filings.toolsItem 8. Financial Statements and Supplementary Data
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Item 8. Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Expand Energy Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Expand Energy Corporation and its subsidiaries (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of operations, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
The Impact of Proved Developed Natural Gas and Oil Reserves on Proved Natural Gas and Oil Properties, Net
As described in Note 1 to the consolidated financial statements, the Company's property and equipment, net balance was $24.4 billion as of December 31, 2025, and the related depreciation, depletion and amortization expense for the year ended December 31, 2025 was $3.0 billion, both of which substantially related to proved natural gas and oil properties. The Company follows the successful efforts method to account for its natural gas and oil properties. Under this method, all capitalized well costs and leasehold costs of proved natural gas and oil properties are depreciated using the unit-of-production depreciation method based on total estimated proved developed natural gas and oil reserves. As disclosed by management, estimates of natural gas and oil reserves and their values, future production rates, future development costs and commodity pricing differentials are the most significant of management’s estimates. The accuracy of any reserve estimate is a function of the quality of data available and of engineering and geological interpretation and judgment. In addition, estimates of reserves may be revised based on actual production, results of subsequent exploration and development activities, recent commodity prices, operating costs and other factors. The estimates of proved natural gas and oil reserves have been developed by specialists, specifically the Company’s reservoir engineers, and assessed by independent petroleum engineers (together “management’s specialists”).
The principal considerations for our determination that performing procedures relating to the impact of proved developed natural gas and oil reserves on proved natural gas and oil properties, net is a critical audit matter are (i) the significant judgment by management, including the use of management’s specialists, when developing the estimates of proved developed natural gas and oil reserves, which are derived using historical production volumes and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to the data, specifically historical production volumes, methods, and assumptions used by management and its specialists in developing the estimates of proved developed natural gas and oil reserves.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s estimates of proved developed natural gas and oil reserves. The work of management’s specialists was used in performing the procedures to evaluate the reasonableness of the estimates of proved developed natural gas and oil reserves. As a basis for using this work, the specialists’ qualifications were understood and the Company’s relationship with the specialists was assessed. The procedures performed also included (i) evaluating the methods and assumptions used by the specialists; (ii) testing the completeness and accuracy of the underlying data used by the specialists related to historical production volumes; and (iii) evaluating the specialists’ findings related to future production volumes by comparing the future production volumes to relevant historical and current period production volumes, as applicable.
/s/ PricewaterhouseCoopers LLP
Oklahoma City, Oklahoma
February 18, 2026
We have served as the Company’s auditor since 1992.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| ($ in millions, except per share data) | December 31, 2025 | December 31, 2024 | ||||||||||||
| Assets | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 616 | $ | 317 | ||||||||||
| Restricted cash | 80 | 78 | ||||||||||||
| Accounts receivable, net | 1,599 | 1,226 | ||||||||||||
| Derivative assets | 264 | 84 | ||||||||||||
| Other current assets | 357 | 292 | ||||||||||||
| Total current assets | 2,916 | 1,997 | ||||||||||||
| Property and equipment: | ||||||||||||||
| Natural gas and oil properties, successful efforts method | ||||||||||||||
| Proved natural gas and oil properties | 26,606 | 23,093 | ||||||||||||
| Unproved properties | 5,478 | 5,897 | ||||||||||||
| Other property and equipment | 509 | 654 | ||||||||||||
| Total property and equipment | 32,593 | 29,644 | ||||||||||||
| Less: accumulated depreciation, depletion and amortization | (8,278) | (5,362) | ||||||||||||
| Property and equipment held for sale, net | 40 | — | ||||||||||||
| Total property and equipment, net | 24,355 | 24,282 | ||||||||||||
| Long-term derivative assets | 47 | 1 | ||||||||||||
| Deferred income tax assets | 168 | 589 | ||||||||||||
| Other long-term assets | 801 | 1,025 | ||||||||||||
| Total assets | $ | 28,287 | $ | 27,894 | ||||||||||
| Liabilities and stockholders' equity | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable | $ | 753 | $ | 777 | ||||||||||
| Current maturities of long-term debt, net | — | 389 | ||||||||||||
| Accrued interest | 100 | 100 | ||||||||||||
| Derivative liabilities | 3 | 71 | ||||||||||||
| Other current liabilities | 2,045 | 1,786 | ||||||||||||
| Total current liabilities | 2,901 | 3,123 | ||||||||||||
| Long-term debt, net | 5,009 | 5,291 | ||||||||||||
| Long-term derivative liabilities | 1 | 68 | ||||||||||||
| Asset retirement obligations, net of current portion | 688 | 499 | ||||||||||||
| Long-term contract liabilities | 975 | 1,227 | ||||||||||||
| Other long-term liabilities | 135 | 121 | ||||||||||||
| Total liabilities | 9,709 | 10,329 | ||||||||||||
| Contingencies and commitments (Note 5) | ||||||||||||||
| Stockholders' equity: | ||||||||||||||
| Common stock, $0.01 par value, 450,000,000 shares authorized: 239,249,874 and 231,769,886 shares issued | 2 | 2 | ||||||||||||
| Additional paid-in capital | 13,746 | 13,687 | ||||||||||||
| Retained earnings | 4,830 | 3,876 | ||||||||||||
| Total stockholders' equity | 18,578 | 17,565 | ||||||||||||
| Total liabilities and stockholders' equity | $ | 28,287 | $ | 27,894 |
The accompanying notes are an integral part of these consolidated financial statements.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
| Years Ended December 31, | ||||||||||||||||||||
| ($ in millions, except per share data) | 2025 | 2024 | 2023 | |||||||||||||||||
| Revenues and other: | ||||||||||||||||||||
| Natural gas, oil and NGL | $ | 8,476 | $ | 2,969 | $ | 3,547 | ||||||||||||||
| Marketing | 3,163 | 1,290 | 2,500 | |||||||||||||||||
| Gain (loss) on derivatives | 550 | (38) | 1,728 | |||||||||||||||||
| Gains (losses) on sales of assets | (65) | 14 | 946 | |||||||||||||||||
| Total revenues and other | 12,124 | 4,235 | 8,721 | |||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Production | 635 | 316 | 356 | |||||||||||||||||
| Gathering, processing and transportation | 2,376 | 1,035 | 853 | |||||||||||||||||
| Severance and ad valorem taxes | 193 | 97 | 167 | |||||||||||||||||
| Exploration | 46 | 10 | 27 | |||||||||||||||||
| Marketing | 3,160 | 1,310 | 2,499 | |||||||||||||||||
| General and administrative | 181 | 186 | 127 | |||||||||||||||||
| Separation and other termination costs | 5 | 23 | 5 | |||||||||||||||||
| Depreciation, depletion and amortization | 2,980 | 1,729 | 1,527 | |||||||||||||||||
| Impairments | 37 | — | — | |||||||||||||||||
| Other operating expense, net | 40 | 332 | 18 | |||||||||||||||||
| Total operating expenses | 9,653 | 5,038 | 5,579 | |||||||||||||||||
| Income (loss) from operations | 2,471 | (803) | 3,142 | |||||||||||||||||
| Other income (expense): | ||||||||||||||||||||
| Interest expense | (235) | (123) | (104) | |||||||||||||||||
| Gains (losses) on purchases, exchanges or extinguishments of debt | 4 | (1) | — | |||||||||||||||||
| Other income, net | 42 | 86 | 79 | |||||||||||||||||
| Total other income (expense) | (189) | (38) | (25) | |||||||||||||||||
| Income (loss) before income taxes | 2,282 | (841) | 3,117 | |||||||||||||||||
| Income tax expense (benefit) | 463 | (127) | 698 | |||||||||||||||||
| Net income (loss) | $ | 1,819 | $ | (714) | $ | 2,419 | ||||||||||||||
| Earnings (loss) per common share: | ||||||||||||||||||||
| Basic | $ | 7.67 | $ | (4.55) | $ | 18.21 | ||||||||||||||
| Diluted | $ | 7.57 | $ | (4.55) | $ | 16.92 | ||||||||||||||
| Weighted average common shares outstanding (in thousands): | ||||||||||||||||||||
| Basic | 237,290 | 156,989 | 132,840 | |||||||||||||||||
| Diluted | 240,370 | 156,989 | 142,976 |
The accompanying notes are an integral part of these consolidated financial statements.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Years Ended December 31, | ||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||
| Net income (loss) | $ | 1,819 | $ | (714) | $ | 2,419 | ||||||||||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||||||||
| Depreciation, depletion and amortization | 2,980 | 1,729 | 1,527 | |||||||||||||||||
| Deferred income tax expense (benefit) | 448 | (123) | 428 | |||||||||||||||||
| Derivative (gains) losses, net | (550) | 38 | (1,728) | |||||||||||||||||
| Cash receipts on derivative settlements, net | 189 | 947 | 354 | |||||||||||||||||
| Share-based compensation | 46 | 38 | 33 | |||||||||||||||||
| (Gains) losses on sales of assets | 65 | (14) | (946) | |||||||||||||||||
| Contract amortization | (203) | (57) | — | |||||||||||||||||
| (Gains) losses on purchases, exchanges or extinguishments of debt | (4) | 1 | — | |||||||||||||||||
| Other | 70 | 35 | 18 | |||||||||||||||||
| Changes in assets and liabilities | (285) | (315) | 275 | |||||||||||||||||
| Net cash provided by operating activities | 4,575 | 1,565 | 2,380 | |||||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||
| Capital expenditures | (2,736) | (1,557) | (1,829) | |||||||||||||||||
| Property acquisitions | (195) | — | — | |||||||||||||||||
| Receipts of deferred consideration | 116 | 166 | — | |||||||||||||||||
| Business combination, net | — | (459) | — | |||||||||||||||||
| Contributions to investments | (14) | (75) | (231) | |||||||||||||||||
| Proceeds from divestitures of property and equipment | 70 | 21 | 2,533 | |||||||||||||||||
| Net cash provided by (used in) investing activities | (2,759) | (1,904) | 473 | |||||||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||
| Proceeds from Prior Credit Facility | 825 | 20 | 1,125 | |||||||||||||||||
| Payments on Prior Credit Facility | (825) | (20) | (2,175) | |||||||||||||||||
| Proceeds from 2025 Credit Facility | 165 | — | — | |||||||||||||||||
| Payments on 2025 Credit Facility | (165) | — | — | |||||||||||||||||
| Proceeds from issuance of senior notes, net | — | 747 | — | |||||||||||||||||
| Proceeds from warrant exercise | 24 | 3 | — | |||||||||||||||||
| Debt issuance and other financing costs | (11) | (11) | — | |||||||||||||||||
| Cash paid to repurchase and retire common stock | (100) | — | (355) | |||||||||||||||||
| Cash paid to purchase debt | (663) | (767) | — | |||||||||||||||||
| Cash paid for common stock dividends | (765) | (388) | (487) | |||||||||||||||||
| Other | — | (3) | — | |||||||||||||||||
| Net cash used in financing activities | (1,515) | (419) | (1,892) | |||||||||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 301 | (758) | 961 | |||||||||||||||||
| Cash, cash equivalents and restricted cash, beginning of period | 395 | 1,153 | 192 | |||||||||||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 696 | $ | 395 | $ | 1,153 | ||||||||||||||
| Cash and cash equivalents | $ | 616 | $ | 317 | $ | 1,079 | ||||||||||||||
| Restricted cash | 80 | 78 | 74 | |||||||||||||||||
| Total cash, cash equivalents and restricted cash | $ | 696 | $ | 395 | $ | 1,153 | ||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
| Common Stock | Additional Paid-in Capital | Retained Earnings | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||
| ($ in millions) | Shares | Amount | ||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2022 | 134,715,094 | $ | 1 | $ | 5,724 | $ | 3,399 | $ | 9,124 | |||||||||||||||||||||||||||||
| Share-based compensation | 214,684 | — | 31 | — | 31 | |||||||||||||||||||||||||||||||||
| Issuance of common stock for warrant exercise | 221,952 | — | — | — | — | |||||||||||||||||||||||||||||||||
| Issuance of reserve common stock and warrants | 12,089 | — | — | — | — | |||||||||||||||||||||||||||||||||
| Repurchase and retirement of common stock | (4,373,883) | — | (1) | (357) | (358) | |||||||||||||||||||||||||||||||||
| Net income | — | — | — | 2,419 | 2,419 | |||||||||||||||||||||||||||||||||
| Dividends on common stock | — | — | — | (487) | (487) | |||||||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | 130,789,936 | $ | 1 | $ | 5,754 | $ | 4,974 | $ | 10,729 | |||||||||||||||||||||||||||||
| Issuance of common stock for Southwestern Merger | 95,700,325 | 1 | 7,888 | — | 7,889 | |||||||||||||||||||||||||||||||||
| Share-based compensation | 727,799 | — | 42 | — | 42 | |||||||||||||||||||||||||||||||||
| Issuance of common stock for warrant exercise | 4,083,103 | — | 3 | — | 3 | |||||||||||||||||||||||||||||||||
| Issuance of reserved common stock and warrants | 468,723 | — | — | — | — | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | (714) | (714) | |||||||||||||||||||||||||||||||||
| Dividends on common stock | — | — | — | (384) | (384) | |||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | 231,769,886 | $ | 2 | $ | 13,687 | $ | 3,876 | $ | 17,565 | |||||||||||||||||||||||||||||
| Share-based compensation | 538,885 | — | 35 | — | 35 | |||||||||||||||||||||||||||||||||
| Issuance of common stock for warrant exercise | 7,497,509 | — | 24 | — | 24 | |||||||||||||||||||||||||||||||||
| Issuance of reserved common stock and warrants | 295,255 | — | — | — | — | |||||||||||||||||||||||||||||||||
| Repurchase and retirement of common stock | (851,661) | — | — | (100) | (100) | |||||||||||||||||||||||||||||||||
| Net income | — | — | — | 1,819 | 1,819 | |||||||||||||||||||||||||||||||||
| Dividends on common stock | — | — | — | (765) | (765) | |||||||||||||||||||||||||||||||||
| Balance as of December 31, 2025 | 239,249,874 | $ | 2 | $ | 13,746 | $ | 4,830 | $ | 18,578 |
The accompanying notes are an integral part of these consolidated financial statements.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| 1. | Basis of Presentation and Summary of Significant Accounting Policies |
Description of Company
On October 1, 2024, Chesapeake Energy Corporation (“Chesapeake”) changed its name to Expand Energy Corporation ("Expand Energy," “we,” “our,” “us” or the "Company") in connection with the Southwestern Merger, further discussed in Note 2. Following the Southwestern Merger, Expand Energy is the largest natural gas producer in the U.S., based on net daily production, and is focused on responsibly developing an abundant supply of natural gas, oil and NGL to expand energy access for all. We have operations in Louisiana, Texas, Pennsylvania, West Virginia and Ohio, with all of our operations located onshore in the United States.
Basis of Presentation
The accompanying consolidated financial statements of Expand Energy were prepared in accordance with GAAP and include the accounts of our direct and indirect wholly owned subsidiaries and entities in which Expand Energy has a controlling financial interest. Intercompany accounts and balances have been eliminated. All monetary values, other than per unit and per share amounts, are stated in millions of U.S. dollars unless otherwise specified.
This Annual Report on Form 10-K (this “Form 10-K”) relates to our financial position as of December 31, 2025 and as of December 31, 2024, and our results of operations for the year ended December 31, 2025, the year ended December 31, 2024 and the year ended December 31, 2023. For the time periods covered by this Form 10-K, we did not have any changes or items impacting other comprehensive income.
Accounting Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosures in the financial statements. Management evaluates its estimates and related assumptions regularly, including those related to the impairment of natural gas and oil properties, natural gas and oil reserves, derivatives, income taxes, impairment of other property and equipment, environmental remediation costs, asset retirement obligations, litigation and regulatory proceedings and fair values. Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ significantly from these estimates.
Consolidation
We consolidate entities in which we have a controlling financial interest and variable interest entities in which we are the primary beneficiary. We consolidate subsidiaries in which we hold, directly or indirectly, more than 50% of the voting rights. We use the equity method of accounting to record our net interests where we have the ability to exercise significant influence through our investment but lack a controlling financial interest. Under the equity method, our share of net income (loss) is included in our consolidated statements of operations according to our equity ownership or according to the terms of the applicable governing instrument. See Note 15 for further discussion of our investments. Undivided interests in natural gas and oil properties are consolidated on a proportionate basis.
Segments
Operating segments are defined as components of an enterprise that engage in activities from which it may earn revenues and incur expenses for which separate operational financial information is available and is regularly evaluated by the chief operating decision maker (“CODM”), who is our Chief Executive Officer, for the purpose of allocating an enterprise’s resources and assessing its operating performance. We have concluded that we have one reportable segment, due to the similar nature of the exploration and production business across Expand Energy and its consolidated subsidiaries and the fact that our marketing activities are ancillary to our operations. See Note 18 for additional information.
Cash and Cash Equivalents
For purposes of the consolidated financial statements, we consider investments in all highly liquid instruments with original maturities of three months or less at the date of purchase to be cash equivalents.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Restricted Cash
As of December 31, 2025, we had restricted cash of $80 million. Our restricted cash represents funds restricted for payment of certain royalties pending the outcome of competing ownership claims for certain minerals, as well as for payment of certain convenience class unsecured claims.
Accounts Receivable
Our accounts receivable are primarily from purchasers of natural gas, oil and NGL and from exploration and production companies that own interests in properties we operate. This industry concentration could affect our overall exposure to credit risk, either positively or negatively, because our purchasers and joint working interest owners may be similarly affected by changes in economic, industry or other conditions. We monitor the creditworthiness of all our counterparties and we generally require letters of credit or parent guarantees for receivables from parties deemed to have sub-standard credit, unless the credit risk can otherwise be mitigated. We utilize an allowance method in accounting for bad debt based on historical trends in addition to specifically identifying receivables that we believe may be uncollectible. See Note 8 for additional information regarding our accounts receivable.
Natural Gas and Oil Properties
We follow the successful efforts method of accounting for our natural gas and oil properties. Under this method, exploration costs such as exploratory geological and geophysical costs, expiration of unproved leasehold, delay rentals and exploration overhead are expensed as incurred. All costs related to production, general corporate overhead and similar activities are also expensed as incurred. All property acquisition costs and development costs are capitalized when incurred.
Exploratory drilling costs are initially capitalized, or suspended, pending the determination of proved reserves. If proved reserves are found, drilling costs remain capitalized and are classified as proved properties. Costs of unsuccessful wells are charged to exploration expense. For exploratory wells that find reserves that cannot be classified as proved when drilling is completed, costs continue to be capitalized as suspended exploratory drilling costs if there have been sufficient reserves found to justify completion as a producing well and sufficient progress is being made in assessing the reserves and the economic and operational viability of the project. If we determine that future appraisal drilling or development activities are unlikely to occur, associated suspended exploratory well costs are expensed. In some instances, this determination may take longer than one year. We review the status of all suspended exploratory drilling costs quarterly. Costs to develop proved reserves, including the costs of all development wells and related equipment used in the production of natural gas and oil are capitalized.
Costs of drilling and equipping successful wells, costs to construct or acquire facilities, and associated asset retirement costs are depreciated using the unit-of-production (“UOP”) method based on total estimated proved developed gas and oil reserves. Costs of acquiring proved properties, including leasehold acquisition costs transferred from unproved properties, are depleted using the UOP method based on total estimated proved developed and undeveloped reserves.
Proceeds from the sales of individual natural gas and oil properties and the capitalized costs of individual properties sold or abandoned are credited and charged, respectively, to accumulated depreciation, depletion and amortization, if doing so does not materially impact the depletion rate of an amortization base. Generally, no gain or loss is recognized until an entire amortization base is sold. However, a gain or loss is recognized from the sale of less than an entire amortization base if the disposition is significant enough to materially impact the depletion rate of the remaining properties in the amortization base.
When circumstances indicate that the carrying value of proved natural gas and oil properties may not be recoverable, we compare unamortized capitalized costs to the expected undiscounted pre-tax future cash flows for the associated assets grouped at the lowest level for which identifiable cash flows are independent of cash flows of other assets. If the expected undiscounted pre-tax future cash flows, based on our estimate of future natural gas and crude oil prices, operating costs, anticipated production from proved reserves and other relevant data, are lower than the unamortized capitalized costs, the capitalized costs are reduced to fair value. Fair value is generally estimated using the income approach described in the ASC 820, Fair Value Measurements. If applicable, we utilize prices and other relevant information generated by market transactions involving assets and liabilities that are identical or comparable to the item being measured as the basis for determining fair value. The expected future cash flows used for impairment reviews and related fair value measurements are typically based on judgmental
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
assessments of commodity prices, pricing adjustments for differentials, operating costs, capital investment plans, future production volumes, and estimated proved reserves, considering all available information at the date of review. These assumptions are applied to develop future cash flow projections that are then discounted to estimated fair value, using a market-based weighted average cost of capital. We have classified these fair value measurements as Level 3 in the fair value hierarchy. Additionally, we evaluate the carrying value of our unproved properties and record impairment based on time or geologic factors. Factors such as drilling results, reservoir performance, seismic interpretation, lease expiration dates or future plans to develop acreage is utilized in our evaluation of unproved properties. When unproved properties are deemed to be impaired, this amount is reported in exploration expenses in our consolidated statements of operations.
Other Property and Equipment
Other property and equipment consists primarily of buildings and improvements, computers and office equipment, gathering and water systems, land and other assets that support our operations. Major renewals and betterments are capitalized while the costs of repairs and maintenance are charged to expense as incurred. Other property and equipment costs, excluding land, are depreciated on a straight-line basis and recorded within depreciation, depletion and amortization in the consolidated statement of operations.
Realization of the carrying value of other property and equipment is reviewed for possible impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Assets are determined to be impaired if a forecast of undiscounted estimated future net operating cash flows directly related to the asset, including any disposal value, is less than the carrying amount of the asset. If any asset is determined to be impaired, the loss is measured as the amount by which the carrying amount of the asset exceeds its fair value. An estimate of fair value is based on the best information available, including prices for similar assets and discounted cash flow. See Note 14 for further discussion of other property and equipment.
Assets Held for Sale
We may market certain non-core natural gas and oil assets or other properties for sale. At the end of each reporting period, we evaluate if these assets should be classified as held for sale. The held for sale criteria includes the following: management commits to a plan to sell, the asset is available for immediate sale, an active program to locate a buyer exists, the sale of the asset is probable and expected to be completed within a year, the asset is actively being marketed for sale and that it is unlikely that significant changes to the plan will be made. If each of the criteria are met, then the assets and associated liabilities are classified as held for sale. Additionally, once assets are classified as held for sale, we cease depreciation on those related assets. See Note 14 for further discussion of other property and equipment.
Capitalized Interest
Interest from external borrowings is capitalized on significant investments in major development projects until the asset is ready for service using the weighted average borrowing rate of outstanding borrowings. Capitalized interest is determined by multiplying our weighted average borrowing cost on debt by the average amount of qualifying costs incurred. Capitalized interest is depreciated over the useful lives of the assets in the same manner as the depreciation of the underlying asset.
Accounts Payable
Included in accounts payable as of December 31, 2025 are liabilities of approximately $58 million, representing the amount by which checks issued, but not yet presented to our banks for collection, exceeded balances in applicable bank accounts.
Debt Issuance Costs
Costs associated with the arrangement of our credit facility are included in other long-term assets and are amortized over the life of the facility using the straight-line method. As of December 31, 2025, these costs were $22 million. Costs associated with the issuance of the senior notes are included in long-term debt and the remaining unamortized issuance costs are amortized over the life of the senior notes using the straight-line method. Unamortized issuance costs associated with our senior notes as of December 31, 2025 totaled $8 million.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Litigation Contingencies
We are subject to litigation and regulatory proceedings, claims and liabilities that arise in the ordinary course of business. We accrue losses associated with litigation and regulatory claims when such losses are probable and reasonably estimable. If we determine that a loss is probable and cannot estimate a specific amount for that loss but can estimate a range of loss, our best estimate within the range is accrued. Estimates are adjusted as additional information becomes available or circumstances change. We do not reduce these liabilities for potential insurance or third-party recoveries. If applicable, we accrue receivables for probable insurance or third-party recoveries. Legal defense costs associated with loss contingencies are expensed in the period incurred. See Note 5 for further discussion of litigation contingencies.
Environmental Remediation Costs
We record environmental reserves for estimated remediation costs related to existing conditions from past operations when the responsibility to remediate is probable and the costs can be reasonably estimated. Expenditures that create future benefits or contribute to future revenue generation are capitalized. See Note 5 for discussion of environmental contingencies.
Asset Retirement Obligations
We recognize liabilities for obligations associated with the retirement of tangible long-lived assets that result from the acquisition, construction and development of the assets. We recognize the fair value of a liability for a retirement obligation in the period in which the liability is incurred. For natural gas and oil properties, this is the period in which a natural gas or oil well is acquired or drilled. The liability is then accreted each period until the liability is settled or the well is sold, at which time the liability is removed. The related asset retirement cost is capitalized as part of the carrying amount of our natural gas and oil properties. See Note 16 for further discussion of asset retirement obligations.
Revenue Recognition
Revenue from the sale of natural gas, oil and NGL is recognized upon the transfer of control of the products, which is typically when the products are delivered to customers. Revenue is recognized net of royalties due to third parties in an amount that reflects the consideration we expect to receive in exchange for those products. We follow the sales method of accounting for our natural gas revenue whereby we recognize sales revenue on all natural gas sold to our purchasers, regardless of whether the sales are proportionate to our ownership in the property.
Revenue from contracts with customers includes the sale of our natural gas, oil and NGL production (recorded as natural gas, oil and NGL revenues in the consolidated statements of operations) as well as the sale of certain of our joint interest holders’ production which we purchase under joint operating arrangements (recorded in marketing revenues in the consolidated statements of operations). In connection with the marketing of these products, we obtain control of the natural gas, oil and NGL we purchase from other interest owners at defined delivery points and deliver the product to third parties, at which time revenues are recorded. See Note 8 for a presentation of the disaggregation of revenue.
Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days. There are no significant judgments that significantly affect the amount or timing of revenue from contracts with customers.
Generally our commodity sales contracts are less than 12 months in duration, however in certain cases we have long-term commodity sales contracts based on market prices at the time of delivery. With these long-term contracts, the transaction price is variable and determined as physical delivery occurs. As such, we have applied the practical expedient allowed in ASC 606 and do not disclose the aggregate amount of the transaction price allocated to performance obligations or when we expect to recognize revenues that are unsatisfied as of the end of the reporting period.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
We also generate revenue from other sources, including from a variety of derivative and hedging activities to reduce our exposure to fluctuations in future commodity prices and to protect our expected operating cash flow against significant market movements or volatility, as well as a variety of natural gas, oil and NGL purchase and sale contracts with third parties for various commercial purposes, including credit risk mitigation and satisfaction of our pipeline delivery commitments (recorded within marketing revenues in the consolidated statements of operations). In circumstances where we act as an agent rather than a principal, our results of operations related to natural gas, oil and NGL marketing activities are presented on a net basis.
Fair Value Measurements
Certain financial instruments are reported on a recurring basis at fair value on our consolidated balance sheets. We also use fair value measurements on a nonrecurring basis when a qualitative assessment of our assets indicates a potential impairment. Under fair value measurement accounting guidance, fair value is defined as the amount that would be received from the sale of an asset or paid for the transfer of a liability in an orderly transaction between market participants (i.e., an exit price). To estimate an exit price, a three-level hierarchy is used. The fair value hierarchy prioritizes the inputs, which refer broadly to assumptions market participants would use in pricing an asset or a liability, into three levels. Level 1 inputs are unadjusted quoted prices in active markets for identical assets and liabilities and have the highest priority. Level 2 inputs are inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability and have the lowest priority.
The valuation techniques that may be used to measure fair value include a market approach, an income approach and a cost approach. A market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. An income approach uses valuation techniques to convert future amounts to a single present amount based on current market expectations, including present value techniques, option-pricing models and the excess earnings method. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).
The carrying values of financial instruments comprising cash and cash equivalents, accounts payable and accounts receivable approximate fair values due to the short-term maturities of these instruments. See Notes 4 and 13 for further discussion of fair value measurements.
Derivatives
Derivative instruments are recorded at fair value, and changes in fair value are recognized currently in earnings unless specific hedge accounting criteria are followed. As of December 31, 2025, none of our open derivative instruments were designated as cash flow hedges.
Derivative instruments reflected as current in the consolidated balance sheets represent the estimated fair value of derivatives scheduled to settle over the next 12 months based on market prices/rates as of the respective balance sheet dates. Cash settlements of our derivative instruments are generally classified as operating cash flows unless the derivatives are deemed to contain, for accounting purposes, a significant financing element at contract inception, in which case these cash settlements are classified as financing cash flows in the accompanying consolidated statements of cash flows. All of our commodity derivative instruments are subject to master netting arrangements by contract type which provide for the offsetting of asset and liability positions within each contract type, as well as related cash collateral if applicable, by counterparty. Therefore, we net the value of our derivative instruments by contract type with the same counterparty in the accompanying consolidated balance sheets.
We have established the fair value of our derivative instruments using established index prices, volatility curves and discount factors. These estimates are compared to our counterparty values for reasonableness. The values we report in our financial statements are as of a point in time and subsequently change as these estimates are revised to reflect actual results, changes in market conditions and other factors. Derivative transactions are subject to the risk that counterparties will be unable to meet their obligations. This non-performance risk is considered in the valuation of our derivative instruments, but to date has not had a material impact on the values of our derivatives. See Note 13 for further discussion of our derivative instruments.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Income Taxes
We are subject to current income taxes assessed by the federal and various state jurisdictions in the U.S. and account for current income taxes based on amounts paid or estimated to be payable net of amounts refunded or estimated to be refunded. Additionally, we account for deferred income taxes using the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recorded for the estimated future tax consequences attributable to the differences between the financial carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the tax rate expected to be in effect for the year in which those temporary differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the year of the enacted rate change. Deferred income taxes are provided to recognize the income tax effect of reporting certain transactions in different years for income tax and financial reporting purposes. A valuation allowance for deferred tax assets, including net operating losses, is recognized when it is more likely than not that some or all of the benefit from the deferred tax assets will not be realized.
We are required to make judgments, including estimating reserves for potential adverse outcomes regarding tax positions that we have taken. We account for uncertainty in income taxes using a recognition and measurement threshold for tax positions taken or expected to be taken in a tax return. The tax benefit from an uncertain tax position is recognized when it is more likely than not that the position will be sustained upon examination by taxing authorities based on technical merits of the position. The amount of the tax benefit recognized is the largest amount of the benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement. The effective tax rate and the tax basis of assets and liabilities reflect management’s estimates of the ultimate outcome of various tax uncertainties. We recognize accrued interest related to uncertain tax positions in interest expense and accrued penalties related to such positions in general and administrative expense in the consolidated statements of operations. See Note 9 for further discussion of income taxes.
Share-Based Compensation
Our share-based compensation program consists of restricted stock units and performance share units granted to employees and restricted stock units granted to non-employee directors under our Long Term Incentive Plan. We recognize the cost of services received in exchange for restricted stock units based on the fair value of the equity instruments as of the grant date. This value is amortized over the vesting period, which is generally three years from the grant date. Forfeitures on our share-based compensation awards are recognized as they occur. Because performance share units are settled in shares, they are classified as equity and are measured at fair value as of the grant date.
To the extent compensation expense relates to employees directly involved in the acquisition of natural gas and oil leasehold and development activities, these amounts are capitalized to natural gas and oil properties. Amounts not capitalized to natural gas and oil properties are generally recognized as general and administrative expense, production expense, marketing expense, or exploration expense, based on the employees involved in those activities. See Note 11 for further discussion of share-based compensation.
Recently Issued Accounting Standards
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. ASU 2025-11 clarifies interim disclosure requirements and the applicability of Topic 270. Additionally, ASU 2025-11 includes a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. This ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. We are evaluating the impact this ASU will have on our disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 expands disclosures about specific costs and expenses presented on the face of the income statement. This ASU is effective for annual reporting periods beginning after December 15, 2026 and for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. We are evaluating the impact this ASU will have on our disclosures.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 intends to provide investors with additional information about an entity’s income taxes by requiring disclosure of items such as disaggregation of the effective tax rate reconciliation as well as information regarding income taxes paid. This ASU is effective beginning with this annual report on Form 10-K and we have applied the updates retrospectively to impacted disclosures. See Note 9 for further discussion on our income taxes and Note 17 for additional information on income taxes paid.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segments Disclosures. Under ASU 2023-07, the scope and frequency of segment disclosures is increased to provide investors with additional detail about information utilized by an entity’s CODM, including information about significant segment expenses. This ASU was effective for annual reporting beginning with our 2024 Form 10-K and for interim periods beginning with our quarterly report on Form 10-Q for the first quarter of 2025. See Note 18 for further discussion on our segment reporting.
We consider the applicability and impact of all ASUs. ASUs not listed above were evaluated and determined to either be not applicable, already adopted and disclosed or not material upon adoption.
| 2. | Natural Gas and Oil Property Transactions |
Southwestern Merger
On January 10, 2024, Chesapeake and Southwestern entered into an all-stock agreement and plan of merger (the “Merger Agreement”). Southwestern was an independent energy company engaged in development, exploration and production activities, including related marketing activities, within its operating areas in the Appalachia and Haynesville shale plays. Our Board of Directors and the Board of Directors of Southwestern both approved the Merger Agreement. At separate special meetings each held on June 18, 2024, Chesapeake’s stockholders approved the issuance of Chesapeake’s common stock to the stockholders of Southwestern in connection with the Southwestern Merger, and Southwestern’s stockholders approved the Merger Agreement.
On October 1, 2024, the Southwestern Merger was completed, and we issued approximately 95.7 million shares of our common stock to Southwestern’s shareholders in connection with the Merger Agreement. Under the terms of the Merger Agreement, subject to certain exceptions, each share of Southwestern common stock was converted into the right to receive 0.0867 of a share of the Company’s common stock. Based on the closing price of our common stock, the total value of the shares of our common stock issued to Southwestern’s shareholders was approximately $7.9 billion. During 2025, we recognized approximately $57 million of costs related to the Southwestern Merger, which primarily consisted of employee expenses. During 2024, we recognized approximately $312 million of costs related to the Southwestern Merger, which included $148 million related to employee expenses and the remainder of the costs relating to transaction fees, consulting and legal fees and other fees related to the transaction. These acquisition-related costs are included within other operating expense, net within our consolidated statements of operations. The Southwestern Merger was structured as a tax-free reorganization for United States federal income tax purposes.
Southwestern Merger Purchase Price Allocation
We have accounted for the Southwestern Merger as a business combination, using the acquisition method, with Expand Energy (formerly Chesapeake) treated as the accounting acquirer. During 2025, we finalized the acquisition accounting for this transaction. The following table represents the allocation of the total purchase price of Southwestern to the identifiable assets acquired and the liabilities assumed based on the fair values as of the acquisition date.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
| 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 |
(a)Reflects the repayment of $585 million outstanding on Southwestern's 2022 revolving credit facility including $2 million of accrued interest and fees, as the facility was repaid and retired upon close of the Southwestern Merger.
(b)The fair value of our common stock is a Level 1 input, as our stock price is a quoted price in an active market as of the acquisition date.
Natural Gas and Oil Properties
For the Southwestern Merger, we applied the business combination guidance, under which an acquirer should recognize the identifiable assets acquired and the liabilities assumed on the acquisition date at fair value. The fair value estimate of proved and unproved natural gas and oil properties as of the acquisition date was based on estimated natural gas and oil reserves and related future net cash flows discounted using a weighted average cost of capital, including estimates of future production rates and future development costs. We utilized NYMEX strip pricing adjusted for inflation to value the reserves. We then applied various discount rates depending on the classification of reserves and other risk characteristics. Management utilized the assistance of a third-party valuation expert to estimate the value of the natural gas and oil properties acquired. Additionally, the fair value estimate of proved and unproved natural gas and oil properties was corroborated by utilizing a market approach, which considers recent comparable transactions for similar assets.
The inputs used to value natural gas and oil properties require significant judgment and estimates made by management and represent Level 3 inputs.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
As part of the Southwestern Merger, we assumed gathering, processing and transportation contracts, certain of which were deemed to be above or below current market rates. We recognized assets and liabilities for the difference in the contractual and market rates of these contracts, as of the date of the Merger. The terms of the contracts extend through 2035.
Southwestern Merger Revenues and Expenses Subsequent to Acquisition
We included in our consolidated statements of operations natural gas, oil and NGL revenues of $1,021 million, marketing revenues of $482 million, net losses on natural gas, oil and NGL derivatives of $34 million, and direct operating expenses of $1,384 million, including depreciation, depletion and amortization, and net earnings of $36 million, related to the Southwestern Merger businesses for the period from October 1, 2024 through December 31, 2024.
Combined Pro Forma Financial Information
As the Southwestern Merger closed on October 1, 2024, all activity in 2025 is included in our consolidated statements of operations. The following unaudited pro forma financial information is based on our historical consolidated financial statements adjusted to reflect as if the Southwestern Merger and the divestiture of our Eagle Ford assets had each occurred on January 1, 2023. The information below reflects pro forma adjustments based on available information and certain assumptions that we believe are reasonable, including the estimated tax impact of the pro forma adjustments.
| Years Ended December 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Revenues | $ | 8,193 | $ | 14,247 | ||||||||||
| Net income (loss) available to common stockholders | $ | (607) | $ | 3,852 | ||||||||||
| Earnings (loss) per common share: | ||||||||||||||
| Basic | $ | (2.65) | $ | 16.86 | ||||||||||
| Diluted | $ | (2.65) | $ | 16.14 |
Eagle Ford Divestitures
During 2023, we divested our Eagle Ford assets through three separate transactions (“the Eagle Ford divestiture transactions”), for approximately $3.5 billion, subject to customary post-closing adjustments. In each of these transactions, we received a portion of the purchase price upon closing, subject to customary post-closing adjustments, with the remainder of the purchase price recorded as deferred consideration and treated as a non-interest-bearing note to be paid in installments in up to the following four years following the close of the transaction. The deferred consideration is recorded at fair value with an imputed rate of interest as a Level 2 input, and approximately $114 million and $114 million of the deferred consideration is reflected within other current assets and approximately $91 million and $188 million of the deferred consideration is reflected within other long-term assets on the consolidated balance sheets as of December 31, 2025 and December 31, 2024, respectively. Additionally, during 2024, we received a contingent payment of $25 million related to one of the Eagle Ford divestiture transactions, based upon the average NYMEX prices during the year following the close of the transaction. These installment payments are recorded as receipts of deferred consideration in our consolidated statements of cash flows. The contingent payment noted above was recorded as cash receipts on derivative settlements, net in our consolidated statements of cash flows. The Eagle Ford divestiture transactions, resulted in an aggregate gain of approximately $947 million, inclusive of post-closing adjustments, based on the difference between the carrying value of the assets and consideration received.
During the years ended December 31, 2025, 2024 and 2023, we amortized approximately $19 million, $31 million and $24 million, respectively, related to the deferred consideration from the Eagle Ford divestiture transactions described above. The deferred consideration amortization is recorded within other income, net, in our consolidated statements of operations.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
| 3. | Earnings Per Share |
Basic earnings (loss) per common share is computed by dividing the net income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings (loss) per common share is calculated in the same manner but includes the impact of potentially dilutive securities utilizing the treasury stock method. Potentially dilutive securities consists of issuable shares related to warrants, unvested restricted stock units (“RSUs”), and unvested performance share units (“PSUs”).
The reconciliations between basic and diluted earnings (loss) per share are as follows:
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Numerator | ||||||||||||||||||||
| Net income (loss) available to common stockholders, basic and diluted | $ | 1,819 | $ | (714) | $ | 2,419 | ||||||||||||||
| Denominator (in thousands) | ||||||||||||||||||||
| Weighted average common shares outstanding, basic | 237,290 | 156,989 | 132,840 | |||||||||||||||||
| Effect of potentially dilutive securities | ||||||||||||||||||||
| Warrants | 2,670 | — | 9,750 | |||||||||||||||||
| Restricted stock units | 372 | — | 338 | |||||||||||||||||
| Performance share units | 38 | — | 48 | |||||||||||||||||
| Weighted average common shares outstanding, diluted | 240,370 | 156,989 | 142,976 | |||||||||||||||||
| Earnings per common share: | ||||||||||||||||||||
| Basic | $ | 7.67 | $ | (4.55) | $ | 18.21 | ||||||||||||||
| Diluted | $ | 7.57 | $ | (4.55) | $ | 16.92 |
During the years ended December 31, 2025, 2024 and 2023, the diluted earnings (loss) per share calculation excludes the effect of 13,391, 308,646 and 777,369 reserved shares of common stock and 25,015, 582,109 and 1,466,502 reserved Class C Warrants related to the settlement of General Unsecured Claims associated with the Chapter 11 Cases, as all necessary conditions had not been met for such shares to be considered dilutive shares during the years ended December 31, 2025, 2024 and 2023, respectively. Additionally, the diluted loss per share calculation during the year ended December 31, 2024 excludes the antidilutive effect of 9,058,361 Warrants, 315,318 RSUs and 86,421 PSUs.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
| 4. | Debt |
Our long-term debt consisted of the following as of December 31, 2025 and 2024:
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Carrying Amount | Fair Value**(a)** | Carrying Amount | Fair Value**(a)** | ||||||||||||||||||||
| 2025 Credit Facility | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
| Prior Credit Facility | — | — | — | — | |||||||||||||||||||
| 4.95% senior notes due 2025(b) | — | — | 389 | 389 | |||||||||||||||||||
| 5.50% senior notes due 2026 | — | — | 47 | 47 | |||||||||||||||||||
| 5.375% senior notes due 2029(b) | 638 | 639 | 700 | 684 | |||||||||||||||||||
| 5.875% senior notes due 2029 | 440 | 441 | 500 | 494 | |||||||||||||||||||
| 6.75% senior notes due 2029 | 847 | 852 | 950 | 959 | |||||||||||||||||||
| 5.375% senior notes due 2030(b) | 1,200 | 1,218 | 1,200 | 1,174 | |||||||||||||||||||
| 4.75% senior notes due 2032(b) | 1,150 | 1,137 | 1,150 | 1,067 | |||||||||||||||||||
| 5.70% senior notes due 2035(c) | 750 | 776 | 750 | 734 | |||||||||||||||||||
| Premiums (discounts) on senior notes, net | (8) | — | 4 | — | |||||||||||||||||||
| Debt issuance costs | (8) | — | (10) | — | |||||||||||||||||||
| Total debt, net | 5,009 | 5,063 | 5,680 | 5,548 | |||||||||||||||||||
| Less current maturities of long-term debt, net | — | — | (389) | (389) | |||||||||||||||||||
| Total long-term debt, net | $ | 5,009 | $ | 5,063 | $ | 5,291 | $ | 5,159 |
(a)The carrying value of borrowings under our 2025 Credit Facility and Prior Credit Facility approximates fair value as the interest rates are based on prevailing market rates; therefore, they are a Level 1 fair value measurement. For all other debt, a market approach, based upon quotes from major financial institutions, which are Level 2 inputs, is used to measure the fair value.
(b)On October 1, 2024, we assumed the debt of Southwestern in connection with the Southwestern Merger, which primarily consisted of these senior notes. See Note 2 for additional discussion on the Southwestern Merger and further discussion of these senior notes below.
(c)On December 2, 2024, we issued $750 million of 5.70% senior notes. See further discussion below.
The table below presents debt maturities as of December 31, 2025, excluding debt issuance costs, discounts and premiums:
| Total | ||||||||
| 2029 | 1,925 | |||||||
| 2030 | 1,200 | |||||||
| Thereafter | 1,900 | |||||||
| Total debt | $ | 5,025 |
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Credit Facility. On September 30, 2025, the Company entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) that, as amended, has a maturity date of September 30, 2030 (the “2025 Credit Facility”), with the lenders and issuing banks party thereto from time to time (the “Lenders”), and JPMorgan Chase Bank, N.A., as administrative agent. The 2025 Credit Facility, among other things, extended the maturity date from December 2027 to September 2030, with two one-year extension options available, each subject to the Lenders’ consent, increased the aggregate commitments under the 2025 Credit Facility from $2.5 billion to $3.5 billion with incremental capacity for additional commitments in an amount up to $1.0 billion, subject to the receipt of commitments thereto and certain customary conditions. The Credit Agreement also increased the sublimit available for the issuance of letters of credit from $500 million to $1.0 billion, and increased the sublimit available for swingline loans from $50 million to $100 million. As of December 31, 2025, we had approximately $3.5 billion available for borrowings under the 2025 Credit Facility.
The Credit Agreement contains restrictive covenants that, subject to exceptions customary to investment-grade credit facilities, limit Expand Energy and its subsidiaries’ ability to, among other things: (i) incur priority indebtedness, (ii) enter into mergers; (iii) make or declare dividends; (iv) incur liens; (v) sell all or substantially all of their assets; and (vi) engage in certain transactions with affiliates. The Credit Agreement requires our compliance with an indebtedness to capitalization ratio, which is the ratio of the Company’s total indebtedness to the sum of total indebtedness plus stockholders’ equity (the “Debt to Capitalization Ratio”), not to exceed 65%, tested at the end of each quarter. As of December 31, 2025, we were in compliance with the Debt to Capitalization Ratio.
Borrowings under the Credit Agreement may be alternate base rate loans or term SOFR loans, at our election. Interest is payable quarterly for alternate base rate loans and at the end of the applicable interest period for term SOFR loans. Term SOFR loans bear interest at term SOFR plus an applicable rate ranging from 112.5 to 200 basis points per annum, depending on the Company’s unsecured debt ratings. Alternate base rate loans bear interest at a rate per annum equal to the greatest of: (i) the prime rate; (ii) the federal funds effective rate plus 50 basis points; and (iii) the term SOFR rate for a one-month interest period plus 100 basis points, plus an applicable margin ranging from 12.5 to 100 basis points per annum, depending on the Company’s unsecured debt ratings. Expand Energy also pays a commitment fee on unused commitment amounts under the 2025 Credit Facility ranging from 12.5 to 32.5 basis points per annum, depending on the Company’s unsecured debt ratings.
The 2025 Credit Facility is subject to customary events of default, remedies, and cure periods for investment-grade credit facilities of this nature.
The Prior Credit Facility was terminated in connection with the entry into the 2025 Credit Facility.
Assumption of Southwestern’s Senior Notes and Southwestern Credit Facility Extinguishment.
On October 1, 2024, the Southwestern Merger was completed, and we became the successor issuer in respect to Southwestern’s (i) $389 million aggregate principal amount of 4.950% Senior Notes due 2025 (the “SWN 2025 Notes”), (ii) $304 million aggregate principal amount of 8.375% Senior Notes due 2028 (the “SWN 2028 Notes”), (iii) $700 million aggregate principal amount of 5.375% Senior Notes due 2029 (the “SWN 2029 Notes”), (iv) $1,200 million aggregate principal amount of 5.375% Senior Notes due 2030 (the “SWN 2030 Notes”) and (v) $1,150 million aggregate principal amount of 4.750% Senior Notes due 2032 (the “SWN 2032 Notes” and together with the SWN 2025 Notes, the SWN 2028 Notes, the SWN 2029 Notes and the SWN 2030 Notes, the “SWN Notes”). We assumed the obligations under (i) the SWN 2025 Notes pursuant to Supplemental Indenture No. 9 (“SWN 2025 Notes Supplemental Indenture No. 9”) to a base indenture dated January 23, 2015, by and among Southwestern and U.S. Bank National Association, as Trustee, (ii) the SWN 2028 Notes pursuant to Supplemental Indenture No. 9 (“SWN 2028 Notes Supplemental Indenture No. 9”) to a base indenture dated September 25, 2017, by and among Southwestern and U.S. Bank National Association, as Trustee, (iii) the SWN 2029 Notes pursuant to Supplemental Indenture No. 6 (“Supplemental Indenture No. 6”) to a base indenture dated August 30, 2021 (the “2021 Base Indenture”) by and among Southwestern and Regions Bank, as Trustee, (iv) the 2030 Notes pursuant to Supplemental Indenture No. 7 (“Supplemental Indenture No. 7”) to the 2021 Base Indenture and (v) the 2032 Notes pursuant to Supplemental Indenture No. 8 (“Supplemental Indenture No. 8” and, together with SWN 2025 Notes Supplemental Indenture No. 9, SWN 2028 Notes Supplemental Indenture No. 9, Supplemental Indenture No. 6 and Supplemental Indenture No. 7, the “SWN Supplemental Indentures”) to the 2021 Base Indenture. In addition, pursuant to each SWN Supplemental Indenture, existing subsidiaries of the Company that guarantee our notes provided guarantees of the SWN Notes. As a result of the investment grade ratings we received on October 1 and
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
October 2, 2024, and the satisfaction of certain other conditions, all guarantees previously provided in connection with the Company’s outstanding senior notes, including the SWN Notes, were released.
The SWN 2025 Notes matured on January 23, 2025 and bore interest at a rate of 4.950% per annum, with interest that was payable on January 23 and July 23 of each year. The SWN 2029 Notes mature on February 1, 2029 and bear interest at a rate of 5.375% per annum, with interest payable on February 1 and August 1 of each year. The SWN 2030 Notes mature on March 15, 2030 and bear interest at a rate of 5.375% per annum, with interest payable on March 15 and September 15 of each year. The SWN 2032 Notes mature on February 1, 2032 and bear interest at a rate of 4.750% per annum, with interest payable on February 1 and August 1 of each year.
On October 1, 2024, Southwestern’s existing credit facility was terminated, with all loan amounts and other obligations outstanding thereunder repaid in full and all commitments thereunder extinguished, for approximately $585 million, which included all outstanding borrowings, accrued interest and transaction fees.
Issuance of 5.70% Senior Notes
On December 2, 2024, we completed our underwritten public offering of $750 million aggregate principal amount of our 5.70% Senior Notes due 2035 (the “2035 Notes”). The 2035 Notes were issued pursuant to the Indenture (the “Base Indenture”), dated as of December 2, 2024, between the Company and Regions Bank (the “Trustee”), as trustee, as supplemented by the First Supplemental Indenture, dated as of December 2, 2024 (the “First Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), between the Company and the Trustee, setting forth specific terms applicable to the 2035 Notes.
The 2035 Notes are the Company’s senior unsecured obligations and rank equally in right to payment of the holders of the Company’s other current and future unsecured senior debt, including debt under the Company’s revolving credit facility and the Company’s existing senior notes, and senior in right of payment to any future subordinated debt that the Company may incur. The 2035 Notes are not guaranteed by any of the Company’s subsidiaries and are therefore structurally subordinated to any indebtedness incurred by any of the Company’s subsidiaries.
The 2035 Notes mature on January 15, 2035 and interest on the 2035 Notes is payable semi-annually, on January 15 and July 15 of each year to holders of record on the immediately preceding January 1 and July 1.
Outstanding Senior Notes. On October 28, 2024, the Company satisfied the “Investment Grade Date” conditions set forth under the Prior Credit Facility (the “Investment Grade Date Event”) and, as a result, entered into supplemental indentures pursuant to which each subsidiary guarantor party thereto was released of all of its obligations under its guarantee of the Company’s obligations under the indenture, dated as of February 5, 2021, among the Issuer, the guarantor party thereto and Deutsche Bank Trust Company Americas, as trustee, that issued the $500 million aggregate principal amount of 5.50% Senior Notes due 2026 (“the 2026 Notes”) and the $500 million aggregate principal amount of 5.875% Senior Notes due 2029 (the “2029 Notes”). Additionally, as a result of receiving such investment grade rating, pursuant to the indenture governing the 2026 Notes and the 2029 Notes, certain restrictive covenants under such indentures are no longer in effect upon the Company.
Interest on the 2026 Notes and 2029 Notes is payable semi-annually, on February 1 and August 1 of each year to holders of record on the immediately preceding January 15 and July 15.
The Company and certain of its subsidiaries previously agreed to guarantee such obligations under the indenture dated April 7, 2021 with Wilmington Trust, National Association, as Trustee (the “Vine Indenture”) under which the Company assumed the obligations under Vine’s $950 million aggregate principal amount of 6.75% Senior Notes due 2029 (the “Vine Notes”). Additionally, certain subsidiaries of Vine entered into a supplemental indenture to the Company’s existing indenture, dated February 5, 2021, with Deutsche Bank Trust Company Americas as trustee (the “CHK Indenture”), pursuant to which such subsidiaries of Vine have agreed to guarantee obligations under the CHK Indenture. On October 28, 2024, in connection with the Investment Grade Date Event, the Company entered into a supplemental indenture to the CHK Indenture pursuant to which each subsidiary guarantor party thereto was released of all its obligations under its guarantee of the Company’s obligations under the CHK Indenture.
Interest on the Vine Notes is payable semi-annually, on April 15 and October 15 of each year to holders of record on the immediately preceding April 1 and October 1.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
In connection with the completion of the Southwestern Merger, on October 1, 2024, the Company entered into (i) Supplemental Indenture No. 3 to the Indenture dated February 5, 2021, by and among Chesapeake Escrow LLC, as issuer, the guarantors signatory thereto and Deutsche Bank Trust Company, as Trustee governing the 2026 Notes and 2029 Notes and (ii) Supplemental Indenture No. 5 to the Indenture dated April 7, 2021, by and among Vine Energy Holdings LLC, the guarantors signatory thereto and Wilmington Trust, National Association, as Trustee governing the Company’s existing 6.75% Senior Notes due 2029 (the “Vine Notes” and together with the 2026 Notes and the 2029 Notes, the “Existing Notes”), in each case to add as guarantors of the Existing Notes, the subsidiaries of Southwestern that guarantee SWN Notes that are described above. As discussed above, on October 28, 2024, each Southwestern subsidiary guarantor was released of all its obligations under its guarantee of the Company’s obligations under each of the indentures governing the Existing Notes in connection with the Investment Grade Date Event.
The 2025 Credit Facility, the SWN Notes and the Existing Notes are the Company’s senior unsecured obligations. Accordingly, they rank (i) equal in right of payment to all existing and future senior unsecured indebtedness, (ii) effectively subordinate in right of payment to all existing and future secured indebtedness, to the extent of the value of the collateral securing such indebtedness, (iii) structurally subordinate in right of payment to all existing and future indebtedness and other liabilities of any future subsidiaries that do not guarantee the 2025 Credit Facility, the SWN Notes and/or Existing Notes and any entity that is not a subsidiary that does not guarantee the 2025 Credit Facility, the SWN Notes and/or Existing Notes and (iv) senior in right of payment to all future subordinated indebtedness.
The Company had no secured debt as of December 31, 2025.
Tender Offer and Senior Notes Repayment
During the fourth quarter of 2024, we announced an offer to purchase for cash, any and all of our outstanding 2026 Notes, the “Tender Offer”. Upon expiration of the Tender Offer, approximately 91%, or $453 million, of the 2026 Notes were validly tendered and not validly withdrawn. In a separate transaction during the fourth quarter of 2024, we redeemed all of the $304 million aggregate principal of the SWN 2028 Notes for approximately $312 million, which included an $8 million premium to call the notes. We utilized the proceeds from the 2035 Notes to fund the Tender Offer for the 2026 Notes and the early redemption of the SWN 2028 Notes.
In January 2025, the $389 million aggregate principal of SWN 2025 Notes was repaid and terminated with cash on hand and borrowings on the Prior Credit Facility. The borrowings on the Prior Credit Facility were subsequently repaid during the year ended December 31, 2025. In March 2025, we redeemed the remaining $47 million aggregate principal of the 5.50% Senior Notes due 2026 with cash on hand. During the year ended December 31, 2025, we redeemed approximately $103 million of our 6.750% Senior Notes due 2029, approximately $60 million of our 5.875% Senior Notes due 2029 and approximately $62 million of our 5.375% Senior Notes due 2029 through open market repurchases using cash on hand.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
| 5. | Contingencies and Commitments |
Contingencies
Business Operations and Litigation and Regulatory Proceedings
We are involved in, and expect to continue to be involved in, various lawsuits and disputes incidental to our business operations, including commercial disputes, personal injury claims, royalty claims, property damage claims and contract actions. We are also party to the consolidated Chapter 11 Cases pending for the Debtors in the Bankruptcy Court.
Our total accrued liability in respect of litigation and regulatory proceedings is determined on a case-by-case basis and represents an estimate of probable losses after considering, among other factors, the progress of each case or proceeding, our experience and the experience of others in similar cases or proceedings, and the opinions and views of legal counsel. Significant judgment is required in making these estimates. While it is not possible at this time to estimate the amount of any additional loss, or range of loss that is reasonably possible, based on the nature of the claims, management believes that current litigation, claims and proceedings, individually or in aggregate and after taking into account insurance, are not likely to have a material adverse impact on our financial position, results of operations or cash flows. Many of these matters are in early stages and are all subject to inherent uncertainties. Therefore, management’s view may change in the future. If an unfavorable final outcome were to occur, there exists the possibility of our final liabilities being materially different.
The majority of Chesapeake’s pre-petition legal proceedings were settled during the Chapter 11 Cases or will be resolved in connection with the claims reconciliation process before the Bankruptcy Court, together with actions seeking to collect pre-petition indebtedness or to exercise control over the property of Chesapeake’s bankruptcy estates. Any allowed claim related to such litigation will be treated in accordance with the Plan. The Plan in the Chapter 11 Cases, which became effective on February 9, 2021, provided for the treatment of claims against Chesapeake’s bankruptcy estates, including pre-petition liabilities that had not been satisfied or addressed during the Chapter 11 Cases. Many of these proceedings were in early stages as of the Petition Date, and many of them sought damages and penalties, the amount of which is indeterminate. Any legal proceeding pending against Southwestern and assumed by us in connection with the Southwestern Merger is not subject to discharge or resolution as part of the Chapter 11 Cases.
Environmental Contingencies
The nature of the natural gas and oil business carries with it certain environmental risks for us and our subsidiaries. We have implemented various policies, programs, procedures, training and audits to reduce and mitigate such environmental risks. We conduct periodic reviews, on a company-wide basis, to assess changes in our environmental risk profile. Environmental reserves are established for environmental liabilities for which economic losses are probable and reasonably estimable. We manage our exposure to environmental liabilities in acquisitions by using an evaluation process that seeks to identify pre-existing contamination or compliance concerns and address the potential liability. Depending on the extent of an identified environmental concern, we may, among other things, exclude a property from the transaction, require the seller to remediate the property to our satisfaction in an acquisition or agree to assume liability for the remediation of the property.
Commitments
Gathering, Processing and Transportation Agreements
We have contractual commitments with midstream service companies and pipeline carriers for future gathering, processing and transportation of natural gas, oil and NGL to move certain of our production to market. Working interest owners and royalty interest owners, where appropriate, will be responsible for their proportionate share of these costs. Generally, commitments related to gathering, processing and transportation agreements are not recorded as obligations in the accompanying consolidated balance sheets. See Note 2 for further discussion of commitments recorded on our consolidated balance sheets.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The aggregate undiscounted commitments under our gathering, processing and transportation agreements, excluding any reimbursement from working interest and royalty interest owners, credits for third-party volumes or future costs under cost-of-service agreements, are presented below:
| December 31, 2025 | ||||||||
| 2026 | $ | 1,428 | ||||||
| 2027 | 1,337 | |||||||
| 2028 | 1,221 | |||||||
| 2029 | 1,019 | |||||||
| 2030 | 884 | |||||||
| Thereafter | 3,683 | |||||||
| Total | $ | 9,572 |
In addition, we have long-term agreements for certain natural gas gathering and related services within specified acreage dedication areas in exchange for cost-of-service based fees redetermined annually, or tiered fees based on volumes delivered relative to scheduled volumes. Future gathering fees may vary with the applicable agreement.
Other Commitments
As part of our normal course of business, we enter into various agreements providing, or otherwise arranging for, financial or performance assurances to third parties on behalf of our wholly owned guarantor subsidiaries. These agreements may include future payment obligations or commitments regarding operational performance that effectively guarantee our subsidiaries’ future performance.
In connection with acquisitions and divestitures, our purchase and sale agreements generally provide indemnification to the counterparty for liabilities incurred as a result of a breach of a representation or warranty by the indemnifying party and/or other specified matters. These indemnifications generally have a discrete term and are intended to protect the parties against risks that are difficult to predict or cannot be quantified at the time of entering into or consummating a particular transaction. For divestitures of natural gas and oil properties, our purchase and sale agreements may require the return of a portion of the proceeds we receive as a result of uncured title or environmental defects.
While executing our strategic priorities, we have incurred certain cash charges, including contract termination charges, financing extinguishment costs and charges for unused natural gas transportation and gathering capacity.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
| 6. | Other Liabilities |
Other current liabilities as of December 31, 2025 and 2024 are detailed below:
| December 31, 2025 | December 31, 2024 | |||||||||||||
| Revenues and royalties due to others | $ | 972 | $ | 734 | ||||||||||
| Accrued drilling and production costs | 350 | 296 | ||||||||||||
| Accrued compensation and benefits | 107 | 124 | ||||||||||||
| Taxes payable | 157 | 142 | ||||||||||||
| Operating leases | 51 | 71 | ||||||||||||
| Joint interest prepayments received | 11 | 13 | ||||||||||||
| Contract liabilities | 253 | 284 | ||||||||||||
| Other | 144 | 122 | ||||||||||||
| Total other current liabilities | $ | 2,045 | $ | 1,786 |
| 7. | Leases |
We are a lessee under various agreements for drilling rigs, pressure pumping equipment, vehicles, office space, compressors and other equipment under non-cancelable operating leases expiring through 2036. Certain of our lease agreements include options to renew the lease, terminate the lease early or purchase the underlying asset at the end of the lease. We determine the lease term at the lease commencement date as the non-cancelable period of the lease, including options to extend or terminate the lease when we are reasonably certain to exercise the option. The Company’s vehicles are the only leases with renewal options that we are reasonably certain to exercise. The renewals are reflected in the right of use (“ROU”) asset and lease liability balances. Regarding our drilling rigs and pressure pumping equipment, our policy is to treat both lease and non-lease components as a single lease component.
Our operating ROU assets are included in other long-term assets while operating lease liabilities are included in other current and other long-term liabilities on the consolidated balance sheets. Our total lease costs are recognized within proved natural gas and oil properties, production expenses and general and administrative expenses within our consolidated financial statements.
The following table presents our ROU assets and lease liabilities as of December 31, 2025 and 2024. As of December 31, 2025 and 2024, we did not have any finance leases.
| Operating Leases | ||||||||||||||
| December 31, 2025 | December 31, 2024 | |||||||||||||
| ROU assets | $ | 99 | $ | 145 | ||||||||||
| Lease liabilities: | ||||||||||||||
| Current lease liabilities | $ | 51 | $ | 71 | ||||||||||
| Long-term lease liabilities | 48 | 74 | ||||||||||||
| Total lease liabilities, net | $ | 99 | $ | 145 |
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Additional information for the Company’s operating leases is presented below:
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Lease cost: | ||||||||||||||||||||
| Operating lease cost | $ | 91 | $ | 88 | $ | 107 | ||||||||||||||
| Short-term lease cost | 45 | 62 | 40 | |||||||||||||||||
| Total lease cost | $ | 136 | $ | 150 | $ | 147 | ||||||||||||||
| Other information: | ||||||||||||||||||||
| Operating cash outflows from operating leases | $ | 32 | $ | 13 | $ | 10 | ||||||||||||||
| Investing cash outflows from operating leases | $ | 104 | $ | 137 | $ | 137 | ||||||||||||||
| December 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||
| Weighted average remaining lease term - operating leases | 2.49 years | 3.03 years | ||||||||||||||||||||||||
| Weighted average discount rate - operating leases | 5.77 | % | 5.99 | % |
Maturity analysis of operating lease liabilities is presented below:
| December 31, 2025 | ||||||||
| 2026 | $ | 51 | ||||||
| 2027 | 34 | |||||||
| 2028 | 15 | |||||||
| 2029 | 6 | |||||||
| 2030 | — | |||||||
| Thereafter | 1 | |||||||
| Total lease payments | 107 | |||||||
| Less imputed interest | (8) | |||||||
| Present value of lease liabilities | 99 | |||||||
| Less current maturities | (51) | |||||||
| Present value of lease liabilities, less current maturities | $ | 48 |
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
| 8. | Revenue |
The following tables show revenue disaggregated by operating area and product type, for the periods presented:
| Year Ended December 31, 2025 | ||||||||||||||||||||||||||
| Natural Gas | Oil | NGL | Total | |||||||||||||||||||||||
| Haynesville | $ | 3,477 | $ | — | $ | — | $ | 3,477 | ||||||||||||||||||
| Northeast Appalachia | 2,860 | — | — | 2,860 | ||||||||||||||||||||||
| Southwest Appalachia | 1,096 | 319 | 724 | 2,139 | ||||||||||||||||||||||
| Natural gas, oil and NGL revenue | $ | 7,433 | $ | 319 | $ | 724 | $ | 8,476 | ||||||||||||||||||
| Marketing revenue | $ | 2,889 | $ | 132 | $ | 142 | $ | 3,163 |
| Year Ended December 31, 2024 | ||||||||||||||||||||||||||
| Natural Gas | Oil | NGL | Total | |||||||||||||||||||||||
| Haynesville | $ | 1,205 | $ | — | $ | — | $ | 1,205 | ||||||||||||||||||
| Northeast Appalachia | 1,242 | — | — | 1,242 | ||||||||||||||||||||||
| Southwest Appalachia | 239 | 69 | 214 | 522 | ||||||||||||||||||||||
| Natural gas, oil and NGL revenue | $ | 2,686 | $ | 69 | $ | 214 | $ | 2,969 | ||||||||||||||||||
| Marketing revenue | $ | 1,095 | $ | 116 | $ | 79 | $ | 1,290 |
| Year Ended December 31, 2023 | ||||||||||||||||||||||||||
| Natural Gas | Oil | NGL | Total | |||||||||||||||||||||||
| Haynesville | $ | 1,300 | $ | — | $ | — | $ | 1,300 | ||||||||||||||||||
| Northeast Appalachia | 1,483 | — | — | 1,483 | ||||||||||||||||||||||
| Eagle Ford | 70 | 596 | 98 | 764 | ||||||||||||||||||||||
| Natural gas, oil and NGL revenue | $ | 2,853 | $ | 596 | $ | 98 | $ | 3,547 | ||||||||||||||||||
| Marketing revenue | $ | 989 | $ | 1,332 | $ | 179 | $ | 2,500 |
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Major Customers
For the year ended December 31, 2025, we had sales to one purchaser that accounted for 11% of our total revenues (before the effects of hedging). For the year ended December 31, 2024, we had no purchaser that accounted for 10% or greater of our total revenues (before the effects of hedging). For the year ended December 31, 2023, we had sales to two purchasers that accounted for approximately 17% and 10% of total revenues (before the effects of hedging). No other purchasers accounted for more than 10% of our total revenues during the years ended December 31, 2025 or 2023.
Accounts Receivable
Accounts receivable as of December 31, 2025 and 2024 are detailed below:
| December 31, 2025 | December 31, 2024 | |||||||||||||
| Natural gas, oil and NGL sales | $ | 1,363 | $ | 1,028 | ||||||||||
| Joint interest | 232 | 191 | ||||||||||||
| Other | 18 | 18 | ||||||||||||
| Allowance for doubtful accounts | (14) | (11) | ||||||||||||
| Total accounts receivable, net | $ | 1,599 | $ | 1,226 |
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
| 9. | Income Taxes |
The components of the income tax expense (benefit) for each of the periods presented below are as follows:
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Current Tax Expense (Benefit) | ||||||||||||||||||||
| US Federal | $ | 8 | $ | (1) | $ | 264 | ||||||||||||||
| US State and Local | 7 | (3) | 6 | |||||||||||||||||
| Total Current Tax Expense (Benefit) | 15 | (4) | 270 | |||||||||||||||||
| Deferred Tax Expense (Benefit) | ||||||||||||||||||||
| US Federal | 410 | (178) | 381 | |||||||||||||||||
| US State and Local | 38 | 55 | 47 | |||||||||||||||||
| Total Deferred Tax Expense (Benefit) | 448 | (123) | 428 | |||||||||||||||||
| Total Income Tax Expense (Benefit) | ||||||||||||||||||||
| US Federal | 418 | (179) | 645 | |||||||||||||||||
| US State and Local | 45 | 52 | 53 | |||||||||||||||||
| Total Income Tax Expense (Benefit) | $ | 463 | $ | (127) | $ | 698 |
The income tax expense (benefit) reported in our consolidated statement of operations is different from the federal income tax expense (benefit) computed using the federal statutory rate for the following reasons:
| Years Ended December 31, | |||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||
| U.S. Federal Statutory Tax Rate | $ | 479 | 21.0 | % | $ | (177) | 21.0 | % | $ | 655 | 21.0 | % | |||||||||||||||||
| State and Local Income Taxes, Net of Federal Income Tax Effect**(a)** | 42 | 1.8 | % | 29 | (3.4) | % | 51 | 1.6 | % | ||||||||||||||||||||
| Tax credits | |||||||||||||||||||||||||||||
| Research and development tax credits | (46) | (2.0) | % | (32) | 3.8 | % | (10) | (0.3) | % | ||||||||||||||||||||
| Changes in Valuation Allowances | 11 | 0.5 | % | 9 | (1.1) | % | (28) | (0.9) | % | ||||||||||||||||||||
| Nontaxable or nondeductible items | |||||||||||||||||||||||||||||
| Merger Related Costs | (21) | (0.9) | % | 33 | (3.9) | % | — | — | % | ||||||||||||||||||||
| Other | 3 | 0.1 | % | 1 | (0.1) | % | 3 | 0.1 | % | ||||||||||||||||||||
| Changes in Unrecognized Tax Benefits | — | — | % | — | — | % | 6 | 0.2 | % | ||||||||||||||||||||
| Other adjustments | |||||||||||||||||||||||||||||
| Return to provision | (35) | (1.5) | % | — | — | % | (16) | (0.5) | % | ||||||||||||||||||||
| Capital loss expirations | 30 | 1.3 | % | 5 | (0.6) | % | 26 | 0.8 | % | ||||||||||||||||||||
| Other | — | — | % | 5 | (0.6) | % | 11 | 0.4 | % | ||||||||||||||||||||
| Effective Tax Rate | $ | 463 | 20.3 | % | $ | (127) | 15.1 | % | $ | 698 | 22.4 | % |
(a)State taxes in Louisiana, Pennsylvania and West Virginia made up the majority (greater than 50 percent) of the tax effect in this category.
In 2025, the Company’s overall effective tax rate increased compared to 2024 due to the prior year’s deferred remeasurement due to Louisiana law change and also the impact of the merger costs. Due to the prior year pre-tax loss, these items caused the effective tax rate to be lower than the statutory national rate. The Company’s effective tax rate in 2024 decreased from 2023 due to the aforementioned remeasurement due to Louisiana’s law change. The return to provision adjustment in 2025 includes the impact of tax basis and attribute true ups from filing the final Southwestern tax returns during the year.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Deferred income taxes are provided to reflect temporary differences in the tax basis of assets and liabilities and their reported amounts in the financial statements. The tax-effected temporary differences, net operating loss (“NOL”) carryforwards and excess business interest expense carryforwards that comprise our deferred income taxes are as follows:
| December 31, 2025 | December 31, 2024 | |||||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Property, plant and equipment | $ | (2,250) | $ | (1,730) | ||||||||||
| Derivative instruments | (72) | — | ||||||||||||
| Investments | (82) | — | ||||||||||||
| Contracts | (71) | — | ||||||||||||
| Right of use lease asset | (24) | (36) | ||||||||||||
| Other | (5) | (3) | ||||||||||||
| Deferred tax liabilities | (2,504) | (1,769) | ||||||||||||
| Deferred tax assets: | ||||||||||||||
| Net operating loss carryforwards | 1,613 | 1,258 | ||||||||||||
| Carrying value of debt | 1 | 4 | ||||||||||||
| Excess business interest expense carryforward | 654 | 777 | ||||||||||||
| Capital loss carryforwards | 70 | 103 | ||||||||||||
| Tax credit carryforwards | 107 | 53 | ||||||||||||
| Contract liabilities | 286 | 261 | ||||||||||||
| Asset retirement obligations | 169 | 123 | ||||||||||||
| Future lease payments | 25 | 36 | ||||||||||||
| Accrued liabilities | 22 | 39 | ||||||||||||
| Derivative instruments | — | 13 | ||||||||||||
| Other | 32 | 24 | ||||||||||||
| Deferred tax assets | 2,979 | 2,691 | ||||||||||||
| Valuation allowance | (344) | (343) | ||||||||||||
| Deferred tax assets after valuation allowance | 2,635 | 2,348 | ||||||||||||
| Net deferred tax asset | $ | 131 | $ | 579 | ||||||||||
| Reflected in the accompanying balance sheets as: | ||||||||||||||
| Deferred income tax assets | $ | 168 | $ | 589 | ||||||||||
| Other long-term liabilities | (37) | (10) | ||||||||||||
| Total | $ | 131 | $ | 579 |
As of December 31, 2025 and 2024, we had deferred tax assets of $2.979 billion and $2.691 billion, respectively, upon which we had a valuation allowance of $344 million and $343 million, respectively.
We maintain a partial valuation allowance of $344 million against a portion of our federal and state deferred tax assets such as NOLs, credit carryovers, and capital losses, which may expire before we are able to utilize them due to the application of the limitations under Section 382 and the ordering in which such attributes may be applied.
Our ability to utilize NOL carryforwards, disallowed business interest carryforwards, tax credits and possibly other tax attributes to reduce future taxable income and federal income tax is subject to various limitations under Section 382 of the Code. The utilization of such attributes may be subject to an annual limitation under Section 382 of the Code should transactions involving our equity result in a cumulative shift of more than 50% in the beneficial ownership of our stock during any three-year testing period (an “Ownership Change”).
The Company experienced an Ownership Change in 2021 and as a result of the Southwestern Merger on October 1, 2024. As a result, certain limitations apply to our NOL carryforwards, disallowed business interest
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
carryforwards and general business credits. Some states impose similar limitations on tax attribute utilization upon experiencing an Ownership Change. Accordingly, our deferred tax asset position is reflective of such limitations.
On October 1, 2024, we completed the Southwestern Merger. For federal income tax purposes, the transaction qualified as a tax-free merger under Section 368 of the Code and, as a result, we acquired carryover tax basis in Southwestern’s assets and liabilities. We recorded a $479 million net deferred tax liability determined through business combination accounting. Additionally, we acquired NOL and interest expense carryforwards which were previously subject to base annual Section 382 limitations of $2 million and $48 million. The acquired NOL and interest expense carryforwards that were not previously subject to a base annual Section 382 limitation are now subject to a base annual Section 382 limitation of approximately $269 million as a result of the merger. The base annual limitation is estimated to be increased over the first five years for recognized built-in gains.
As of December 31, 2025, and after taking into account each of the foregoing matters, the federal NOLs are as follows:
| Net operating losses, by year of expiration: | ||||||||
| 2031 | $ | 9 | ||||||
| 2032 | 3 | |||||||
| 2033 | 2 | |||||||
| 2034 | 2 | |||||||
| 2035 | 79 | |||||||
| 2036 | 642 | |||||||
| 2037 | 726 | |||||||
| Indefinitely lived | 5,302 | |||||||
| Total federal net operating losses | $ | 6,765 |
We had state NOL carryforwards of approximately $4.818 billion. Several states adopt the federal NOL carryforward period such that our more recent state NOLs do not expire. The state NOL carryforwards are subject to apportioned amounts of the federal Section 382 limitations.
As of December 31, 2025 and 2024, we have an income tax receivable of $83 million and $32 million included in other current assets within our consolidated balance sheets, respectively.
On July 4, 2025, the current Presidential Administration signed into law the One Big Beautiful Bill Act (the “OBBBA”). This bill restores 100% bonus depreciation for property acquired and placed into service after January 19, 2025, restores the immediate expensing of research expenditures, and provides for parity between the treatment of intangible drilling costs and depreciation for purposes of the CAMT. The enactment of the OBBBA did not impact beginning of the year deferred tax balances, as there was no change in the applicable tax rate. However, the OBBBA and its provisions contributed to a reduction in the Company’s expected current tax expense and is expected to have a material reduction to tax expense in future years.
Accounting guidance for recognizing and measuring uncertain tax positions requires a more likely than not threshold condition be met on a tax position, based solely on the technical merits of being sustained, before any benefit of the tax position can be recognized in the financial statements. Guidance is also provided regarding recognition, classification and disclosure of uncertain tax positions. If recognized, $31 million of the uncertain tax positions identified would have an effect on the effective tax rate. As of December 31, 2025, we had $2 million accrued for interest related to these uncertain tax positions. As of December 31, 2024, we had $1 million accrued for interest related to these uncertain tax positions. We recognize interest related to uncertain tax positions as a component of interest expense. Penalties, if any, related to uncertain tax positions would be recorded in other expenses.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
A reconciliation of the beginning and ending balances of unrecognized tax benefits is as follows:
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Balance at January 1 | $ | 80 | $ | 68 | $ | 69 | ||||||||||||||
| Additions based on tax positions related to the current year | 7 | 3 | 3 | |||||||||||||||||
| Additions to tax positions of prior years | 1 | 1 | 3 | |||||||||||||||||
| Additions to tax positions related to acquisitions | — | 9 | — | |||||||||||||||||
| Settlements | — | — | (5) | |||||||||||||||||
| Reductions to tax positions of prior years | (24) | (1) | (2) | |||||||||||||||||
| Balance at December 31 | $ | 64 | $ | 80 | $ | 68 |
Our federal and state income tax returns are subject to examination by federal and state tax authorities. Our tax years 2022 through 2025 remain open for all purposes of examination by the IRS as well as the Southwestern 2022 through 2023 returns, and the Southwestern short period return for January 1, 2024 through October 1, 2024. However, certain earlier tax years remain open for adjustment to the extent of their NOL carryforwards available for future utilization.
In addition, tax years 2022 through 2025 as well as certain earlier years remain open for examination by state tax authorities. We do not anticipate that the outcome of any federal or state audit will have a significant impact on our financial position or results of operations.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
| 10. | Equity |
Common Stock
On October 1, 2024, we issued 95,700,325 shares of our common stock to Southwestern’s shareholders in connection with the closing of the Southwestern Merger. See further discussion in Note 2.
During the years ended December 31, 2025, 2024 and 2023, 295,255, 468,723 and 12,089 reserved shares, respectively, were issued to resolve allowed General Unsecured Claims.
Dividends
In May 2021, we initiated an annual base dividend on our shares of common stock, expected to be paid quarterly. In March 2022, we adopted a variable return program that resulted in the payment of an additional variable dividend equal to the sum of Adjusted Free Cash Flow from the prior quarter less the base quarterly dividend, multiplied by 50%. In 2025, we prioritized paying a base dividend per share and provided for annual net debt reduction prior to additional shareholder returns such as additional dividend payments or share repurchases. The following table summarizes our dividend payments during the years ended December 31, 2025, 2024 and 2023:
| Base | Variable | Rate Per Share | Total | |||||||||||||||||||||||
| 2025: | ||||||||||||||||||||||||||
| First Quarter | $ | 0.575 | $ | — | $ | 0.575 | $ | 138 | ||||||||||||||||||
| Second Quarter | $ | 0.575 | $ | — | $ | 0.575 | $ | 138 | ||||||||||||||||||
| Third Quarter | $ | 0.575 | $ | 0.89 | $ | 1.465 | $ | 351 | ||||||||||||||||||
| Fourth Quarter | $ | 0.575 | $ | — | $ | 0.575 | $ | 138 | ||||||||||||||||||
| 2024: | ||||||||||||||||||||||||||
| First Quarter | $ | 0.575 | $ | — | $ | 0.575 | $ | 77 | ||||||||||||||||||
| Second Quarter | $ | 0.575 | $ | 0.14 | $ | 0.715 | $ | 95 | ||||||||||||||||||
| Third Quarter | $ | 0.575 | $ | — | $ | 0.575 | $ | 78 | ||||||||||||||||||
| Fourth Quarter | $ | 0.575 | $ | — | $ | 0.575 | $ | 134 | ||||||||||||||||||
| 2023: | ||||||||||||||||||||||||||
| First Quarter | $ | 0.55 | $ | 0.74 | $ | 1.29 | $ | 175 | ||||||||||||||||||
| Second Quarter | $ | 0.55 | $ | 0.63 | $ | 1.18 | $ | 160 | ||||||||||||||||||
| Third Quarter | $ | 0.575 | $ | — | $ | 0.575 | $ | 77 | ||||||||||||||||||
| Fourth Quarter | $ | 0.575 | $ | — | $ | 0.575 | $ | 75 |
On February 17, 2026, we declared a base quarterly dividend payable of $0.575 per share which will be paid on March 26, 2026 to stockholders of record at the close of business on March 5, 2026.
Share Repurchase Programs
As of December 2, 2021, the Company was authorized to purchase up to $1.0 billion of the Company’s common stock and/or warrants under a share repurchase program, and in March 2022, we commenced our share repurchase program. In June 2022, our Board of Directors authorized an expansion of the share repurchase program by $1.0 billion, bringing the total authorized share repurchase amount to $2.0 billion for common stock and/or warrants. Under the $2.0 billion share repurchase program, we repurchased approximately 4.4 million shares for an aggregate price of approximately $357 million during the year ended December 31, 2023. The $2.0 billion share repurchase program expired on December 31, 2023.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
On October 22, 2024, our Board of Directors authorized repurchases of up to $1.0 billion, in aggregate, of the Company’s common stock and/or warrants under a new share repurchase program. Under this $1.0 billion share repurchase program, we repurchased 0.9 million shares for an aggregate price of $100 million during the year ended December 31, 2025. We did not repurchase any shares during the year ended December 31, 2024.
The repurchased shares of common stock were retired and recorded as a reduction to common stock and retained earnings. All share repurchases made after January 1, 2023 are subject to a 1% excise tax on share repurchases, as enacted under the Inflation Reduction Act of 2022. We are able to net this 1% excise tax on share repurchases against certain issuance of shares of our common stock. To date, the impact of this 1% excise tax has been immaterial.
Warrants
| Class A Warrants | Class B Warrants | Class C Warrants**(a)** | |||||||||||||||
| Outstanding as of December 31, 2022 | 4,495,004 | 4,404,564 | 4,006,229 | ||||||||||||||
| Converted into common stock(b) | (247,389) | (1,500) | (5,581) | ||||||||||||||
| Issued for General Unsecured Claims | — | — | 22,835 | ||||||||||||||
| Outstanding as of December 31, 2023 | 4,247,615 | 4,403,064 | 4,023,483 | ||||||||||||||
| Converted into common stock(b) | (2,993,136) | (1,329,870) | (524,242) | ||||||||||||||
| Issued for General Unsecured Claims | — | — | 884,393 | ||||||||||||||
| Outstanding as of December 31, 2024 | 1,254,479 | 3,073,194 | 4,383,634 | ||||||||||||||
| Converted into common stock(b) | (1,238,774) | (3,024,393) | (3,696,720) | ||||||||||||||
| Issued for General Unsecured Claims | — | — | 557,094 | ||||||||||||||
| Outstanding as of December 31, 2025 | 15,705 | 48,801 | 1,244,008 |
(a)As of December 31, 2025, we had 25,015 of reserved Class C Warrants.
(b)During the years ended December 31, 2025, 2024 and 2023, we issued 7,497,509, 4,083,103 and 221,952 common shares, respectively, as a result of Warrant exercises.
Our Class A, Class B and Class C Warrants were initially exercisable for one share of common stock per Warrant at initial exercise prices of $27.63, $32.13 and $36.18 per share, respectively, subject to adjustments pursuant to the terms of the Warrants. The Warrants were exercisable until February 9, 2026. The Warrants contained customary anti-dilution adjustments in the event of any stock split, reverse stock split, reclassification, stock dividend or other distributions. The exercise prices of the Warrants were adjusted to prevent the dilution of rights for the effects of the quarterly dividend distribution on December 4, 2025, and the adjusted exercise prices are $21.89, $25.45, and $28.66 per share for the Class A, Class B and Class C Warrants, respectively. Additionally, we have recalculated the number of shares of common stock issuable upon the exercise of each of the Class A, Class B and Class C Warrants, respectively, and as a result, 1.22 shares are issuable upon the exercise of a Class A, Class B or Class C Warrant.
At February 9, 2026, all of the outstanding Warrants had been exercised or expired. As a result of these Warrant exercises, we issued 1,122,179 common shares and no longer have any outstanding Warrants.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
| 11. | Share-Based Compensation |
Our long-term incentive plan, as amended and adopted by our Board of Directors (the “LTIP”), provides for the grant of restricted stock units (“RSUs”), restricted stock awards, stock options, stock appreciation rights, performance awards and other stock awards to the Company’s employees and non-employee directors and has a share reserve equal to 6,800,000 shares of common stock.
Restricted Stock Units. During the years ended December 31, 2025, 2024 and 2023, we granted RSUs to employees and non-employee directors under the LTIP, which will vest over a three-year to five-year period and one-year period, respectively. The fair value of RSUs is based on the closing sales price of our common stock on the date of grant, and compensation expense is recognized ratably over the requisite service period. A summary of the changes in unvested RSUs is presented below:
| Unvested Restricted Stock Units | Weighted Average Grant Date Fair Value Per Share | |||||||||||||
| (in thousands) | ||||||||||||||
| Unvested as of December 31, 2022 | 957 | $ | 68.91 | |||||||||||
| Granted | 440 | $ | 72.25 | |||||||||||
| Vested | (329) | $ | 61.66 | |||||||||||
| Forfeited | (128) | $ | 68.42 | |||||||||||
| Unvested as of December 31, 2023 | 940 | $ | 73.08 | |||||||||||
| Granted (a) | 962 | $ | 83.09 | |||||||||||
| Vested (a) | (925) | $ | 74.18 | |||||||||||
| Forfeited | (20) | $ | 77.71 | |||||||||||
| Unvested as of December 31, 2024 | 957 | $ | 81.99 | |||||||||||
| Granted | 557 | $ | 103.38 | |||||||||||
| Vested | (520) | $ | 80.52 | |||||||||||
| Forfeited | (37) | $ | 98.24 | |||||||||||
| Unvested as of December 31, 2025 | 957 | $ | 94.61 |
(a)During the year ended December 31, 2024, approximately 5.2 million Southwestern RSUs were converted to 478 thousand Company RSUs, of which approximately 384 thousand RSUs were accelerated. We recognized the accelerated share-based compensation expense related to these awards in other operating expense, net on our consolidated statements of operations. Additionally, approximately 105 thousand RSUs were accelerated related to one-time termination benefits for certain employees.
The aggregate intrinsic value of RSUs that vested during the years ended December 31, 2025, 2024 and 2023 was approximately $58 million, $77 million and $25 million, respectively, based on the stock price at the time of vesting.
As of December 31, 2025, there was approximately $58 million of total unrecognized compensation expense related to unvested RSUs. The expense is expected to be recognized over a weighted average period of approximately 1.93 years.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Performance Share Units. During the years ended December 31, 2025, 2024 and 2023, we granted performance share units (“PSUs”) to senior management and certain employees under the LTIP, which will generally vest over a three-year period and will be settled in shares. The performance criteria include total shareholder return (“TSR”) and relative TSR (“rTSR”) and could result in a total payout between 0% - 200% of the target units. The fair value of the PSUs was measured on the grant date using a Monte Carlo simulation, and compensation expense is recognized ratably over the requisite service period because these awards depend on a combination of service and market criteria.
The following table presents the assumptions used in the valuation of the PSUs granted during the years ended December 31, 2025, 2024 and 2023.
| Assumption - TSR, rTSR | 2025 PSU Awards | 2024 PSU Awards | 2023 PSU Awards | |||||||||||||||||
| Risk-free interest rate | 4.00 | % | 4.55 | % | 3.85 | % | ||||||||||||||
| Volatility | 33.40 | % | 39.36 | % | 64.4 | % |
A summary of the changes in unvested PSUs is presented below:
| Unvested Performance Share Units | Weighted Average Grant Date Fair Value Per Share | |||||||||||||
| (in thousands) | ||||||||||||||
| Unvested as of December 31, 2022 | 276 | $ | 88.28 | |||||||||||
| Granted | 131 | $ | 78.78 | |||||||||||
| Vested | — | $ | — | |||||||||||
| Forfeited | (13) | $ | 68.77 | |||||||||||
| Unvested as of December 31, 2023 | 394 | $ | 85.78 | |||||||||||
| Granted | 133 | $ | 95.33 | |||||||||||
| Vested | (151) | $ | 71.29 | |||||||||||
| Forfeited | — | $ | — | |||||||||||
| Unvested as of December 31, 2024 | 376 | $ | 94.67 | |||||||||||
| Granted | 250 | $ | 125.64 | |||||||||||
| Vested | (132) | $ | 108.56 | |||||||||||
| Forfeited | (30) | $ | 113.86 | |||||||||||
| Unvested as of December 31, 2025 | 464 | $ | 106.14 |
The aggregate intrinsic value of PSUs that vested during the years ended December 31, 2025 and 2024 was approximately $22 million and $19 million, respectively, based on the stock price at the time of vesting.
As of December 31, 2025, there was approximately $26 million of total unrecognized compensation expense related to unvested PSUs. The expense is expected to be recognized over a weighted average period of approximately 2.03 years.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
RSU and PSU Compensation.
We recognized the following compensation costs, net of actual forfeitures, related to RSUs and PSUs for the periods presented:
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| General and administrative expenses | $ | 37 | $ | 33 | $ | 29 | ||||||||||||||
| Natural gas and oil properties | 8 | 7 | 6 | |||||||||||||||||
| Production expense | 6 | 4 | 4 | |||||||||||||||||
| Separation and other termination costs | 2 | 9 | — | |||||||||||||||||
| Marketing expense | 3 | — | — | |||||||||||||||||
| Other operating expense, net | 4 | 28 | — | |||||||||||||||||
| Total RSU and PSU compensation | $ | 60 | $ | 81 | $ | 39 | ||||||||||||||
| Related income tax benefit | $ | 13 | $ | 13 | $ | 7 |
| 12. | Employee Benefit Plans |
Our qualified 401(k) profit sharing plan (“401(k) Plan”) is the Expand Energy Corporation 401(k) Plan, which is open to employees of Expand Energy and all our subsidiaries. Eligible employees may elect to defer compensation through voluntary contributions to their 401(k) Plan accounts, subject to plan limits and those set by the IRS. We match employee contributions dollar for dollar (subject to a maximum contribution of 6% of an employee's base salary and performance bonus) in cash. In addition to our employer match contributions, we have a discretionary fixed dollar contribution benefit for all employees, paid quarterly, which is based upon a calculation of 1% of Adjusted Free Cash Flow less the base quarterly dividend. This discretionary fixed dollar contribution is subject to an annual maximum contribution of $15,000 per employee. We contributed $25 million, $8 million and $13 million to the 401(k) Plan during the years ended December 31, 2025, 2024 and 2023, respectively.
| 13. | Derivative and Hedging Activities |
We use derivative instruments to reduce our exposure to fluctuations in future commodity prices and to protect our expected operating cash flow against significant market movements or volatility. All of our natural gas, oil and NGL derivative instruments are net settled based on the difference between the fixed-price payment and the floating-price payment, resulting in a net amount due to or from the counterparty. None of our open natural gas, oil and NGL derivative instruments were designated for hedge accounting as of December 31, 2025 and 2024.
Natural Gas, Oil and NGL Derivatives
As of December 31, 2025 and 2024, our natural gas, oil and NGL derivative instruments consisted of the following types of instruments:
-
Swaps: We receive a fixed price and pay a floating market price to the counterparty for the hedged commodity. In exchange for higher fixed prices on certain of our swap trades, we may sell call options and swap options.
-
Options: We have bought and sold call options in exchange for a premium. At the time of settlement, if the market price exceeds the fixed price of the call option, we pay the counterparty the excess on sold call options and receive the excess on bought call options. If the market price settles below the fixed price of the call option, no payment is due from either party.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
*•*Collars: These instruments contain a fixed floor price (put) and ceiling price (call). In two-way collars, if the market price exceeds the call strike price or falls below the put strike price, we receive the fixed price and pay the market price. Additionally, if the market price is between the put and the call strike prices, no payments are due from either party. Three-way collars include the sale by us of an additional put option in exchange for a more favorable strike price on the call option. This eliminates the counterparty’s downside exposure below the second put option strike price.
*•*Basis Protection Swaps: These instruments are arrangements that guarantee a fixed price differential to NYMEX from a specified delivery point. We receive the fixed price differential and pay the floating market price differential to the counterparty for the hedged commodity.
The estimated fair values of our natural gas, oil and NGL derivative instrument assets (liabilities) as of December 31, 2025 and 2024 are provided below:
| December 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||
| Notional Volume | Fair Value | Notional Volume | Fair Value | |||||||||||||||||||||||
| Natural gas (Bcf): | ||||||||||||||||||||||||||
| Fixed-price swaps | 756 | $ | 128 | 369 | $ | (28) | ||||||||||||||||||||
| Two-way collars | 1,143 | 212 | 1,098 | (27) | ||||||||||||||||||||||
| Three-way collars | 175 | 32 | 161 | 60 | ||||||||||||||||||||||
| Call options (purchased) | — | — | 73 | 1 | ||||||||||||||||||||||
| Call options (sold) | 73 | (1) | 219 | (16) | ||||||||||||||||||||||
| Basis protection swaps | 337 | (66) | 279 | (39) | ||||||||||||||||||||||
| Total natural gas | 2,484 | 305 | 2,199 | (49) | ||||||||||||||||||||||
| Oil (MMBbls): | ||||||||||||||||||||||||||
| Three-way collars | — | $ | 2 | 2 | $ | 4 | ||||||||||||||||||||
| Total oil | — | 2 | 2 | 4 | ||||||||||||||||||||||
| NGLs (MMBbls): | ||||||||||||||||||||||||||
| Fixed-price swaps | — | $ | — | 7 | $ | (9) | ||||||||||||||||||||
| Total NGL | — | — | 7 | (9) | ||||||||||||||||||||||
| Total estimated fair value | $ | 307 | $ | (54) |
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Effect of Derivative Instruments – Consolidated Balance Sheets
The following table presents the fair value and location of each classification of derivative instrument included in the consolidated balance sheets as of December 31, 2025 and 2024 on a gross basis and after same-counterparty netting:
| Gross Fair Value**(a)** | Amounts Netted in the Consolidated Balance Sheets | Net Fair Value Presented in the Consolidated Balance Sheets | ||||||||||||||||||
| As of December 31, 2025 | ||||||||||||||||||||
| Commodity Contracts: | ||||||||||||||||||||
| Short-term derivative asset | $ | 340 | $ | (76) | $ | 264 | ||||||||||||||
| Long-term derivative asset | 66 | (19) | 47 | |||||||||||||||||
| Short-term derivative liability | (79) | 76 | (3) | |||||||||||||||||
| Long-term derivative liability | (20) | 19 | (1) | |||||||||||||||||
| Total derivatives | $ | 307 | $ | — | $ | 307 | ||||||||||||||
| 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) |
(a)These financial assets (liabilities) are measured at fair value on a recurring basis utilizing significant other observable inputs; see further discussion on fair value measurements below.
Fair Value
The fair value of our commodity derivatives is based on third-party pricing models, which utilize inputs that are either readily available in the public market, such as natural gas, oil and NGL forward curves and discount rates, or can be corroborated from active markets or broker quotes, and, as such, are classified as Level 2. These values are compared to the values given by our counterparties for reasonableness. Derivatives are also subject to the risk that either party to a contract will be unable to meet its obligations. We factor non-performance risk into the valuation of our derivatives using current published credit default swap rates. To date, this has not had a material impact on the values of our derivatives.
Credit Risk Considerations
Our derivative instruments expose us to our counterparties’ credit risk. To mitigate this risk, we only enter into commodity contracts derivatives with counterparties that are highly rated or deemed by us to have acceptable credit strength and deemed by management to be competent and competitive market-makers, and we attempt to limit our exposure to non-performance by any single counterparty. As of December 31, 2025, our commodity contracts derivative instruments were spread among 19 counterparties.
Hedging Arrangements
Certain of our hedging arrangements are with counterparties that are also Lenders (or affiliates of Lenders) under our 2025 Credit Facility. We do not expect to post cash or letters of credit to secure our obligations under these hedging arrangements while we have our investment grade ratings. The obligations under these contracts must be secured by cash or letters of credit to the extent that any mark-to-market amounts exceed defined thresholds. As of December 31, 2025, we did not have any cash or letters of credit posted as collateral for our commodity derivatives.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
| 14. | Other Property and Equipment |
A summary of other property and equipment held for use and the estimated useful lives thereof is as follows:
| Estimated Useful Life | ||||||||||||||||||||
| December 31, 2025 | December 31, 2024 | |||||||||||||||||||
| (in years) | ||||||||||||||||||||
| Buildings and improvements | $ | 135 | $ | 329 | 10 - 39 | |||||||||||||||
| Computer equipment | 110 | 110 | 5 | |||||||||||||||||
| Gathering and water systems | 76 | 78 | 7 - 20 | |||||||||||||||||
| Machinery and equipment | 53 | 40 | 7 - 10 | |||||||||||||||||
| Land | 25 | 29 | ||||||||||||||||||
| Other | 110 | 68 | 3 - 15 | |||||||||||||||||
| Total other property and equipment, at cost | 509 | 654 | ||||||||||||||||||
| Less: accumulated depreciation | (152) | (127) | ||||||||||||||||||
| Total other property and equipment, net | $ | 357 | $ | 527 |
On December 31, 2025, we sold a portion of our Oklahoma City campus and recognized a loss of $69 million based on the difference between the carrying value of the assets and the consideration received. Additionally, as of December 31, 2025, we signed agreements to sell other parts of our Oklahoma City campus. Approximately $40 million was classified as held for sale related to these agreements and we recognized asset impairments of $37 million based on the difference between the carrying value of the assets and the agreed upon sale price. We anticipate these agreements closing in the first quarter of 2026.
| 15. | Investments |
Momentum Sustainable Ventures LLC. During the fourth quarter of 2022, the Company entered into an agreement with Momentum Sustainable Ventures LLC (“Momentum”) to build a new natural gas gathering pipeline and carbon capture project, which gathers and treats natural gas produced in the Haynesville Shale for delivery to Gulf Coast markets, including LNG export, the New Generation Gas Gathering LLC (“NG3” operated pipeline) (the “NG3 pipeline”). The NG3 pipeline was placed in service and began gathering operations on October 1, 2025. Under a CO2 services agreement with ExxonMobil Low Carbon Solutions Onshore Storage, LLC (“Exxon”), NG3 anticipates that it will deliver CO2 to Exxon for capture, additional transportation and storage. We have a 35% interest in the joint venture entity and classify our investment with Momentum in the NG3 pipeline as a related party.
We have accounted for this investment as an equity method investment, and its carrying value, which is reflected within other long-term assets on the consolidated balance sheets, was $313 million and $307 million as of December 31, 2025 and December 31, 2024, respectively. As of December 31, 2025, the carrying value of our investment included approximately $29 million of capitalized interest related to the project. We recognize our proportionate share of income (loss) related to our investment with Momentum in other income, net within our consolidated statements of operations. Our proportionate share of income (loss) related to our investment with Momentum is recognized on a three-month lag and during the years ended December 31, 2025, 2024 and 2023, our proportionate share of income (loss) related our investment in the NG3 pipeline did not have a material impact to our financial statements. We periodically review our investment with Momentum to determine if a loss in value, which is other than a temporary decline, has occurred. If an other than temporary decline has occurred, we recognize an impairment on our investment. Through December 31, 2025, we have not recognized any impairments related to our investment with Momentum.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The NG3 pipeline provides to us certain gathering, processing and transportation services. We have a gathering agreement in which approximately 900 MMcf per day, on average, of natural gas are to be gathered and processed by the NG3 pipeline over the course of the next 12 years. During the year ended December 31, 2025, approximately $15 million of our gathering, processing and transportation expenses were related to services provided by the NG3 pipeline, and is reflected within our consolidated statements of operations. Additionally, approximately $12 million of our accounts payable balance as of December 31, 2025 was related gathering, processing and transportation services rendered to us by the NG3 pipeline.
| 16. | Asset Retirement Obligations |
The components of the change in our asset retirement obligations are shown below:
| Years Ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Asset retirement obligations, beginning of period | $ | 531 | $ | 276 | ||||||||||
| Additions(a) | 16 | 263 | ||||||||||||
| Revisions(b) | 157 | (21) | ||||||||||||
| Settlements and disposals | (10) | (5) | ||||||||||||
| Accretion expense | 30 | 18 | ||||||||||||
| Asset retirement obligations, end of period | 724 | 531 | ||||||||||||
| Less current portion | 36 | 32 | ||||||||||||
| Asset retirement obligations, long-term | $ | 688 | $ | 499 |
(a) During the year ended December 31, 2024, approximately $251 million of additions relate to the Southwestern Merger. See Note 2 for further discussion of this transaction.
(b) In 2025, revisions primarily represent changes in the present value of liabilities resulting from changes in estimated costs.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
| 17. | Supplemental Cash Flow Information |
Supplemental disclosures to the consolidated statements of cash flows are presented below.
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Changes in assets and liabilities | ||||||||||||||||||||
| Accounts receivable | $ | (370) | $ | (168) | $ | 857 | ||||||||||||||
| Accounts payable | (68) | (62) | (152) | |||||||||||||||||
| Other current assets | (40) | 3 | 143 | |||||||||||||||||
| Other current liabilities | 193 | (88) | (573) | |||||||||||||||||
| Total | $ | (285) | $ | (315) | $ | 275 | ||||||||||||||
| Supplemental cash flow information: | ||||||||||||||||||||
| Interest paid, net of capitalized interest | $ | 230 | $ | 93 | $ | 117 | ||||||||||||||
| Income taxes paid (refunds received), net | ||||||||||||||||||||
| Federal | $ | 80 | $ | 7 | $ | 120 | ||||||||||||||
| State(a) | $ | (14) | $ | (10) | $ | 12 | ||||||||||||||
| Total | $ | 66 | $ | (3) | $ | 132 | ||||||||||||||
| Supplemental disclosure of significant non-cash investing and financing activities: | ||||||||||||||||||||
| Change in accrued drilling and completion costs | $ | 114 | $ | (49) | $ | (31) | ||||||||||||||
| Common stock issued for business combination | $ | — | $ | 7,888 | $ | — | ||||||||||||||
| Operating lease obligations recognized | $ | 39 | $ | 137 | $ | 96 | ||||||||||||||
| Liabilities established in connection with property acquisitions | $ | 29 | $ | — | $ | — |
(a)Income taxes paid (refunds received), net by state is provided below. Amounts reported within other states below include states that are individually below the reporting threshold.
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| State | ||||||||||||||||||||
| Louisiana | $ | (15) | $ | (1) | $ | 12 | ||||||||||||||
| New York | 1 | — | — | |||||||||||||||||
| Pennsylvania | (1) | (10) | — | |||||||||||||||||
| Texas | — | 2 | — | |||||||||||||||||
| West Virginia | 1 | — | — | |||||||||||||||||
| Other states | — | (1) | — | |||||||||||||||||
| Total | $ | (14) | $ | (10) | $ | 12 |
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
| 18. | Segment Information |
Operating segments are defined as components of an enterprise that engage in activities from which it may earn revenues and incur expenses for which separate operational financial information is available and is regularly evaluated by the CODM, who is our Chief Executive Officer, for the purpose of allocating an enterprise’s resources and assessing its operating performance. Our revenues are derived from the production, marketing and sale of natural gas, oil and NGL. Additional information on our revenues, including the disaggregation of our revenues and major customers, is found in Note 8. As of December 31, 2025, we considered each of our operating areas as operating segments, however, we have aggregated those operating segments into one reportable segment due to the similar nature of the exploration and production business across Expand Energy and its consolidated subsidiaries and the fact that our marketing activities are ancillary to our operations.
Our CODM uses consolidated net income (loss), for purposes of allocating resources and in assessing Expand Energy’s operating performance, which also includes analyzing results to forecasted information. Additionally, our CODM is regularly provided information on production expense, gathering, processing and transportation expense, severance and ad valorem taxes and general and administrative expense, which are our significant segment expenses. Other segment items primarily consist of depreciation, depletion and amortization, marketing expense, interest expense and income tax expense (benefit). Our significant segment expenses and other segment items are derived from, and can be found within the consolidated statements of operations.
The measure of segment assets is total assets as reported on our consolidated balance sheets, and as of December 31, 2025 and 2024 our total assets were $28,287 million and $27,894 million, respectively. Additionally, in analyzing company performance, our CODM reviews capital expenditures. During the years ended December 31, 2025, 2024 and 2023, our capital expenditures were $2,852 million, $1,529 million and $1,782 million, respectively. We did not make any contributions to equity method investments during the year ended December 31, 2025 and during the years ended December 31, 2024 and 2023, we contributed approximately $58 million and $220 million, respectively, to equity method investments, which primarily consisted of our investment with Momentum Sustainable Ventures LLC. Additional discussion around our investment with Momentum Sustainable Ventures LLC is in Note 15. Our interest revenue during the years ended December 31, 2025, 2024 and 2023 was $16 million, $45 million and $29 million, respectively.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION
| Supplemental Disclosures About Natural Gas, Oil and NGL Producing Activities (unaudited) |
Net Capitalized Costs
Capitalized costs related to our natural gas, oil and NGL producing activities are summarized as follows:
| December 31, 2025 | December 31, 2024 | |||||||||||||
| Natural gas and oil properties: | ||||||||||||||
| Proved | $ | 26,606 | $ | 23,093 | ||||||||||
| Unproved | 5,478 | 5,897 | ||||||||||||
| Total | 32,084 | 28,990 | ||||||||||||
| Less accumulated depreciation, depletion and amortization | (8,126) | (5,235) | ||||||||||||
| Net capitalized costs | $ | 23,958 | $ | 23,755 |
Unproved properties as of December 31, 2025 and December 31, 2024 primarily consisted of leasehold acquired through our Southwestern Merger in 2024. We will continue to evaluate our unproved properties, and although the timing of the ultimate evaluation or disposition of the properties cannot be determined, we can expect the majority of our unproved properties not held by production to be transferred into the amortization base over the next five years.
Costs Incurred in Natural Gas and Oil Property Acquisition, Exploration and Development
Costs incurred in natural gas and oil property acquisition, exploration and development, including capitalized interest and asset retirement costs, are summarized as follows:
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Acquisition of properties(a): | ||||||||||||||||||||
| Proved properties | $ | 5 | $ | 10,010 | $ | 10 | ||||||||||||||
| Unproved properties | 409 | 4,393 | 52 | |||||||||||||||||
| Exploratory costs | 45 | 17 | 15 | |||||||||||||||||
| Development costs | 2,751 | 1,420 | 1,721 | |||||||||||||||||
| Costs incurred | $ | 3,210 | $ | 15,840 | $ | 1,798 |
(a) Includes $10.0 billion and $4.3 billion of proved and unproved property acquisitions, respectively, related to the Southwestern Merger in 2024.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION - (Continued)
Results of Operations from Natural Gas, Oil and NGL Producing Activities
The following table includes revenues and expenses associated directly with our natural gas, oil and NGL producing activities for the periods presented. It does not include any derivative activity, interest costs or indirect general and administrative costs and, therefore, is not necessarily indicative of the contribution to consolidated net operating results of our natural gas, oil and NGL operations.
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Natural gas, oil and NGL sales | $ | 8,476 | $ | 2,969 | $ | 3,547 | ||||||||||||||
| Production expenses | (635) | (316) | (356) | |||||||||||||||||
| Gathering, processing and transportation expenses | (2,376) | (1,035) | (853) | |||||||||||||||||
| Severance and ad valorem taxes | (193) | (97) | (167) | |||||||||||||||||
| Exploration | (46) | (10) | (27) | |||||||||||||||||
| Depletion and depreciation | (2,890) | (1,673) | (1,478) | |||||||||||||||||
| Accretion of asset retirement obligations | (30) | (18) | (16) | |||||||||||||||||
| Imputed income tax provision(a) | (542) | 42 | (152) | |||||||||||||||||
| Results of operations from natural gas, oil and NGL producing activities | $ | 1,764 | $ | (138) | $ | 498 |
(a) The imputed income tax provision is hypothetical (at the statutory tax rate) and determined without regard to our deduction for general and administrative expenses, interest costs and other income tax credits and deductions, nor whether the hypothetical tax provision (benefit) will be payable (receivable).
Natural Gas, Oil and NGL Reserve Quantities
Our petroleum engineers estimated all of our proved reserves as of December 31, 2025, 2024 and 2023. Independent petroleum engineering firm Netherland, Sewell & Associates, Inc. audited our total proved reserves as of December 31, 2025.
Proved natural gas, oil and NGL reserves are those quantities of natural gas, oil and NGL which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible – from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations – prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. Based on reserve reporting rules, the price is calculated using the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within the period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions. A project to extract hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time. The area of the reservoir considered as proved includes: (i) the area identified by drilling and limited by fluid contacts, if any, and (ii) adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible natural gas or oil on the basis of available geoscience and engineering data. In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons as seen in a well penetration unless geoscience, engineering or performance data and reliable technology establish a lower contact with reasonable certainty. Where direct observation from well penetrations has defined a highest known oil elevation and the potential exists for an associated natural gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering or performance data and reliable technology establish the higher contact with reasonable certainty. Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when: (i) successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION - (Continued)
was based; and (ii) the project has been approved for development by all necessary parties and entities, including governmental entities.
The information provided below on our natural gas, oil and NGL reserves is presented in accordance with regulations prescribed by the SEC. Our reserve estimates are generally based upon extrapolation of historical production trends, analogy to similar properties and volumetric calculations. Accordingly, these estimates will change as future information becomes available and as commodity prices change. These changes could be material and could occur in the near term.
Presented below is a summary of changes in estimated proved reserves for the periods presented:
| Natural Gas | Oil | NGL | Total | |||||||||||||||||||||||
| (Bcf) | (MMBbl) | (MMBbl) | (Bcfe) | |||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||
| Proved reserves, beginning of period | 16,924 | 67.9 | 578.1 | 20,800 | ||||||||||||||||||||||
| Extensions, discoveries and other additions | 52 | — | — | 52 | ||||||||||||||||||||||
| Revisions of previous estimates | 8,008 | (3.2) | (56.6) | 7,650 | ||||||||||||||||||||||
| Production | (2,409) | (5.9) | (29.6) | (2,622) | ||||||||||||||||||||||
| Sale of reserves-in-place | — | — | — | — | ||||||||||||||||||||||
| Purchase of reserves-in-place | — | — | — | — | ||||||||||||||||||||||
| Proved reserves, end of period | 22,575 | 58.8 | 491.9 | 25,880 | ||||||||||||||||||||||
| Proved developed reserves: | ||||||||||||||||||||||||||
| Beginning of period | 14,418 | 40.3 | 383.0 | 16,958 | ||||||||||||||||||||||
| End of period | 16,395 | 35.0 | 328.5 | 18,576 | ||||||||||||||||||||||
| Proved undeveloped reserves: | ||||||||||||||||||||||||||
| Beginning of period | 2,506 | 27.6 | 195.1 | 3,842 | ||||||||||||||||||||||
| End of period(a) | 6,180 | 23.8 | 163.4 | 7,304 | ||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||
| Proved reserves, beginning of period | 9,688 | — | — | 9,688 | ||||||||||||||||||||||
| Extensions, discoveries and other additions | 124 | — | — | 124 | ||||||||||||||||||||||
| Revisions of previous estimates | (1,654) | — | — | (1,654) | ||||||||||||||||||||||
| Production | (1,321) | (1.2) | (7.8) | (1,375) | ||||||||||||||||||||||
| Sale of reserves-in-place | — | — | — | — | ||||||||||||||||||||||
| Purchase of reserves-in-place | 10,087 | 69.1 | 585.9 | 14,017 | ||||||||||||||||||||||
| Proved reserves, end of period | 16,924 | 67.9 | 578.1 | 20,800 | ||||||||||||||||||||||
| Proved developed reserves: | ||||||||||||||||||||||||||
| Beginning of period | 6,363 | — | — | 6,363 | ||||||||||||||||||||||
| End of period | 14,418 | 40.3 | 383.0 | 16,958 | ||||||||||||||||||||||
| Proved undeveloped reserves: | ||||||||||||||||||||||||||
| Beginning of period | 3,325 | — | — | 3,325 | ||||||||||||||||||||||
| End of period(a) | 2,506 | 27.6 | 195.1 | 3,842 | ||||||||||||||||||||||
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION - (Continued)
| Natural Gas | Oil | NGL | Total | |||||||||||||||||||||||
| (Bcf) | (MMBbl) | (MMBbl) | (Bcfe) | |||||||||||||||||||||||
| December 31, 2023 | ||||||||||||||||||||||||||
| Proved reserves, beginning of period | 11,369 | 198.4 | 73.9 | 13,002 | ||||||||||||||||||||||
| Extensions, discoveries and other additions | 415 | — | — | 415 | ||||||||||||||||||||||
| Revisions of previous estimates | (325) | — | — | (325) | ||||||||||||||||||||||
| Production | (1,266) | (7.7) | (3.8) | (1,335) | ||||||||||||||||||||||
| Sale of reserves-in-place | (563) | (190.7) | (70.1) | (2,127) | ||||||||||||||||||||||
| Purchase of reserves-in-place | 58 | — | — | 58 | ||||||||||||||||||||||
| Proved reserves, end of period | 9,688 | — | — | 9,688 | ||||||||||||||||||||||
| Proved developed reserves: | ||||||||||||||||||||||||||
| Beginning of period | 7,385 | 157.2 | 58.9 | 8,681 | ||||||||||||||||||||||
| End of period | 6,363 | — | — | 6,363 | ||||||||||||||||||||||
| Proved undeveloped reserves: | ||||||||||||||||||||||||||
| Beginning of period | 3,984 | 41.2 | 15.0 | 4,321 | ||||||||||||||||||||||
| End of period(a) | 3,325 | — | — | 3,325 |
(a) As of December 31, 2025, 2024 and 2023, there were no PUDs that had remained undeveloped for five years or more.
During 2025, we recorded 7,650 Bcfe of upward revisions of previous estimates, with 2,028 Bcfe of upward revisions due to higher natural gas prices in 2025 and 5,622 Bcfe due to non-price related positive revisions. The non-price positive revisions primarily consisted of 6,858 Bcfe of new PUDs and new producing wells that had improved economics and were in areas previously classified as proved, partially offset by 1,236 Bcfe of reserves decreases on existing proved properties. The non-price revision decreases were related to an update to the ethane recovery assumptions of 555 Bcfe as well as 146 Bcfe of negative non-price revisions related to updates to development plans, both of these revisions primarily within Southwest Appalachia. Additionally, 535 Bcfe of negative revisions were due to aligning production forecasts with latest production trends. We recorded extensions and discoveries of 52 Bcfe, primarily related to new PUDs in Southwest Appalachia. The natural gas, oil and NGL prices used in computing our reserves as of December 31, 2025, were $3.39 per Mcf, $65.34 per Bbl and $65.34 per Bbl, respectively, before basis differential adjustments.
During 2024, we acquired 14,017 Bcfe, primarily related to the Southwestern Merger. We recorded extensions and discoveries of 124 Bcfe, primarily related to new PUDs in Northeast Appalachia and previously unproved producing wells in both Northeast Appalachia and Haynesville. We recorded 1,654 Bcfe of downward revisions of previous estimates, with 2,395 Bcfe of downward revisions due to lower natural gas, oil and NGL prices in 2024, partially offset by 741 Bcfe of non-price related positive revisions. The non-price revisions primarily consisted of 750 Bcfe of reserves increases on existing proved properties, related to increases in PUD forecasts and aligning forecasts for proved developed wells with latest production trends, increased ownership interests in some of the locations, and improved differentials in Haynesville. Also included within the non-price revisions were 174 Bcfe of new PUDs and producing wells in areas previously classified as proved, and 183 Bcfe of downward revisions due to development plan and other changes in Northeast Appalachia and Haynesville. The natural gas, oil and NGL prices used in computing our reserves as of December 31, 2024, were $2.13 per Mcf, $75.48 per Bbl and $75.48 per Bbl, respectively, before basis differential adjustments.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION - (Continued)
During 2023, we divested 2,127 Bcfe, primarily related to our Eagle Ford divestitures. We recorded extensions and discoveries of 415 Bcfe, primarily related to new PUDs and previously unproved producing wells in the Upper Marcellus and Bossier Shales. We recorded 325 Bcfe of downward revisions of previous estimates, with 1,623 Bcfe of downward revisions due to lower natural gas, oil and NGL prices in 2023, partially offset by 1,298 Bcfe of non-price related positive revisions. The non-price revisions primarily consisted of 1,517 Bcfe from new PUDs and producing wells added in previously proved areas, 469 Bcfe of positive revisions to previously recorded PUD reserves primarily due to expected longer laterals in both Northeast Appalachia and Haynesville, partially offset by downward revisions of 451 Bcfe due to development plan and other changes in Northeast Appalachia and Haynesville, and a downward revision of 237 Bcfe on proved developed reserves related to aligning forecasts with latest production trends. The natural gas, oil and NGL prices used in computing our reserves as of December 31, 2023, were $2.64 per Mcf, $78.22 per Bbl and $28.61 per Bbl, respectively, before basis differential adjustments.
Standardized Measure of Discounted Future Net Cash Flows
Accounting Standards Codification Topic 932 prescribes guidelines for computing a standardized measure of future net cash flows and changes therein relating to estimated proved reserves. Expand Energy has followed these guidelines which are briefly discussed below.
Future cash inflows and future production and development costs as of December 31, 2025, 2024 and 2023 were determined by applying the average of the first-day-of-the-month prices for the 12 months of the year and year-end costs to the estimated quantities of natural gas, oil and NGL to be produced. Actual future prices and costs may be materially higher or lower than the prices and costs used. For each year, estimates are made of quantities of proved reserves and the future periods during which they are expected to be produced based on continuation of the economic conditions applied for that year. Estimated future income taxes are computed using current statutory income tax rates including consideration of the current tax basis of the properties and related carryforwards, giving effect to permanent differences and tax credits. The resulting future net cash flows are reduced to present value amounts by applying a 10% annual discount factor.
The assumptions used to compute the standardized measure are those prescribed by the Financial Accounting Standards Board and do not necessarily reflect our expectations of actual revenue to be derived from those reserves nor their present worth. The limitations inherent in the reserve quantity estimation process, as discussed previously, are equally applicable to the standardized measure computations since these estimates reflect the valuation process.
The following summary sets forth our future net cash flows relating to proved natural gas, oil and NGL reserves based on the standardized measure:
| Years Ended December 31, | |||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||
| Future cash inflows | $ | 54,193 | (a) | $ | 24,213 | (b) | $ | 14,659 | (c) | ||||||||||||||
| Future production costs | (10,794) | (7,007) | (3,326) | ||||||||||||||||||||
| Future development costs | (6,397) | (d) | (3,537) | (e) | (2,779) | (f) | |||||||||||||||||
| Future income tax provisions | (4,603) | (119) | (174) | ||||||||||||||||||||
| Future net cash flows | 32,399 | 13,550 | 8,380 | ||||||||||||||||||||
| Less effect of a 10% discount factor | (15,273) | (6,019) | (3,903) | ||||||||||||||||||||
| Standardized measure of discounted future net cash flows | $ | 17,126 | $ | 7,531 | $ | 4,477 |
(a) Calculated using prices of $3.39 per Mcf of natural gas, $65.34 per Bbl of oil and $65.34 per Bbl of NGL, before basis differential adjustments.
(b) Calculated using prices of $2.13 per Mcf of natural gas, $75.48 per Bbl of oil and $75.48 per Bbl of NGL, before basis differential adjustments.
(c) Calculated using prices of $2.64 per Mcf of natural gas, before basis differential adjustments.
(d) Included approximately $2,120 million of future plugging and abandonment costs as of December 31, 2025.
(e) Included approximately $1,625 million of future plugging and abandonment costs as of December 31, 2024.
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION - (Continued)
(f) Included approximately $730 million of future plugging and abandonment costs as of December 31, 2023.
The principal sources of change in the standardized measure of discounted future net cash flows are as follows:
| Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Standardized measure, beginning of period | $ | 7,531 | $ | 4,477 | $ | 26,305 | ||||||||||||||
| Sales of natural gas, oil and NGL produced, net of production costs and gathering, processing and transportation(a) | (5,272) | (1,521) | (2,171) | |||||||||||||||||
| Net changes in prices and production costs | 11,359 | (2,266) | (23,535) | |||||||||||||||||
| Extensions and discoveries, net of production and development costs | 19 | 50 | 182 | |||||||||||||||||
| Changes in estimated future development costs | (2,316) | 652 | 346 | |||||||||||||||||
| Previously estimated development costs incurred during the period | 827 | 396 | 818 | |||||||||||||||||
| Revisions of previous quantity estimates | 7,109 | (922) | (205) | |||||||||||||||||
| Purchase of reserves-in-place | — | 5,409 | 77 | |||||||||||||||||
| Sales of reserves-in-place | — | — | (7,158) | |||||||||||||||||
| Accretion of discount | 757 | 457 | 3,270 | |||||||||||||||||
| Net change in income taxes | (2,213) | 58 | 6,301 | |||||||||||||||||
| Changes in production rates and other | (675) | 741 | 247 | |||||||||||||||||
| Standardized measure, end of period(a) | $ | 17,126 | $ | 7,531 | $ | 4,477 |
(a) Excludes gains and losses on derivatives. Production costs includes severance and ad valorem taxes.
Previous: Item 7A. Quantitative and Qualitative Disclosures About Market Risk · Next: Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure