Earnings call transcript Q2 2023

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Operator

Good morning, and welcome to the Chesapeake Energy Second Quarter 2023 Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Chris Ayers. Please go ahead.

Chris Ayres

Thank you, Marley. thank second joining operating quarter and to call results. everyone, Chesapeake's discuss XXXX morning, you our for today Good financial and and yesterday. Hopefully, our that chance a posted the release we website you've presentation updated our to to investor had press review

call, note, Please including will be to materially including making morning's statements. underlying projections beliefs, expectations, statements and of a regarding which forward-looking that filings. reference by and will be and forecasts, cannot from our in that confirmed are statements, other such of factors discussed we yesterday there the future cause number forward-looking to this press statements, and actual differ consist During release factors statements SEC our results existing assumptions identified our performance information, goals,

required recognize statements. which applicable and statements, with reliance certain periods financial also should except Please undertake peers. update non-GAAP to no any on law, as may undue by across any forward-looking facilitate that comparisons duty to such not place you refer We help we measures,

measure any to GAAP corresponding nearest be a our and use can For the measure found reconciliation on we non-GAAP website.

today on and Viets. overview are Q&A. will Nick the Dell'Osso, Josh will brief and Mohit of the give Singh a then results, to teleconference call Nick our we me up With open

that, thank teleconference the Nick. with So to you again turn and over now

Nick Dell'Osso

joining you for call. Thank our everyone. morning, Good

cycles. jump to strategy and to had a give through We we recent our execute quick accomplishments, I'll Q&A. to sustainable and on highlight we'll of outstanding value then this continue operating and shareholders an deliver results quarter, some

of ways We enhance continues equation. that and asked show We've some run today I I'm the often to go. industry of think opportunities our remains basin-leading highlighted at performance find innings that pleased strong, to out performance. efficiency Our our the field have get all has the we if things operating several level team to innovative the

a five us advancements of in improved during reached best grading fastest combination year our history eight rig our depth These XX,XXX learning, feet drilling of data drill operations XX,XXX-foot days. second our we machine the behind This in allowed the a high three quarter. to this analytics, equipment. of Marcellus team start, rapidly lateral, To of which and under a included wells total the fleet

We completion as to saw We technologies in records previous new and yield greater in XX% increase strong equally to both recent a results company on and Marcellus side the efficiencies well. the leading relative frac operations. equipment to than zipper Haynesville deployed

drilling development continues strong boundary performance, to of team the our completion to and the addition push our In strategy.

Our hybrid a Upper yields vertical well. sections well extended efficient footage million and more a the design into $X accretive and combined incremental impact. NPV single Marcellus Marcellus lower The the need Marcellus for with eliminating spend greater much surface capital in wellbore, than design multiple stranded reducing acreage per

has to well program, decreasing pleased extended Marcellus also lateral similar over five basin our across increased in length Upper drilling the in laterals our the deliver cost foot. by see entire average last lower while productivity Overall, XX% the our I'm per to the years. prolific Marcellus per

Haynesville. the to Moving

to between feet. efforts optimize uplift of projects our interest XX,XXX effort Resulting to working in Combination leasing of incremental by on Our location. lateral XXX,XXX-foot trades increased million and leasing locations through NPV has converted $X position near-term per all of growth X%. million nearly our has an approximately acreage to acreage $X our

expansions last lower and we also additional effort to in line over year Our and dividends capacity Haynesville the to offload offloads. a And through production. systems paying have ongoing recognized higher midstream pressures XX% our the debottleneck through is increase

in to LNG ready. our with progressing to path we're the continue Haynesville, our we importantly As optimize be operations also

previously our recent agreement our liquefaction exposure. for advances Our Gunvor deliver LNG - on to Lake Charles price JKM with recent a Lake for linked announced agreement agreement with gas Charles

In the shareholders, strength really given this market. prices our in pleased the I'm low in year lean for financial we and and on the can impactful a innovations, prudent current way addition value-oriented to allocate capital

on advantage The cycles. competitive that flexibility creation of and market, deferring enables means reducing is us a pricing. to for decisions production smarter in levels and periods voluntarily stronger focus activity today's In in value through TILs

will lower production Bcf measured by be our While end high first second than completions CapEx. per at half XXXX spuds, X.X our approximately second guidance the rig approximately reached half day, quarterly one-third of our our as quarter activity and

and development shares have activities, to increased we we continue dividend. our on base As our buyback spend reduced

our are In Marcellus program, XX,XXX our second cost and average addition we to per adding inventory an expect acre at Haynesville and acreage. to and to the have in $X,XXX half Year-to-date, lease of return strategically of to approximately length. opportunities add position in more footprint improving acres we our on year valuable using strong focused our acreage added the

our two this on to credit from our all total rating. continue debt upgrades our XX%, about recent rating path investment-grade we of doing and an credit we received We're is Today, as to net reaching cap agencies.

balance our of will the be sheet strengthened further our through Eagle progress. continues Ford which completion that expect to exit, We

this than far million shareholders fallen have Our to strategy while shareholder capital has so prices prioritizes more being resulted returns and allocation year, gas $XXX significantly. in returned

in base growing has Our $XXX we dividend, which returned this and million year-to-date stable X.X% approach a raised includes quarter. which

dividend dividend, buyback million the paying has second has our large-cap repurchasing in variable today's countercyclical including returned million We shares million during program, quarter. $XXX market. and returned company remain only procyclical $XXX year-to-date, consistently $XXX which a which and in repurchases, the share gas Our

waiver. commitment strategic our to the underlying that's continue to company value, in and and be. conditions we for adjust will us The long-term maximizing discipline warrant. our we'll means year, of we value our remain levels maintain our focused activity execute what will further our which allows capital lastly, and prudent shareholders. to not on the on will pillars, steadfast remain should And to decisions approach patient of rest strength exactly make attention our We'll Turning

address We're pleased to questions. your

And if so you'll the operator, open line.

Operator

Please very go ahead. [Operator Umang Instructions] comes much. from Goldman you from Umang first Sachs. Thank question Our Choudhary

Umang Choudhary

taking my morning. questions. And thank Good you

Nick Dell'Osso

Good morning, Umang.

Umang Choudhary

morning. My a really first is Good two-pronged question question.

would fortress talked and optionality your love purchase about have commodity. macro. cadence management hedging? thoughts sheet, hedging maintaining your risk the of balance a extent underlying of the through And of gas contracyclical repurchase does the around two, given thoughts also of macro First, the influence around the the and How volatility share you the

Nick Dell'Osso

start. are Those I'll questions. Sure. great

We So activity year. early this than Those We TILs cuts activity. earlier year. even the perspective, announced first, well pretty been supply has industry activity. We from up. really We in demand up are cuts now. cutting activity challenged cuts macro showed seen the the a respond. through think showing pretty the We've deferred cut

off some or in smoothed it that's pulled that year, we the think out and been helpful. So gas

cut or of predicting and the we We coming that. from continue certainly decisions online. we is through a We'll to kinds think as demand flow it's form profile. individually those as been in at industry levels helpful the our not of an 'XX. activity we have What think course, exact own is make a market that of to supply-demand the of doing, We great perspective approach as cash timing recovery growing have we're LNG for poised capacity

kinds are the I we move really look like tangible getting activity decisions. don't before things for financial really let to way make our about, strength those that, us. that's a of back. on show we'll some market of We leaning to be and the signs, improving out And what expect front when we'll to I'm bring So, our in talk

strength I to think when without leaning they're great I through uncertainty. prudent you have and cycles able smart of be ride at to there's to have in hard to and prudent continue lot decisions, and financial too make think a times decisions

have do We to don't that. just

feel a really year. hedging perspective, a a approach good That very how continue looking about rolling X-quarter to nice going our exactly methodical out We're to this add we well. So offset a around to offers cash basis. hedging that. we've do has on served flows with that. to hedges us It view From

pretty One the hedge of things have of rest that see, the through gain of a sizable that course, year. is you'll the we

and is a really offset we to of these the cost friction activity. activity them think That us out helps that reduces in levels allow in it changes smooth changes in way - those how about to

the is seen of out particularly you've pretty been But it's the our and other year, hedges this things we basis that I'd tough, lot Northeast. point well. challenged of differentials One a really in get have as

well So those basis just index basis are And an differentials. it's us as it's offset to serving those not hedges hedges. hedging,

buyback, So, they show embedded our NYMEX. we in and think really We a that. that plays statement to hedging, macro there there the addition year the are on income and in our certainly, how increase a cadence, role And with guess, buyback buyback, we're about announced our lastly, hedges the to that. realized in basis then ago, in about progressing well lines the up I

We have $XXX million remaining.

quite when warrant. have going lot second the over a time. out progress deploy really we feel of to opportunities year. and we'll buyback. program we look conditions about our of cash good And ultimately, shareholders expect think We're value finish as the continue carry buyback, for buyback to into to maximizes and prudently, cash that accelerate it to we that having to half against that We for But flexibility the the

Umang Choudhary

a the your of the And more in in. Nick. and much, much of Appalachia, you confidence lower side expect design of forward? A combining Thank about Upper going Marcellus the operations do On the X, add your love response. things program is wellbore. If design, thoughts so lot Slide And Would Marcellus it around just today? you you've in how interesting well helpful execution? what the single in hybrid on the Very talked can one equation. I

Josh Viets

Umang. morning, Good

So to-date, we've of executed four these.

would in our ability quite I so to execute And is high. our say confidence

proven The we've South well through complex example a really as an with the of in well innovative that our we've to done done designs. wells is think W-shaped U-turn I design be Texas, we've ability company, years wells. hybrid

And from technical create have proven so, operational our own. and I we ability these that value assets and be really innovative capture have teams we to and the that think incremental

through about these five as we work execute this back the half will year. more We of of

stated, we inventory execute assets. looking XX of at to opportunities our enhance in the the value acreage remaining have kind and position, We're around yet program. we've critiquing As the to from all constantly

confident highly hybrid we've the So, we're in excited design here to our and done, what we're presented well execute, to about that today. ability we pretty

Nick Dell'Osso

with stranded mean, you in think I what as talked finding that. So Umang, add to laterals could for program in program. leasing opportunities there play, just if there a back design laterals as developed trading that that around there's look We development kinds of at Haynesville, to the some of longer short we the you the about longer wells. the it's as all with if add I and more of know well early remaining. both the value And hybrid all about acreage well areas

life And go this to later been back the for core central is these shorter plays would way great add a longer by of otherwise really in laterals. to some acreage adding that and have across, opportunities us

something development continue about really back these the lateral some by long is great ways a for this So, an well. to think creating us, drill bring lateral opportunities, to front that program, of opportunities of to ultimately we'll smaller to development the

Umang Choudhary

Makes Thank you much. Great. lot of sense. a so

Operator

next please comes UBS. ahead. from question And from Silverstein go our Josh Josh,

Josh Silverstein

package morning, guys. Nick, with the process. Eagle Ford is remaining Good mentioned ongoing sale Thanks. the Yes. still you

And then? price proceeds there? shareholder just environment sheet now, Just it gas something opportunities Thanks. those that balance with as give Is divested, we're if then waiting this do an thinking on? about here return natural this the towards where is go you're buyback right all a is for to the execute update higher

Nick Dell'Osso

talked along Yes, sale from we've about return buybacks. all we're hi incremental with Josh, towards programs leaning how the

an you think But will we're about to process multiple transaction. and can an that process. the complete once that's finish interesting parties line I how is It's with that, here. been have to continue ongoing talk So, seeking it to we that we expect it get

something and for obviously. progress assets. The think, mind financing have us, super been to I sell strong. It's get been a But of front done. we're year making challenging not hope to good markets It's

Josh Silverstein

declines And to around Haynesville, the flexibility rigs. X Thanks. leaving kind Can the the rig level? thanks. stay or the don't So managing for if of X in then XXXX you come lower you you're count XXX in prices talk and from optionality about rigs you're with how what

Josh Viets

Yes.

we're so is -- And Josh. this

middle right we're rigs. the So in of dropping

six from week. go In fact, we'll rigs this to five

environment. into productive We We commodity very do to inefficiencies are a we We it's important simply think will matters. constructive price more to that to be absolutely being rebound thoughtful maintain about capacity. attempt avoid just think created our as that any flexibility

something a really, Previously, in that's back would allow market five-year we'll January. to end that of indicated coming we're year. outlook, as get I when presented And I to the needed. to rig that the gas say what we're into we this think think presented to maintain that that's we signal going sixth continue I our we a just going monitor. supply And is case

that. so don't to pressure really run and we front And feel get any out

We're for improve, and what our sheet really conditions to really which key us us today into happy balance is We is affords being back the pull just being strong patient, market the to think and ultimately flexible, for it. our assets us do.

Josh Silverstein

Okay. guys. Thanks

Operator

Bank from a Doug from have go Doug, Leggate now we question America. ahead. And of please

Doug Leggate

question. I this, Josh, don't micro a Nick everyone. Thank one you. different Good but I take you which know slightly or of to wants have morning,

dynamics get whether overhang be from Haynesville. Rystad to the CIA, hearing big seems look at U.S. the industry But between what we One of we think when pushbacks of what our we're markets company. gas data, the whatever, the sort seems and in be and difference is the to there new of very on the a DUC Baris it

- like? your what could backlog you're So, that backlog reporting looks DUC looks DUC us I trust tell the wonder can like are and if your what seeing you with agencies maybe what

Josh Viets

that morning, I is generally good data noise this agree overstated. is would is And that potentially is Yes, on current any overhang in you would of the align impact course, that This were to accurately. Josh. track supply commonly to metric of relatively it indicate DUCs. type if believe the Haynesville XXX a But metric and over We numbers we implication a It's the that there's most there for would a could of recovery. complex the think, lot Dough. of something in that public

have into have for abandoned to is a get how reasons be which reasons of on creating. contribute just may production So, really units or many you I will wells a frac of crew several be maybe case think which will zones that can't completed. out that, included you there's that, also, that, being fall noncore taken in rig do don't a maybe never And then that mechanical simply of mismatches

I we public we're would data inventory XX%. have the in beam, of they data were to sitting what really at What we extract actually see Haynesville from set. these So, it If at put is is pads think the looking DUC actively best are see that we sources, our own drilling. us our majority the roughly two-thirds on

considered they're word. sense therefore, so And DUCs in not any true of the

And XX leaves would true we DUCs. what with so, us to consider about that be

pretty put about about you If a run if you inventory. pad, two per in you into you leaves consider crews, with And wells pads. that that would three frac normal working five

roughly So again, this, maybe the implication have of overstated. you two-thirds

stated and Haynesville is that XXX opposed put as And the ultimately, XXX publishers. something where other would to the maybe probably DUCs closer to to XXX that

our as the whole. So kind back a to sits of where again, industry data that's internal into just maybe using

Doug Leggate

Thanks That's with it guys. way a follow-up done really activity Ford. understanding I in I that, you're thank for going of the simple you largely is My with the sense Josh. Eagle helpful kind to is question. Is My wanted so that. color, check but hopefully now just was

I which little looks realize looking capital It sustaining where So, that quite bit. your would at as down under normally you be. of has is can cadence to capital, come a you the your your extent a so

capital capital 'XX So maybe there? say beyond go forward looks would outlook outlook Thanks that ex you main down and what and Eagle current portfolio Ford, for

Nick Dell'Osso

the or slow It's I'll what think a about Haynesville. Marcellus the something And at to the us capital And takes can times, way sustaining to six Marcellus either in really you maintain we in it for you and and that rigs profile have the rigs subtracting with either changed Doug, Haynesville. is frac may and can down Josh Hi five about this, by adding in crew. obviously, or around Yes. But that different hasn't accelerate production. that development add. start really both around

frac ratio a there's there. of rigs an level so, that equate exact maintenance to And to crews

little But that's design. we're now, that a below and by right

the go volumes. so the year and of then above to we see and should the as level that true we looking And supply, the we next market clear back recovery always increase maintain for market more the into see go to need market signals we'll that for the and ability growth

the good us, you level rigs for you a six about five when in rigs modeling Haynesville, think in So capital pretty think that's about to maintenance us. going Marcellus, get

Doug Leggate

the Thanks answers. Got it. and appreciate Nick

Operator

Matt, from comes from Matt question TPH. next go Portillo please Our ahead.

Matt Portillo

to Maybe Good Josh. question morning just all. off, a for start

looks about year-to-date. On asset do of the a I forward? know talk some And Haynesville, occurred. the you infrastructure gains expectations the Could like you've bit just level? outperforming at operational expect has of you going expansion talked some tail about the been additional the you seen field

Josh Viets

Yes. Good morning, Matt.

have out year, asset of as related comment our infrastructure. wells, far everything the maybe is and looks first in Haynesville just through to half line the expectations. very it with of new would strong there We seen performance largely as relatively I

from part from And largely And that outperformance XXXX our is is the base. so, TILs. a coming large the of

the gathering introducing was at interconnects last adjacent very And year we systems. worked between one of hard things

time And then, alarming has that's we into work flow. allowed so, what upset, the to see us any And a do redirect have our ability response we quickly that to to operations with system marketing pressure potentially adding in midstream our as pressure is center. teams a

it's Haynesville. just of asset associated underlying translates forecast. outages. in less that's us simply our relative allowed the outproduce demonstrating what's downtime there really, that is to what our strength And to the ultimately And And midstream own to

Matt Portillo

active on question. a you front. quite follow-up guys have LNG then the know And been I Great.

progress You're making great some there.

and investment have forward potentially LNG could negotiations evolved the things? your those position side improve how how curious potentially maybe grade Just of on reaching going

Mohit Singh

I'll Yes, Matt. is Good that. Mohit. morning. This take

pleased We with today. where stand we are very

you Gunvor. we agreement So recall, heads in if March, with of announced our

that the it's we've we facilities with dimensions. that grade was five of then, to the jointly we methodology has liquefy So been And going main to working high used the through. LNG. since high-grade be then different your here, Gunvor to just would buyer And

a which is gas means the we One of field accessibility, LNG which our from - facility. that to have transporting, do is way

do is fees how of would one which we be course, second The liquefaction pay. the have much to pricing,

was whether versus not. accounting was us treated The treatment, it third, important also which gets the to

we've progress front So, a ton of made well. that on as

fourth credit the a be the being And not that, picking investment one of get come just would grade, is which will but creative the we us And last that with up ways which to feels very good. requirements, referenced least, not the circumventing but FID. some you have facility

gets So a the for probability that of is what them line works declaring to FID us. on that time

have we So graded on And Transfer that saw, methodology, on agreement based high Lake signed heads a a the facility. we Charles to facilities. using you of few Energy recently with

excited. the being then and us parties say involved it taking That's willing buyer There's Lake willing Gunvor end three there Charles. the that's now through a seller. pretty So being state. not to

We to get want we to linked have LNG. XX% production to of signaled our to you previously XX%

And announcing the There's put the a efforts step is This that. very lot the future. have that of proud that made. in clearly team and And the us you very, has going progress a I'm towards on. see deals of conversations we similar in should

Matt Portillo

you. Thank

Operator

Zach, from Parham please go Zach ahead. from JPMorgan. comes question next Our

Zach Parham

updated what numbers But for to taking with that tax cash $X on there the some starting know million the you year, million Eagle for half cash is taxes pieces associated moving year? clarify question. cash for I sale. cash includes my $XX of second tax the thanks expectation guess indicates payments were the I taxes. quarter. this guidance the that your the of just and Yes, in just Ford payments Can the with tax

Mohit Singh

This is Yes, good morning. Zach, Mohit.

net that $XX What $X you also, it million. about changed So also That remains divestitures. the us year has is business is guidance is unchanged. million. outflow cash base think includes for million as and the again, our stays you should pointed between million to full The as way $XX $X still out, our to you referenced,

Zach Parham

And that just to clarify, half the or is the second for year? for full

Mohit Singh

full No, year. that's for full the the That's year. for

Zach Parham

deflation, then about operating just to activity declines seeing Okay. pretty the given Thanks. little granular in you level cost area? a differences any in there? on In more the the of follow-up. just one X% provided X%. And some seeing deflation highlighting Haynesville you're total detail versus talk of Are deflation the deck, Can deflation slide you Marcellus you

Josh Viets

Yes, good behave relative differential to Josh. - think the the just is Haynesville some somewhat in saw We of deflation inflation see morning. would we Marcellus level we I similarly. like to the expect This

that flexibility just the and to whereas going be though we're under that's also really long-term terms service we have we to depend think somewhat upon under. something the in the in at contractual have dependent or I Haynesville contract going which the Marcellus, contracting working And today.

is So, a I think your it little I dependent see would think it timing I what's to of deflation much in than the contract going long each more occurring bit Haynesville. more of fundamentals situation, expect upon think you to be so is probably in basin. term, the But the

Zach Parham

color Got guys. it. the for Thanks

Operator

Donnes please ahead. And our comes Bert, next from question Truist. from Bert go

Bertrand Donnes

guys. morning, Good Hi.

about these could Or Or against these the in maybe bit you dynamic you and guys you you then going Chesapeake? curtain each energy you'll backfill negotiations. And very Are the what's if volumes a is your out the in into LNG Just little comfortably? then Is maybe other? of are step finding Can with you follow-up - agreements the the back transfer describe negotiations question. fact? that so more for next pull everybody these far power and liquefaction? some additional focused liquefaction kind after existing talk on volumes more want of locking are to on on focused just pitting

Mohit Singh

we us. the point unchanged I'll morning, production. Yes. The Mohit. that. get just remains LNG view plan sales way on for of And strategy Bert. LNG our announced side us. it, for When initially diversification the was another Good is take the is This we to

to sort view MX just we when linked and to XX% at production look portfolio to sales CGML that to or some is say, in just is Haynesville. index, LNG be the to XX% of sales should a we XX% point - an similar say any of intent our to overall Tedco a XX% So, the

eyes of on be when Now, that long-term reduce open duration shareholders time contracts. the for the diversification There that and back risk of will XX-plus periods periods overall wide money. the a will But where which of there the our will years these duration And the in be in we the to risk money. we looking doing of it returns, are expectation do we be underpins be is the at that go time the out portfolio this returns by diversification. will in

that's unchanged. remains the strategy this, that broad behind and So

question LNG the universe, in part is of your The dynamics conversations, group. the about pretty power second tight-knit these

once working then suddenly announce we together was of we we been We and that least. say past at as Chesapeake number of I have is - And want been high heads facilities since and to March, what of first has of received great the through. making I the that go agreement inroads said, have some we that working inbounds have graded year did lot with what doing in created Gunvor, the our a for would a in interest half and

getting. we agreement to excited should as competitive that announcing and to traction see heads visibility we - have that of that our of So, were it's signed that a agreement of we the to these very and we us these. suddenly were more we And Charles, you pretty increased announcing led more space - increased heads of expect some us be with think earlier, referenced and Lake

Bertrand Donnes

That's great. shifting Thanks. And gears. then

on on touched but front, guys buyback cash of a obviously kind the balance. earlier, large you have you think I it

drivers? have free you investors certain Could for that? guys your some to to about so, do some amount significant And the just cash aren't amount based - reserving in Is cash linked market are you that maybe you your for now. your on internal to probably of to what You buybacks market? it do for flow. a of how talk a float? formula Just want of are optionality opportunistic pushing Or your use buybacks percentage you

just to want color when you I a market? the more So enter on to decide little how get

Nick Dell'Osso

about is relevant This think we're Nick. think are time, said we're doing to repurchases. approach sure make how not and drives We warehouse think just point things what how hi. wanting us. about at valued those going we consistent that a about cash. Yes, All of We any to in certainly we've - that before, we to

be to want back to cash shareholders. we So, delivering

positioned and volatility even We be with don't program fact been and definitely think been that the We've And to expect think in There's uncertainty, continue to buyback and macro active is been we're we about think environment, our what about active. lot like lot we to about. over. of But, the that with there's that come we've volatility uncertainty a a of this year. gas. active been

for half more, look about the the the we're do for to to approach deploy good prudent we're going shareholders we'll So, through it, to think for of but having about think and opportunities We be second going in do cash way, on looking pretty think is times can. thing right cash to a that's the that nice some We the maintained when the you long-term. year buyback in sheet. we a balance

And that have flexibility. right now, we

talk cash balance thing. we that with a number but So, holding a good specific we about we certainly a is investors, that have don't think

look for But I before, do we'll we how us the quite have lot to continue expect more. I to unfolds and we'll us. opportunities we'll see for would market continue And to right said it, now. a active. deploy to be So, And like

Bertrand Donnes

I Thanks appreciate. guys.

Operator

Please Citigroup. Paul now And from a ahead. Diamond from we have question Paul, go

Paul Diamond

Thanks for Good call. taking morning. Yes. my

Slide that down transferred guys and is to Haynesville Just long-term, that guys talking well about highlighted well Haynesville - the X, tech Marcellus. a Bossier? the - in on between the hybrid Does quick question that as over view you you and

Josh Viets

Yes. Good morning, Paul. This is Josh.

makes I and the think that as a challenging general there's two bud that basins that differences the be and opportunities between differences and more rock other replicate to is probably practices looking we're operational another. to Marcellus the unique going true technology formations bit one distances between constantly certain little characteristics types vertical for Haynesville require

say I because teams capable would looks to So, tough our some say accomplish. I feat are pretty doing never. that would phenomenal a of things. like Paul, never But pretty today,

Paul Diamond

then rigs, pressure out follow-up you those on or if going give a that And pumping bit mid-single-digit coming was as more breakdown well a kind are on bit in others? Thanks. and like environment. more you Or any could stand gave [ph] around just that one color on down quick see I than they your XG wondering you flationary of a sand expectations to few right that Understood. there all the range? of Is logistics? guys

Josh Viets

I'll Paul, again. that Yes. take

think is mill So mean, general a There's that see now, to year. really surplus impactful about has and the I probably it for just think capacity us healthy could how of on OCTG one U.S. be inventory. is are the right Imports easiest last I high. the side. been over

bit created that's a so little of surplus. And

think, it's really, the so magnitude. about, And not I

it's but going material think quite just timing. to go, our be as I part we think that savings

that. bought have we to we inventories And through out advance of work pipe we in that need

benefits of we we as into so realizing get the fourth that. the And start quarter,

upon as is the the just I going, dependent activity not by basins, maybe bit gas Permian. It's Haynesville see counts we places be think in really more be being going sticky. to the but going described in to the a where little impacted like others, just rig

longer-term about I are rigs, think relatively cost pressure softening support think the modestly help on so, with And are And low, under side oil I then typically really being feel contracts. good pumping I logistical rigs in commodities diesel prices seeing priced today, we which sand. pretty think right lower now,

And position to to your order lower rates. that, to a situation have in contract renegotiate realize really so bring be in you have to in managed rigs go and at

So road exclude I air. the conditions think the point done pretty think we've it want that in a to see that a spot to year to this really for magnitude lateraling. a will But out, the And we also to down has we X% or that. of And primed where level. of think from going taken we X% to up to date efficiency market in next reduction I QX roughly any the QX The improvements that just us are that - well year. changes to is that's is do good work still of the pace,

So we that XXXX. as potentially head some as into on well upside

Paul Diamond

clarity. for Thanks the

Operator

And next question please RBC is from Scott Hanold from Scott, Capital. our go ahead.

Scott Hanold

time. I it you what you if hold sounded obviously, more where of those some like So, you basis? but look looking are of just that guess, amount what there it Is 'XX really a you'd are outlook. on? it constructive for get to storage hedging? of next it Is relative a it your points back, Is look to activity point on in you you're specifically Nick, pace, in where us on rigs is sense give you the price? when can specific Hi macro is are And the add in year? at off all trigger just somewhat at leads to gas cautious optimistic, But decisions your more, kind this that focused

Nick Dell'Osso

great the We're focused fundamentals. Scott, Yes, question. on

we're come those storage market level. course, doing look things, focused year the to fall, And that storage on be. of that that production of this time what, So, winter to winter of big will is we like what we then, through the factor positions this winter card as ends all where and the wild always what face relative of into certainly out in. is spring,

usually one No Early inaccurate. knows. weather are predictions highly of

what performed in put basis. We're We're with quite recession strong. for for And And gen demand and pullback predictions country. economic happens continuing then despite So nicely very are demand. the see stock to winter the demand we trends power up and don't those. watch for longer-term gas much hold we'll domestic on in for well the weather-adjusted of seeing a see gas gas

chunky. We LNG those growth impactful, to Are of watch the for course, timing very pay they of That very the on attention importantly, be holding? but in demand we'll side, things will to then, also And the hold. very facilities. demand

are those impact what projects. changes good that schedules there about those feel if us. to will we're so reading And on We

than on those information anybody any have projects. don't else We better has

in us is I of lean market we for market fundamentals out show that think allow supply the needs and the market to the before same those view but again, we that line share of we'll in the far that. gaining front really projects, the confidence would actually time of in

Scott Hanold

a It of definitely real-time very of kind sounds monitoring situation. like more Okay.

appreciate I certainly, So that?

Nick Dell'Osso

me talking we're you right Again, Haynesville. mind I you the we're that point though, would don't now, about there Marcellus rigs in if in Scott, adding is at four the and five

about maintenance. below talking we've what our in rig as really each we're So play being indicated one

change would by amount production of change for much. design. of our not trajectory the And it to take that is that's us So the

friction want so manner a really in pull and is there's to that don't a you wanted market, allocate pivot. working hedge, place all think a we we where but that that's have be tremendous prudent soft our We why also of us. can a we costs of for And capital in back capital to in

it's heroic And respond, the our going when part. respond on we time shows to it's so move take when we're decide the not ready to market that a to market, us to

Mohit Singh

hedging, we've Bcf The so, our you it Scott, offers XXX and When added if good I fairly may hedge add the the is look about of feel our width callers very of we on disclosure. the that protection hedges Mohit. this book, at downside last wide. the – about very, since

the protects upside the while time, retains downside. it us from So, at the same

plays scenario then retaining callers. we bullish So, good white the about the through upside we time, the that plays if through quite are bare the the floors at very same the out, new bit out, of collars. then with the feel a But

Scott Hanold

you is follow-up Got and bit on a obviously, strategic Okay. it. I doing. all are tactical question guess, little my the bolt-ons And M&A

on with financing be Is And moving - is scale us there? things talk provide about bolt-ons forward? but more appetite opportunity with the the with now? some M&A of like sense what picture, issued side, the balance, on little are there your cash of that that of countercyclical of you car things Eagle you that does I the right being out there Ford are a out bit big give just of some a you parties M&A? attractive? Is see what mean Just quantum the there to we attractive your could

Nick Dell'Osso

what's We're always close to available. paying attention really

things attractive, And acquisition with what or but to we that to price have are a lot seller have months motivated things. the about contact side. now seller people a attractive are a quiet a of there been lot stay We've transact. so that's on at in of And you willing several for

think of in, strategic there sellers at the what their as least a I uncertainty be. you So, things may spread direction that tells that we've bid-ask probably there's part to or been that interested

a always don't reasonable side good always there's available a anything. we for a patient in we'll to do be if feel But But a there's patient and want at rush now acreage price, We while. be add. to needs

And have our should watch We strength something what to so, comes we'll we and financial do decide do way. see a to.

a And strategic part good think that a is be If that maintain. to because so, able are important time real there that's are point, advantage. as maybe I raising that others buy appreciate of not to attractive financial you a we is assets aggressive, really flexibility to at when

things to that, hold us. and So, we for come on try to wait to to those can we

Scott Hanold

Thank you.

Operator

ahead. Read comes question go our And from Wells Fargo. Roger, from next Roger please

Roger Read

guess of in I up 'XX willingness to, of questions latter of maintenance maybe like and your as gets on to I macro get to terms last maybe the guess, morning. part your something to or couple Good the a terms more the in of favorable, reactive follow-up level Thanks. of committing contracts, here that drilling then be 'XX. to beyond service proactive I'd

say, as to pressure contract over look think does there? months? the XX or we contract as you status compared side, just how materials whether it's about the pumping current XX your do to does an maybe How rigs So how market current - or you look status ideal the next,

Josh Viets

Roger. is Yes, good This morning Josh.

when our rig of look year. roughly contracts half of will as week, in rigs, of will this half fleet come the end as we at of the for service of of that kind the go, by of far those renewal up line our As end roughly be

fleet So we potentially half out of that pretty to that one. to that. actually the have with and it's is it say softer contracts, And shorter-term take some on advantage the I roughly flexibility we on would turns frac the markets. We're of side, half of similar have

but longer-term of up end I contract, the don't will come year. know, a at the

provide for well our business. contract So the actually flexibility our is important think design. we us, action we ultimately adjustments really always think that pretty that will maintaining and positioned think tenors be work across cost. lower That's to to We by lead going able to structural we're to to flexibility is advantage

Roger Read

which willingness the is you answered or earlier, then to mean, for needs I And show I question, wait to production trying think the more I guess, you'll market you anticipate. it than rather

if clarify, Just correctly? to I comment wanted that understood

Josh Viets

the up back, more. That absolutely very is market we want needed. see in was the Roger. adding just again that to far We And commenting clear Nick activity start Yes, there as This earlier gas shape Josh until to are the here. is aggressively bit need true. fact, this signals is, as as feel a little macro, XXXX don't

matters. flexibility And again, think, we think really company But affords that us dynamic. fairly it's So flexibility. of we the strength the

Roger Read

understand linear expectation environment there for is for my better about forward, about as a sort is question follow-up this year. guidance think any the of how price and we we And probably gas going cash taxes. cash But this you. I then prices Okay. where should on tax Mohit, between think obligations?

Mohit Singh

business how generating. of Mohit. certainly, a One you for your is the what gas - our much is prices components. the be couple this settled pretty is the think divestitures. we are we what pay know because and tax doing prices of the Yes, the much there's when outlay on one a leakage, numbers. would other unknown is the base point, tax Roger, this how That Yes, year, well To of would are

we linked XQ last And started in just the have little strengthening. that's based if an overpaying estimates year, that us had when prices they refund was and you weakening, to you we were from bit then last overpaid received they they on the the a When of remember, think that unknown. of had initially. year IRS And because

prices do. will So, as volatility remain. to would the unknown what is Unfortunately, that an

in divestitures including is the an the business. said, reiterate, basis, Our just base as all-in on to guidance, I

remains probably Our million $XX $X for And we of guidance different give up guidance at the flow can this to that's the best adding million cash still all now net between point. components.

Roger Read

you. Thank Okay.

Operator

from Please me. Subash this Chandra. Subash, question we'll And forgive time, at our Benchmark ahead. Subash last from take go

Subash Chandra

Great. you. Thank Yes.

So liquefaction as something effort But and the two-part question equity a LNG. on a and not that's Nick, talked separate being I think guess, stakes about imminent. I you maybe there,

other get First Obviously, updated is any on assume is makes had thoughts have Lake handicap this I many you if LNG FID that part the list? think? those And projects that year, to then opportunities? Charles you do if the you on how

Nick Dell'Osso

we've We've sense successful done in our we've the talked would stakes that for not equity that sure and very lately, been that project, to said deal we came the handful consider on we've right proven structure does, has along. that, great. for afraid - If We've done projects a for so of it Subash, momentum to projects, about if Not will and Hi that ever invest us. make far, be, that. us. so to

rate could of of that and to a you're exposure that, a return to you coming. And about program. derisking we're so We where our give things dollars capital necessarily place relatively not project. think in like because but where I a that, be a similar tell that modest would expect amount to could compared it's great you

not necessarily now.. but it to open it anticipating So right

our going about point FID a we tracking to we've deck There's that where the that and get out we what got have projects the gets lot of are a in handful are are there projects what under a that show been others try there. there. slide of are FID-ed, construction, to think On of

more. we and the really about LNG to are all a to that estimates need And of lot continue the that for Rod. this think of internationally means about demand market, what We LNG

you're So, gas the FID. has I continue estimates see internationally to projects to going be long that think get demand for to the tremendous The hold growing, continues around as as of resources. a up volume then U.S. export And lower should we broadly advantage cost lower importing and that from where connect economy they're fuel. the to economies perspective, gas it's the carbon to advantage to It's an are an resources needed. markets gas an those a

advanced to - more have consumers reliable an lower fuel. a carbon It's

LNG. more So, I of think plenty momentum there's for

continue, think pertain well we're I and to that will think it chain. positioned I value in

Subash Chandra

you. the Thank and sort on of My Great. activity. Haynesville industry is follow-up

think And that they view guys spot third were happen slow for were drops would those recall, you most was even though start. by rig if I I your rig quarter. the the to in calling I of think on drops

now, about then take, just give slowdown, stop. or and So it would if not

rigs replacement if wanted just what so thoughts required still that's are the And on case your to production and hold flat?

Nick Dell'Osso

Yes.

made those So, we have all now. changes

activity particularly to now. to one effects Marcellus. And that did out You're year had reduced this seeing we effects of smooth and in we've of TILs levels did the that or right some is predicted sooner the the to some get we fall of the early that things that production defer that we

see production up you're otherwise so, show And where stronger gas. you might the our demand numbers had been in that for there seeing

can take and the activity to a more cycle way TILs a and sense We're production conditions then position thoughtful lot what allow where market of on back drop decision-making. in we given place makes that defer pull for of is a in in a

have to in you words, middle run out the and that of other a pad down don't drilling. shut So in rig a it's

make a to have you you're friction money the what then can of finish there wells. through changes reduce of and activity You you you've doing, in you in where plans front decision work that started costs spending you already better

really how play We're that's this So happy us year. out seeing gone. for that

to doing Modest We a have That's like pull activity pretty been and from we good. changes standpoint. it. we're to think on to able what big that lever about how a we've production to pull, have impact

one So, said in the that's for us. gone Marcellus we and feel the like how And those of that's in then about rigs good for both at maintenance plays. short currently four five we're really before, I of Haynesville,

supply growth, the until the always those. is rig have option market market see focused see market back doing go in you'll required. And we need on But And now, we we're us add so, what right to shows that. just what towards should the the we're us of both would recover, a as doing really

Subash Chandra

Yes.

industry you're And if what's well? To And count about of that that Haynesville that maybe of production will I level mirror Haynesville stated hold views some fraction experiencing. clarify, And activity. was think of a Sorry, firm Nick. DUC the kind if wondering will is are publicly what as yes. truly industry you if overstated

Nick Dell'Osso

DUC how thought analysis the walked Yes. with rig completions. rig of to below. level happened has and that and when cycle but of a of an of that count, really course, Josh We times things think the through cadence or maintenance one this what And happens. activity that good think that Haynesville the now reduced is about we year, activity And has is also reduced count reduced we

a expand to that's are he the crews. that has numbers of completion completions truly seeing are cycle been relatively rig running the walked the the wells ratio additional adding underlying that and You for the waiting wells moving through all of bit, can of But in tight. process, in short-term on wells times affect that with market you to completion,

the You side are to starting lines to see now completion and stay crews there. some go

market has been the for But tight. completions

a a activity That effect. lag Haynesville is that the now has levels think maintenance. at in of maybe I mains are below place or So,

around has decisions months supply we in that wait But So industry for you're should to six up. to think the up right we do and production going activity the to of see still Haynesville, nine a showing from the last bit. show the the for made

Subash Chandra

much. so Thanks

Operator

would I remarks. our the back like to for this conference to any And Dell'Osso concludes question-and-answer turn closing session. Nick over

Nick Dell'Osso

really where Well, gas been feel morning. our thank time this prices, for company. a about We in but good year. It's this reduced performance we year the for all you sit certainly of strong

proud performance, after way shareholders seeing time, and your this we're again pleased the that the we we with road. questions always call of continue forward you setup the proud of available Thanks. and out Thanks really look future. to have on offline guys to are for for We value for return to the that and

Operator

conference The has Thank for concluded. attending now you presentation. today's

disconnect. now may You

Expand Energy (EXE) 2 Aug 232023 Q2 Earnings call transcript