Expand Cuts Rigs to 10; 13 Bcfd Demand Forecast for 2028

By Elena Vasquez

Spring, Texas-based Expand Energy Corp. curtailed some production as it reduced activity from about 12 rigs to 10 entering the fourth quarter. The cuts included pulling a rig in Northeast Appalachia and a completion crew in the Haynesville because natural-gas prices weakened.

During an Oct. 28 conference call after the release of Expand’s third-quarter results, chief operating officer Josh Viets tied the move to the market: “That activity reduction, moving from around 12 rigs down to 10, is in direct acknowledgement that the market is weakening.”

Executives also said they were prepared to curtail more work late this year and into 2027.

What changed in Expand’s third quarter?

Expand’s third-quarter production and spending metrics moved in different directions:

• Wells turned in: 59 in the third quarter, compared with 48 in the second quarter.
• Wells spudded: 46 in the third quarter, down from 55 in the second quarter.
• Capital spending: $403 million in the third quarter, slightly below $409 million in the second quarter.

The company turned in more wells while drilling fewer new ones and spending marginally less. Its decision to remove a Northeast Appalachia rig and a Haynesville completion crew showed where management saw the clearest pressure from weaker gas prices.

Takeaway: The near-term plan is to do less work and keep the ability to add activity later.

What is pressuring soft gas prices?

JPMorgan analyst Arun Jayaram asked what was driving soft natural-gas prices despite solid demand growth. He cited potential Super El Niño weather patterns, more supply moving out of the Permian Basin, and several LNG infrastructure owners being more levered to the back end of the year. He said those factors could affect the market environment in 2027.

Viets agreed with that supply-demand assessment and said Expand was prepared to revisit the strategy it used two years earlier: building an inventory of drilled but uncompleted wells while waiting for prices to climb.

He said the company pushed out about nine turn-in lines from the third quarter and would wait for the optimal time to bring them online.

Takeaway: Management is focused on when supply reaches the market while keeping its longer-term growth plan.

What does the 2028 demand case rest on?

As of Oct. 28, Expand’s team was led by Danny Brown, the former president and chief executive officer of Chord Energy Corp.

Viets remained upbeat about longer-term demand as more Gulf LNG infrastructure comes online and power plants and data centers grow into their projections. By end-2028, he said an additional 13 billion cubic feet per day, or 13 Bcfd, of demand should materialize on top of today’s need.

“The demand is coming and there is going to need to be a supply push in order to match that,” Viets said. “That should lead to higher prices. We will continue to be flexible.”

Takeaway: The 2028 demand case rests on Gulf LNG infrastructure and power and data-center users.

Is Western Haynesville commercial yet?

Expand’s early Western Haynesville effort includes one horizontal production well that has come online. Teams have drilled a second appraisal well about 15 miles north of that asset.

Viets said further progress would be slow because costs were not yet competitive. The area needs gas prices above $4 to compete now, and he said Expand would remain methodical in its appraisal.

Takeaway: Western Haynesville remains an appraisal effort, with economics setting the pace.

What changes in 2027?

Viets also described a shift in the inflation Expand expects in 2027. Diesel produced most of this year’s cost pressure, but he expected that pressure to ease as the company uses more e-fleets.

As industry activity ramps, he expected prices for pressure pumps and tubular goods to take over from diesel as the main cost pressure.

On Oct. 28, Expand shares under ticker EXE traded down about 2% at $92.82 in midday trading. They had fallen about 5% over the previous six months, trimming market capitalization to about $21.5 billion.

Watch item: The $4 gas-price hurdle in Western Haynesville and the timing for Expand’s nine deferred turn-in lines.