Expand Energy (EXE) Barclays 38th Annual CEO Energy-Power Conference 2024 summary

Gas market outlook and trends

• LNG demand is expected to grow significantly, with new projects like Golden Pass, Plaquemines, and Corpus Christi coming online through 2025-2026.

• Over 4 Bcf/d of new demand is anticipated from these projects, while capital investment in natural gas has been sharply reduced for over a year.

• Deferred and completed wells (D-TILs and DUCs) and production curtailments add uncertainty to current supply estimates.

• Underlying production declines are expected to become more apparent by late 2024 and into 2025.

• A tighter gas market is anticipated as reduced supply and rising demand converge, likely by early 2025.

Production dynamics and capital discipline

• Production has been more resilient than expected due to improved capital efficiency and less pipeline congestion.

• Despite a strong macro outlook for 2025, rig counts remain low and long-term contracts are not being signed, reflecting ongoing capital discipline.

• Both public and private operators are showing restraint, with private companies facing higher costs and inventory exhaustion.

• Higher interest rates and sponsor fatigue are limiting private capital inflows.

• Current curtailments are smaller than in spring, with flexibility to adjust production based on market conditions.

Operational efficiency and cost management

• Base production is outperforming expectations due to better well performance, faster drilling, and improved maintenance.

• Sustainable cost reductions are being achieved, especially in the Marcellus, with a focus on permanently lowering maintenance capital.

• Lower rig day rates are being locked in for 2025 through a rolling contract strategy.

• CapEx reductions are driven by strong base performance, reducing the need for new drilling.

• The goal is to sustain lower costs and improved efficiency into 2025 and beyond.