KEY POINTS
- Expand Energy plans to increase gas output by over 5 percent by 2026.
- The company is investing $2.7 billion in drilling and $300 million in expansion.
- LNG export growth and rising gas prices are expected to drive demand.
Expand Energy, formerly known as Chesapeake Energy, has announced plans to increase its natural gas production by over 5 percent by 2026 to meet rising demand.
The company’s CEO, Nick Dell’Osso, revealed the strategy during its fourth-quarter earnings call, emphasizing that the expansion will depend on market conditions.
The company reported that production is expected to rise from 6.4 billion cubic feet of gas equivalent per day (bcfed) in late 2024 to 7.1 bcfed in 2025 and 7.5 bcfed in 2026.
Despite strong earnings, Expand Energy’s stock price fell by 3 percent on Thursday, reaching a two-month low of $99.17.
However, the company’s decline was less severe compared to other U.S. energy firms, with APA Corporation’s stock dropping 8 percent and Comstock Resources and Range Resources seeing losses of 5 percent.
Investment in drilling and LNG export growth
To reach its production targets, Expand Energy plans to operate around 12 drilling rigs in 2025, investing $2.7 billion into its operations.
Additionally, the company intends to allocate $300 million to expand its capacity by mid-2025, potentially running 15 rigs to increase production further.
Dell’Osso explained that the company possesses investment flexibility through which it can adapt to market fluctuations. “We have time to watch the market and will adjust accordingly,” he said.
According to Reuters, one key driver behind the company’s strategy is the expected rise in LNG exports, which is set to increase demand for U.S. natural gas.
Expand Energy sees this as an opportunity to strengthen its position in the energy sector, with more than 11 billion cubic feet per day (bcfd) of LNG capacity currently under construction.
Market trends and price forecasts
Natural gas benchmarks at Henry Hub experienced a four-year lowest point in 2024, when prices fell to $2.19 per million British thermal units (mmBtu) and decreased by 14 percent from previous market values.
The economic downturn created reductions in output which became the first production decrease since the COVID-19 pandemic hit.
However, the U.S. Energy Information Administration (EIA) predicts gas price increases will occur for the forecasted period beginning in 2025 with $3.79 per mmBtu, and continuing through 2026 with $4.16 per mmBtu.
The price surge is likely to push production to 104.6 bcfd in 2025 and 107.3 bcfd in 2026, up from 103.1 bcfd in 2024.
Investment analysts at Piper Sandler believe Expand Energy is one of the few public operators positioned to meet growing natural gas demand, particularly for deliveries to the Gulf Coast LNG corridor.
The increased demand, they noted, is arriving earlier than expected, making Expand’s strategic production boost a timely move.
