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In addition, our headquarters is currently located in Oklahoma City, Oklahoma, an area that experiences earthquakes and severe weather events, including tornadoes. Our information systems and administrative and management processes are primarily provided to our various drilling projects and producing wells throughout the United States from this location, which could be disrupted if a catastrophic event destroyed or severely damaged our headquarters. Any such catastrophic event could harm our ability to conduct normal operations and could adversely affect our business.
A deterioration in general economic, political, business or industry conditions would have a material adverse effect on our results of operations, liquidity and financial condition.
Historically, concerns about global economic growth and international political stability have had a significant impact on global financial markets and commodity prices, including petroleum products. If the economic or political climate in the United States or abroad deteriorates, worldwide demand for petroleum products could diminish, which could impact the price at which we can sell our production, affect the ability of our vendors, suppliers and customers to continue operations and materially adversely impact our results of operations, liquidity and financial condition. The global market is also continuing to experience inflationary pressure, including rising fuel costs, a tightening steel market and labor and supply chain shortages, which could result in increases to our operating and capital costs that are not fixed. Additionally, while concerns over energy security have, in some situations, seen increased demand for natural gas, sustained concerns over energy security may result in an accelerated adoption of renewable energy and other alternative energy generation or storage, or energy efficiency, technologies. Any such accelerated adoption of alternative energy sources or energy efficiency improvements may decrease demand for our products or otherwise adversely impact our financial condition or results of operations.
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We may be unable to dispose of assets on attractive terms, and may be required to retain liabilities for certain matters.
Various factors could materially affect our ability to dispose of assets if and when we decide to do so, including the availability of purchasers willing to purchase the assets at prices acceptable to us, particularly in times of reduced and volatile commodity prices. Sellers typically retain liabilities for certain matters. The magnitude of any such retained liability or indemnification obligation may be difficult to quantify at the time of the transaction and ultimately may be material. Also, as is typical in divestiture transactions, third parties may be unwilling to release us from guarantees or other credit support provided prior to the sale of the divested assets. As a result, after a sale, we may remain secondarily liable for the obligations guaranteed or supported to the extent that the buyer of the assets fails to perform these obligations.
Military and other armed conflicts, including terrorist activities, and related price volatility and geopolitical instability could materially and adversely affect our business and results of operations.
Military and other armed conflicts, terrorist attacks and the threat of both, whether domestic or foreign, could cause further instability in the global financial and energy markets. The armed conflict between Russia and Ukraine, continued instability in the Middle East and Venezuela, and changes in China-Taiwan relations and the occurrence or threat of terrorist attacks in the United States or other countries could adversely affect the global economy in unpredictable ways, including the disruption of energy supplies and markets, increased volatility in commodity prices, including petroleum products, or the possibility that the infrastructure on which we rely could be a direct target or an indirect casualty of an act of terrorism, and, in turn, could materially and adversely affect our business and results of operations.
For example, in late February 2022, Russia launched a military invasion against Ukraine. Sustained conflict and disruption in the region are likely in the near term, and the longer-term duration of the war is uncertain. The Russian invasion has caused, and could intensify, volatility in natural gas, oil and NGL prices, driving a sharp upward spike in the short term, and may have an impact on global growth prospects, which could in turn affect demand for natural gas and oil. In addition, any exacerbation or spillover of the current armed conflict between Israel and Hamas into the broader region could produce similar impacts. Any such volatility, impacts on demand and disruptions may also magnify the impact of other risk factors described in this report.
Regional epidemics or pandemics and related economic turmoil, including supply chain constraints, have affected, and could in the future adversely affect our business, financial condition, results of operations and cash flows.
The COVID-19 pandemic adversely impacted the entire global economy, including creating supply chain constraints, and any future regional epidemics or global pandemics and governmental and other measures implemented to try to address them, such as quarantines, shelter-in-place orders, business and government shutdowns and restrictions on operations, could adversely affect our business, financial condition, results of operations and cash flows. Actions by our customers and derivative contract counterparties in response to such events and their economic impacts, including potential non-performance or delays, could also have an adverse impact on our business.
Financial Risks Related to our Business
We have significant capital needs, and our ability to access the capital and credit markets to raise capital on favorable terms is limited by industry conditions.
Disruptions in the capital and credit markets, in particular with respect to the energy sector, could limit our ability to access these markets or may significantly increase our cost to borrow. In the past, low commodity prices have caused and may continue to cause lenders to increase the interest rates under upstream operators’ credit facilities, enact tighter lending standards, refuse to refinance existing debt around maturity on favorable terms or at all and may reduce or cease to provide funding to borrowers. Additionally, certain financial institutions have announced their intention to cease investment banking and corporate lending activities in the North American gas and oil sector or have established climate-related funding commitments that could have the effect of limiting their investment in us or our industry. If we are unable to access the capital and credit markets on favorable terms, it
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could have a material adverse effect on our business, financial condition, results of operations, cash flows and liquidity and our ability to repay or refinance our debt. Additionally, challenges in the economy have led and could further lead to reductions in the demand for gas and oil, or further reductions in the prices of gas and oil, or both, which could have a negative impact on our financial position, results of operations and cash flows.
Restrictive covenants in certain of our existing and future debt instruments may limit our ability to finance our operations, fund our capital needs, respond to changing conditions and engage in other business activities that may be in our best interests.
Restrictive covenants in certain of our existing and future debt instruments may limit our ability to finance our operations, fund our capital needs, respond to changing conditions and engage in other business activities that may be in our best interests. Certain of our debt instruments contain, and the terms of any future indebtedness may contain, restrictive covenants that limit our ability to, among other things: incur or guarantee additional indebtedness; create liens; merge or consolidate with another entity; make restricted payments; and engage in transactions with affiliates. A breach of any of these restrictive covenants could result in default under the applicable debt instrument.
We may be prevented from taking advantage of business opportunities that arise because of the limitations imposed on us by the restrictive covenants and financial covenants contained in our debt instruments. As an example, our Amended and Restated Credit Agreement dated September 30, 2025 (the “Credit Agreement”) requires us to comply with a total indebtedness to capitalization ratio not to exceed 65%. The requirement that we comply with these provisions may adversely affect our ability to react to changes in market conditions, take advantage of business opportunities we believe to be desirable, obtain future financing, fund needed capital expenditures or withstand a continuing or future downturn in our business.
Changes to the ability of our customers to receive our products or meet their financial, performance and other obligations to us could adversely impact our business and financial condition.
In addition to credit risk related to receivables from commodity derivative contracts, our principal exposures to credit risk are through receivables resulting from the sale of our natural gas, oil and NGL production that we market to energy companies, end users and refineries ($1,363 million as of December 31, 2025). We do not require all of our customers to post collateral. The inability or failure of our customers to meet their obligations to us or their insolvency or liquidation may adversely affect our financial condition.
We have a significant amount of indebtedness, which will limit our liquidity and financial flexibility. We may also incur additional indebtedness in the future.
As of December 31, 2025, we had indebtedness of approximately $5.0 billion, which included approximately $3.7 billion of Southwestern’s senior notes we assumed as a result of the Southwestern Merger during the year ended December 31, 2024. In addition, subject to the limits contained in the documents governing such indebtedness, we may be able to incur substantial additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions or for other purposes. Our indebtedness and other financial commitments have important consequences to our business, including, but not limited to:
• making it more difficult for us to satisfy our obligations with respect to senior notes and other indebtedness due to the increased debt-service obligations, which could, in turn, result in an event of default on such other indebtedness or the senior notes;
• requiring us to dedicate a substantial portion of our cash flows from operations to debt service payments, thereby limiting our ability to fund working capital, capital expenditures, investments or acquisitions and other general corporate purposes;
• increasing our vulnerability to general adverse economic and industry conditions, including low commodity price environments;
• limiting our ability to obtain additional financing due to higher costs and more restrictive covenants;
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• limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and
• placing us at a competitive disadvantage compared with our competitors that have proportionately less debt and fewer guarantee obligations.
Any failure to meet our debt obligations could harm our business, financial condition and results of operations.
Our earnings and cash flow fluctuate from year to year due to the variable nature of commodity prices. If our cash flow and capital resources are insufficient to fund our debt obligations, we may be forced to sell assets, seek equity sales or restructure our debt. Our ability to restructure our debt will depend on the condition of the capital markets and our financial condition at such time. Any restructuring of debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our operations and our financial flexibility. The terms of existing or future debt instruments may restrict us from adopting some of these alternatives.
We receive debt ratings from the major credit rating agencies in the United States. Factors that may impact our credit ratings include debt levels, planned asset purchases or sales and near-term and long-term cash flow relative to debt balances. Liquidity, asset quality, cost structure, product mix (natural gas, oil and NGLs) and projected commodity pricing levels are also considered by the rating agencies. A ratings downgrade could adversely impact our ability to access debt markets in the future, increase the cost of future debt and could require us to post letters of credit or other forms of collateral for certain obligations. Many of our existing commercial contracts contain, and future commercial contracts may contain, provisions permitting the counterparty to require increased security upon the occurrence of a downgrade in our credit rating. We cannot provide assurance that our current ratings will remain in effect for any given period of time or that a rating will not be downgraded in the future.
Our ability to comply with the covenants and other restrictions in our financing agreements may be affected by events beyond our control, including prevailing economic and financial conditions.
Failure to comply with the covenants and other restrictions could lead to an event of default and the acceleration of our obligations under our senior notes, credit facility or other financing agreements, and in the case of the lease agreements for drilling rigs, compressors and pressure pumping equipment, loss of use of the equipment. In particular, the occurrence of risks identified elsewhere in this section, such as declines in commodity prices, increases in basis differentials and inability to access markets, could reduce our profits and thus the cash we have to fulfill our financial obligations. If we are unable to satisfy our obligations with cash on hand, we could attempt to refinance such debt, sell assets or repay such debt with the proceeds from an equity offering. We cannot assure that we will be able to generate sufficient cash flow to pay the interest on our debt, to meet our lease obligations, or that future borrowings, equity financings or proceeds from the sale of assets will be available to pay or refinance such debt or obligations. The terms of our financing agreements may also prohibit us from taking such actions. Factors that will affect our ability to raise cash through an offering of our capital stock, a refinancing of our debt or a sale of assets include financial market conditions and our market value and operating performance at the time of such offering or other financing. We cannot assure that any such proposed offering, refinancing or sale of assets can be successfully completed or, if completed, that the terms will be favorable to us.
Our common stockholders will be diluted if additional shares are issued.
We endeavor to create value for our stockholders on a per share basis. From time to time, we have issued stock to raise capital for our business or as consideration for acquisitions. We also issue common stock from time to time as a result of Warrant exercise and we issue restricted stock and performance share units to our employees and directors as part of their compensation. In addition, we may issue additional shares of common stock, additional notes or other securities or debt convertible into common stock, to extend maturities or fund capital expenditures. If we issue additional shares of our common stock in the future, it may have a dilutive effect on our current outstanding stockholders.
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Our ability to declare and pay dividends, and to repurchase common stock, is subject to limitations.
The payment of future dividends on, and any repurchases of, our common stock are each subject to the discretion of the Board of Directors, taking into consideration, among other factors, financial results, cash requirements, future prospects, restrictions under our indentures and other financing agreements, restrictions under Oklahoma law, general business and market conditions, and other factors the Board of Directors deems relevant. The Board of Directors is not required to declare dividends on or repurchase our common stock and may decide not to declare dividends or repurchase common stock at the current rate or at all. Any downward revision in the amount of dividends we pay to stockholders, or reduction in the pace or amount of share repurchases, could have an adverse effect on the market price of our common stock.
The trading price and volume of our common stock may be volatile, and you could lose a significant portion of your investment.
The market price of our common stock could be volatile, and holders of our common stock may not be able to resell their shares of common stock at or above the price at which they acquired such securities due to fluctuations in the market price of our common stock. The stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of the common stock. Specific factors that may have a significant effect on the market price for our common stock include:
• general economic conditions within the U.S. and internationally, including inflationary pressures and changes in interest rates;
• general market conditions, including fluctuations in commodity prices;
• domestic and international economic, legal and regulatory factors unrelated to our performance;
• changes in natural gas, oil and NGL prices;
• volatility in the financial markets or other global economic factors;
• actual or anticipated fluctuations in our and our competitors’ quarterly and annual results;
• quarterly variations in the rate of growth of our financial indicators;
• our business, operations, results and prospects;
• our operating and financial performance;
• future mergers and acquisitions, divestitures, joint ventures or similar strategic alliances;
• market conditions in the energy industry;
• changes in government regulation, taxes, legal proceedings or other developments;
• shortfalls in our operating results from levels forecasted by securities analysts;
• investor sentiment toward the stock of oil and gas companies;
• changes in revenue or earnings estimates, or changes in recommendations by equity research analysts;
• failure to achieve the perceived benefits of the acquisitions, including financial results and anticipated synergies, as rapidly as or to the extent anticipated by financial or industry analysts;
• speculation in the press or investment community;
• the failure of research analysts to cover our stock;
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• sales of common stock by us, large shareholders or management, or the perception that such sales may occur;
• changes in accounting principles, policies, guidance, interpretations or standards;
• announcements concerning us or our competitors;
• public reaction to our press releases, other public announcements and filings with the SEC;
• strategic actions taken by competitors;
• actions taken by our shareholders;
• additions or departures of key management personnel;
• maintenance of acceptable credit ratings or credit quality; and
• the general state of the securities markets.
These and other factors may impair the market for our common stock and the ability of investors to sell shares at an attractive price. These factors also could cause the market price and demand for our common stock to fluctuate substantially, which may negatively affect the price and liquidity of our common stock. Many of these factors and conditions are beyond our control.
Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market price of a company’s securities. Such litigation, if instituted against us, could result in very substantial costs, divert management’s attention and resources and harm our business, operating results and financial condition.
Legal and Regulatory Risks
We are subject to extensive governmental regulation, which can change and could adversely impact our business.
Our operations are subject to extensive federal, state, local and other laws, rules and regulations, including with respect to the environment, worker health and safety, wildlife conservation, the gathering and transportation of gas, oil and NGLs, conservation policies, reporting obligations, royalty payments, unclaimed property, the imposition of taxes and tribal laws for a minor portion of our acreage. Such regulations include requirements for permits to drill and to conduct other operations and for provision of financial assurances (such as bonds) covering drilling, completion and well operations. If permits are not issued, or if unfavorable restrictions or conditions are imposed on our drilling or completion activities, we may not be able to conduct our operations as planned.
In addition, changes in public policy have affected, and in the future could further affect, our operations. At both the federal and state level, for example, there are an increasing number of legislative initiatives and proposals that may lead to reduced demand for fossil fuels such as oil and gas. These include certain tax advantages and other subsidies to support alternative energy sources or that mandate the use of specific fuels or technologies, in addition to the promotion of research into new technologies to reduce the cost and increase the scalability of alternative energy sources. The IRA, signed into law in August 2022, provides significant funding and incentives for research, development and implementation of low-carbon energy production methods, carbon capture, and other programs directed at addressing climate change. In January 2025, the current Presidential Administration announced Executive Orders related to climate, energy and environmental matters that, among other things, withdrew the U.S. from the Paris Agreement; paused issuance and implementation of pending regulations; required a review of recent final regulations and federal financial assurance potentially related to climate change and low-carbon initiatives, potentially including direct air capture and sequestration; and rescinded prior Executive Orders supportive of such projects. Additional actions by the current Presidential Administration or Congress to revise, amend, or roll back statutes like the IRA or Infrastructure Investment and Jobs Act, or regulations that support direct air capture, sequestration and other low-carbon ventures could materially impact our current or future low-carbon operations and strategy. See Exploration and Production, Environmental, Health and Safety and Occupational Laws and
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Regulations included in Item 1 of Part I of this report for more information on methane emissions and greenhouse gas reporting.
Pipeline Safety. The pipeline assets in which we own interests are subject to stringent and complex regulations related to pipeline safety and integrity management. The PHMSA has established a series of rules that require pipeline operators to develop and implement integrity management programs for gas, NGL and condensate transmission pipelines as well as for certain low stress pipelines and gathering lines transporting hazardous liquids, such as oil, that, in the event of a failure, could affect “high consequence areas.” Recent PHMSA rules have also extended certain requirements for integrity assessments and leak detections beyond high consequence areas and impose a number of reporting and inspection requirements on regulated pipelines. In November 2021, the PHMSA issued a final rule that expands certain federal pipeline safety requirements to all onshore gas gathering pipelines, regardless of size or location. The final rule establishes two new types of onshore gas gathering pipelines subject to varying degrees of regulation: all onshore gathering line operators are now subject to PHMSA’s annual reporting and incident reporting requirements, and certain previously unregulated rural gas gathering lines must now comply with PHMSA damage prevention and, depending on the size of the pipeline, construction and operational requirements. The final rule became effective on May 16, 2022. Further, legislation funding the PHMSA through 2023 requires the agency to engage in additional rulemaking (i) to amend the integrity management program, emergency response plan, operation and maintenance manual and pressure control recordkeeping requirements for gas distribution operators, (ii) to create new leak detection and repair program obligations and (iii) to set new minimum federal safety standards for onshore gas gathering lines. In January 2025, the PHMSA finalized a rule that requires pipelines, underground natural gas storage facilities, and liquefied natural gas facilities to update leak detection and repair programs to require companies to use commercially available technologies to find and fix methane leaks from pipelines and other facilities. However, shortly before the rule could be published or become effective, the current Presidential Administration published an Executive Order directing federal agencies to immediately withdraw all unpublished rules pending further review and approval. Proposed bill H.R. 4818, introduced in the House of Representatives in July 2025, would codify the January 2025 PHMSA rule, but the bill has not passed to date. At this time, we cannot predict the cost of these requirements or other potential new or amended regulations, but they could be significant. Moreover, violations of pipeline safety regulations can result in the imposition of significant penalties. However, in January 2025, the current Presidential Administration issued an Executive Order directing the heads of all federal agencies to identify and begin the processes to suspend, revise, or rescind all agency actions that are unduly burdensome on the identification, development, or use of domestic energy resources. Consequently, future implementation and enforcement of these final rules remains uncertain at this time.
Hydraulic Fracturing. Hydraulic fracturing typically is regulated by state oil and natural gas commissions or similar agencies, but EPA has asserted federal regulatory authority pursuant to the Safe Drinking Water Act over certain hydraulic fracturing activities involving the use of diesel fuel in fracturing fluids and issued permitting guidance that applies to such activities.
Several states have adopted or are considering adopting regulations that could impose more stringent permitting, public disclosure and/or well construction requirements on hydraulic fracturing operations. State regulatory agencies have also recently focused on a possible connection between the operation of injection wells used for natural gas and oil waste disposal and seismic activity, which has caused some states, such as New Mexico, Oklahoma and Texas, to implement seismicity response programs that allow state regulators to deny, modify, suspend or terminate injection well permits if the state regulator determines that the injection well is contributing or likely to contribute to seismic activity. In some instances, regulators may also order that disposal wells be shut in. States could also elect to prohibit high volume hydraulic fracturing altogether. A number of lawsuits have been filed alleging that disposal well operations have caused damage to neighboring properties or otherwise violated state and federal rules regulating waste disposal. In addition to state laws, local land use restrictions, such as city ordinances, may restrict drilling in general and/or hydraulic fracturing in particular. We cannot predict whether additional federal, state or local laws or regulations applicable to hydraulic fracturing will be enacted in the future and, if so, what actions any such laws or regulations would require or prohibit. If additional levels of regulation or permitting requirements were imposed on hydraulic fracturing operations, our business and operations could be subject to delays, increased operating and compliance costs and potential bans. Additional regulation could also lead to greater opposition to hydraulic fracturing, including litigation.
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Climate Change and Regulation of Methane and Other Greenhouse Gas Emissions. Political and social attention to the issue of climate change has resulted in legislative, regulatory and other initiatives to reduce GHG emissions, such as carbon dioxide and methane. Policy makers at both the U.S. federal and state levels have adopted, or are considering adopting, rules designed to quantify and limit the emission of GHGs through inventories, limitations and/or taxes on GHG emissions. For example, the EPA has issued regulations for the control of methane emissions, which include leak detection and repair requirements, for the gas and oil industry. In November 2021, the EPA proposed new performance standards and emissions guidelines for new, modified, reconstructed and existing oil and gas facilities. The proposed rule sought to make the existing regulations in Subpart OOOOa more stringent and create a Subpart OOOOb to expand reduction requirements for new, modified, and reconstructed oil and gas sources, including standards focusing on certain source types that have never been regulated under the CAA (including intermittent vent pneumatic controllers, associated gas, and liquids unloading facilities). In addition, the proposed rule sought to establish “Emissions Guidelines,” creating a Subpart OOOOc that would require states to develop plans to reduce methane emissions from existing sources that must be at least as effective as presumptive standards set by EPA. In November 2022, the EPA issued a supplemental proposed rule, which among other things, removed an emissions monitoring exemption for small wellhead-only sites and created a new third-party monitoring program to flag large emissions events, referred to in the proposed rule as “super emitters”. See Exploration and Production, Environmental, Health and Safety and Occupational Laws and Regulations included in Item 1 of Part I of this report for more information on the EPA’s and BLM’s rules.
In addition, several states in which we operate have imposed limitations designed to reduce methane emissions from gas and oil exploration and production activities. Legislative and state initiatives to date have generally focused on the development of renewable energy standards and/or cap-and-trade and/or carbon tax programs. Renewable energy standards (also referred to as renewable portfolio standards) require electric utilities to provide a specified minimum percentage of electricity from eligible renewable resources, with potential increases to the required percentage over time. The development of a federal renewable energy standard, or the development of additional or more stringent renewable energy standards at the state level could reduce the demand for gas and oil, thereby adversely impacting our earnings, cash flows and financial position. In addition, federal or state carbon taxes or fees could directly increase our costs of operation.
At the international level, the United Nations sponsored “Paris Agreement” requires member states to submit non-binding, individually determined reduction goals known as Nationally Determined Contributions every five years after 2020. Although the previous Presidential Administration recommitted the United States to the Paris Agreement in 2021 and announced a goal of reducing the United States’ GHG emissions by 50-52% below 2005 levels by 2030, on January 20, 2025, the current Presidential Administration issued an Executive Order directing the immediate notice to the United Nations of the United States’ withdrawal from the Paris Agreement and all other agreements made under the United Nations Framework Convention on Climate Change. At the same time, various state and local governments have publicly committed to furthering the goals of the Paris Agreement. As a result, it is not possible at this time to predict how legislation or regulations that may be adopted to address climate change, methane and other GHG emissions would impact our business. Further, the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo to overrule Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc. and end the concept of general deference to regulatory agency interpretations of laws introduces new complexity for federal agencies and administration of climate change policy and regulatory programs. However, many of these initiatives at the international, state and local levels are expected to continue.
These various legislative, regulatory and other activities addressing GHG emissions could adversely affect our business, including by imposing reporting obligations on, or limiting emissions of GHGs from, our equipment and operations, which could require us to incur costs to reduce emissions of GHGs associated with our operations. Limitations on GHG emissions could also adversely affect demand for gas and oil, which could lower the value of our reserves and have a material adverse effect on our profitability, financial condition and liquidity. Additionally, political, litigation and financial risks may result in our restricting or canceling production activities, incurring liability for infrastructure damages as a result of climatic changes, or impairing our ability to continue to operate in an economic manner. One or more of these developments could have a material adverse effect on our business, financial condition and results of operations.
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Costs to comply with environmental, health and safety regulations and initiatives can be significant.
As an owner, lessee or operator of gas and oil properties, we are subject to various federal, state, tribal and local laws and regulations relating to discharge of materials into, and protection of, the environment. These laws and regulations may, among other things, impose liability on us for the cost of remediating pollution that results from our operations. Environmental laws may impose strict, joint and several liability, and failure to comply with environmental laws and regulations can result in the imposition of administrative, civil or criminal fines and penalties, as well as injunctions limiting operations in affected areas. Any future costs associated with these matters are uncertain and could be influenced by several factors, including any new or amended regulatory requirements or changes to the interpretation of existing regulatory requirements. One or more of these matters could have a material adverse effect on our business, financial condition and results of operations. Applicable environmental laws and regulations may:
• require the acquisition of a permit or other authorization and procurement of financial assurance before construction or drilling commences and for certain other activities;
• limit or prohibit construction, drilling and other activities on certain lands lying within wilderness and other protected areas; and
• impose substantial liabilities for pollution resulting from our operations.
The permits required for our operations may be subject to revocation, modification and renewal by issuing authorities. Governmental authorities have the power to enforce their regulations, and violations are subject to fines or injunctions, or both. In the opinion of management, we are in substantial compliance with current applicable environmental laws and regulations, and have no material commitments for capital expenditures to comply with existing environmental requirements. Nevertheless, changes in existing environmental laws and regulations or in interpretations thereof could have a significant impact on our company, as well as the oil and natural gas industry in general.
The Comprehensive Environmental, Response, Compensation, and Liability Act (“CERCLA”) and comparable state statutes impose strict, joint and several liability on several categories of persons, including current and former owners and operators of sites and on persons who disposed of or arranged for the disposal of “hazardous substances” found at such sites. It is not uncommon for the neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment. The federal Resource Conservation and Recovery Act (“RCRA”) and comparable state statutes govern the disposal of “solid waste” and “hazardous waste” and authorize the imposition of substantial fines and penalties for noncompliance. Although CERCLA currently excludes petroleum from its definition of “hazardous substance,” state laws affecting our operations may impose clean-up liability relating to petroleum and petroleum related products. In addition, although RCRA classifies certain oil field wastes as “non-hazardous” if properly handled, such exploration and production wastes could be reclassified in the future as hazardous wastes thereby making such wastes subject to more stringent handling and disposal requirements. Recent regulation and litigation that has been brought against others in the industry under RCRA concern liability for earthquakes that were allegedly caused by injection of oil field wastes.
The Endangered Species Act (“ESA”) seeks to ensure that activities do not jeopardize endangered or threatened animal, fish and plant species, nor destroy or modify the critical habitat of such species. Under the ESA, if a species is listed as threatened or endangered, restrictions may be imposed on activities adversely affecting that species or its habitat. Accordingly, restrictions may be imposed on exploration and production operations, as well as actions by federal agencies, to avoid significantly impairing or jeopardizing the species or its habitat. The ESA provides for criminal penalties for willful violations of the ESA. The U.S. Fish and Wildlife Service must also designate the species’ critical habitat and suitable habitat as part of the effort to ensure survival of the species. A critical habitat or suitable habitat designation could result in further material restrictions to land use and may materially delay or prohibit land access for oil and natural gas development. Other statutes that provide protection to animal and plant species and that may apply to our operations include, but are not necessarily limited to, the Fish and Wildlife Coordination Act, the Fishery Conservation and Management Act, the Migratory Bird Treaty Act and the National Historic Preservation Act. In April 2025, the U.S. Department of Interior issued a memo, M-37085, to repeal M-37065, which had previously declared that the Migratory Bird Treaty Act prohibited both the intentional and incidental “take” of migratory birds. The memo restored M-37050, clarifying that only the intentional “take” of
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migratory birds is prohibited. Additionally, in April 2025, the FWS and National Marine Fisheries Service proposed to redefine “harm” to mean affirmative acts that are directed immediately and intentionally against a particular animal, excluding acts or omissions that indirectly cause injury. Additionally, in November 2025, the current Presidential Administration proposed several rules that would significantly alter ESA protections for plants and animals. One proposed rule would rescind a rule that automatically extends protections for endangered species to threatened species. Another proposed rule would change regulations for listing species as endangered or threatened as well as for designating critical habitats. Additionally, a third proposed rule would reinstate the framework for evaluating the benefits and cost of designating a critical habitat by considering factors like economic impact, impact on national security, and other relevant impacts. The U.S. Fish and Wildlife Service is expected to issue final rules in 2026. Although we believe that our operations are in substantial compliance with such statutes, future amendments are uncertain, and any change in these statutes or any reclassification of a species as endangered could subject our company (directly or indirectly through our operating partners) to significant expenses to modify our operations or could force discontinuation of certain operations altogether. There is also increasing interest in nature-related matters beyond protected species, such as general biodiversity, which may similarly require us or our customers to incur costs or take other measures which may adversely impact our business or operations.
The Clean Air Act (“CAA”) controls air emissions from oil and natural gas production and natural gas processing operations, among other sources. CAA regulations include New Source Performance Standards (“NSPS”) for the oil and natural gas source category to address emissions of sulfur dioxide and volatile organic compounds (“VOCs”) and a separate set of emission standards to address hazardous air pollutants frequently associated with oil and natural gas production and processing activities.
The Federal Water Pollution Control Act of 1972, or the Clean Water Act (the “CWA”), imposes restrictions and controls on the discharge of produced waters and other pollutants into waters of the United States (“WOTUS”). Permits must be obtained to discharge pollutants into state and federal waters and to conduct construction activities in waters and wetlands. The CWA and certain state regulations prohibit the discharge of produced water, sand, drilling fluids, drill cuttings, sediment and certain other substances related to the oil and gas industry into certain coastal and offshore waters without an individual or general National Pollutant Discharge Elimination System discharge permit. In addition, the CWA and analogous state laws require individual permits or coverage under general permits for discharges of storm water runoff from certain types of facilities. CWA jurisdiction depends on the definition of WOTUS. In January 2023, the EPA and the U.S. Army Corps of Engineers (the “Corps”) issued a final rule that based the definition of WOTUS on a pre-2015 definition, which never took effect before being replaced in 2020. Separately, in May 2023, the U.S. Supreme Court’s decision in Sackett v. EPA narrowed federal jurisdiction over wetlands to “traditional navigable waters” and wetlands or other waters that have a “continuous surface connection” with or are otherwise indistinguishable from traditional navigable water. In September 2023, the EPA and the Corps published a direct-to-final rule that conforms the regulatory definition of WOTUS to the Supreme Court’s May 2023 decision in Sackett. However, roughly half of the states and other plaintiffs are challenging the September 2023 rule, and the EPA and the Corps are using the pre-2015 definition of WOTUS in these states while litigation continues. As a result, substantial uncertainty exists with respect to future implementation of the September 2023 rule and the scope of CWA jurisdiction more generally. Any expansion to CWA jurisdiction could impact areas where oil and gas operations are conducted. Some states also maintain groundwater protection programs that require permits for discharges or operations that may impact groundwater conditions. In 2021, the United States Supreme Court held that the CWA requires a discharge permit if the addition of pollutants through groundwater is the functional equivalent of a direct discharge from the point source into navigable waters. In November 2023, the EPA issued draft guidance describing the information that should be used to determine which discharges through groundwater may require a permit. However, in January 2025, the current Presidential Administration issued Executive Orders directing (i) the EPA and the Corps to identify planned or potential actions that could be subject to emergency treatment under Section 404 of the CWA and (ii) the heads of all federal agencies to identify and begin the processes to suspend, revise, or rescind all agency actions, including all existing regulations and guidance documents, that are unduly burdensome on the identification, development, or use of domestic energy resources. Accordingly, in November 2025, the Corps and the EPA issued a proposed rule revising the definition of WOTUS with the stated aim of conforming to the Supreme Court’s decision in Sackett and revising certain regulatory terms, such as “relatively permanent,” “tributary,” and “continuous surface connection”; a final rule is expected in early 2026, and litigation is highly likely following issuance of the final rule. In January 2026, EPA also announced a proposed rule to revise the Section 401 state and tribal water quality certification regulations. The proposed rule aims to narrow the “activity”-based scope of state and tribal certification to point source discharges into waters of the United States. As a result, future implementation and enforcement of these rules and policies is
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uncertain at this time. Additionally, costs may be associated with the treatment of wastewater and/or developing and implementing storm water pollution prevention plans.
The CAA, CWA and comparable state statutes provide for civil, criminal and administrative penalties for unauthorized discharges of oil and other pollutants and impose liability on parties responsible for those discharges, for the costs of cleaning up any environmental damage caused by the release and for natural resource damages resulting from the release.
Increasing attention to sustainability matters and our ability to achieve and maintain sustainability certifications, goals and commitments may impact our business, financial results or stock price.
Increasing attention has been given to corporate activities related to sustainability matters in public discourse and the investment community. Expectations regarding voluntary sustainability initiatives and disclosures and consumer demand for more sustainable products, including alternative forms of energy, may result in increased costs (including but not limited to increased costs related to compliance, stakeholder engagement, contracting and insurance), changes in demand for certain products, increased availability of (and competition from) alternative energy sources and technologies, increased development of and demand for products that do not use fossil fuels or their derivatives, enhanced compliance or disclosure obligations or other adverse impacts to our business, financial condition or results of operations. Additionally, such expectations and related activism may result in demand shifts for natural gas, oil and NGLs in addition to potentially impacting our access to, and costs of, capital.
While we may at times engage in voluntary initiatives (such as voluntary disclosures, certifications or targets, among others) or commitments to improve our sustainability profile and/or products or to respond to stakeholder expectations, such initiatives or achievement of such commitments may be costly and may not have the desired effect. For example, while we are exploring initiatives related to various energy-related technologies, such as carbon capture and sequestration, this may require us to incur significant costs, and there is no guarantee that markets will develop, either in the manner we anticipate or at all, for the technologies in which we invest. In addition, we may commit to certain initiatives or goals, and we may not ultimately be able to achieve such commitments or goals, either on the timeframes or costs initially anticipated or at all, due to factors that are within or outside of our control. For example, while we have entered into a joint venture involving a new natural gas gathering pipeline and carbon capture project, a number of factors outside of our control could affect the success of the project, including evolving government regulation and voluntary protocols for reporting or verification of carbon emissions and their capture or sequestration, including new or different interpretations or reversal thereof, as well as the potential for enactment of opposing or incompatible statutes or regulations and changes in technology and other factors. Moreover, actions or statements that we may take based on expectations, assumptions or third-party information that we currently believe to be reasonable may subsequently be determined to be erroneous or be subject to misinterpretation. Even if this is not the case, our current actions may subsequently be determined to be insufficient by various stakeholders, and we may be subject to investor or regulator engagement on our sustainability initiatives and disclosures, even if such initiatives are currently voluntary. Any failure to comply with investor, customer or other stakeholder expectations and standards, which are evolving and can conflict, or if we are perceived to not have responded appropriately to the growing concern for sustainability issues, regardless of whether there is a legal requirement to do so, could cause reputational harm to our business, increase our risk of litigation, and could have a material adverse effect on our results of operations. For example, plaintiffs have brought litigation against various companies, including those in the fossil fuel sector, alleging that such companies created public nuisances by producing, handling or marketing fuels that contributed to climate change or that the companies have been aware of the adverse effects of climate change for some time but failed to adequately disclose those impacts. While we are not currently parties to any such litigation, the ultimate outcomes of such litigation and its impact to us are uncertain; we could incur substantial legal costs associated with defending against these or similar lawsuits in the future.
In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings systems for evaluating companies on their approach to sustainability matters. These ratings are used by some investors to inform their investment and voting decisions. Unfavorable ESG or sustainability ratings may lead to increased negative investor sentiment toward us and our industry and to the diversion of investment to other industries, which could have a negative impact on our stock price and our access to and costs of capital. To the extent sustainability matters negatively affect our reputation, it may also harm our ability to attract or retain employees or customers.
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Simultaneously, there are efforts by some stakeholders to reduce companies’ efforts on certain sustainability-related matters. Both advocates and opponents to certain sustainability initiatives are increasingly resorting to a range of activism forms, including media campaigns and litigation, to advance their perspectives. To the extent we are subject to such activism, it may require us to incur costs or otherwise adversely impact our business.
Separately, various regulators have adopted, or are considering adopting, regulations on environmental marketing claims or the prevention of greenwashing more generally, including, but not limited to the use of “ESG,” “sustainable,” “eco-friendly,” “green” or similar language in the marketing of products and services or the prevention of greenwashing more generally. Further, there have been increasing scrutiny on sustainability-related claims and frequency of allegations of “greenwashing” against companies making sustainability-related claims due to, among other things, allegations of incomplete, false or misleading disclosures, including with respect to the sustainable nature of their operations and products, as well as to a variety of perceived deficiencies in performance, including as stakeholder perceptions of sustainability continue to evolve.
There may be new regulation, disclosure-related and otherwise, with respect to sustainability matters, which will likely lead to increased compliance costs as well as scrutiny that could heighten all of the risks identified in this risk factor. Such sustainability matters may also impact our suppliers or customers, which could augment existing, or cause additional, impacts to our business or operations. To date, we have not incurred material sustainability-related costs, but we cannot guarantee that we will not incur such costs in the future.
The taxation of independent producers is subject to change, and changes in tax law could increase our cost of doing business .
We are subject to taxation by various governmental authorities at the federal, state and local levels in the jurisdictions in which we do business. New legislation could be enacted by any of these governmental authorities making it more costly for us to produce natural gas and oil by increasing our tax burden. The IRA was enacted on August 16, 2022, and included, among other things, a 15% corporate alternative minimum tax (“CAMT”) on adjusted financial statement income. Based on our book income for the past three years, we believe we are subject to the CAMT and will remain subject to the CAMT for the foreseeable future. In addition, state and local authorities could enact new legislation that would increase various taxes such as sales, severance and ad valorem taxes as well as accelerate the collection of such taxes.
The completion of the Southwestern Merger in 2024 triggered an annual limitation on the utilization of our tax attributes, reducing our ability to offset future taxable income, which may result in an increase to income tax liabilities. In addition, trading in our common stock, additional issuance of common stock, and certain other stock transactions could lead to an additional, potentially more restrictive, annual limitation.
Upon the completion of the Southwestern Merger, we experienced an ownership change under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code” and such change, a “Section 382 Ownership Change”), for purposes of both Southwestern’s tax attributes as well as for our own. We believe that the annual limitation on the utilization of our tax attributes resulting from the Southwestern Merger is less restrictive than the Section 382 Ownership Change we experienced in 2021. As a result, the new limitation would generally only apply to those tax attributes generated subsequent to that first ownership change.
Moreover, trading in our stock, additional issuances, and other stock transactions occurring subsequent to the Southwestern Merger could lead to a further Section 382 Ownership Change. In the event of any additional Section 382 Ownership Change a new annual limitation would be determined at such time that could be more restrictive than the current limitations. Depending on the market conditions and our 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 our tax items other than just net operating loss (“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.
Some states would impose similar limitations on tax attribute utilization upon experiencing an additional Section 382 Ownership Change.
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Judicial decisions can affect our rights and obligations.
Our ability to develop natural gas, oil and NGL depends on the leases and other mineral rights we acquire and the rights of owners of nearby properties. We operate in areas where judicial decisions have not yet definitively interpreted various contractual provisions or addressed relevant aspects of property rights, nuisance and other matters that could be the source of claims against us as a developer or operator of properties. Although we plan our activities according to our expectations of these unresolved areas, based on decisions on similar issues in these jurisdictions and decisions from courts in other states that have addressed them, courts could resolve issues in ways that increase our liabilities or otherwise restrict or add costs to our operations.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 1C. Cybersecurity
Cybersecurity Risk Management and Strategy
We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information.
We design and assess our cybersecurity risk management program guided by the NIST Cybersecurity Framework to help us identify, assess and manage cybersecurity risks relevant to our business.
Our cybersecurity risk management program is integrated into our overall enterprise risk management program, and shares common methodologies, reporting channels and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational, and financial risk areas.
Our cybersecurity risk management program includes, but is not limited to, the following key elements:
• risk assessments designed to help identify and address material cybersecurity risks to our critical systems and information;
• a security team principally responsible for managing our cybersecurity risk assessment processes, our security controls, and our response to cybersecurity incidents;
• the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security processes ;
• systems for protecting information technology systems and monitoring for suspicious events, such as threat protection, firewall and anti-virus software;
• cybersecurity awareness training for our employees and contractors;
• a cybersecurity incident response plan that includes procedures for responding to, escalating, and reporting cybersecurity incidents; and
• a third-party risk management process for service providers, suppliers, software, and vendors who access our data and/or systems .
We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our business strategy, results of operations, or financial condition. We face certain ongoing risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition. See Item 1A. Risk Factors “ Cyber-attacks targeting systems and infrastructure used by the gas and oil industry and related regulations may adversely impact our operations and, if we or our third-party providers are unable to obtain and maintain adequate protection for our key systems and data, our business may be harmed. ”
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Cybersecurity Governance
Our Board of Directors considers cybersecurity risk as a critical part of the enterprise and its risk oversight function and has delegated to its Audit Committee oversight of cybersecurity and other information technology risks. Our Audit Committee oversees management’s implementation of our cybersecurity risk management program.
Our Audit Committee receives bi-annual updates from management on our cybersecurity risks. In addition, management updates our Audit Committee, as necessary, regarding any significant cybersecurity incidents.
Our Audit Committee reports to the full Board of Directors regarding its activities, including those related to cybersecurity. Our Board of Directors also receives briefings from management on our cybersecurity risk management program. Members of our Board of Directors receive presentations on cybersecurity topics from information security management, internal security staff, our internal audit group and external experts as part of our Board of Directors’ continuing education on topics that impact public companies.
Our Cybersecurity Manager leads our cybersecurity risk management program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants. Our Cybersecurity Manager is responsible for assessing and managing risks from cybersecurity threats and reporting significant incidents to our Cybersecurity Committee , which includes our Interim Chief Financial Officer, General Counsel and Corporate Secretary, Chief Information Officer, Cybersecurity Manager and Director of Internal Audit. Our Cybersecurity Manager has over 20 years of experience in information security and incident response and our internal cybersecurity team has over 50 years of combined experience in information security and maintains several cybersecurity certificates including but not limited to CISSP, CISM, SRISC, GSEC, and GCFE. Our Cybersecurity team regularly participates with private energy industry and federal security working groups and organizations. The members of our Cybersecurity Committee have significant experience in risk management, assessment of disclosure controls, information technology and auditing.
Our management team strives to stay informed about and monitors efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, including, as appropriate, briefings from internal security personnel, threat intelligence and other information obtained from governmental, public or private sources, such as external consultants engaged by us, and alerts and reports produced by security tools deployed in the IT environment.
Item 2. Properties
Information regarding our properties is included in Item 1. Business of Part I of this report and in the Supplementary Information included in Item 8 of Part II of this report.
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Item 3. Legal Proceedings
Litigation and Regulatory Proceedings
We are involved in various regulatory proceedings, lawsuits and disputes arising in the ordinary course of our business operations, including commercial disputes, personal injury claims, royalty claims, property damage claims and contract actions. We are also party to the consolidated Chapter 11 Cases pending for the Debtors in the Bankruptcy Court. Legal proceedings that were in existence prior to the Petition Date and have not yet been settled as part of the Chapter 11 Cases will be resolved in connection with the claims reconciliation process before the Bankruptcy Court. Any allowed claim related to such prepetition litigation will be treated in accordance with the Plan. Any legal proceeding pending against Southwestern and assumed by us in connection with the Southwestern Merger is not subject to discharge or resolution as part of the Chapter 11 Cases.
See Note 5 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for information regarding our estimation and provision for potential losses related to litigation and regulatory proceedings. Based on management’s current assessment, we are of the opinion that no pending or threatened lawsuit or dispute relating to our business operations is likely to have a material adverse effect on our future consolidated financial position, results of operations or cash flows. Pursuant to this item, we use a threshold of $1 million for purposes of determining whether any legal proceedings in regards to federal, state or local environmental laws with a governmental authority require disclosure. This $1 million disclosure threshold does not imply that this amount is necessarily material to our business or financial condition, and as of December 31, 2025, there were no environmental proceedings to disclose. The final resolution of such matters could exceed amounts accrued, however, and actual results could differ materially from management’s estimates.
Environmental Contingencies
The nature of the natural gas and oil business carries with it certain environmental risks for us and our subsidiaries. We have implemented various policies, programs, procedures, training and audits to reduce and mitigate such environmental risks. We conduct periodic reviews, on a company-wide basis, to assess changes in our environmental risk profile. Environmental reserves are established for environmental liabilities for which economic losses are probable and reasonably estimable. We manage our exposure to environmental liabilities in acquisitions by using an evaluation process that seeks to identify pre-existing contamination or compliance concerns and address the potential liability. Depending on the extent of an identified environmental concern, we may, among other things, exclude a property from the transaction, require the seller to remediate the property to our satisfaction in an acquisition or agree to assume liability for the remediation of the property.
Item 4. Mine Safety Disclosures
The information concerning mine safety violations and other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95.1 to this Form 10-K.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Common Stock
Our common stock is traded on the NASDAQ under the “EXE” trading symbol. Additionally, our Class A Warrants, Class B Warrants and Class C Warrants were traded on the NASDAQ under the “EXEEW”, “EXEEZ” and “EXEEL” trading symbols, respectively. The Warrants expired on February 9, 2026 and are no longer listed for trading. More information on our common stock and Warrants can be found in Note 10 of the notes to our consolidated financial statements included in Item 8 of Part II of this report.
Dividends
In March 2022, we adopted a variable return program that resulted in the payment of an additional variable dividend equal to the sum of Adjusted Free Cash Flow from the prior quarter less the base quarterly dividend, multiplied by 50%. Effective for 2025, we prioritized paying a base dividend per share and provided for annual net debt reduction prior to additional shareholder returns such as additional dividend payments or share repurchases. The declaration and payment of any future dividend is subject to the approval of our Board of Directors in its discretion. For additional information on our dividends, see Note 10 of the notes to our consolidated financial statements included in Item 8 of Part II of this report.
Repurchases of Equity Securities; Unregistered Sales of Equity Securities and Use of Proceeds
On October 22, 2024 our Board of Directors authorized repurchases of up to $1.0 billion, in aggregate, of the Company’s common stock and/or warrants under a share repurchase program. The repurchase authorization permits repurchases on a discretionary basis subject to market conditions, obtaining required internal approvals, applicable legal requirements, available liquidity, compliance with the Company’s debt agreements and other appropriate factors. We did not repurchase any shares of our common stock during the quarter ended December 31, 2025. As of December 31, 2025, the approximate dollar value of shares that may yet be purchased under the share repurchase program was $900 million.
Stockholders
As of February 11, 2026, there were approximately 1,244 holders of record of our common stock.
Item 6. Reserved
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with management’s perspective on our financial condition, liquidity, results of operations and certain other factors that may affect our future results. This information is intended to provide investors with an understanding of our past performance, current financial condition and outlook for the future and should be read in conjunction with Item 8 of Part II of this report.
Introduction
On October 1, 2024, we completed the Southwestern Merger, creating a premier energy company that we believe is underpinned by a leading natural gas portfolio adjacent to the highest demand markets, premium inventory, a resilient financial foundation and an investment grade balance sheet. We believe that this new company is uniquely positioned to deliver affordable, lower-carbon energy to meet growing domestic and international demand while creating sustainable value for stakeholders. In conjunction with the closing of the Southwestern Merger, Chesapeake Energy Corporation changed its name to Expand Energy Corporation.
Expand Energy is the largest independent natural gas producer in the U.S., based on net daily production, and is focused on responsibly developing an abundant supply of natural gas, oil and NGL to expand energy access for all. Our operations are located in Louisiana and Texas in the Haynesville and Bossier Shales (“Haynesville”), in Pennsylvania in the Marcellus Shale (“Northeast Appalachia”) and in West Virginia and Ohio in the Marcellus and Utica Shales (“Southwest Appalachia”).
Our strategy is to create resilient shareholder value through the responsible development of our significant resource plays while continuing to be a leading provider of natural gas to growing markets. We continue to focus on improving margins through operating efficiencies, marketing and commercial efforts and financial discipline and improving our safety and sustainability performance. To accomplish these goals, we plan to allocate our human resources and capital expenditures to projects we believe offer the highest cash return on capital invested, to deploy leading drilling and completion technology throughout our portfolio, and to take advantage of acquisition and divestiture opportunities to strengthen our portfolio. We also intend to continue to invest in projects designed to reduce the environmental impact of our production activities.
Additionally, we aim to be conscientious in our efforts and how they will shape our approach to sustainability for the future and have established the following goals:
• Net zero (Scope 1 and 2) greenhouse gas emissions by 2035.
• Maintain 100% responsibly sourced gas (RSG) certification across our portfolio.
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Recent and Significant Developments
Southwestern Merger
On October 1, 2024, we completed the Southwestern Merger and issued approximately 95.7 million shares of our common stock to Southwestern’s shareholders in connection with the Merger Agreement. Under the terms of the Merger Agreement, subject to certain exceptions, each share of Southwestern common stock was converted into the right to receive 0.0867 of a share of the Company’s common stock. Based on the closing price of our common stock, the total value of such shares of our common stock issued to Southwestern’s shareholders was approximately $7.9 billion. See Note 2 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
Investment Grade Rating
On October 1, 2024, we received an investment grade rating from S&P Global Ratings (“S&P”). S&P assigned an issuer-level rating of ‘BBB-’ on our unsecured debt and raised our issuer credit rating to ‘BBB-’, with a stable outlook. Additionally, on October 2, 2024, we received an investment grade rating from Fitch Ratings (“Fitch”). Fitch affirmed our revolver credit rating at ‘BBB-’ and upgraded the rating on our senior notes to ‘BBB-’, with a stable outlook. Additionally, on April 16, 2025, we received an investment grade rating from Moody’s Ratings (“Moody’s”). Moody’s upgraded the rating on our senior unsecured notes from Ba1 to Baa3, with a stable outlook.
Addition to the S&P 500 Index
In March 2025, following the close of the Southwestern Merger and the receipt of investment grade ratings, our common stock was added to the S&P 500.
Credit Facility
On September 30, 2025, the Company entered into an Amended and Restated Credit Agreement that, among other things, extended the 2025 Credit Facility’s maturity date from December 2027 to September 2030, with two one-year extension options available, each subject to the Lenders’ consent, increased the aggregate commitments under the 2025 Credit Facility from $2.5 billion to $3.5 billion with incremental capacity for additional commitments in an amount up to $1.0 billion, subject to the receipt of commitments thereto and certain customary conditions. The Credit Agreement also increased the sublimit available for the issuance of letters of credit from $500 million to $1.0 billion and increased the sublimit available for swingline loans from $50 million to $100 million. See Note 4 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
Issuance of Senior Notes and Senior Notes Repayment
In December 2024, we completed our underwritten public offering of $750 million aggregate principal amount of our 5.70% Senior Notes due 2035 (the “2035 Notes”). Additionally, we announced an offer to purchase for cash, any and all of our outstanding 2026 Notes (the “Tender Offer”). Upon expiration of the Tender Offer, approximately 91%, or $453 million, of the 2026 Notes were validly tendered and not validly withdrawn. In a separate transaction during the fourth quarter of 2024, we redeemed all of the $304 million aggregate principal of the SWN 2028 Notes for approximately $312 million, which included an $8 million premium to call the notes.
In January 2025, the $389 million aggregate principal of the SWN 2025 Notes was repaid and terminated with cash on hand and borrowings on the Prior Credit Facility. Additionally, in March 2025, we redeemed the remaining $47 million aggregate principal of the 2026 Notes with cash on hand. During 2025, we also redeemed approximately $103 million of our 6.750% Senior Notes due 2029, approximately $60 million of our 5.875% Senior Notes due 2029 and approximately $62 million of our 5.375% Senior Notes due 2029 through open market repurchases using cash on hand. See Note 4 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
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Shareholder Returns
In October 2024, our Board of Directors authorized the Company to repurchase up to $1.0 billion, in aggregate, of the Company’s common stock and/or warrants. In 2025, we prioritized paying the base dividend of $2.30 per share and $1.0 billion of annual net debt reduction, with 75% of the remaining free cash flow distributed, as market conditions warranted, through share repurchases and additional dividend payments. During 2025, we made dividend payments of $765 million, repurchased 0.9 million shares for an aggregate price of $100 million, reduced the principal amount of our debt through senior notes repayments as noted above, and increased our cash on hand. See Note 10 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion on our dividend payments and share repurchases. In 2026, the Company will continue to prioritize debt reduction while continuing to effectively return cash to shareholders.
Economic and Market Conditions
Geopolitical risk and policy uncertainty continue to drive volatility in natural gas, oil and NGL prices, while macroeconomic headwinds in key consuming countries could impact global growth prospects, potentially affecting supply and demand for energy commodities. Domestically, the natural gas market balance has tightened through 2027 as robust demand, primarily driven by seasonal weather-driven consumption patterns and increasing structural demand gains from LNG, power generation, and industrials, has put upward pressure and additional volatility on near-term pricing. Our future estimated cash flow is partially protected from commodity price volatility due to our current hedge positions that provide a floor price on over 60% of our projected gas volumes through the end of 2026 with significant upside participation via costless collars and three-way collars. For the foreseeable future, we believe our operational flexibility, cost structure and liquidity position will enable us to successfully navigate continued price volatility.
We continue to monitor factors impacting commodity supply and demand situations, including tariffs on steel, and assess their impact on our business, including business partners and customers. As part of the Southwestern Merger, we assumed Southwestern’s oilfield service business that will allow for some vertical integration of our exploration and production operations, which may help to control costs and secure inputs for our operations. For additional discussion regarding risk associated with price volatility and economic uncertainty, see Item 1A Risk Factors in this report.
Management Changes
On February 6, 2026, the Board of Directors of the Company appointed Mr. Wichterich, Chairman of the Board, as Interim President and Chief Executive Officer, replacing Domenic J. Dell’Osso, Jr., effective immediately. In connection with his separation, Mr. Dell’Osso also resigned from the Board of Directors, effective immediately. Mr. Dell’Osso will serve as an external advisor for a period of time.
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Liquidity and Capital Resources
Liquidity Overview
Our primary sources of capital resources and liquidity are internally generated cash flows from operations and borrowings under our 2025 Credit Facility, and our primary uses of cash are for the development of our natural gas and oil properties, acquisitions of additional natural gas and oil properties, repayments of debt and return of value to stockholders through dividends and equity repurchases. If needed, we also have the ability to issue equity or debt securities through public offerings or private placements. We believe our cash flow from operations, cash on hand and unused borrowing capacity under the 2025 Credit Facility, as discussed below, will provide sufficient liquidity during the next 12 months and the foreseeable future. As of December 31, 2025, we had $4.1 billion of liquidity available, including $616 million of cash on hand and $3.5 billion of aggregate unused borrowing capacity available under the 2025 Credit Facility. As of December 31, 2025, we had no outstanding borrowings under our 2025 Credit Facility.
Further, we may from time to time seek to retire, refinance or amend some or all of our outstanding debt or debt agreements through exchanges, open market purchases, privately negotiated transactions, tender offers or otherwise. Such transactions, if any, and the terms thereof, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved in such financing transactions may be material. See Note 4 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion of our debt obligations, including principal and carrying amounts of our senior notes.
Dividends
On February 17, 2026, we declared a base quarterly dividend payable of $0.575 per share, which will be paid on March 26, 2026 to stockholders of record at the close of business on March 5, 2026. See Note 10 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
The declaration and payment of any future dividend, whether fixed or variable, will remain at the full discretion of the Board of Directors and will depend on the Company’s financial results, cash requirements, future prospects and other relevant factors. The Company’s ability to pay dividends to its stockholders is restricted by (i) Oklahoma corporate law, (ii) its Certificate of Incorporation, (iii) the terms and provisions of the Credit Agreement and (iv) the terms and provisions of the Indentures governing our senior notes. See Note 4 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion of our debt obligations.
Derivative and Hedging Activities
Our results of operations and cash flows are impacted by changes in market prices for natural gas, oil and NGL. We enter into various derivative instruments to mitigate a portion of our exposure to commodity price declines, but these transactions may also limit our cash flows in periods of rising commodity prices. Our natural gas, oil and NGL derivative activities, when combined with our sales of natural gas, oil and NGL, allow us to better predict the total revenue we expect to receive. See Item 7A. Quantitative and Qualitative Disclosures About Market Risk included in Part II of this report for further discussion on the impact of commodity price risk on our financial position.
Shelf Registration
We have a universal shelf registration statement on file with the SEC, as a “well-known seasoned issuer” as defined in Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”), under which we have the ability to issue and sell an indeterminate amount of various types of debt and equity securities. The specific terms of any securities to be sold will be described in supplemental filings with the SEC. There were no sales of such securities during the year ended December 31, 2025. Our shelf registration statement will expire in November 2027.
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Contractual Obligations and Off-Balance Sheet Arrangements
As of December 31, 2025, our material contractual obligations include repayment of senior notes, derivative obligations, asset retirement obligations, lease obligations, undrawn letters of credit and various other commitments we enter into in the ordinary course of business that could result in future cash obligations. In addition, we have contractual commitments with midstream companies and pipeline carriers for future gathering, processing and transportation of natural gas to move certain of our production to market. The estimated gross undiscounted future commitments under these agreements were approximately $9.6 billion as of December 31, 2025. As discussed above, we believe our existing sources of liquidity will be sufficient to fund our near and long-term contractual obligations. See Notes 4 , 5 , 7 , 13 and 16 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
Credit Facility
On September 30, 2025, we entered into the Credit Agreement, which matures in September 2030. The 2025 Credit Facility provides for aggregate commitments of $3.5 billion, with a $1.0 billion sublimit available for the issuance of letters of credit and a $100 million sublimit available for swingline loans. Borrowings under the Credit Agreement may be alternate base rate loans or term SOFR loans, at the Company’s election. As of December 31, 2025, we had $3.5 billion available for borrowings under the 2025 Credit Facility. See Note 4 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
Assumption of Southwestern’s Senior Notes and Southwestern Credit Facility Extinguishment
On October 1, 2024, the Southwestern Merger was completed, and we assumed approximately $3.7 billion of Southwestern’s senior notes. On October 1, 2024, Southwestern’s existing credit facility was terminated, with all loan amounts and other obligations outstanding thereunder repaid in full and all commitments thereunder extinguished, for approximately $585 million, which included all outstanding borrowings, accrued interest and transaction fees. See Note 4 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
Capital Expenditures
For the year ending December 31, 2026, we currently expect to complete and turn in line 205 to 235 gross wells utilizing approximately 11 to 12 rigs and plan to invest between approximately $2.75 – $2.95 billion in capital expenditures. We currently plan to fund our 2026 capital program through cash on hand, expected cash flow from our operations and borrowings under our 2025 Credit Facility. We may alter or change our plans with respect to our capital program and expected capital expenditures based on developments in our business, our financial position, our industry or any of the markets in which we operate.
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Sources and (Uses) of Cash and Cash Equivalents
The following table presents the sources and uses of our cash and cash equivalents for the periods presented:
Years Ended December 31,
2025 2024 2023
Cash provided by operating activities $ 4,575 $ 1,565 $ 2,380
Proceeds from divestitures of property and equipment 70 21 2,533
Receipts of deferred consideration 116 166 —
Proceeds from issuance of senior notes, net — 747 —
Proceeds from warrant exercise 24 3 —
Capital expenditures (2,736) (1,557) (1,829)
Contributions to investments (14) (75) (231)
Payments on Prior Credit Facility, net — — (1,050)
Business combination, net — (459) —
Property acquisitions (195) — —
Cash paid to purchase debt (663) (767) —
Debt issuance and other financing costs (11) (11) —
Cash paid to repurchase and retire common stock (100) — (355)
Cash paid for common stock dividends (765) (388) (487)
Other — (3) —
Net increase (decrease) in cash, cash equivalents and restricted cash $ 301 $ (758) $ 961
Cash Flow from Operating Activities
Cash provided by operating activities was $4.58 billion, $1.57 billion and $2.38 billion during the years ended December 31, 2025, 2024 and 2023, respectively. The increase in 2025 is primarily due to increased sales volumes, including those related to the Southwestern Merger, as well as higher prices for the natural gas we sold. The decrease in 2024 is primarily due to lower prices for the natural gas, oil and NGL we sold. Cash flows from operations are largely affected by the same factors that affect our net income, excluding various non-cash items, such as depreciation, depletion and amortization, certain impairments, gains or losses on sales of assets, deferred income taxes and mark-to-market changes in our open derivative instruments. See further discussion below under Results of Operations .
Proceeds from Divestitures of Property and Equipment
In 2025, we sold a portion of our Oklahoma City campus as well as certain minor leasehold positions. In 2023, we sold our Eagle Ford assets through three separate transactions resulting in total cash proceeds of $2.5 billion after customary post-closing adjustments. See Note 2 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
Receipts of Deferred Consideration
During the years ended December 31, 2025 and 2024, we received $116 million and $166 million, respectively, in deferred consideration associated with our Eagle Ford divestiture transactions. See Note 2 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
Proceeds from Issuance of Senior Notes, net
In 2024, we completed our underwritten public offering of $750 million aggregate principal amount of our 5.70% Senior Notes due 2035. See Note 4 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
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Capital Expenditures
Our capital expenditures during the year ended December 31, 2025 increased compared to the year ended December 31, 2024, primarily as a result of increased drilling and completion activity within our operating areas, including those related to the Southwestern Merger. Our capital expenditures during the year ended December 31, 2024 decreased compared to the year ended December 31, 2023, primarily as a result of decreased drilling and completion activity within our Northeast Appalachia and Haynesville operating areas, as well as reduced activity in Eagle Ford due to our Eagle Ford divestitures. During the year ended December 31, 2025, our average operated rig count was 11 rigs and 188 spud wells, compared to an average operated rig count of 9 rigs and 133 spud wells in the year ended December 31, 2024 and 11 rigs and 193 spud wells in the year ended December 31, 2023. We completed 272 operated wells in the year ended December 31, 2025 compared to 81 in the year ended December 31, 2024 and 166 in the year ended December 31, 2023.
Contributions to Investments
During the year ended December 31, 2025, contributions to investments primarily related to capitalized interest on our investment with Momentum Sustainable Ventures LLC. During the years ended December 31, 2024 and 2023, contributions to investments primarily consisted of contributions to our investment with Momentum Sustainable Ventures LLC to build a new natural gas gathering pipeline and carbon capture project, the NG3 pipeline. In October 2025, the NG3 pipeline was placed in service and began gathering operations. See Note 15 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for additional information.
Payments on Prior Credit Facility, net
During the year ended December 31, 2023, we made net repayments of $1.05 billion on the Prior Credit Facility, utilizing a portion of the proceeds from the Eagle Ford divestitures and internally generated cash provided by operating activities.
Business Combination, net
In connection with the completion of the Southwestern Merger during 2024, we terminated Southwestern’s existing credit facility, with all loan amounts and other obligations outstanding thereunder repaid in full and all commitments thereunder extinguished, for approximately $585 million utilizing cash on hand as well as the cash assumed from Southwestern. See Note 2 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion of this acquisition.
Property Acquisitions
Property acquisitions during the year ended December 31, 2025 primarily related to undeveloped leasehold acquired in Haynesville and Southwest Appalachia.
Cash Paid to Purchase Debt
In 2025, the $389 million aggregate principal of the SWN 2025 Notes was repaid and terminated upon maturity with cash on hand and borrowings under the Prior Credit Facility, of which the Prior Credit Facility borrowings were subsequently repaid. Additionally, we redeemed the remaining $47 million aggregate principal of the 2026 Notes using cash on hand. We also redeemed approximately $103 million of our 6.750% Senior Notes due 2029, approximately $60 million of our 5.875% Senior Notes due 2029 and approximately $62 million of our 5.375% Senior Notes due 2029 through open market repurchases using cash on hand.
In 2024, we announced an offer to purchase for cash, any and all of our outstanding 2026 Notes, the “Tender Offer”. Upon expiration of the Tender Offer, approximately 91%, or $453 million, of the 2026 Notes were validly tendered and not validly withdrawn. In a separate transaction during the fourth quarter of 2024, we redeemed all of the $304 million aggregate principal of the 2028 Notes assumed in the Southwestern Merger for approximately $312 million, which included an $8 million premium to call the notes. See Note 4 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
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Cash Paid to Repurchase and Retire Common Stock
On October 22, 2024, our Board of Directors authorized repurchases of up to $1.0 billion, in aggregate, of the Company’s common stock and/or warrants under a share repurchase program. During 2025, we repurchased 0.9 million shares for an aggregate price of $100 million. We did not repurchase any shares during 2024. During 2023, we repurchased 4.4 million shares of our common stock for an aggregate cost of approximately $355 million. The repurchased shares of common stock were retired and recorded as a reduction to common stock and retained earnings. See Note 10 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
Cash Paid for Common Stock Dividends
As part of our dividend program, we paid common stock dividends of $765 million, $388 million and $487 million during the years ended December 31, 2025, 2024 and 2023, respectively. See Note 10 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion.
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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
Year Ended December 31, 2025
Natural Gas Oil NGL Total
MMcf per day $/Mcf MBbl per day $/Bbl MBbl per day $/Bbl MMcfe per day $/Mcfe
Haynesville 3,000 3.17 — — — — 3,000 3.17
Northeast Appalachia 2,624 2.99 — — — — 2,624 2.99
Southwest Appalachia 976 3.08 16 54.47 81 24.48 1,559 3.76
Total 6,600 3.08 16 54.47 81 24.48 7,183 3.23
Average NYMEX Price 3.43 64.81
Average Realized Price (including realized derivatives) 3.16 55.60 24.30 3.30
Year Ended December 31, 2024
Natural Gas Oil NGL Total
MMcf per day $/Mcf MBbl per day $/Bbl MBbl per day $/Bbl MMcfe per day $/Mcfe
Haynesville 1,532 2.14 — — — — 1,532 2.14
Northeast Appalachia 1,809 1.88 — — — — 1,809 1.88
Southwest Appalachia 270 2.42 3 60.41 21 27.44 417 3.42
Total 3,611 2.03 3 60.41 21 27.44 3,758 2.16
Average NYMEX Price 2.27 75.72
Average Realized Price (including realized derivatives) 2.75 61.04 26.91 2.84
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Natural Gas, Oil and NGL Sales
Year Ended December 31, 2025
Natural Gas Oil NGL Total
Haynesville $ 3,477 $ — $ — $ 3,477
Northeast Appalachia 2,860 — — 2,860
Southwest Appalachia 1,096 319 724 2,139
Total natural gas, oil and NGL sales $ 7,433 $ 319 $ 724 $ 8,476
Year Ended December 31, 2024
Natural Gas Oil NGL Total
Haynesville $ 1,205 $ — $ — $ 1,205
Northeast Appalachia 1,242 — — 1,242
Southwest Appalachia 239 69 214 522
Total natural gas, oil and NGL sales $ 2,686 $ 69 $ 214 $ 2,969
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
Years Ended December 31,
2025 2024
$/Mcfe $/Mcfe
Haynesville $ 297 0.27 $ 170 0.30
Northeast Appalachia 163 0.17 97 0.15
Southwest Appalachia 175 0.31 49 0.32
Total production expenses $ 635 0.24 $ 316 0.23
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”)
Years Ended December 31,
2025 2024
$/Mcfe $/Mcfe
Haynesville $ 800 0.73 $ 326 0.58
Northeast Appalachia 838 0.87 507 0.77
Southwest Appalachia 738 1.30 202 1.33
Total GP&T $ 2,376 0.91 $ 1,035 0.75
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.
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Severance and Ad Valorem Taxes
Years Ended December 31,
2025 2024
$/Mcfe $/Mcfe
Haynesville $ 69 0.06 $ 60 0.11
Northeast Appalachia 32 0.03 15 0.02
Southwest Appalachia 92 0.16 22 0.14
Total severance and ad valorem taxes $ 193 0.07 $ 97 0.07
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
Years Ended December 31,
2025 2024
Natural gas derivatives - realized gains $ 188 $ 919
Natural gas derivatives - unrealized gains (losses) 354 (951)
Total gains (losses) on natural gas derivatives $ 542 $ (32)
Oil derivatives - realized gains $ 6 $ 1
Oil derivatives - unrealized losses (2) (3)
Total gains (losses) on oil derivatives $ 4 $ (2)
NGL derivatives - realized losses $ (5) $ (4)
NGL derivatives - unrealized gains (losses) 9 (13)
Total gains (losses) on NGL derivatives $ 4 $ (17)
Contingent consideration - realized gains $ — $ 25
Contingent consideration - unrealized losses — (12)
Total gains on contingent consideration $ — $ 13
Total gains (losses) on derivatives $ 550 $ (38)
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
Years Ended December 31,
2025 2024
Marketing revenues $ 3,163 $ 1,290
Marketing expenses 3,160 1,310
Marketing margin $ 3 $ (20)
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.
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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
Years Ended December 31,
2025 2024
Total G&A, net $ 181 $ 186
G&A, net per Mcfe $ 0.07 $ 0.14
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
Years Ended December 31,
2025 2024
DD&A $ 2,980 $ 1,729
DD&A per Mcfe $ 1.13 $ 1.26
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
Years Ended December 31,
2025 2024
Other operating expense, net $ 40 $ 332
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.
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Interest Expense
Years Ended December 31,
2025 2024
Interest expense on debt $ 295 $ 181
Amortization of premium, discount, issuance costs and other 4 (7)
Capitalized interest (64) (51)
Total interest expense $ 235 $ 123
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).
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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.
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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.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The primary objective of the following information is to provide forward-looking quantitative and qualitative information about our exposure to market risk. The term market risk relates to our risk of loss arising from adverse changes in natural gas, oil and NGL prices and interest rates. These disclosures are not meant to be precise indicators of expected future losses, but rather indicators of reasonably possible losses. The forward-looking information provides indicators of how we view and manage our ongoing market risk exposures.
Commodity Price Risk
Our results of operations and cash flows are impacted by changes in market prices for natural gas, oil and NGL, which have historically been volatile. To mitigate a portion of our exposure to adverse price changes, we enter into various derivative instruments. Our natural gas, oil and NGL derivative activities, when combined with our sales of natural gas, oil and NGL, allow us to predict with greater certainty the revenue we will receive. We believe our derivative instruments continue to be highly effective in achieving our risk management objectives.
We determine the fair value of our derivative instruments utilizing established index prices, volatility curves and discount factors. These estimates are compared to counterparty valuations for reasonableness. Derivative transactions are also subject to the risk that counterparties will be unable to meet their obligations. This non-performance risk is considered in the valuation of our derivative instruments, but to date has not had a material impact on the values of our derivatives. Future risk related to counterparties not being able to meet their obligations has been partially mitigated under our commodity hedging arrangements that require counterparties to post collateral if their obligations to us are in excess of defined thresholds. The values we report in our financial statements are as of a point in time and subsequently change as these estimates are revised to reflect actual results, changes in market conditions and other factors. See Note 13 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further discussion of the fair value measurements associated with our derivatives.
For the year ended December 31, 2025, natural gas, oil and NGL revenues, excluding any effect of our derivative instruments, were $7,433 million, $319 million, and $724 million, respectively. Based on production, natural gas, oil and NGL revenue for the year ended December 31, 2025 would have increased or decreased by approximately $743 million, $32 million, and $72 million, respectively, for each 10% increase or decrease in prices. As of December 31, 2025, the fair value of our natural gas and oil derivatives were net assets of $305 million and $2 million, respectively. A 10% increase in forward gas prices would decrease the valuation of natural gas derivatives by approximately $525 million, while a 10% decrease would increase the valuation by approximately $533 million. A 10% fluctuation in forward oil prices would not have made a meaningful impact on the valuation of our oil derivatives. This fair value change assumes volatility based on prevailing market parameters at December 31, 2025. See Note 13 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for further information on our open derivative positions.
Interest Rate Risk
Our exposure to interest rate changes relates primarily to borrowings under our 2025 Credit Facility. Interest is payable on borrowings under the 2025 Credit Facility based on floating rates. See Note 4 of the notes to our consolidated financial statements included in Item 8 of Part II of this report for additional information. As of December 31, 2025, we did not have any outstanding borrowings under our 2025 Credit Facility.
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Item 8. Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
EXPAND ENERGY CORPORATION AND SUBSIDIARIES
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )
71
Consolidated Financial Statements:
Consolidated Balance Sheets
74
Consolidated Statements of Operations
75
Consolidated Statements of Cash Flows
76
Consolidated Statements of Stockholders’ Equity
77
Notes to the Consolidated Financial Statements:
Note 1. Basis of Presentation and Summary of Significant Accounting Policies
78
Note 2. Natural Gas and Oil Property Transactions
84
Note 3. Earnings Per Share
87
Note 4. Debt
88
Note 5. Contingencies and Commitments
92
Note 6. Other Liabilities
94
Note 7. Leases
94
Note 8. Revenue
96
Note 9. Income Taxes
98
Note 10. Equity
102
Note 11. Share-Based Compensation
104
Note 12. Employee Benefit Plans
106
Note 13. Derivative and Hedging Activities
106
Note 14. Other Property and Equipment
109
Note 15. Investments
109
Note 16. Asset Retirement Obligations
110
Note 17. Supplemental Cash Flow Information
111
Note 18. Segment Information
112
Supplementary Information:
Supplemental Disclosures About Natural Gas, Oil and NGL Producing Activities (unaudited)
113
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Expand Energy Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Expand Energy Corporation and its subsidiaries (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of operations, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
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Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
The Impact of Proved Developed Natural Gas and Oil Reserves on Proved Natural Gas and Oil Properties, Net
As described in Note 1 to the consolidated financial statements, the Company's property and equipment, net balance was $24.4 billion as of December 31, 2025, and the related depreciation, depletion and amortization expense for the year ended December 31, 2025 was $3.0 billion, both of which substantially related to proved natural gas and oil properties. The Company follows the successful efforts method to account for its natural gas and oil properties. Under this method, all capitalized well costs and leasehold costs of proved natural gas and oil properties are depreciated using the unit-of-production depreciation method based on total estimated proved developed natural gas and oil reserves. As disclosed by management, 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 management’s 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. The estimates of proved natural gas and oil reserves have been developed by specialists, specifically the Company’s reservoir engineers, and assessed by independent petroleum engineers (together “management’s specialists”).
The principal considerations for our determination that performing procedures relating to the impact of proved developed natural gas and oil reserves on proved natural gas and oil properties, net is a critical audit matter are (i) the significant judgment by management, including the use of management’s specialists, when developing the estimates of proved developed natural gas and oil reserves, which are derived using historical production volumes and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to the data, specifically historical production volumes, methods, and assumptions used by management and its specialists in developing the estimates of proved developed natural gas and oil reserves.
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Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s estimates of proved developed natural gas and oil reserves. The work of management’s specialists was used in performing the procedures to evaluate the reasonableness of the estimates of proved developed natural gas and oil reserves. As a basis for using this work, the specialists’ qualifications were understood and the Company’s relationship with the specialists was assessed. The procedures performed also included (i) evaluating the methods and assumptions used by the specialists; (ii) testing the completeness and accuracy of the underlying data used by the specialists related to historical production volumes; and (iii) evaluating the specialists’ findings related to future production volumes by comparing the future production volumes to relevant historical and current period production volumes, as applicable.
/s/ PricewaterhouseCoopers LLP
Oklahoma City, Oklahoma
February 18, 2026
We have served as the Company’s auditor since 1992.
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CONSOLIDATED BALANCE SHEETS
($ in millions, except per share data) December 31, 2025 December 31, 2024
Assets
Current assets:
Cash and cash equivalents $ 616 $ 317
Restricted cash 80 78
Accounts receivable, net 1,599 1,226
Derivative assets 264 84
Other current assets 357 292
Total current assets 2,916 1,997
Property and equipment:
Natural gas and oil properties, successful efforts method
Proved natural gas and oil properties 26,606 23,093
Unproved properties 5,478 5,897
Other property and equipment 509 654
Total property and equipment 32,593 29,644
Less: accumulated depreciation, depletion and amortization ( 8,278 ) ( 5,362 )
Property and equipment held for sale, net 40 —
Total property and equipment, net 24,355 24,282
Long-term derivative assets 47 1
Deferred income tax assets 168 589
Other long-term assets 801 1,025
Total assets $ 28,287 $ 27,894
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 753 $ 777
Current maturities of long-term debt, net — 389
Accrued interest 100 100
Derivative liabilities 3 71
Other current liabilities 2,045 1,786
Total current liabilities 2,901 3,123
Long-term debt, net 5,009 5,291
Long-term derivative liabilities 1 68
Asset retirement obligations, net of current portion 688 499
Long-term contract liabilities 975 1,227
Other long-term liabilities 135 121
Total liabilities 9,709 10,329
Contingencies and commitments ( Note 5 )
Stockholders' equity:
Common stock, $ 0.01 par value, 450,000,000 shares authorized: 239,249,874 and 231,769,886 shares issued
2 2
Additional paid-in capital 13,746 13,687
Retained earnings 4,830 3,876
Total stockholders' equity 18,578 17,565
Total liabilities and stockholders' equity $ 28,287 $ 27,894
The accompanying notes are an integral part of these consolidated financial statements.
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CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31,
($ in millions, except per share data) 2025 2024 2023
Revenues and other:
Natural gas, oil and NGL $ 8,476 $ 2,969 $ 3,547
Marketing 3,163 1,290 2,500
Gain (loss) on derivatives 550 ( 38 ) 1,728
Gains (losses) on sales of assets ( 65 ) 14 946
Total revenues and other 12,124 4,235 8,721
Operating expenses:
Production 635 316 356
Gathering, processing and transportation 2,376 1,035 853
Severance and ad valorem taxes 193 97 167
Exploration 46 10 27
Marketing 3,160 1,310 2,499
General and administrative 181 186 127
Separation and other termination costs 5 23 5
Depreciation, depletion and amortization 2,980 1,729 1,527
Impairments 37 — —
Other operating expense, net 40 332 18
Total operating expenses 9,653 5,038 5,579
Income (loss) from operations 2,471 ( 803 ) 3,142
Other income (expense):
Interest expense ( 235 ) ( 123 ) ( 104 )
Gains (losses) on purchases, exchanges or extinguishments of debt 4 ( 1 ) —
Other income, net 42 86 79
Total other income (expense) ( 189 ) ( 38 ) ( 25 )
Income (loss) before income taxes 2,282 ( 841 ) 3,117
Income tax expense (benefit) 463 ( 127 ) 698
Net income (loss) $ 1,819 $ ( 714 ) $ 2,419
Earnings (loss) per common share:
Basic $ 7.67 $ ( 4.55 ) $ 18.21
Diluted $ 7.57 $ ( 4.55 ) $ 16.92
Weighted average common shares outstanding (in thousands):
Basic 237,290 156,989 132,840
Diluted 240,370 156,989 142,976
The accompanying notes are an integral part of these consolidated financial statements.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
($ in millions) 2025 2024 2023
Cash flows from operating activities:
Net income (loss) $ 1,819 $ ( 714 ) $ 2,419
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization 2,980 1,729 1,527
Deferred income tax expense (benefit) 448 ( 123 ) 428
Derivative (gains) losses, net ( 550 ) 38 ( 1,728 )
Cash receipts on derivative settlements, net 189 947 354
Share-based compensation 46 38 33
(Gains) losses on sales of assets 65 ( 14 ) ( 946 )
Contract amortization ( 203 ) ( 57 ) —
(Gains) losses on purchases, exchanges or extinguishments of debt ( 4 ) 1 —
Other 70 35 18
Changes in assets and liabilities ( 285 ) ( 315 ) 275
Net cash provided by operating activities 4,575 1,565 2,380
Cash flows from investing activities:
Capital expenditures ( 2,736 ) ( 1,557 ) ( 1,829 )
Property acquisitions ( 195 ) — —
Receipts of deferred consideration 116 166 —
Business combination, net — ( 459 ) —
Contributions to investments ( 14 ) ( 75 ) ( 231 )
Proceeds from divestitures of property and equipment 70 21 2,533
Net cash provided by (used in) investing activities ( 2,759 ) ( 1,904 ) 473
Cash flows from financing activities:
Proceeds from Prior Credit Facility 825 20 1,125
Payments on Prior Credit Facility ( 825 ) ( 20 ) ( 2,175 )
Proceeds from 2025 Credit Facility 165 — —
Payments on 2025 Credit Facility ( 165 ) — —
Proceeds from issuance of senior notes, net — 747 —
Proceeds from warrant exercise 24 3 —
Debt issuance and other financing costs ( 11 ) ( 11 ) —
Cash paid to repurchase and retire common stock ( 100 ) — ( 355 )
Cash paid to purchase debt ( 663 ) ( 767 ) —
Cash paid for common stock dividends ( 765 ) ( 388 ) ( 487 )
Other — ( 3 ) —
Net cash used in financing activities ( 1,515 ) ( 419 ) ( 1,892 )
Net increase (decrease) in cash, cash equivalents and restricted cash 301 ( 758 ) 961
Cash, cash equivalents and restricted cash, beginning of period 395 1,153 192
Cash, cash equivalents and restricted cash, end of period $ 696 $ 395 $ 1,153
Cash and cash equivalents $ 616 $ 317 $ 1,079
Restricted cash 80 78 74
Total cash, cash equivalents and restricted cash $ 696 $ 395 $ 1,153
The accompanying notes are an integral part of these consolidated financial statements.
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Common Stock Additional Paid-in Capital Retained Earnings Total Stockholders’ Equity
($ in millions) Shares Amount
Balance as of December 31, 2022 134,715,094 $ 1 $ 5,724 $ 3,399 $ 9,124
Share-based compensation 214,684 — 31 — 31
Issuance of common stock for warrant exercise 221,952 — — — —
Issuance of reserve common stock and warrants 12,089 — — — —
Repurchase and retirement of common stock ( 4,373,883 ) — ( 1 ) ( 357 ) ( 358 )
Net income — — — 2,419 2,419
Dividends on common stock — — — ( 487 ) ( 487 )
Balance as of December 31, 2023 130,789,936 $ 1 $ 5,754 $ 4,974 $ 10,729
Issuance of common stock for Southwestern Merger 95,700,325 1 7,888 — 7,889
Share-based compensation 727,799 — 42 — 42
Issuance of common stock for warrant exercise 4,083,103 — 3 — 3
Issuance of reserved common stock and warrants 468,723 — — — —
Net loss — — — ( 714 ) ( 714 )
Dividends on common stock — — — ( 384 ) ( 384 )
Balance as of December 31, 2024 231,769,886 $ 2 $ 13,687 $ 3,876 $ 17,565
Share-based compensation 538,885 — 35 — 35
Issuance of common stock for warrant exercise 7,497,509 — 24 — 24
Issuance of reserved common stock and warrants 295,255 — — — —
Repurchase and retirement of common stock ( 851,661 ) — — ( 100 ) ( 100 )
Net income — — — 1,819 1,819
Dividends on common stock — — — ( 765 ) ( 765 )
Balance as of December 31, 2025 239,249,874 $ 2 $ 13,746 $ 4,830 $ 18,578
The accompanying notes are an integral part of these consolidated financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation and Summary of Significant Accounting Policies
Description of Company
On October 1, 2024, Chesapeake Energy Corporation (“Chesapeake”) changed its name to Expand Energy Corporation ("Expand Energy," “we,” “our,” “us” or the "Company") in connection with the Southwestern Merger, further discussed in Note 2 . Following the Southwestern Merger, Expand Energy is the largest natural gas producer in the U.S., based on net daily production, and is focused on responsibly developing an abundant supply of natural gas, oil and NGL to expand energy access for all. We have operations in Louisiana, Texas, Pennsylvania, West Virginia and Ohio, with all of our operations located onshore in the United States.
Basis of Presentation
The accompanying consolidated financial statements of Expand Energy were prepared in accordance with GAAP and include the accounts of our direct and indirect wholly owned subsidiaries and entities in which Expand Energy has a controlling financial interest. Intercompany accounts and balances have been eliminated. All monetary values, other than per unit and per share amounts, are stated in millions of U.S. dollars unless otherwise specified.
This Annual Report on Form 10-K (this “Form 10-K”) relates to our financial position as of December 31, 2025 and as of December 31, 2024, and our results of operations for the year ended December 31, 2025, the year ended December 31, 2024 and the year ended December 31, 2023. For the time periods covered by this Form 10-K, we did not have any changes or items impacting other comprehensive income.
Accounting Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosures in the financial statements. Management evaluates its estimates and related assumptions regularly, including those related to the impairment of natural gas and oil properties, natural gas and oil reserves, derivatives, income taxes, impairment of other property and equipment, environmental remediation costs, asset retirement obligations, litigation and regulatory proceedings and fair values. Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ significantly from these estimates.
Consolidation
We consolidate entities in which we have a controlling financial interest and variable interest entities in which we are the primary beneficiary. We consolidate subsidiaries in which we hold, directly or indirectly, more than 50% of the voting rights. We use the equity method of accounting to record our net interests where we have the ability to exercise significant influence through our investment but lack a controlling financial interest. Under the equity method, our share of net income (loss) is included in our consolidated statements of operations according to our equity ownership or according to the terms of the applicable governing instrument. See Note 15 for further discussion of our investments. Undivided interests in natural gas and oil properties are consolidated on a proportionate basis.
Segments
Operating segments are defined as components of an enterprise that engage in activities from which it may earn revenues and incur expenses for which separate operational financial information is available and is regularly evaluated by the chief operating decision maker (“CODM”), who is our Chief Executive Officer, for the purpose of allocating an enterprise’s resources and assessing its operating performance. We have concluded that we have one reportable segment, due to the similar nature of the exploration and production business across Expand Energy and its consolidated subsidiaries and the fact that our marketing activities are ancillary to our operations. See Note 18 for additional information.
Cash and Cash Equivalents
For purposes of the consolidated financial statements, we consider investments in all highly liquid instruments with original maturities of three months or less at the date of purchase to be cash equivalents.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Restricted Cash
As of December 31, 2025, we had restricted cash of $ 80 million. Our restricted cash represents funds restricted for payment of certain royalties pending the outcome of competing ownership claims for certain minerals, as well as for payment of certain convenience class unsecured claims.
Accounts Receivable
Our accounts receivable are primarily from purchasers of natural gas, oil and NGL and from exploration and production companies that own interests in properties we operate. This industry concentration could affect our overall exposure to credit risk, either positively or negatively, because our purchasers and joint working interest owners may be similarly affected by changes in economic, industry or other conditions. We monitor the creditworthiness of all our counterparties and we generally require letters of credit or parent guarantees for receivables from parties deemed to have sub-standard credit, unless the credit risk can otherwise be mitigated. We utilize an allowance method in accounting for bad debt based on historical trends in addition to specifically identifying receivables that we believe may be uncollectible. See Note 8 for additional information regarding our accounts receivable.
Natural Gas and Oil Properties
We follow the successful efforts method of accounting for our natural gas and oil properties. Under this method, exploration costs such as exploratory geological and geophysical costs, expiration of unproved leasehold, delay rentals and exploration overhead are expensed as incurred. All costs related to production, general corporate overhead and similar activities are also expensed as incurred. All property acquisition costs and development costs are capitalized when incurred.
Exploratory drilling costs are initially capitalized, or suspended, pending the determination of proved reserves. If proved reserves are found, drilling costs remain capitalized and are classified as proved properties. Costs of unsuccessful wells are charged to exploration expense. For exploratory wells that find reserves that cannot be classified as proved when drilling is completed, costs continue to be capitalized as suspended exploratory drilling costs if there have been sufficient reserves found to justify completion as a producing well and sufficient progress is being made in assessing the reserves and the economic and operational viability of the project. If we determine that future appraisal drilling or development activities are unlikely to occur, associated suspended exploratory well costs are expensed. In some instances, this determination may take longer than one year. We review the status of all suspended exploratory drilling costs quarterly. Costs to develop proved reserves, including the costs of all development wells and related equipment used in the production of natural gas and oil are capitalized.
Costs of drilling and equipping successful wells, costs to construct or acquire facilities, and associated asset retirement costs are depreciated using the unit-of-production (“UOP”) method based on total estimated proved developed gas and oil reserves. Costs of acquiring proved properties, including leasehold acquisition costs transferred from unproved properties, are depleted using the UOP method based on total estimated proved developed and undeveloped reserves.
Proceeds from the sales of individual natural gas and oil properties and the capitalized costs of individual properties sold or abandoned are credited and charged, respectively, to accumulated depreciation, depletion and amortization, if doing so does not materially impact the depletion rate of an amortization base. Generally, no gain or loss is recognized until an entire amortization base is sold. However, a gain or loss is recognized from the sale of less than an entire amortization base if the disposition is significant enough to materially impact the depletion rate of the remaining properties in the amortization base.
When circumstances indicate that the carrying value of proved natural gas and oil properties may not be recoverable, we compare unamortized capitalized costs to the expected undiscounted pre-tax future cash flows for the associated assets grouped at the lowest level for which identifiable cash flows are independent of cash flows of other assets. If the expected undiscounted pre-tax future cash flows, based on our estimate of future natural gas and crude oil prices, operating costs, anticipated production from proved reserves and other relevant data, are lower than the unamortized capitalized costs, the capitalized costs are reduced to fair value. Fair value is generally estimated using the income approach described in the ASC 820, Fair Value Measurements . If applicable, we utilize prices and other relevant information generated by market transactions involving assets and liabilities that are identical or comparable to the item being measured as the basis for determining fair value. The expected future cash flows used for impairment reviews and related fair value measurements are typically based on judgmental
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assessments of commodity prices, pricing adjustments for differentials, operating costs, capital investment plans, future production volumes, and estimated proved reserves, considering all available information at the date of review. These assumptions are applied to develop future cash flow projections that are then discounted to estimated fair value, using a market-based weighted average cost of capital. We have classified these fair value measurements as Level 3 in the fair value hierarchy. Additionally, we evaluate the carrying value of our unproved properties and record impairment based on time or geologic factors. Factors such as drilling results, reservoir performance, seismic interpretation, lease expiration dates or future plans to develop acreage is utilized in our evaluation of unproved properties. When unproved properties are deemed to be impaired, this amount is reported in exploration expenses in our consolidated statements of operations.
Other Property and Equipment
Other property and equipment consists primarily of buildings and improvements, computers and office equipment, gathering and water systems, land and other assets that support our operations. Major renewals and betterments are capitalized while the costs of repairs and maintenance are charged to expense as incurred. Other property and equipment costs, excluding land, are depreciated on a straight-line basis and recorded within depreciation, depletion and amortization in the consolidated statement of operations.
Realization of the carrying value of other property and equipment is reviewed for possible impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Assets are determined to be impaired if a forecast of undiscounted estimated future net operating cash flows directly related to the asset, including any disposal value, is less than the carrying amount of the asset. If any asset is determined to be impaired, the loss is measured as the amount by which the carrying amount of the asset exceeds its fair value. An estimate of fair value is based on the best information available, including prices for similar assets and discounted cash flow. See Note 14 for further discussion of other property and equipment.
Assets Held for Sale
We may market certain non-core natural gas and oil assets or other properties for sale. At the end of each reporting period, we evaluate if these assets should be classified as held for sale. The held for sale criteria includes the following: management commits to a plan to sell, the asset is available for immediate sale, an active program to locate a buyer exists, the sale of the asset is probable and expected to be completed within a year, the asset is actively being marketed for sale and that it is unlikely that significant changes to the plan will be made. If each of the criteria are met, then the assets and associated liabilities are classified as held for sale. Additionally, once assets are classified as held for sale, we cease depreciation on those related assets. See Note 14 for further discussion of other property and equipment.
Capitalized Interest
Interest from external borrowings is capitalized on significant investments in major development projects until the asset is ready for service using the weighted average borrowing rate of outstanding borrowings. Capitalized interest is determined by multiplying our weighted average borrowing cost on debt by the average amount of qualifying costs incurred. Capitalized interest is depreciated over the useful lives of the assets in the same manner as the depreciation of the underlying asset.
Accounts Payable
Included in accounts payable as of December 31, 2025 are liabilities of approximately $ 58 million, representing the amount by which checks issued, but not yet presented to our banks for collection, exceeded balances in applicable bank accounts.
Debt Issuance Costs
Costs associated with the arrangement of our credit facility are included in other long-term assets and are amortized over the life of the facility using the straight-line method. As of December 31, 2025, these costs were $ 22 million. Costs associated with the issuance of the senior notes are included in long-term debt and the remaining unamortized issuance costs are amortized over the life of the senior notes using the straight-line method. Unamortized issuance costs associated with our senior notes as of December 31, 2025 totaled $ 8 million.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Litigation Contingencies
We are subject to litigation and regulatory proceedings, claims and liabilities that arise in the ordinary course of business. We accrue losses associated with litigation and regulatory claims when such losses are probable and reasonably estimable. If we determine that a loss is probable and cannot estimate a specific amount for that loss but can estimate a range of loss, our best estimate within the range is accrued. Estimates are adjusted as additional information becomes available or circumstances change. We do not reduce these liabilities for potential insurance or third-party recoveries. If applicable, we accrue receivables for probable insurance or third-party recoveries. Legal defense costs associated with loss contingencies are expensed in the period incurred. See Note 5 for further discussion of litigation contingencies.
Environmental Remediation Costs
We record environmental reserves for estimated remediation costs related to existing conditions from past operations when the responsibility to remediate is probable and the costs can be reasonably estimated. Expenditures that create future benefits or contribute to future revenue generation are capitalized. See Note 5 for discussion of environmental contingencies.
Asset Retirement Obligations
We recognize liabilities for obligations associated with the retirement of tangible long-lived assets that result from the acquisition, construction and development of the assets. We recognize the fair value of a liability for a retirement obligation in the period in which the liability is incurred. For natural gas and oil properties, this is the period in which a natural gas or oil well is acquired or drilled. The liability is then accreted each period until the liability is settled or the well is sold, at which time the liability is removed. The related asset retirement cost is capitalized as part of the carrying amount of our natural gas and oil properties. See Note 16 for further discussion of asset retirement obligations.
Revenue Recognition
Revenue from the sale of natural gas, oil and NGL is recognized upon the transfer of control of the products, which is typically when the products are delivered to customers. Revenue is recognized net of royalties due to third parties in an amount that reflects the consideration we expect to receive in exchange for those products. We follow the sales method of accounting for our natural gas revenue whereby we recognize sales revenue on all natural gas sold to our purchasers, regardless of whether the sales are proportionate to our ownership in the property.
Revenue from contracts with customers includes the sale of our natural gas, oil and NGL production (recorded as natural gas, oil and NGL revenues in the consolidated statements of operations) as well as the sale of certain of our joint interest holders’ production which we purchase under joint operating arrangements (recorded in marketing revenues in the consolidated statements of operations). In connection with the marketing of these products, we obtain control of the natural gas, oil and NGL we purchase from other interest owners at defined delivery points and deliver the product to third parties, at which time revenues are recorded. See Note 8 for a presentation of the disaggregation of revenue.
Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days. There are no significant judgments that significantly affect the amount or timing of revenue from contracts with customers.
Generally our commodity sales contracts are less than 12 months in duration, however in certain cases we have long-term commodity sales contracts based on market prices at the time of delivery. With these long-term contracts, the transaction price is variable and determined as physical delivery occurs. As such, we have applied the practical expedient allowed in ASC 606 and do not disclose the aggregate amount of the transaction price allocated to performance obligations or when we expect to recognize revenues that are unsatisfied as of the end of the reporting period.
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We also generate revenue from other sources, including from a variety of derivative and hedging activities to reduce our exposure to fluctuations in future commodity prices and to protect our expected operating cash flow against significant market movements or volatility, as well as a variety of natural gas, oil and NGL purchase and sale contracts with third parties for various commercial purposes, including credit risk mitigation and satisfaction of our pipeline delivery commitments (recorded within marketing revenues in the consolidated statements of operations). In circumstances where we act as an agent rather than a principal, our results of operations related to natural gas, oil and NGL marketing activities are presented on a net basis.
Fair Value Measurements
Certain financial instruments are reported on a recurring basis at fair value on our consolidated balance sheets. We also use fair value measurements on a nonrecurring basis when a qualitative assessment of our assets indicates a potential impairment. Under fair value measurement accounting guidance, fair value is defined as the amount that would be received from the sale of an asset or paid for the transfer of a liability in an orderly transaction between market participants (i.e., an exit price). To estimate an exit price, a three-level hierarchy is used. The fair value hierarchy prioritizes the inputs, which refer broadly to assumptions market participants would use in pricing an asset or a liability, into three levels. Level 1 inputs are unadjusted quoted prices in active markets for identical assets and liabilities and have the highest priority. Level 2 inputs are inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability and have the lowest priority.
The valuation techniques that may be used to measure fair value include a market approach, an income approach and a cost approach. A market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. An income approach uses valuation techniques to convert future amounts to a single present amount based on current market expectations, including present value techniques, option-pricing models and the excess earnings method. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).
The carrying values of financial instruments comprising cash and cash equivalents, accounts payable and accounts receivable approximate fair values due to the short-term maturities of these instruments. See Notes 4 and 13 for further discussion of fair value measurements.
Derivatives
Derivative instruments are recorded at fair value, and changes in fair value are recognized currently in earnings unless specific hedge accounting criteria are followed. As of December 31, 2025, none of our open derivative instruments were designated as cash flow hedges.
Derivative instruments reflected as current in the consolidated balance sheets represent the estimated fair value of derivatives scheduled to settle over the next 12 months based on market prices/rates as of the respective balance sheet dates. Cash settlements of our derivative instruments are generally classified as operating cash flows unless the derivatives are deemed to contain, for accounting purposes, a significant financing element at contract inception, in which case these cash settlements are classified as financing cash flows in the accompanying consolidated statements of cash flows. All of our commodity derivative instruments are subject to master netting arrangements by contract type which provide for the offsetting of asset and liability positions within each contract type, as well as related cash collateral if applicable, by counterparty. Therefore, we net the value of our derivative instruments by contract type with the same counterparty in the accompanying consolidated balance sheets.
We have established the fair value of our derivative instruments using established index prices, volatility curves and discount factors. These estimates are compared to our counterparty values for reasonableness. The values we report in our financial statements are as of a point in time and subsequently change as these estimates are revised to reflect actual results, changes in market conditions and other factors. Derivative transactions are subject to the risk that counterparties will be unable to meet their obligations. This non-performance risk is considered in the valuation of our derivative instruments, but to date has not had a material impact on the values of our derivatives. See Note 13 for further discussion of our derivative instruments.
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Income Taxes
We are subject to current income taxes assessed by the federal and various state jurisdictions in the U.S. and account for current income taxes based on amounts paid or estimated to be payable net of amounts refunded or estimated to be refunded. Additionally, we account for deferred income taxes using the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recorded for the estimated future tax consequences attributable to the differences between the financial carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the tax rate expected to be in effect for the year in which those temporary differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the year of the enacted rate change. Deferred income taxes are provided to recognize the income tax effect of reporting certain transactions in different years for income tax and financial reporting purposes. A valuation allowance for deferred tax assets, including net operating losses, is recognized when it is more likely than not that some or all of the benefit from the deferred tax assets will not be realized.
We are required to make judgments, including estimating reserves for potential adverse outcomes regarding tax positions that we have taken. We account for uncertainty in income taxes using a recognition and measurement threshold for tax positions taken or expected to be taken in a tax return. The tax benefit from an uncertain tax position is recognized when it is more likely than not that the position will be sustained upon examination by taxing authorities based on technical merits of the position. The amount of the tax benefit recognized is the largest amount of the benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement. The effective tax rate and the tax basis of assets and liabilities reflect management’s estimates of the ultimate outcome of various tax uncertainties. We recognize accrued interest related to uncertain tax positions in interest expense and accrued penalties related to such positions in general and administrative expense in the consolidated statements of operations. See Note 9 for further discussion of income taxes.
Share-Based Compensation
Our share-based compensation program consists of restricted stock units and performance share units granted to employees and restricted stock units granted to non-employee directors under our Long Term Incentive Plan. We recognize the cost of services received in exchange for restricted stock units based on the fair value of the equity instruments as of the grant date. This value is amortized over the vesting period, which is generally three years from the grant date. Forfeitures on our share-based compensation awards are recognized as they occur. Because performance share units are settled in shares, they are classified as equity and are measured at fair value as of the grant date.
To the extent compensation expense relates to employees directly involved in the acquisition of natural gas and oil leasehold and development activities, these amounts are capitalized to natural gas and oil properties. Amounts not capitalized to natural gas and oil properties are generally recognized as general and administrative expense, production expense, marketing expense, or exploration expense, based on the employees involved in those activities. See Note 11 for further discussion of share-based compensation.
Recently Issued Accounting Standards
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements . ASU 2025-11 clarifies interim disclosure requirements and the applicability of Topic 270. Additionally, ASU 2025-11 includes a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. This ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. We are evaluating the impact this ASU will have on our disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses . ASU 2024-03 expands disclosures about specific costs and expenses presented on the face of the income statement. This ASU is effective for annual reporting periods beginning after December 15, 2026 and for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. We are evaluating the impact this ASU will have on our disclosures.
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In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . ASU 2023-09 intends to provide investors with additional information about an entity’s income taxes by requiring disclosure of items such as disaggregation of the effective tax rate reconciliation as well as information regarding income taxes paid. This ASU is effective beginning with this annual report on Form 10-K and we have applied the updates retrospectively to impacted disclosures. See Note 9 for further discussion on our income taxes and Note 17 for additional information on income taxes paid.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segments Disclosures . Under ASU 2023-07, the scope and frequency of segment disclosures is increased to provide investors with additional detail about information utilized by an entity’s CODM, including information about significant segment expenses. This ASU was effective for annual reporting beginning with our 2024 Form 10-K and for interim periods beginning with our quarterly report on Form 10-Q for the first quarter of 2025. See Note 18 for further discussion on our segment reporting.
We consider the applicability and impact of all ASUs. ASUs not listed above were evaluated and determined to either be not applicable, already adopted and disclosed or not material upon adoption.
2. Natural Gas and Oil Property Transactions
Southwestern Merger
On January 10, 2024, Chesapeake and Southwestern entered into an all-stock agreement and plan of merger (the “Merger Agreement”). Southwestern was an independent energy company engaged in development, exploration and production activities, including related marketing activities, within its operating areas in the Appalachia and Haynesville shale plays. Our Board of Directors and the Board of Directors of Southwestern both approved the Merger Agreement. At separate special meetings each held on June 18, 2024, Chesapeake’s stockholders approved the issuance of Chesapeake’s common stock to the stockholders of Southwestern in connection with the Southwestern Merger, and Southwestern’s stockholders approved the Merger Agreement.
On October 1, 2024, the Southwestern Merger was completed, and we issued approximately 95.7 million shares of our common stock to Southwestern’s shareholders in connection with the Merger Agreement. Under the terms of the Merger Agreement, subject to certain exceptions, each share of Southwestern common stock was converted into the right to receive 0.0867 of a share of the Company’s common stock. Based on the closing price of our common stock, the total value of the shares of our common stock issued to Southwestern’s shareholders was approximately $ 7.9 billion. During 2025, we recognized approximately $ 57 million of costs related to the Southwestern Merger, which primarily consisted of employee expenses. During 2024, we recognized approximately $ 312 million of costs related to the Southwestern Merger, which included $ 148 million related to employee expenses and the remainder of the costs relating to transaction fees, consulting and legal fees and other fees related to the transaction. These acquisition-related costs are included within other operating expense, net within our consolidated statements of operations. The Southwestern Merger was structured as a tax-free reorganization for United States federal income tax purposes.
Southwestern Merger Purchase Price Allocation
We have accounted for the Southwestern Merger as a business combination, using the acquisition method, with Expand Energy (formerly Chesapeake) treated as the accounting acquirer. During 2025, we finalized the acquisition accounting for this transaction. The following table represents the allocation of the total purchase price of Southwestern to the identifiable assets acquired and the liabilities assumed based on the fair values as of the acquisition date.
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Purchase Price Allocation
Consideration:
Cash (a)
$ 585
Fair value of Expand Energy common stock issued (b)
7,871
Restricted stock unit and performance stock unit replacement awards 17
Total consideration $ 8,473
Fair Value of Assets Acquired:
Cash and cash equivalents and restricted cash $ 126
Other current assets 828
Proved natural gas and oil properties 10,002
Unproved properties 4,270
Other property and equipment 128
Other long-term assets 496
Amounts attributable to assets acquired $ 15,850
Fair Value of Liabilities Assumed:
Current liabilities $ 1,955
Long-term debt 3,305
Deferred tax liabilities 479
Long-term contract liabilities 1,287
Other long-term liabilities 351
Amounts attributable to liabilities assumed $ 7,377
Total identifiable net assets $ 8,473
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(a) Reflects the repayment of $ 585 million outstanding on Southwestern's 2022 revolving credit facility including $ 2 million of accrued interest and fees, as the facility was repaid and retired upon close of the Southwestern Merger.
(b) The fair value of our common stock is a Level 1 input, as our stock price is a quoted price in an active market as of the acquisition date.
Natural Gas and Oil Properties
For the Southwestern Merger, we applied the business combination guidance, under which an acquirer should recognize the identifiable assets acquired and the liabilities assumed on the acquisition date at fair value. The fair value estimate of proved and unproved natural gas and oil properties as of the acquisition date was based on estimated natural gas and oil reserves and related future net cash flows discounted using a weighted average cost of capital, including estimates of future production rates and future development costs. We utilized NYMEX strip pricing adjusted for inflation to value the reserves. We then applied various discount rates depending on the classification of reserves and other risk characteristics. Management utilized the assistance of a third-party valuation expert to estimate the value of the natural gas and oil properties acquired. Additionally, the fair value estimate of proved and unproved natural gas and oil properties was corroborated by utilizing a market approach, which considers recent comparable transactions for similar assets.
The inputs used to value natural gas and oil properties require significant judgment and estimates made by management and represent Level 3 inputs.
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As part of the Southwestern Merger, we assumed gathering, processing and transportation contracts, certain of which were deemed to be above or below current market rates. We recognized assets and liabilities for the difference in the contractual and market rates of these contracts, as of the date of the Merger. The terms of the contracts extend through 2035.
Southwestern Merger Revenues and Expenses Subsequent to Acquisition
We included in our consolidated statements of operations natural gas, oil and NGL revenues of $ 1,021 million , marketing revenues of $ 482 million , net losses on natural gas, oil and NGL derivatives of $ 34 million , and direct operating expenses of $ 1,384 million , including depreciation, depletion and amortization, and net earnings of $ 36 million , related to the Southwestern Merger businesses for the period from October 1, 2024 through December 31, 2024.
Combined Pro Forma Financial Information
As the Southwestern Merger closed on October 1, 2024, all activity in 2025 is included in our consolidated statements of operations. The following unaudited pro forma financial information is based on our historical consolidated financial statements adjusted to reflect as if the Southwestern Merger and the divestiture of our Eagle Ford assets had each occurred on January 1, 2023. The information below reflects pro forma adjustments based on available information and certain assumptions that we believe are reasonable, including the estimated tax impact of the pro forma adjustments.
Years Ended December 31,
2024 2023
Revenues $ 8,193 $ 14,247
Net income (loss) available to common stockholders $ ( 607 ) $ 3,852
Earnings (loss) per common share:
Basic $ ( 2.65 ) $ 16.86
Diluted $ ( 2.65 ) $ 16.14
Eagle Ford Divestitures
During 2023, we divested our Eagle Ford assets through three separate transactions (“the Eagle Ford divestiture transactions”), for approximately $ 3.5 billion, subject to customary post-closing adjustments. In each of these transactions, we received a portion of the purchase price upon closing, subject to customary post-closing adjustments, with the remainder of the purchase price recorded as deferred consideration and treated as a non-interest-bearing note to be paid in installments in up to the following four years following the close of the transaction. The deferred consideration is recorded at fair value with an imputed rate of interest as a Level 2 input, and approximately $ 114 million and $ 114 million of the deferred consideration is reflected within other current assets and approximately $ 91 million and $ 188 million of the deferred consideration is reflected within other long-term assets on the consolidated balance sheets as of December 31, 2025 and December 31, 2024, respectively. Additionally, during 2024, we received a contingent payment of $ 25 million related to one of the Eagle Ford divestiture transactions, based upon the average NYMEX prices during the year following the close of the transaction. These installment payments are recorded as receipts of deferred consideration in our consolidated statements of cash flows. The contingent payment noted above was recorded as cash receipts on derivative settlements, net in our consolidated statements of cash flows. The Eagle Ford divestiture transactions, resulted in an aggregate gain of approximately $ 947 million, inclusive of post-closing adjustments, based on the difference between the carrying value of the assets and consideration received.
During the years ended December 31, 2025, 2024 and 2023, we amortized approximately $ 19 million, $ 31 million and $ 24 million, respectively, related to the deferred consideration from the Eagle Ford divestiture transactions described above. The deferred consideration amortization is recorded within other income, net, in our consolidated statements of operations.
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3. Earnings Per Share
Basic earnings (loss) per common share is computed by dividing the net income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings (loss) per common share is calculated in the same manner but includes the impact of potentially dilutive securities utilizing the treasury stock method. Potentially dilutive securities consists of issuable shares related to warrants, unvested restricted stock units (“RSUs”), and unvested performance share units (“PSUs”).
The reconciliations between basic and diluted earnings (loss) per share are as follows:
Years Ended December 31,
2025 2024 2023
Numerator
Net income (loss) available to common stockholders, basic and diluted $ 1,819 $ ( 714 ) $ 2,419
Denominator (in thousands)
Weighted average common shares outstanding, basic 237,290 156,989 132,840
Effect of potentially dilutive securities
Warrants 2,670 — 9,750
Restricted stock units 372 — 338
Performance share units 38 — 48
Weighted average common shares outstanding, diluted 240,370 156,989 142,976
Earnings per common share:
Basic $ 7.67 $ ( 4.55 ) $ 18.21
Diluted $ 7.57 $ ( 4.55 ) $ 16.92
During the years ended December 31, 2025, 2024 and 2023, the diluted earnings (loss) per share calculation excludes the effect of 13,391 , 308,646 and 777,369 reserved shares of common stock and 25,015 , 582,109 and 1,466,502 reserved Class C Warrants related to the settlement of General Unsecured Claims associated with the Chapter 11 Cases, as all necessary conditions had not been met for such shares to be considered dilutive shares during the years ended December 31, 2025, 2024 and 2023, respectively. Additionally, the diluted loss per share calculation during the year ended December 31, 2024 excludes the antidilutive effect of 9,058,361 Warrants, 315,318 RSUs and 86,421 PSUs.
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4. Debt
Our long-term debt consisted of the following as of December 31, 2025 and 2024:
December 31, 2025 December 31, 2024
Carrying Amount Fair Value (a)
Carrying Amount Fair Value (a)
2025 Credit Facility $ — $ — $ — $ —
Prior Credit Facility — — — —
4.95 % senior notes due 2025 (b)
— — 389 389
5.50 % senior notes due 2026
— — 47 47
5.375 % senior notes due 2029 (b)
638 639 700 684
5.875 % senior notes due 2029
440 441 500 494
6.75 % senior notes due 2029
847 852 950 959
5.375 % senior notes due 2030 (b)
1,200 1,218 1,200 1,174
4.75 % senior notes due 2032 (b)
1,150 1,137 1,150 1,067
5.70 % senior notes due 2035 (c)
750 776 750 734
Premiums (discounts) on senior notes, net ( 8 ) — 4 —
Debt issuance costs ( 8 ) — ( 10 ) —
Total debt, net 5,009 5,063 5,680 5,548
Less current maturities of long-term debt, net — — ( 389 ) ( 389 )
Total long-term debt, net $ 5,009 $ 5,063 $ 5,291 $ 5,159
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(a) The carrying value of borrowings under our 2025 Credit Facility and Prior Credit Facility approximates fair value as the interest rates are based on prevailing market rates; therefore, they are a Level 1 fair value measurement. For all other debt, a market approach, based upon quotes from major financial institutions, which are Level 2 inputs, is used to measure the fair value.
(b) On October 1, 2024, we assumed the debt of Southwestern in connection with the Southwestern Merger, which primarily consisted of these senior notes. See Note 2 for additional discussion on the Southwestern Merger and further discussion of these senior notes below.
(c) On December 2, 2024, we issued $ 750 million of 5.70 % senior notes. See further discussion below.
The table below presents debt maturities as of December 31, 2025, excluding debt issuance costs, discounts and premiums:
Total
2029 1,925
2030 1,200
Thereafter 1,900
Total debt $ 5,025
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Credit Facility. On September 30, 2025, the Company entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) that, as amended, has a maturity date of September 30, 2030 (the “2025 Credit Facility”), with the lenders and issuing banks party thereto from time to time (the “Lenders”), and JPMorgan Chase Bank, N.A., as administrative agent. The 2025 Credit Facility, among other things, extended the maturity date from December 2027 to September 2030, with two one-year extension options available, each subject to the Lenders’ consent, increased the aggregate commitments under the 2025 Credit Facility from $ 2.5 billion to $ 3.5 billion with incremental capacity for additional commitments in an amount up to $ 1.0 billion, subject to the receipt of commitments thereto and certain customary conditions. The Credit Agreement also increased the sublimit available for the issuance of letters of credit from $ 500 million to $ 1.0 billion, and increased the sublimit available for swingline loans from $ 50 million to $ 100 million. As of December 31, 2025, we had approximately $ 3.5 billion available for borrowings under the 2025 Credit Facility.
The Credit Agreement contains restrictive covenants that, subject to exceptions customary to investment-grade credit facilities, limit Expand Energy and its subsidiaries’ ability to, among other things: (i) incur priority indebtedness, (ii) enter into mergers; (iii) make or declare dividends; (iv) incur liens; (v) sell all or substantially all of their assets; and (vi) engage in certain transactions with affiliates. The Credit Agreement requires our compliance with an indebtedness to capitalization ratio, which is the ratio of the Company’s total indebtedness to the sum of total indebtedness plus stockholders’ equity (the “Debt to Capitalization Ratio”), not to exceed 65 %, tested at the end of each quarter. As of December 31, 2025, we were in compliance with the Debt to Capitalization Ratio.