EXPAND ENERGY Corp

Current report

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.

Current report

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

Current report

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.

Current report

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.

Current report

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