that commodity. But in the commodity business, I think there's lots of similarities. And so I think I'll bring those similarities to bear over to Expand and look forward to working with the team to leverage our platform here.

Charles Meade

Got it. That is helpful, Danny. And then a follow-up perhaps for Josh. Josh, I think you addressed some of this in response to earlier question, but regarding the curtailments and TILs in 4Q, I mean, the -- are there any things you're looking at beyond, I'd say, the two big wins, which are weather and pipeline maintenance to -- that could affect how that -- how your curtailments progress over 4Q. And what do you have contemplated right now in your guide in those two dimensions?

Josh Viets

Yes. Maybe kind of answer this in reverse. Included in our guide, and you'll notice there's a relatively wide range of production expectations from 7.4 to 7.6 Bcf a day for Q4. And really what that's implying is that we're going to retain a significant amount of flexibility in the program. We do have curtailments coming into the fourth quarter in Northeast Appalachia. We are actively having discussions around the timing of new turn in lines, and so we're going to be disciplined with how we introduce volumes. And again, the goal is to always align our production with the most constructive price environment.

Clearly, weather is an overhang on the markets right now, production, we typically see a little bit of a pop heading into the winter months. We see that regularly in Appalachia. I think there's an expectation we could expect to see a seasonal pop in Haynesville with some of the private producers as well. I think that is also a overhang on the market today. I think the other thing -- if you think about the longer term, I think really the market is going to be watching for where storage ends up, and this is by region, across the U.S.

And if we end up at elevated levels of storage into -- coming into next spring and summer, that's really going to create another overhang on the market. But I just need to remind you, what we're focused on is long-term value creation. And what we see, again, is roughly 13 Bcf a day of new demand coming by 2028. So we really see a year of 2027 be one of transition. We're going to be flexible with our business and put ourselves in a position to respond when the demand shows up.

Operator

Our next question comes from the line of Betty Jiang of Barclays.

Wei Jiang

I have a question on the long-term marketing margin expansion. In the slide, you guys talked about the $250 million that's tied to new demand growth, particularly LNG. So can you just talk about your strategy to capture that opportunity? Is it more about adding LNG offtake and building capacities to -- on the global spread or -- and then how does Twin Eagle fit into that strategy?

Marcel Teunissen

Thanks for the question, Betty. So when we think of the LNG markets, we really see that as an international gas market. And so our strategy around LNG is to tie our domestic kind of production to international pricing, which provides diversification. And obviously, when you look at LNG prices at the moment, a significant premium over Henry Hub. So what our strategy is around LNG is to build a reasonable portfolio around LNG liquefaction and offtake and then a portfolio of customers that take that LNG as we go in.

We have signed a Delphine agreement earlier this year, which is for 1.5 million tonnes of LNG offtake starting in 2031, towards the end of 2032. You should expect us to add more to that LNG portfolio that it's ultimately quite a sizable portfolio and provides us with access to those international markets and diversification away from Henry Hub.

Wei Jiang

Got it. That makes sense. And then maybe just a follow-up on how you guys think about the production management into next year. To what extent could 2024 be a playbook, would you consider again the DUCs and [indiscernible] to maintain a higher productive capacity into a stronger long-term demand outlook?

Josh Viets

Yes, Betty, I think the answer to that is just yes. I think we've proven an ability to go create value to our productive capacity strategy. That's inclusive of base curtailments, building DUCs building up an inventory deferred turn in line. And so we're going to be very mindful of where the markets are and broader supply/demand fundamentals and look for opportunities to create more value from the production that we produce.

Operator

Our final question comes from the line of Philip Jungwirth of BMO.

Phillip Jungwirth

And I also wanted to extend my congrats to Danny. When you think through the gas supply or data center opportunity and how two increases your scope across much of North America, is there a good way to think about the ultimate benefit to Expand for any supply deals that are outside areas where your core upstream positions are located versus if you were to announce a project within the Gulf Coast or Appalachia footprint? And then just separately, we've seen fewer projects in Northeast PA, but you do have a large acreage footprint here. So just wondering if you see much potential in this area?

Marcel Teunissen

Yes. No, I think you go right to the heart of the benefit of being integrated with Twin Eagle and our own capability, right? So that comes on in two forms. One is where we have equity gas. Obviously, there's a lot there. But in some of those areas, and you mentioned Pennsylvania, data centers go slow the development of data centers, but data centers are going to be everywhere in the country. And so when you start looking west into Ohio, of course, we see more data centers coming in, and we can get gas there.

But even further west, there's going to be data centers all over the U.S. And having the capability that came between Eagle to connect really coast-to-coast allows us to kind of go after those projects. I guess in some of those areas need to come from far. Some of it needs to come from the north, some of it needs to come from the East. But with our capability with Twin Eagle, we can connect all of that and be competitive on all the data centers throughout. So it's very much an integral part of how we think of reaching those customers that are further away from the production basins.

Phillip Jungwirth

Okay. Great. And then Permian gas debottlenecking has obviously been a headwind for price, but a lot of this gas does get stuck around Houston. We do have three pipes though, Black Ben, Trident, Mustang, all starting up here in the next, call it, like 12, 18 months to move gas into the LNG corridor. So just as you look out 12, 18 months, you see higher. How do you see these higher flows impacting realized price for Expand, if at all, in the Haynesville? Or do you think there's enough LNG demand pull between now and then to largely offset incremental supply?

Josh Viets

Yes, Philip, I think the view is that this is expected. We expected pipes to get built and get over and around the city of Houston, which is where a large part of the gas has been bottlenecked for the last several years. So this is really no surprise to us. But when we look out longer term and look at the broader supply-demand fundamentals, what we see is that Permian gas, though there is a significant amount will not be able to meet the upcoming demand. It will periodically, and that's what you see in a year like we're entering into in 2027.

But if we look out over the next, call it, 4 to 6 years or so, we expect the Haynesville is going to need to grow by somewhere around 5 Bcf a day, in order to match the demand. And as the marginal molecule, we expect that to be the mechanism at which price gets set. And so that's why we remain highly constructive on our broader portfolio, the gas markets in general and the option that we've created in a place like the Western Haynesville for ourselves.

Operator

Thank you. I would now like to turn the conference back to Danny Brown for closing remarks. Sir?

Daniel Brown

Thanks, Latif. And for those that joined our call this morning, thank you for your time and your interest in our organization. To the Expand team, I look forward to working with you to deliver the full potential of Expand for our shareholders. And to our investors, I look forward to listening to and engaging with you along the way. Thanks again.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.