EXPAND ENERGY Corp

Results of Operations

Year ended December 31, 2025 compared to the year ended December 31, 2024

Below is a discussion of changes in our results of operations for 2025 compared to 2024. The results of operations discussed below include amounts pertaining to Southwestern after the merger closed on October 1, 2024. A discussion of changes in our results of operations for 2024 compared to 2023 has been omitted from this Form 10-K, but may be found in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Form 10-K for the year ended December 31, 2024 as filed with the SEC on February 26, 2025.

Natural Gas, Oil and NGL Production and Average Sales Prices

Natural Gas, Oil and NGL Sales

Natural gas, oil and NGL sales in 2025 increased $5,507 million compared to 2024. Increased volumes across all of our operating areas, which were primarily driven by the Southwestern Merger, resulted in a $3,476 million increase. Higher average natural gas prices also drove a $2,031 million increase in 2025.

Production Expenses

Production expenses in 2025 increased $319 million compared to 2024. The increases were primarily related to the Southwestern Merger and increased volumes across all of our operating areas.

Gathering, Processing and Transportation Expenses (“GP&T”)

Gathering, processing and transportation expenses in 2025 increased $1,341 million compared to 2024. These increases were primarily related to the Southwestern Merger and increased volumes and rates across all of our operating areas.

Severance and Ad Valorem Taxes

Severance and ad valorem taxes in 2025 increased $96 million compared to 2024. The increase was primarily related to a $103 million increase due to the Southwestern Merger, which impacted each of our operating areas. The increase due to the Southwestern Merger was partially offset by a decrease in the Haynesville statutory severance tax rate, which resulted in a per unit decrease.

Gain (Loss) on Derivatives

See Note 13 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for a complete discussion of our derivative activity.

Marketing Revenues and Expenses

Marketing revenues and expenses increased in 2025 compared to 2024 as a result of increased marketing activities primarily driven by our increased production volumes across all of our operating areas as a result of the Southwestern Merger as well as an increase in natural gas prices.

Exploration Expenses

During 2025, exploration expense of $46 million was primarily the result of $16 million of lease extension payments, $15 million of non-cash impairment charges related to expirations of unproved properties and $14 million of geological and geophysical expense. During 2024, exploration expense of $10 million was primarily the result of $6 million of non-cash impairment charges related to expirations of unproved properties and $3 million of geological and geophysical expense.

General and Administrative Expenses

Total general and administrative expenses, net during 2025 decreased $5 million compared to 2024 as the increase in employee compensation and benefits as a result of the Southwestern Merger was offset by a corresponding increase in allocations and reimbursements due to increased drilling and production activity. The per unit decrease in total general and administrative, net during 2025 compared to 2024 was due to increased production volumes as a result of the Southwestern Merger.

Separation and Other Termination Costs

During 2025 and 2024, we recognized $5 million and $23 million, respectively, of separation and other termination costs related to one-time termination benefits for certain employees.

Depreciation, Depletion and Amortization

The absolute increase in depreciation, depletion and amortization for 2025 compared to 2024 is primarily related to the Southwestern Merger. Depreciation, depletion and amortization per Mcfe decreased for 2025 compared to 2024 primarily due to lower depletion rates on wells acquired in the Southwestern Merger.

Other Operating Expense, Net

During 2025 and 2024, we recognized approximately $57 million and $312 million, respectively, of costs related to the Southwestern Merger, which included employee expenses, legal fees, consulting fees and financial advisory fees. In 2025, the costs related to the Southwestern Merger were partially offset by favorable legal settlements. In 2024, approximately $148 million of the Southwestern Merger costs were related to employee expenses.

Interest Expense

The increase in total interest expense for 2025 compared to 2024, was primarily due to our assumption of Southwestern’s Senior Notes as a result of the Southwestern Merger. Capitalized interest increased during 2025 compared to 2024 primarily as a result of increased capital activity following the completion of the Southwestern Merger. See Note 4 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for additional discussion.

Income Tax Expense (Benefit)

We recorded income tax expense of $463 million in 2025. Of this amount, $15 million is related to current federal and state income taxes, and the remainder is related to deferred federal and state income taxes. We recorded an income tax benefit of $127 million in 2024. Of this amount, $4 million is related to current federal and state income taxes, and the remainder is related to deferred federal and state income taxes. See Note 9 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for a discussion of income tax expense (benefit).

Critical Accounting Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States require us to make estimates and assumptions. The accounting estimates and assumptions that involve a significant level of estimation uncertainty and have or are reasonably likely to have a material impact on our financial condition or results of operations are discussed below. Our management has discussed each critical accounting estimate with the Audit Committee of our Board of Directors.

Natural Gas and Oil Reserves. 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 our 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. These revisions could materially affect our financial statements. The volatility of commodity prices results in increased uncertainty inherent in these estimates and assumptions. Changes in natural gas, oil or NGL prices could result in actual results differing significantly from our estimates. See Supplemental Disclosures About Natural Gas, Oil and NGL Producing Activities included in Item 8 of Part II of this report for further information.

Accounting for Business Combinations. We account for business combinations using the acquisition method, which is the only method permitted under FASB ASC Topic 805 – Business Combinations and involves the use of significant judgment. Under the acquisition method of accounting, a business combination is accounted for at a purchase price based on the fair value of the consideration given. The assets and liabilities acquired are measured at their fair values, and the purchase price is allocated to the assets and liabilities based upon these fair values. The excess, if any, of the consideration given to acquire an entity over the net amounts assigned to its assets acquired and liabilities assumed is recognized as goodwill. The excess, if any, of the fair value of assets acquired and liabilities assumed over the cost of an acquired entity is recognized immediately to earnings as a gain from bargain purchase.

The Company’s principal assets are its natural gas and oil properties, which are accounted for under the successful efforts accounting method. The Company determines the fair value of acquired natural gas and oil properties based on the discounted future net cash flows expected to be generated from these assets. Discounted cash flow models by operating area are prepared using the estimated future revenues and operating costs for all proved developed properties and undeveloped properties comprising the proved and unproved reserves. Significant inputs associated with the calculation of discounted future net cash flows include estimates of (i) future production volumes based on estimated reserves, (ii) future operating and development costs, (iii) future commodity prices escalated by an inflationary rate after three years, adjusted for differentials, and (iv) a market-based weighted average cost of capital by operating area. The Company utilizes NYMEX strip pricing, adjusted for differentials, to value the reserves. The NYMEX strip pricing inputs used are classified as Level 1 fair value assumptions and all other inputs are classified as Level 3 fair value assumptions. The discount rates utilized are derived using a weighted average cost of capital computation, which includes an estimated cost of debt and equity for market participants with similar geographies and asset development type by operating area.

See Note 2 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for additional information on our business combinations, including the Southwestern Merger, which was completed on October 1, 2024.

Income Taxes. Income taxes are accounted for using the asset and liability method as required by GAAP. Deferred tax assets and liabilities arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets for tax attributes such as NOL carryforwards and disallowed business interest carryforwards are also recognized. Deferred tax assets represent potential future tax benefits and are reduced by a valuation allowance if it is more likely than not that such benefits will not be realized.

In assessing the need for a valuation allowance or adjustments to existing valuation allowances, one source of evidence is a projection of income exclusive of existing timing differences. Our judgement regarding the realizability of deferred tax assets is thus partially affected by estimates of future financial condition.

We also routinely assess potential uncertain tax positions and, if required, establish accruals for such positions. Accounting guidance for recognizing and measuring uncertain tax positions requires that a more likely than not threshold condition be met on a tax position, based solely on its technical merits of being sustained, before any benefit of the uncertain tax position can be recognized in the financial statements. If it is more likely than not a tax position will be sustained, we measure and recognize the position following a cumulative probability estimate.

Impairments. Long-lived assets used in operations, including proved gas and oil properties, are assessed for impairment whenever changes in facts and circumstances indicate a possible significant deterioration in future cash flows expected to be generated by an asset group. Individual assets are grouped for impairment purposes based on a judgmental assessment of the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. If there is an indication the carrying amount of an asset may not be recovered, the asset is assessed by management through an established process in which changes to significant assumptions such as prices, volumes, and future development plans are reviewed. If, upon review, the sum of the undiscounted pre-tax cash flows is less than the carrying value of the asset group, the carrying value is written down to estimated fair value by discounting using a weighted average cost of capital. Because there usually is a lack of quoted market prices for long-lived assets, the fair value of impaired assets is assessed by management using the income approach. Level 3 inputs associated with the calculation of discounted cash flows used in the impairment analysis include our estimate of future natural gas and crude oil prices, production costs, development expenditures, anticipated production of proved reserves and other relevant data. Additionally, we utilize NYMEX strip pricing, adjusted for differentials, to value the reserves.