Expand Energy (NASDAQ:EXE) CEO Nick Dell’Osso said the company is “pretty constructive” on the macro outlook for U.S. natural gas heading into 2026 and 2027, while warning that volatility is likely to remain a defining feature of the market. Speaking during a conference discussion focused on gas-producing basins including the Marcellus and Haynesville, Dell’Osso argued that volatility also “comes with opportunity,” and said Expand believes its low-cost assets, inventory depth, and connectivity to end markets position it for “differential performance.”
Production growth surprised, with questions on sustainability
In response to a question about U.S. natural gas production rising more than 5 Bcf/d sequentially over the past 12 months—led by roughly 3 Bcf/d of Haynesville growth—Dell’Osso said the magnitude did surprise him. He noted Expand itself contributed meaningfully to year-over-year growth after curtailing “a significant amount of production” and stalling “turn-in line activity” during 2024 due to low prices, which left the company with artificially low output entering 2025. As prices recovered in early 2025, Expand brought volumes back as planned.
Looking forward, Dell’Osso framed the key issue as whether current production levels are sustainable at prevailing prices, particularly as the market moves into shoulder months. He said industry efficiency “continues to surprise” to the upside, enabling more gas to reach market for a given level of spending. Still, he suggested growth incentives remain limited at around $3.50 gas, saying he does not believe producers are motivated for growth at that level and that the “marginal break-even for growth” is above $3.50.
Forward curve, mid-cycle pricing, and capital signals
Dell’Osso said Expand remains comfortable with where the 2026 and 2027 forward strips sit relative to the company’s planning assumptions. He reiterated Expand’s mid-cycle price expectations of $3.50-$4, and said the 2026 and 2027 strip is “right where we are” against that range.
He also described recent market behavior as more rational than in prior cycles, citing an early-December prompt-price spike that did not materially change the character of the forward strip and faded as temperatures warmed. As a result, he said the market has not been “asking for big changes in capital allocation,” with rig counts grinding higher but not moving materially. He added that rig count “doesn’t mean what it used to mean” due to rising operational efficiency, but emphasized that material volume growth still requires a shift in capital allocation.
Demand: data centers, measurement “fuzziness,” and a not-too-loose market
On U.S. demand, Dell’Osso called the power story “super interesting,” saying weather-adjusted gas burns in 2025 appear strong even as coal regained some market share and renewables had a strong year. He attributed the underlying strength to power “running harder,” driven in part by data centers.
He also said visibility into power demand is becoming more difficult because of distributed power systems and behind-the-meter setups serving data centers, making it harder to track associated demand and supply flows. He suggested reported supply and demand figures around roughly 110 Bcf/d may be “a little bit fuzzy,” raising the possibility that supply could be overreported or demand underreported, and added that Expand does not believe the market is “super loose” at present.
International backdrop: Russian gas, LNG cyclicality, and potential U.S. moderation
Dell’Osso said the return of Russian gas to global markets is likely over time, calling it “too large and too valuable of an economic good to stay in the ground forever.” He said the likelihood of at least partial flows returning to Europe “grows every day,” and that any such developments would have to impact Henry Hub indirectly through broader global supply-demand dynamics.
He also discussed LNG pricing, saying Expand expects LNG prices to be cyclical in a manner similar to U.S. natural gas. With global LNG supply growth “lumpier” than demand growth, he said the market will periodically test price levels that force supply reductions. While he said Expand lacks clarity on how much that could translate into U.S. LNG shut-ins or curtailments, he noted it would require prices falling below the marginal cost of delivery, which he described as “a pretty low price.” He added that any such downturn likely would not last very long because international demand responds favorably to very low prices and because structural demand growth remains strong.
Strategy: hedging discipline, stable basin mix, and early Western Haynesville work
Dell’Osso outlined the company’s “Hedge-to-Wedge” approach, describing it as a framework to protect capital given that the drilling-to-payback cycle can span two to three years while gas price cycles are shorter. Expand typically hedges about eight quarters forward, using a mix of collars and swaps depending on the curve and perceived downside risks. He said the goal is to reduce cash flow volatility over time, and confirmed that the company intends to continue the approach. He also said Expand has been aggressive in locking in pricing when the curve moves above $4.
On capital allocation, Dell’Osso said the company’s mix between the Marcellus and Haynesville is “pretty stable year over year.” He characterized the Marcellus as constrained, arguing that incremental capital there could drive volumes but would likely receive lower in-basin pricing, reducing returns. In the Haynesville, he said Expand is comfortable with a volume profile designed around the $3.50-$4 mid-cycle view. He referenced a company framework in which about 7.5 Bcf/d of total production—combining relatively flat Marcellus volumes with Haynesville output—optimizes cash flow creation at that price range.
Dell’Osso also addressed Expand’s Western Haynesville position, which he said the company has been evaluating for several years and disclosed publicly during its third-quarter earnings call. He described the acreage as early-stage and higher cost due to depth and heat, with the company drilling its first horizontal well. He said Expand acquired the leasehold at what he characterized as well under $1 million per location—contrasting it with recent Haynesville transactions that, in his view, implied $3-$4 million per location—though he emphasized the Western Haynesville area is less proven. He argued Expand can apply learnings and cost advantages from deeper, hotter parts of its Louisiana footprint, where he said the company is the low-cost operator, and indicated peers may be 20%-25% higher in drilling and completion costs in comparable settings.
Finally, Dell’Osso said he believes Marcellus basis differentials can improve over time, citing what he described as a growing recognition of unmet energy demand and the economic impact of higher Northeast energy prices. He suggested shifting sentiment around infrastructure and affordable energy—alongside competition for data center investment—could influence future development, while also cautioning that any incremental infrastructure could be quickly filled, potentially compressing basis again.
About Expand Energy (NASDAQ:EXE)
Expand Energy Corporation is an independent natural gas producer principally in the United States. Expand Energy Corporation, formerly known as Chesapeake Energy Corporation, is based in OKLAHOMA CITY.
