EXPAND ENERGY Corp

Results of Operations

Following the Twin Eagle Acquisition we completed during the Current Quarter, we changed our reportable segment structure from one reportable segment to two reportable segments: Exploration and Production (“E&P”) and Marketing. Prior-period information has been recast to conform to the current-period presentation. See Note 14 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for further discussion on our reportable segments.

The following table presents income from operations for each of our reportable segments and the related discussion for items impacting each segment. For items that are not allocated to reportable segments, but are meaningful to the discussion of our consolidated results of operations, those have been labeled “Other Condensed Consolidated Statements of Operations Items” within the below discussion.

Exploration and Production

Natural Gas, Oil and NGL Production and Average Sales Prices

Natural Gas, Oil and NGL Sales

Natural gas, oil and NGL sales during the Current Quarter increased $31 million compared to the Prior Quarter. Higher sales volumes, primarily driven by new well production, resulted in a $48 million increase. This increase was partially offset by a $17 million decrease resulting from lower average natural gas prices, partially offset by higher oil and NGL prices.

Natural gas, oil and NGL sales during the Current Period increased $855 million compared to the Prior Period. Higher average natural gas prices, primarily driven by Winter Storm Fern, increased revenues by $547 million. Additionally, increased volumes across all of our operating areas, driven by new well production, resulted in a $308 million increase.

Production Expenses

Production expenses during the Current Period increased $54 million compared to the Prior Period. This increase was primarily driven by increased salt water disposal expenses and workover expenses in Haynesville as a result of increased production activity.

Gathering, Processing and Transportation Expenses

Gathering, processing and transportation expenses during the Current Quarter and Current Period increased $70 million and $268 million compared to the Prior Quarter and Prior Period, respectively. These increases were primarily related to increased rates across all of our operating areas as well as increased volumes due to new well production, annual fee escalations and the NG3 pipeline going into service.

Severance and Ad Valorem Taxes

Severance and ad valorem taxes during the Current Quarter and Current Period increased $13 million and $36 million compared to the Prior Quarter and Prior Period, respectively. These increases were primarily related to higher effective severance tax rates in Haynesville.

Gains (Losses) on E&P Derivatives

See Note 11 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for a discussion of our derivative activity.

General and Administrative Expenses

Total general and administrative expenses, net during the Current Quarter and Current Period increased $5 million and $31 million compared to the Prior Quarter and Prior Period, respectively, due to an increase in employee compensation and benefits as well as other corporate expenses.

Separation and Other Termination Costs

During the Current Period and Prior Period, we recognized $12 million and $5 million, respectively, of separation and other termination costs related to one-time termination benefits for certain employees.

Depreciation, Depletion and Amortization

The absolute and per unit decrease in depreciation, depletion and amortization for the Current Period compared to the Prior Period is related to lower depletion rates in the Current Period due to an increase in prices used in the evaluation of our reserves.

Other Operating Expense (Income), Net

During the Current Quarter and Current Period, we recognized approximately $22 million of costs related to the Twin Eagle Acquisition, which included transaction fees, consulting and legal fees and other fees related to the transaction. During the Prior Quarter and Prior Period, other operating expense (income), net included favorable legal settlements of approximately $40 million. Additionally, during the Prior Period, we recognized approximately $53 million of costs related to the Southwestern Merger, which included employee expenses, legal fees, consulting fees and financial advisory fees.

Marketing

Marketing Revenues and Expenses

Marketing revenues and expenses increased in the Current Quarter compared to the Prior Quarter primarily as a result of increased activity following the close of the Twin Eagle Acquisition. Optimization efforts and increases in marketed volumes also contributed to an increase in marketing revenues and expenses.

Marketing revenues and expenses increased in the Current Period compared to the Prior Period primarily as a result of increased marketed volumes, higher prices amid natural gas price volatility as well as increased activity following the close of the Twin Eagle Acquisition, and optimization efforts.

The table below presents the total marketing derivative gains and losses included within our Marketing segment results. See Note 11 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for additional discussion.

Other Condensed Consolidated Statements of Operations Items

Interest Expense

The decrease in interest expense on debt during the Current Quarter and Current Period compared to the Prior Quarter and Prior Period was primarily due to lower average debt outstanding during the Current Quarter and Current Period. Capitalized interest decreased during the Current Quarter and Current Period compared to the Prior Quarter and Prior Period, as we ceased capitalizing interest on our investment in the NG3 pipeline once operations commenced on October 1, 2025.

See Note 4 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for additional discussion.

Income Taxes

The projected full year current and deferred taxes are allocated to the Current Period based on the proportion of year-to-date pre-tax book income to the projected full year pre-tax book income. As a result, an income tax expense of $569 million was recorded for the Current Period. Of this amount, $19 million was related to current taxes and $550 million was related to deferred taxes. An income tax expense of $329 million was recorded for the Prior Period. Of this amount, $9 million was related to current taxes and $320 million was related to deferred taxes. Our effective income tax rate was 20.6% and 20.6% during the Current Period and the Prior Period, respectively. Our effective tax rate can fluctuate due to the impact of discrete items, state income taxes and permanent differences. The OBBBA and its provisions contributed to a reduction in the Company’s expected current tax expense with an offsetting increase to the Company’s deferred tax expense. See Note 8 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for a discussion of income taxes.

Critical Accounting Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires 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.

Accounting for Business Combinations. We account for business combinations using the acquisition method of accounting, which requires us to recognize the assets acquired and liabilities assumed at their acquisition-date fair values. Any excess of the consideration transferred over the fair value of the identifiable net assets acquired is recognized as goodwill. Determining the acquisition-date fair values of the assets acquired and liabilities assumed requires significant judgment and the use of estimates and assumptions.

During the Current Quarter, we completed the Twin Eagle Acquisition. The preliminary purchase price allocation includes significant identifiable intangible assets, principally customer relationships and transportation and storage contracts, as well as goodwill. We engaged a third-party valuation specialist to assist management in estimating the fair values of the acquired intangible assets. The valuation of the customer relationship intangible assets was based on the multi-period excess earnings method, while the valuation of the transportation and storage contract intangible assets was based on a discounted cash flow analysis. Significant assumptions used in these valuations included forecasted revenue, customer attrition, operating margins, contract renewal assumptions and discount rates. These assumptions reflect management’s estimates of the future economic performance of the acquired businesses and are subject to uncertainty.

Changes in the underlying estimates and assumptions could materially affect the estimated fair values assigned to the assets acquired and liabilities assumed, the amount of goodwill recognized and future amortization expense. The purchase price allocation is preliminary and may be revised during the measurement period as additional information about facts and circumstances existing as of the acquisition date becomes available. See Note 2 of the notes to our condensed consolidated financial statements included in Item 1 of Part I of this report for additional information regarding the Twin Eagle Acquisition and the preliminary purchase price allocation.

Forward-Looking Statements

This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). Forward-looking statements include our current expectations or forecasts of future events, including matters relating to armed conflict between Russia and Ukraine, instability in the Middle East and Venezuela and changes in China-Taiwan relations, along with the effects of the current global economic environment, and the impact of each on our business, financial condition, results of operations and cash flows, actions by, or disputes among or between, members of OPEC+ and other foreign oil-exporting countries, market factors, market prices, our ability to meet debt service requirements, our ability to continue to pay cash dividends, the amount and timing of any cash dividends and our sustainability initiatives. Forward-looking and other statements in this Form 10-Q regarding our environmental, social and other sustainability plans and goals are not an indication that these statements are necessarily material to investors or required to be disclosed in our filings with the SEC. In addition, historical, current, and forward-looking environmental, social and sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. Forward-looking statements often address our expected future business, financial performance and financial condition, and often contain words such as “aim,” “predict,” “should,” "expect," “could,” “may,” "anticipate," "intend," "plan," “ability,” "believe," "seek," "see," "will," "would," “estimate,” “forecast,” "target," “guidance,” “outlook,” “opportunity” or “strategy.”

Although we believe the expectations and forecasts reflected in our forward-looking statements are reasonable, they are inherently subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. No assurance can be given that such forward-looking statements will be correct or achieved or that the assumptions are accurate or will not change over time. Particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include:

•reduced demand for natural gas, oil and natural gas liquids;

•negative public perceptions of our industry;

•competition in the natural gas and oil exploration and production industry;

•the volatility of natural gas, oil and NGL prices, which are affected by general economic and business conditions, as well as increased demand for (and availability of) alternative fuels and electric vehicles;

•risks from regional epidemics or pandemics and related economic turmoil, including supply chain constraints;

•write-downs of our natural gas and oil asset carrying values due to low commodity prices;

•significant capital expenditures are required to replace our reserves and conduct our business;

•our ability to replace reserves and sustain production;

•uncertainties inherent in estimating quantities of natural gas, oil and NGL reserves and projecting future rates of production and the amount and timing of development expenditures;

•drilling and operating risks and resulting liabilities;

•our ability to generate profits or achieve targeted results in drilling and well operations;

•leasehold terms expiring before production can be established;

•risks from our commodity price risk management activities;

•uncertainties, risks and costs associated with natural gas and oil operations;

•our need to secure adequate supplies of water for our drilling operations and to dispose of or recycle the water used;

•pipeline and gathering system capacity constraints and transportation interruptions;

•risks related to our plans to participate in the global LNG value chain;

•terrorist activities and/or cyber-attacks adversely impacting our operations;

•risks from failure to protect personal information and data and compliance with data privacy and security laws and regulations;

•disruption of our business by natural or human causes beyond our control;

•a deterioration in general economic, business or industry conditions;

•the impact of inflation and commodity price volatility, including as a result of decisions made by OPEC+ and armed conflict between Russia and Ukraine, instability in the Middle East due to the potential broadening of the military conflict between the U.S. and Iran beyond the Strait of Hormuz, instability in Venezuela, changes in China-Taiwan relations, along with the effects of the current global economic environment, on our business, financial condition, employees, contractors, vendors and the global demand for natural gas and oil and on U.S. and global financial markets;

•our inability to access the capital markets on favorable terms;

•the limitations on our financial flexibility due to our level of indebtedness and restrictive covenants from our indebtedness;

•challenges with employee recruitment and retention and an increasingly competitive labor market;

•risks related to acquisitions or dispositions, or potential acquisitions or dispositions;

•security threats, including cybersecurity threats and disruptions to our business and operations from breaches of our information technology systems, or from breaches of information technology systems of third parties with whom we transact business;

•our ability to achieve and maintain sustainability certifications, goals and commitments;

•environmental and sustainability legislation and regulatory initiatives, including those addressing the impact of climate change or further regulating hydraulic fracturing, greenhouse gas emissions, flaring or water disposal;

•federal and state tax proposals affecting our industry;

•risks related to an annual limitation on the utilization of our tax attributes, which was triggered upon the completion of the Southwestern Merger, as well as trading in our common stock, additional issuance of common stock, and certain other stock transactions, which could lead to an additional, potentially more restrictive, annual limitation;

•the results, effects and benefits of the Twin Eagle Acquisition, future opportunities for the Company, other plans with respect to the Twin Eagle Acquisition, and the anticipated impact of the Twin Eagle Acquisition on the Company’s results of operations, financial position, growth opportunities and competitive position;

•the integration of acquisitions, including the Twin Eagle Acquisition; and

•other factors that are described under Risk Factors in Item 1A of our 2025 Form 10-K, as updated by our Form 10-Qs and other filings with the SEC.

We caution you not to place undue reliance on the forward-looking statements contained in this report, which speak only as of the filing date, and we undertake no obligation and have no intention to update this information, except as required by law. We urge you to carefully review and consider the disclosures in this report and our other filings with the SEC that attempt to advise interested parties of the risks and factors that may affect our business.

All forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary statement.

Information About Us

Investors should note that we make available, free of charge on our website at expandenergy.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. We also post announcements, updates, events, investor information and presentations on our website in addition to copies of all recent news releases. We may use the Investors section of our website to communicate with investors. It is possible that the financial and other information posted on the Investors section of our website could be deemed to be material information. Documents and information on our website are not incorporated by reference herein.

The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers, including Expand Energy, that file electronically with the SEC.