Expand Energy 10-Q 2024-09-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-13726

EXPAND ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

Oklahoma									73-1395733
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)
6100 North Western Avenue,			Oklahoma City,			Oklahoma			73118
(Address of principal executive offices)									(Zip Code)
						(405)			848-8000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class						Trading Symbol						Name of each exchange on which registered
Common Stock, $0.01 par value per share						EXE						The Nasdaq Stock Market LLC
Class A Warrants to purchase Common Stock						EXEEW						The Nasdaq Stock Market LLC
Class B Warrants to purchase Common Stock						EXEEZ						The Nasdaq Stock Market LLC
Class C Warrants to purchase Common Stock						EXEEL						The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒ Accelerated Filer ☐ Non-accelerated Filer ☐

Smaller Reporting Company ☐ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of October 24, 2024, there were 231,034,791 shares of our $0.01 par value common stock outstanding.

EXPAND ENERGY CORPORATION AND SUBSIDIARIES

INDEX TO FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2024

			PART I. FINANCIAL INFORMATION
Item 1.			Condensed Consolidated Financial Statements (Unaudited)
			Condensed Consolidated Balance Sheets			5
			Condensed Consolidated Statements of Operations			6
			Condensed Consolidated Statements of Cash Flows			7
			Condensed Consolidated Statements of Stockholders’ Equity			9
			Notes to Condensed Consolidated Financial Statements (Unaudited)
			Note 1. Basis of Presentation and Summary of Significant Accounting Policies			11
			Note 2. Natural Gas and Oil Property Transactions			12
			Note 3. Earnings Per Share			13
			Note 4. Debt			14
			Note 5. Contingencies and Commitments			16
			Note 6. Other Current Liabilities			18
			Note 7. Revenue			18
			Note 8. Income Taxes			19
			Note 9. Equity			20
			Note 10. Share-Based Compensation			21
			Note 11. Derivative and Hedging Activities			23
			Note 12. Investments			25
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			26
			Liquidity and Capital Resources			28
			Results of Operations			32
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			40
Item 4.			Controls and Procedures			41
			PART II. OTHER INFORMATION
Item 1.			Legal Proceedings			42
Item 1A.			Risk Factors			42
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			43
Item 3.			Defaults Upon Senior Securities			43
Item 4.			Mine Safety Disclosures			43
Item 5.			Other Information			43
Item 6.			Exhibits			44
Signatures						45

Explanatory Note and Definitions

On October 1, 2024, Chesapeake completed its previously announced merger with Southwestern. After the Southwestern Merger, Chesapeake changed its name to Expand Energy Corporation. Unless otherwise specified, information set forth herein relates to the period as of and for the quarter and year-to-date periods ended September 30, 2024 and therefore does not include the information of Southwestern and its subsidiaries for those periods, the corresponding prior year periods or financial position as of September 30, 2024 or December 31, 2023.

References to “us,” “we,” “our,” “ours,” “Expand Energy” and the “Company” prior to October 1, 2024 refer to Chesapeake Energy Corporation and its consolidated subsidiaries prior to the Southwestern Merger and do not include Southwestern and its subsidiaries, while such references on or after October 1, 2024 refer to the combined company as a result of the Southwestern Merger, including Southwestern and its subsidiaries. All monetary values, other than per unit and per share amounts, are stated in millions of U.S. dollars unless otherwise specified. In addition, the following are other abbreviations and definitions of certain terms used within this Quarterly Report on Form 10-Q:

“ASU” means Accounting Standards Update.

“Bankruptcy Code” means Title 11 of the United States Code, 11 U.S.C. §§ 101–1532, as amended.

“Bankruptcy Court” means the United States Bankruptcy Court for the Southern District of Texas.

“Bbl” or “Bbls” means barrel or barrels.

“Bcf” means billion cubic feet.

“Chapter 11 Cases” means, when used with reference to a particular Debtor, the case pending for that Debtor under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court, and when used with reference to all the Debtors, the procedurally consolidated Chapter 11 cases pending for the Debtors in the Bankruptcy Court.

“Chesapeake” means Chesapeake Energy Corporation, prior to the Southwestern Merger.

“Class A Warrants” means warrants to purchase 10 percent of the common stock (after giving effect to the Rights Offering, but subject to dilution by the Management Incentive Plan, the Class B Warrants, and the Class C Warrants), at an initial exercise price per share of $27.63. The Class A Warrants are exercisable from the Effective Date until February 9, 2026.

“Class B Warrants” means warrants to purchase 10 percent of the common stock (after giving effect to the Rights Offering, but subject to dilution by the Management Incentive Plan and the Class C Warrants), at an initial exercise price per share of $32.13. The Class B Warrants are exercisable from the Effective Date until February 9, 2026.

“Class C Warrants” means warrants to purchase 10 percent of the common stock (after giving effect to the Rights Offering, but subject to dilution by the Management Incentive Plan), at an initial exercise price per share of $36.18. The Class C Warrants are exercisable from the Effective Date until February 9, 2026.

“Confirmation Order” means the order confirming the Fifth Amended Joint Chapter 11 Plan of Reorganization of Chesapeake Energy Corporation and its Debtor Affiliates, Docket No. 2915, entered by the Bankruptcy Court on January 16, 2021.

“Current Period” means the nine months ended September 30, 2024.

“Current Quarter” means the three months ended September 30, 2024.

“DD&A” means depreciation, depletion and amortization.

“Debtors” means Chesapeake Energy Corporation prior to the Southwestern Merger, together with all of its direct and indirect subsidiaries that have filed the Chapter 11 Cases.

“Effective Date” means February 9, 2021.

“ESG” means environmental, social and governance.

“FASB” means Financial Accounting Standards Board.

“G&A” means general and administrative expenses.

“GAAP” means U.S. generally accepted accounting principles.

“General Unsecured Claim” means any Claim against any Debtor that is not otherwise paid in full during the Chapter 11 Cases pursuant to an order of the Bankruptcy Court and is not an Administrative Claim, a Priority Tax Claim, an Other Priority Claim, an Other Secured Claim, a Revolving Credit Facility Claim, a FLLO Term Loan Facility Claim, a Second Lien Notes Claim, an Unsecured Notes Claim, an Intercompany Claim, or a Section 510(b) Claim.

“LNG” means liquefied natural gas.

“LTIP” means the Chesapeake Energy Corporation 2021 Long-Term Incentive Plan.

“MBbl” means thousand barrels.

“Mcf” means thousand cubic feet.

“Mcfe” means one thousand cubic feet of natural gas equivalent, with one barrel of oil or NGL converted to an equivalent volume of natural gas using the ratio of one barrel of oil or NGL to six Mcf of natural gas.

“MMcf” means million cubic feet.

“MMcfe” means million cubic feet of natural gas equivalent.

“NGL” means natural gas liquids.

“NYMEX” means New York Mercantile Exchange.

“OPEC+” means Organization of the Petroleum Exporting Countries Plus.

“Petition Date” means June 28, 2020, the date on which the Debtors commenced the Chapter 11 Cases.

“Plan” means the Fifth Amended Joint Chapter 11 Plan of Reorganization of Chesapeake Energy Corporation and its Debtor Affiliates, attached as Exhibit A to the Confirmation Order.

“Prior Period” means the nine months ended September 30, 2023.

“Prior Quarter” means the three months ended September 30, 2023.

“Rights Offering” means the common stock rights offering for the Rights Offering Amount consummated by the Debtors on the Effective Date.

“Southwestern” means Southwestern Energy Company.

“Southwestern Merger” means Chesapeake’s merger with Southwestern, which closed on October 1, 2024.

“SEC” means United States Securities and Exchange Commission.

“SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator, the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).

“Warrants” means collectively, the Class A Warrants, Class B Warrants and Class C Warrants.

“/Bbl” means per barrel.

“/Mcf” means per Mcf.

“/Mcfe” means per Mcfe.

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PART I. FINANCIAL INFORMATION

EXPAND ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

($ in millions, except per share data)						September 30, 2024						December 31, 2023
Assets
Current assets:
Cash and cash equivalents						$	1,044					$	1,079
Restricted cash						76						74
Accounts receivable, net						261						593
Derivative assets						199						637
Other current assets						217						226
Total current assets						1,797						2,609
Property and equipment:
Natural gas and oil properties, successful efforts method
Proved natural gas and oil properties						12,373						11,468
Unproved properties						1,806						1,806
Other property and equipment						518						497
Total property and equipment						14,697						13,771
Less: accumulated depreciation, depletion and amortization						(4,743)						(3,674)
Total property and equipment, net						9,954						10,097
Long-term derivative assets						15						74
Deferred income tax assets						1,038						933
Other long-term assets						588						663
Total assets						$	13,392					$	14,376
Liabilities and stockholders' equity
Current liabilities:
Accounts payable						$	264					$	425
Accrued interest						41						39
Derivative liabilities						5						3
Other current liabilities						589						847
Total current liabilities						899						1,314
Long-term debt, net						2,017						2,028
Long-term derivative liabilities						—						9
Asset retirement obligations, net of current portion						271						265
Other long-term liabilities						17						31
Total liabilities						3,204						3,647
Contingencies and commitments (Note 5)
Stockholders' equity:
Common stock, $0.01 par value, 450,000,000 shares authorized: 135,107,576 and 130,789,936 shares issued						1						1
Additional paid-in capital						5,778						5,754
Retained earnings						4,409						4,974
Total stockholders' equity						10,188						10,729
Total liabilities and stockholders' equity						$	13,392					$	14,376

The accompanying notes are an integral part of these condensed consolidated financial statements.

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EXPAND ENERGY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

						Three Months Ended September 30,												Nine Months Ended September 30,
($ in millions, except per share data)						2024						2023						2024						2023
Revenues and other:
Natural gas, oil and NGL						$	407					$	682					$	1,374					$	2,784
Marketing						193						724						641						1,987
Natural gas and oil derivatives						46						106						207						1,195
Gains on sales of assets						2						—						12						807
Total revenues and other						648						1,512						2,234						6,773
Operating expenses:
Production						50						73						158						293
Gathering, processing and transportation						152						192						479						663
Severance and ad valorem taxes						11						27						58						136
Exploration						2						4						7						19
Marketing						192						723						656						1,985
General and administrative						39						29						133						95
Separation and other termination costs						—						—						23						3
Depreciation, depletion and amortization						335						382						1,082						1,148
Other operating expense, net						22						3						55						15
Total operating expenses						803						1,433						2,651						4,357
Income (loss) from operations						(155)						79						(417)						2,416
Other income (expense):
Interest expense						(20)						(23)						(59)						(82)
Losses on purchases, exchanges or extinguishments of debt						—						—						(2)						—
Other income						17						15						58						48
Total other income (expense)						(3)						(8)						(3)						(34)
Income (loss) before income taxes						(158)						71						(420)						2,382
Income tax expense (benefit)						(44)						1						(105)						532
Net income (loss)						$	(114)					$	70					$	(315)					$	1,850
Earnings (loss) per common share:

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Introduction

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with management’s perspective on our financial condition, liquidity, results of operations and certain other factors that may affect our future results. The following discussion should be read together with the condensed consolidated financial statements included in Item 1 of Part I of this report and the consolidated financial statements included in Item 8 of our 2023 Form 10-K.

On October 1, 2024, we completed the Southwestern Merger, creating a premier energy company that we believe is underpinned by a leading natural gas portfolio adjacent to the highest demand markets, premium inventory, a resilient financial foundation and an investment grade balance sheet. We believe that this new company is uniquely positioned to deliver affordable, lower carbon energy to meet growing domestic and international demand while creating sustainable value for stakeholders. In conjunction with the closing of the Southwestern Merger, Chesapeake Energy Corporation changed its name to Expand Energy Corporation.

Expand Energy is the largest independent 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. Our operations are located in Louisiana in the Haynesville/Bossier Shales (“Haynesville”), in Pennsylvania in the Marcellus Shale (“Northeast Appalachia”) and in West Virginia and Ohio in the Marcellus and Utica Shales (“Southwest Appalachia”).

Our strategy is to create shareholder value through the responsible development of our significant resource plays while continuing to be a leading provider of natural gas to markets in need. We continue to focus on improving margins through operating efficiencies and financial discipline and improving our ESG performance. To accomplish these goals, we intend to allocate our human resources and capital expenditures to projects we believe offer the highest cash return on capital invested, to deploy leading drilling and completion technology throughout our portfolio, and to take advantage of acquisition and divestiture opportunities to strengthen our portfolio. We also intend to continue to dedicate capital to projects that reduce the environmental impact of our production activities.

We are focused on expanding America’s energy reach to fuel a more affordable, reliable, lower-carbon future. In our efforts to achieve this ambition, we strive to be a safe operator and dedicated community partner. We have adopted five fundamentals that drive our decision-making, and which we believe will guide our success and increase our ability to sustainably deliver stakeholder value:

• Minimize emissions intensity in support of delivering lower-carbon energy to sustain economic progress.

• Take steps to implement environmentally sound operations that mitigate impact and protect ecosystems.

• Promote a safe and inclusive workplace, promoting collaboration and innovation.

• Take meaningful action to support community well-being.

• Provide transparent and measurable information encouraging accountability.

Additionally, we aim to be conscientious in our efforts and how they will shape our approach to sustainability for the future and have established the following goals:

• Net zero (Scope 1 and 2) greenhouse gas emissions by 2035.

• Maintain 100% responsibly sourced gas (RSG) certification across our portfolio.

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Recent Developments

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 our common stock, the total value of such shares of our common stock issued to Southwestern’s shareholders was approximately $7.9 billion.

Investment Grade Rating

On October 1, 2024, we received an investment grade rating from S&P Global Ratings (“S&P”). S&P assigned an issuer-level rating of ‘BBB-’ on our unsecured debt and raised our issuer credit rating to ‘BBB-’, with a stable outlook. Additionally, on October 2, 2024, we received an investment grade rating from Fitch Ratings (“Fitch”). Fitch affirmed our revolver credit rating at ‘BBB-’ and upgraded the rating on our senior notes to ‘BBB-’, with a stable outlook. As a result of these investment grade ratings, certain restrictive covenants on our credit facility fall away and become more permissive. The leverage ratio and current ratio financial covenants and PV-9 Coverage Ratio are no longer effective, and the Company will be required to maintain compliance with a total indebtedness to capitalization ratio, which is the ratio of the Company’s total indebtedness to the sum of total indebtedness plus stockholders’ equity, not to exceed 65%.

Divestitures

On January 17, 2023, we entered into an agreement to sell a portion of our Eagle Ford assets to WildFire Energy I LLC for approximately $1.425 billion, subject to post-closing adjustments. This transaction closed on March 20, 2023 (with an effective date of October 1, 2022) and resulted in the recognition of a gain of approximately $337 million.

On February 17, 2023, we entered into an agreement to sell a portion of our remaining Eagle Ford assets to INEOS Energy for approximately $1.4 billion, subject to post-closing adjustments. This transaction closed on April 28, 2023 (with an effective date of October 1, 2022) and resulted in the recognition of a gain of approximately $470 million.

On August 11, 2023, we entered into an agreement to sell the final portion of our remaining Eagle Ford assets to SilverBow Resources, Inc. (“SilverBow”) for approximately $700 million, subject to post-closing adjustments. Subject to the satisfaction of certain commodity price triggers, we may receive up to an additional $50 million cash consideration shortly following the first anniversary of the transaction close date. This transaction closed on November 30, 2023 (with an effective date of February 1, 2023) and resulted in the recognition of a gain of approximately $140 million.

LNG Agreement

On February 13, 2024, we announced our entrance into an LNG export deal that includes executed Sales and Purchase Agreements (“SPA”) for long-term liquefaction offtake. Under the SPAs, we will purchase approximately 0.5 million tonnes of LNG per annum from Delfin LNG LLC at a Henry Hub price with a contract targeted start date in 2028, then deliver to Gunvor Group Ltd., on a free on board basis with the sales price linked to the Japan Korea Market for a period of 20 years.

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The primary objective of the following information is to provide forward-looking quantitative and qualitative information about our exposure to market risk. The term market risk relates to our risk of loss arising from adverse changes in natural gas, oil and NGL prices and interest rates. These disclosures are not meant to be precise indicators of expected future losses, but rather indicators of reasonably possible losses. The forward-looking information provides indicators of how we view and manage our ongoing market risk exposures.

Commodity Price Risk

Our results of operations and cash flows are impacted by changes in market prices for natural gas, oil and NGL, which have historically been volatile. To mitigate a portion of our exposure to adverse price changes, we enter into various derivative instruments. Our natural gas, oil and NGL derivative activities, when combined with our sales of natural gas, oil and NGL, allow us to predict with greater certainty the revenue we will receive. We believe our derivative instruments continue to be highly effective in achieving our risk management objectives.

We determine the fair value of our derivative instruments utilizing established index prices, volatility curves and discount factors. These estimates are compared to counterparty valuations for reasonableness. Derivative transactions are also 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. Future risk related to counterparties not being able to meet their obligations has been partially mitigated under our commodity hedging arrangements that require counterparties to post collateral if their obligations to us are in excess of defined thresholds. 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. See Note 11 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for further discussion of the fair value measurements associated with our derivatives.

Our natural gas revenues during the Current Period, excluding any effect of our derivative instruments, were $1,374 million. We did not have any oil or NGL revenues during the Current Period. Based on production, natural gas revenues for the Current Period would have increased or decreased by approximately $137 million, for a 10% increase or decrease in prices. As of September 30, 2024, the fair value of our natural gas derivatives was a net asset of $191 million. As of September 30, 2024, we did not have any open oil or NGL derivative positions. A 10% increase in forward natural gas prices would decrease the valuation of natural gas derivatives by approximately $176 million, while a 10% decrease would increase the valuation by approximately $180 million. This fair value change assumes volatility based on prevailing market parameters at September 30, 2024. Additionally, should oil prices not meet the average target prices specified within the contingent payment from Crescent, we may not receive any payment from the up to $50 million contingent consideration arrangement. See Note 11 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for further information on our open derivative positions, including information about the contingent consideration arrangement.

As a result of the Southwestern Merger, our results of operations and cash flows will continue to be impacted by changes in market prices for natural gas, oil and NGL, which have historically been volatile. We plan to mitigate a portion of our exposure to adverse price changes and have entered into various derivative instruments, which includes hedge positions that cover approximately 45% of our projected natural gas volumes through the end of 2025.

Interest Rate Risk

Our exposure to interest rate changes relates primarily to borrowings under our Credit Facility. Interest is payable on borrowings under the Credit Facility based on floating rates. See Note 4 of the notes to our condensed consolidated financial statements included in Item 1 of Part 1 of this report for additional information. As of September 30, 2024, we did not have any outstanding borrowings under our Pre-IG Credit Facility.

As a result of the Southwestern Merger, we assumed approximately $3.7 billion of Southwestern’s senior notes, all of which had fixed interest rates. On October 1, 2024, Southwestern’s existing credit facility, which was based on floating interest rates, was terminated, with all loan amounts and other outstanding obligations thereunder repaid in full and all commitments thereunder extinguished, for approximately $585 million, which included all outstanding borrowings and transaction fees.

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Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded as of September 30, 2024 that our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the period covered by this quarterly report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Litigation and Regulatory Proceedings

We are involved in various regulatory proceedings, lawsuits and disputes arising in the ordinary course of our business operations, including commercial disputes, personal injury claims, royalty claims, property damage claims and contract actions. The majority of the legal proceedings that were in existence prior to the Petition Date were settled during the Chapter 11 Cases or will be resolved in connection with the claims reconciliation process before the Bankruptcy Court. Any allowed claim related to such prepetition litigation will be treated in accordance with the Plan.

In connection with the Southwestern Merger, two lawsuits have been filed by purported stockholders of the Company or Southwestern against the Company and/or the members of the Company’s board of directors: Gerald Joseph Lovoi v. Chesapeake Energy Corp., et al., No. 1:24-cv-01896 (S.D.N.Y. Mar. 13, 2024); Jeffrey Schantz v. Gass et al., No. 155009/2024 (N.Y. Sup. Ct. May 30, 2024). Included in one or both of the complaints were allegations that the defendants violated Sections 14(a) and 20(a) of the Exchange Act and were negligent in misrepresenting or omitting material facts under Florida common law, because the registration statement filed in connection with the Southwestern Merger allegedly omitted or misstated material information. On June 10, 2024, the complaint in the Supreme Court of the State of New York was dismissed. On June 24, 2024, the complaint in the United States District Court for the Southern District of New York was dismissed.

See Note 5 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for information regarding our estimation and provision for potential losses related to litigation and regulatory proceedings. Based on management’s current assessment, we are of the opinion that no pending or threatened lawsuit or dispute relating to our business operations is likely to have a material adverse effect on our future consolidated financial position, results of operations or cash flows. The final resolution of such matters could exceed amounts accrued, however, and actual results could differ materially from management’s estimates.

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.

Our business has many risks. Factors that could materially adversely affect our business, financial condition, operating results or liquidity and the trading price of our common stock are described under “Risk Factors” in Item 1A of our 2023 Form 10-K and the additional risk factor provided below, which supplements the risk factors included in our 2023 Form 10-K. This information should be considered carefully, together with other information in this report and other reports and materials we file with the SEC.

The completion of the Southwestern Merger may have triggered an annual limitation on the utilization of our tax attributes, reducing their ability to offset future taxable income, which may result in an increase to income tax liabilities. In addition, trading in our common stock, additional issuances of common stock, and certain other stock transactions could lead to an additional, potentially more restrictive annual limitation on the utilization of our tax attributes.

Upon emergence from bankruptcy on February 9, 2021, the Company experienced an ownership change under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code” and such change, a “Section

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382 Ownership Change”), as all of the common stock and preferred stock of our predecessor, or the old loss corporation, was canceled and replaced with common stock of the successor, or the new loss corporation (the “First Ownership Change”). As such, an annual limitation was computed for the First Ownership Change based on the fair market value of the new equity immediately after emergence multiplied by the long-term tax-exempt rate in effect for the month of February 2021. This annual limitation restricts the future utilization of our net operating loss (“NOL”) carryforwards, disallowed business interest carryforwards and tax credits that existed at the time of emergence.

The Southwestern Merger, on October 1, 2024, resulted in an ownership change for Southwestern and is being analyzed to determine if a Section 382 Ownership Change also occurred for the Company (the “Potential Second Ownership Change"). In addition, trading in our stock, additional issuances, and other stock transactions occurring subsequent to the First Ownership Change (or, if the Potential Second Ownership Change occurred, subsequent to the Southwestern Merger) could lead to a further Section 382 Ownership Change. In the event of any additional Section 382 Ownership Change, including the Potential Second Ownership Change, a new annual limitation would be determined at such time that could be more restrictive than the limitation of the First Ownership Change. Depending on the market conditions and the Company’s tax basis, an additional Section 382 Ownership Change may result in a net unrealized built-in loss. The annual limitation in such a case would additionally be applied to certain of the Company’s tax items other than just NOL carryforwards, disallowed business interest carryforwards and tax credits. For example, a portion of tax depreciation, depletion and amortization would also be subject to the annual limitation for a five-year period following the Section 382 Ownership Change, but only to the extent of the net unrealized built-in loss existing at the time of the additional Section 382 Ownership Change. Whether the new annual limitation would be more restrictive would depend on the value of our stock and the long-term tax-exempt rate in effect at the time of such Section 382 Ownership Change. If the Southwestern Merger resulted in a Section 382 Ownership Change for the Company, given the higher long-term tax exempt rates in effect in October 2024 as compared to prior years, we believe that the annual limitation on the utilization of the Company’s tax attributes will be less restrictive than the First Ownership Change. As a result, the new limitation would generally only apply to those tax attributes generated subsequent to the First Ownership Change. However, if the value of our common stock or long-term tax-exempt rates have decreased at the time any additional Section 382 Ownership Change occurs, such ownership change may be more restrictive than the First Ownership Change or the Potential Second Ownership Change, if applicable, and would apply to certain of the tax attributes existing at the time of the additional Section 382 Ownership Change, including those remaining from the time of the First Ownership Change and Potential Second Ownership Change, if applicable.

Some states impose similar limitations on tax attribute utilization upon experiencing an ownership change.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Repurchases of Equity Securities

We did not repurchase any shares of our common stock during the quarter ended September 30, 2024.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

During the three months ended September 30, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

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The exhibits listed below in the Index of Exhibits are filed, furnished or incorporated by reference pursuant to the requirements of Item 601 of Regulation S-K.

INDEX OF EXHIBITS

												Incorporated by Reference
Exhibit Number						Exhibit Description						Form						SEC File Number						Exhibit						Filing Date						Filed or Furnished Herewith
2.1						Fifth Amended Joint Plan of Reorganization of Chesapeake Energy Corporation and its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code (Exhibit A of the Confirmation Order).						8-K						001-13726						2.1						1/19/2021
2.2*						Agreement and Plan of Merger, dated as of January 10, 2024, among Chesapeake Energy Corporation, Hulk Merger Sub, Inc., Hulk LLC Sub, LLC, and Southwestern Energy Company.						8-K						001-13726						2.1						1/11/2024
3.1						Third Amended and Restated Certificate of Incorporation of Expand Energy Corporation.						8-K						001-13726						3.1						10/1/2024
3.2						Third Amended and Restated Bylaws of Expand Energy Corporation.						8-K						001-13726						3.2						10/1/2024
31.1						Domenic J. Dell’Osso, Jr., President and Chief Executive Officer, Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.																														X
31.2						Mohit Singh, Executive Vice President and Chief Financial Officer, Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.																														X
32.1						Domenic J. Dell’Osso Jr., President and Chief Executive Officer, Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.																														X
32.2						Mohit Singh, Executive Vice President and Chief Financial Officer, Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.																														X
101 INS						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.																														X
101 SCH						Inline XBRL Taxonomy Extension Schema Document.																														X
101 CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.																														X
101 DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.																														X
101 LAB						Inline XBRL Taxonomy Extension Labels Linkbase Document.																														X
101 PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.																														X
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).																														X
*						Annexes, schedules and certain exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted annexes, schedules and exhibits upon request by the SEC.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			EXPAND ENERGY CORPORATION
Date: October 29, 2024			By:						/s/ DOMENIC J. DELL’OSSO, JR.
									Domenic J. Dell’Osso, Jr. President and Chief Executive Officer
Date: October 29, 2024			By:						/s/ MOHIT SINGH
									Mohit Singh Executive Vice President and Chief Financial Officer