Following the acquisition and merger with Southwestern Energy of Houston, Oklahoma City’s Expand Energy confirmed some of its operations saw declines in productivity in the past year and it is faced with financial challenges.
Cash provided by operating activities was $1.57 billion, $2.38 billion and $4.12 billion during the years ended December 31, 2024, 2023 and 2022, respectively. The decrease in 2024 is primarily due to lower prices for the natural gas, oil and NGL we sold.
In the filing of its 10-K or annual report, Expand Energy admitted it was a concern that should be pointed out to investors, stating, “The Company’s operating results following the Southwestern Merger will suffer if we do not effectively manage our expanded operations.”
The Expand filing showed that since its merger with Southwestern, the size of business increased “significantly.”
“Our future success depends, in part, upon our ability to manage this expanded business, which will pose substantial challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. We may also face increased scrutiny from governmental authorities as a result of the significant increase in the size of our business.”
The company admitted it has a “significant amount of indebtedness, which will limit our liquidity and financial flexibility,” and may incur additional indebtedness in the future. Its debt at the end of 2024 totaled $5.7 billion and because of the merger, the firm assumed nearly $3.7 billion of Southwestern’s senior notes.
Expand is also challenged by a tightened natural gas market, the result of increasing demand from new LNG export facilities, reduced industry activity levels and a receent period of coler than average temperatures.
The company’s natural gas, oil and NGL sales in 2024 decreased $578 million compared to 2023. Lower average prices, which were consistent with the downward trend in index prices for gas and oil, drove a $426 million decrease in 2024. The Eagle Ford divestitures resulted in a $764 million decrease. Additionally, planned curtailments and activity deferrals led to lower sales volumes in Haynesville and Northeast Appalachia for decreases of $243 million and $167 million, respectively. These decreases were partially offset by a $1.0 billion increase due to the Southwestern Merger.
Expand’s cap-ex for 2024 fell compared to 2023 “primarily as a result of decreased drilling and completion activity” in its Northeast Appalachia and Haynesville operating areas. It compared the 2024 capital expenditures to those the firm had in 2022.
Expand stated it intends to complete and turn in line 240 to 270 gross wells in 2025 through the use of 11 to 15 rigs. It plans to invest nearly $3.1 billion in capital expenditures and do so with cash on hand, expected cash flow from operations and borrowings under its Credit Facility. During the year ended December 31, 2024, the company’s average operated rig count was 9 rigs and 133 spud wells, compared to an average operated rig count of 11 rigs and 193 spud wells in the year ended December 31, 2023 and 14 rigs and 217 spud wells in the year ended December 31, 2022.