Expand curtailing some production ‘in direct acknowledgement that the market is weakening’
Expand Energy Corp., Spring, Tex., pulled back on some production during the third quarter, including by dropping a rig in Northeast Appalachia and a completion crew in the Haynesville, because of weaker prices for natural gas. Executives on Oct. 28 told analysts and investors that they’re prepared to curtail more work late this year and into 2027.
“As we’ve come into the fourth quarter, we’ve ended up reducing some of our activity,” chief operating officer Josh Viets said on a conference call following the release of Expand’s third-quarter results. “That activity reduction, moving from around 12 rigs down to 10, is in direct acknowledgement that the market is weakening.”
Viets was responding to a question from JPMorgan analyst Arun Jayaram, who neatly summed up the factors contributing to soft natural gas prices even though demand growth has been solid. The environment next year could be affected by Super El Niño weather patterns, more supply being transported out of the Permian basin and several LNG infrastructure owners being “a little bit more levered to the back end of the year.”
Viets agreed with that assessment of the supply-demand picture for the coming quarters and later said Expand is prepared to revisit the strategy it employed 2 years ago, when it built up its inventory of drilled but uncompleted wells while waiting for prices to climb.
“We pushed out about nine turn-in-lines out of Q3,” he added. “We are waiting on those still to think about the optimal time to bring them online.”
Map showing Corex and Saturn assets.
A map of IUG's Western and Eastern Development Areas.Expand turned in line 59 wells during the third quarter and spudded another 46. In the second quarter, those numbers were 48 and 55, respectively. Capital spending during the quarter was $403 million, down slightly from $409 million in this year's second quarter.
The Expand team, led as of this week by former Chord Energy Corp. president and chief executive officer Danny Brown, remains upbeat about the longer-term demand picture as more Gulf LNG infrastructure comes online and users such as power plants and data centers grow into their projections. By end-2028, Viets said, an additional 13 bcfd of demand should materialize on top of today’s need.
“The demand is coming and there is going to need to be a supply push in order to match that,” he added. “That should lead to higher prices. We will continue to be flexible.”
Other topics from the Expand conference call included:
- Viets discussing “a little bit of a shift” in the inflation Expand expects in 2027. Not surprisingly, the cost of diesel has contributed most to the company’s cost pressures this year but Viets said that will abate in 2027 as Expand teams use more e-fleets. Expected to take fuel’s place as industry activity has ramped up are the prices for pressure pumps and tubular goods.
- The economic viability of Expand’s Western Haynesville assets. Asked about how the company’s early efforts in that basin are progressing, Viets said one horizontal production well has come online and teams have drilled a second appraisal well about 15 miles north of that asset. Progress from here, he added, will be slow because the costs are not yet competitive. “This place is going to need greater than $4 gas right now in order to compete. We’re happy to be very methodical about how we appraise it," he said.
Shares of Expand (Ticker: EXE) were down about 2% to $92.82 in midday trading on Oct. 28. They’ve fallen about 5% over the past 6 months, trimming the company’s market capitalization to about $21.5 billion.
About the Author
Geert De LombaerdeGeert De Lombaerde
Senior Editor
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications Healthcare Innovation, IndustryWeek, FleetOwner, Oil & Gas Journal and T&D World. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.
