Q4 2024 Expand Energy Corp Earnings Call (Excerpt)

Q4 2024 Expand Energy Corp Earnings Call

I have tried to reduce a lengthy and technical call transcript to the portion that address the Haynesville/Bossier.  I think there are two takeaways - the years of inventory (20 years) and a comparison of economics between Haynesville wells and Bossier wells.  Expand states the two are "somewhat equitable."  This portion of the transcript contains comments that mix the Haynesville with the Marcellus so I've attempted to high light the Haynesville by placing the text in bold.

Question.

So my follow-up is you've kind of certainly slipped into the presentation, 20 years plus of inventory. And I think you used to have the Southwestern, the Chesapeake standalone saying, we've got a 15-year backlog. I think -- when you think about -- we're telling you, you can hold this at $3 billion of capital, 7.5 Bcf a day.
It seems you're making life pretty simple for everybody to kind of lay out what the value proposition is. My question is, what commingling Bossier, Haynesville Upper, Lower Marcellus, what's extending the inventory? What is the relative economics look like of the portfolio today versus what you were seeing before?
And -- because I was obviously an impression that Bossier and Haynesville had very different returns, but now they're both part of the story. So if you could help us understand that a little bit, if that 20 years is an apples-for-apples comparison, that would be great.

Answer.

Yes. Look, it's essentially the productive life of -- around the assets that we generate today. So yes, Bossier is in there, Upper Marcellus is in there. And we continue to derisk all aspects of those plays that have less producing wells than maybe the more traditional Haynesville zone or the Lower Marcellus zone.
Our team has done some really, really good work over the last couple of years to add value to all of those locations. And every time we add value to those locations, more of those locations can turn green, so to speak, in our inventory counts and in our skyline charts.
One of the things that's happening here, though, is that as we brought these two companies together, we think that we are ultimately going to be most efficient and most effective and leaning on the capital efficiency of our business. We'll run less rigs than each company was running on a stand-alone basis.
And so the life extends, the number of years of development extends partially just because of that. But we're definitely very focused on continuing to turn more and more sticks within our acreage green, which allows us to add more adjacent acreage around our plays.

Question.

Let's stick on that same topic, if we could. And specifically with the Upper Marcellus and Bossier, can you talk about how -- what percentage of that is in the activity over the next couple of years? And just give us a sense of the relative economics of those zones comparatively. And are you seeing the ability to kind of what things are you seeing that can maybe improve those economics and you get closer to sort of the Haynesville Lower Marcellus?

Answer.

First on the split, we do provide a slide in the deck on slide 35 that provides the breakdown for the number of TILs. But you'll notice in the Haynesville, we are going to be slightly heavier weighted towards the Haynesville wells. So it's probably closer to 60% to 65%. And in the Northeast with the Upper and Lower, it's probably closer to maybe 45% Lower and the rest will be Upper.
And so on the comparative economics, one of the things I would just say, and I'll maybe start with the Haynesville specifically, both reservoirs offer tremendous potential from a return standpoint. And we like the productivity that we see in each the Bossier tends to be just a little bit more expensive on the completion side, but also recognize it's shallower. So drilling costs are a little bit less. We find productivity to be fantastic across both, I would say, somewhat equitable.