Thank you for standing by, and welcome to Expand Energy's third quarter 2026 earnings conference call. Currently, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. To remove yourself from the queue, you may press star one one again. I would now like to hand the call over to Brittany Raiford, Vice President, Treasurer, and Investor Relations. Please go ahead.
Thank you. Good morning, everyone.
Thanks, Brittany. Good morning, and thanks for joining our call. Last quarter, I discussed my optimism about the future of Expand. Today, that optimism continues to grow and is stronger than ever. You can feel momentum building across our organization. Over the past nine months, we have transformed Expand from an upstream gas producer into an integrated gas company that is a leading producer and marketer of gas coast to coast across North America. While our upstream business remains our foundation, this year we're focused on strengthening our commercial capabilities by adding key leaders in both the C-suite and across the organization. We've expanded our corporate and business development efforts to consider opportunities across the whole gas value chain to include upstream marketing and LNG.
That decision proved to be a good one, as last quarter the team delivered Twin Eagle acquisition, bringing exceptional talent and valuable customer relationships to Expand. With the transaction now closed, the Twin Eagle and Expand teams are working side by side in one office to deliver the synergies we promised. We see significant opportunities ahead and look forward to sharing our progress and successes over the coming quarters. Today, we are demonstrating exactly why an integrated gas company matters.
Low commodity prices are pressuring free cash flow margins for many of our peers. However, at Expand, our marketing business is already making a difference. The combined Expand and Twin Eagle marketing profits are expected to add $0.12 per Mcfe to our fourth quarter margin. This is particularly impressive because the team is expecting to generate solid profits in an anticipated low-price, low-volatility period. As prices rise and volatility returns, we are well-positioned to capture even more value.
Through all this change, our team never took its eye off creating long-term shareholder value. We continue to deliver strong operational results, producing approximately 7.5 Bcfe per day this quarter, and extended our drilling inventory through organic leasing, which remains one of the most accretive ways to add high-quality locations. We have allocated more to share repurchases this year than any of our peers, including $305 million in the third quarter. Our hedging program, which we see as a critical risk management tool, improved our realized prices by $0.46 per Mcfe. Importantly, our balance sheet remains strong, with net debt of $4.7 billion and leverage of 0.8 times. Finally, we said we would name a permanent CEO within nine months, and we kept our promise.
I am excited to be joined today with our new CEO, Danny Brown. The board was deliberate in its choice, focused on finding the right leader to continue our momentum. First and foremost, we wanted a leader with a proven record of building a team-oriented culture that focuses on creating long-term shareholder value. Given our $3 billion annual capital plan, we wanted an upstream expert who has experience managing a large portfolio of assets, and we wanted a former public CEO who understands our shareholders' perspective and is a great allocator of capital and can consistently deliver.
We found all that in Danny, and we believe our patience was rewarded. We do not consider our mission accomplished, but we have built the foundation. We now have a premier upstream business, a coast-to-coast marketing platform, a strong balance sheet, and a team that plays to win. We attack opportunities to improve our business with urgency while maintaining our disciplined approach to value creation, and above all else, we keep our promises. I could not be more impressed with this team, nor more optimistic about Expand's future. I am excited to watch Danny and the team build on this momentum. With that, I am pleased to turn the call over to Danny for a few brief remarks on what is the start of his third day leading our company.
Thank you, Mike. Thank you as well for the confidence you and the board have placed in me to lead this organization. I would also like to take a moment and thank the Chord Energy team. I am proud of what we built and accomplished there together, and have full expectation that Chord will continue delivering for its stakeholders. As I turn my full attention to Expand, I will say that I was drawn to this opportunity because I believe Expand has built something that is unique and that is very well-suited to deliver value for its shareholders in a differentiated fashion.
First, we have meaningful scale, which is tremendously important in any commodity business, and particularly one that is as dynamic as natural gas. Second, we have inventory-rich assets, which are diversified and adjacent to key demand centers. Third, we have resiliency with an investment-grade balance sheet, low breakevens, operational flexibility, and a disciplined hedging strategy. And now, with Twin Eagle, we have a direct line to customers, which should allow Expand to capture incremental margin along the value chain. All of this set against the precipice of a structural increase in natural gas demand with rising needs for LNG, data centers, industrial projects, and broad-scale electrification.
The foundation is set. Now it is time to execute and leverage the platform that has been created to deliver differentiated value for our shareholders. While I have only been here for a few short days, it is clear to me that this team shares the commitment to excellence in all aspects of our business, which is critical to sustainable value creation in this industry. I am honored to be a member of this talented team, and I am excited to be getting started. As I do, I look forward to connecting with all of you. Now, operator, we are ready for questions.
Before we go into questions, I would like to turn the call over to Brittany Raiford, Vice President, Treasurer, and Investor Relations with forward-looking statements. Madam?
Good morning, everyone, and thanks for joining our call this morning to discuss Expand Energy's 2026 third quarter financial and operating results. Hopefully, you have had a chance to review our press release and updated investor presentation that we posted to our website yesterday. During this morning's call, we will be making forward-looking statements which consist of statements that cannot be confirmed by reference to existing information, including statements regarding our beliefs, goals, expectations, forecasts, projections, and future performance, and the assumptions underlying such statements.
Please note that there are a number of factors that will cause actual results to differ materially from our forward-looking statements, including the factors identified and discussed in our press release yesterday and other SEC filings. Please recognize that except as required by law, we undertake no duty to update any forward-looking statements, and you should not place undue reliance on such statements. We may also refer to some non-GAAP financial measures, which help facilitate comparisons across periods and with peers. For any non-GAAP measure we use, a reconciliation to the nearest corresponding GAAP measure that can be found on our website. With me today on the call are Mike Wichterich and Danny Brown, who you've already heard prepared remarks from, as well as Josh Viets and Marcel Teunissen. Operator, with that, you can please turn the line over for questions.
Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone. To remove yourself from the queue, you may press star one one again. We ask that you please limit yourself to one question and one follow-up to allow everyone the opportunity to participate. Please stand by while we compile the Q&A roster. Our first question comes from the line of Neil Mehta of Goldman Sachs and Company. Your line is open, Neil.
Danny, congratulations on the role, and Mike, congratulations on completing the process. Danny, just maybe you can provide some perspective of what attracted you to the opportunity. What of your past experiences, whether at Anadarko or Chord over the years, do you think is most transferable over to the Expand opportunity set? How are you approaching the first 100 days on the job?
Well, thanks, Neil. I'm super excited to be here. I'd say, as I indicated in my prepared remarks, I really see that Expand has built an amazing platform over here and against the backdrop of something that could be really special. I think it's set up with the right assets and the right places to just benefit from this structural increase in demand that we see coming. That was something that I think is very exciting and I'm very excited to be a part of it. R eally that's why I'm here. With respect to my background and the skills I've got, I'd say over many years, I gained skills in capital allocation, allocating capital against multiple different basins, allocating capital against projects with very different cash flow streams and risk profiles, and so that's something that I'm comfortable with.
At Chord, I would say we focused a lot on delivering value every day for our shareholders. Clearly I learned a lot of skills around leadership writ large and leading larger public organizations. All of that I think combines well for the place that Expand's at right now and the opportunities we see in front of us. I just couldn't be more excited to be here and I'm very eager to dig in and work with the team to deliver on what we see as amazing potential within this organization.
Congratulations, Danny. Then the follow-up, this one might be for Marcel. Just on the commercial mandate that the team has set out here, whether it's the $0.20 an Mcf or trying to get more aggressive around marketing and commercial deals, where do you think you are in the journey? What areas or customers are you most focused on right now? Is it LNG? Is it data centers? Is it industrial customers like steel? Just help us get into your thought process around this.
Yeah. Thanks, Neil, for the question. We closed the Twin Eagle acquisition September 16th. We had two weeks of that under our belt by the end of the quarter. Of course, we're a couple of weeks further down and very much focused on integrating the plumbing of that business with ours. As Mike already mentioned, the team from Twin Eagle has moved into our offices, which is a great start. The organizations have been aligned, and we're doing some of the work in the back office, as you can imagine. The early opportunities there are really kind of pretty evident from customer feedback, whether they're on our side or on the original, the Twin Eagle side. We see lots of opportunities, and that kind of supports the thesis that we've had and the synergies and the integration value.
We've guided for Q4 to $80 million, kind of in a low kind of volatility environment for our combined marketing and commercial business, including Twin Eagle. That translates to about $0.12 per Mcf. What we've also laid out is with the synergies, we have good line of sight to get the total number for marketing commercial up to $500 million by 2028. That translates to about $0.20 per Mcf. As we continue to kind of look at the LNG opportunity, we're very active in that. As we said before, we will be thoughtful about making sure that we get the right opportunities, first in liquefaction, but also how we structure our sales portfolio.
That will come a little bit after 2028, and that ultimately gets us to $750 million of additional EBITDA for our marketing and commercial business, and that translates to about $0.30 per Mcf on our current production. We feel good about the progress we've made. The Twin Eagle integration is going well. We'll provide more details once we have a real quarter under our belt after Q4.
Thanks, Marcel. On that question about the logical end customers, LNG, data centers, or industrial, is there one that you're leaning into?
Yeah, no. Well, kind of all of the above. Of course, LNG, and we've laid it out. That is kind of really where the demand step-up is coming from, and we're already supplying a lot of LNG, particularly out of our Haynesville assets, of course, today. That is going to continue to grow as we get to the back end of 2027 into 2028 and up to the 2030s. That's kind of providing that structural demand. Data centers, numerous conversations with data centers, and they're not just in Appalachia, t hey are throughout the country. We see them in the Midwest, we see them in Texas, we see them in Louisiana, and we have conversations with all of those as we go.
And there's this piece around where we talked about industrial demand, which is ongoing. The Twin Eagle team has given us great access to it. They already have a pretty big C&I book where they have those relationships, and it is really a characteristic of a premium market, right? Some of these commercial and industrial customers, they just pay more because they're often not off the beaten path. They're not on a main pipeline. And to them, gas is just one factor into their overall production cost, and it's a relationship business. And that's what we have acquired with Twin Eagle, and they're good at it.
Perfect. Thanks, Marcel.
Thank you. Our next question comes from the line of Doug Leggate of Wolfe Research. Your line is open, Doug.
Thank you. Good morning, everyone. Danny, it is great to get you back. Congratulations on joining Expand. I am going to ask this question as delicately as I can, and it is probably to Mike. Mike, you emphasized the need to be in the flow for trading, for AI, for LNG, for all the things that can be more of a commercial endeavor. Why is Danny the right fit to lead that? Whoever wants to offer their perspective, I would appreciate that. My follow-up is related, if I may, and it really relates to the Twin Eagle organization and the contribution to Neil's question to the break-even. Where is it now? Where do you think it can get to with Twin Eagle as part of the portfolio? I will leave it there. Thank you.
Sure. This is Mike, and I will start. Why Danny? I think you have to think about the journey at Expand. We started in February looking to expand our commercial capabilities. We always said from the very beginning, we were thinking about it in a team perspective and not an individual perspective. We went at that. We ended up adding Marcel, of course, that integrated gas experience with Shell. Then we ended up with the Twin Eagle team, who has tremendous commercial capabilities. Once you have the commercial side set and organization built to get deal flow, then it started to think about our base business.
Our base business is a $3 billion capital business. We wanted an expert who understood that business. Danny filled that role. We wanted someone who is a team builder. Danny had already built teams successfully and has a great following. And then we wanted the CEO to continue our momentum, and the person who can do that is a person who is already a CEO. Danny's not learning the job of CEO. He's learning the job of executing and creating shareholder value. When you put those together, it seemed like a great fit for us, and we're super pleased. Marcel, you want to take a second?
Yeah. Let me follow your question on break even. So including dividends, our cash break even is about $2.80 or so per Mcf. The $0.20 up to $0.30 as we kind of develop our marketing and commercial business will bring that number down. I think maybe the other way to also talk about the resiliency of that marketing and commercial cash flow. So if you look back over the last four quarters, our adjusted free cash flow per Mcf was about $1. So think of that $0.20- $0.30 as an addition to that ratable addition to that, and that makes that cash flow that we generate as a business a lot more resilient. So one, it's reducing the break even, and the other is it makes our free cash flow and our delivery just more resilient as well.
So really. Sorry, Marcel. So where do you see the break even when you've fully integrated Twin Eagle in terms of the synergies?
Yeah, so we go to $2.50- $2.60. So the $2.50 is out when we deliver the $750 million run rate on our marketing and commercial, and then the intermediate stop in 2028 will be around $2.60, and that includes dividend.
Thank you so much, guys. Appreciate you taking my questions.
Thank you. Our next question comes from the line of Arun Jayaram of JP Morgan Securities. Your line is open, Arun.
Yeah. Good morning, Danny. Congratulations on your new role. I wanted to, maybe my first question is follow up on Expand's strategy, kind of managing your upstream volumes and capital allocation in an environment where 2027 could have some headwinds from Super El Niño, some of the Permian supply trends, as well as the fact some of the LNG startups are a little bit more levered to the back end of the year versus what looks to be a much more robust demand picture between 2028 and 2030.
Yeah. Good morning, Arun. This is Josh. Yeah, we would definitely agree with the sentiment around the supply-demand fundamentals. The market is pretty well supplied right now. Despite seeing record levels of demand. LNG flows are at all-time highs. Power burn through the summer was at record levels despite record levels of renewable generation. So, demand is showing up. It's just that there was additional supply that came on to the market late last year. And then, of course, you had new Permian egress coming up through the summer, and that is expected to continue to grow. And so that obviously, combined with the outlook on winter, is suppressing the 2027 curve. So we've definitely been mindful of that. In fact, as we've come into the fourth quarter, we've ended up reducing some of our activity.
That activity reduction, moving from around 12 rigs down to 10, is in direct acknowledgement that the market is weakening. In addition to that, we have proven in the past to be highly flexible with how we manage our production volumes. That is shown up in the third quarter. It is showing up again here in the fourth quarter with how we manage curtailments. We pushed out about nine turn-in-lines out of Q3.
We are waiting on those still to think about the optimal time to bring them online. As we get into 2027, we will also maintain that same level of flexibility through the year. There is around 13 Bcf a day of new incremental demand that will show up by year-end 2028. The demand is coming, and there is going to need to be a supply push in order to match that, and that should lead to higher prices. We will continue to be flexible. We really pride ourselves of better aligning production with price. We are going to be well positioned to take advantage of that opportunity again.
Yep. My follow-up is just starting to think about 2027. Your updated guidance outlines call it maybe a baseline for capital in calendar 2026 at $3 billion or $750 million per quarter. I was wondering if you could comment on some of the inflationary pressures you are seeing in the Haynesville, obviously, where you compete maybe for OFS service capacity relative to the Permian and the Appalachia Basin. Do you have any maybe soft commentary that you could provide on 2027 as we start to dial in some of these inflationary pressures, such as diesel and OCTG?
Yeah, sure. Clearly for 2026, the majority of the inflation has been centered around diesel for us. We run a pretty large program. We have averaged around 12 rigs for the year, running five to six frac crews. A lot of that activity course gets centered in the Haynesville. Just as a point of reference, we end up burning about 25 million gallons of diesel each year. That definitely has added to some of the capital pressures this year. As we think about 2027, we do start to see a little bit of shift in where we see inflationary pressures. We will actually see about a 50% reduction in our diesel usage heading into 2027 as we have more e-fleets coming into the program.
The inflation does start to move around a little bit. Haynesville rig counts are up about 35% year-over-year. With the movement in oil prices, you see U.S. oil rig counts up around 10%-12%. We do expect to see with that activity, some tightening in the pressure pumping market as well as OCTG. We think those are probably two of the factors that we're paying the most attention to. Based upon some of our early outlooks for 2027, we could anticipate a low to mid-single digit inflationary factor from heading from 2026 into 2027.
That's super helpful. Thanks.
Thank you. Our next question comes from the line of Matthew Portillo of TPH Research. Your line is open, Matthew.
Good morning. I just wanted to kick it off on the marketing side of the portfolio. Saw an interesting project announcement from KMI, where they'll be taking Northeast and Haynesville gas into the Southeast. At the same time that we're seeing a ramp in LNG demand and potentially upside to LNG forecasts on the Gulf Coast over the next few years. I was just curious if you might be able to comment on how the market has continued to evolve over the past year as it relates to long-term gas supply agreements on the Gulf Coast.
Yeah. Hey, Matt. I think what you're starting to see is the market is responding to the large LNG pull that's occurring in the U.S. Gulf Coast. People, especially getting into the southeastern markets, are starting to think about supply security. I think that's what you're seeing with the most recent announcement from Kinder to move gas into the Georgia and Florida markets. This is just, I think, a good sign of the strength in demand signals that we're seeing. I think our presence in the U.S. Gulf Coast really positions us to take advantage of the demand pool that we see coming in front of us.
Perfect. For my follow-up question, just wanted to get your latest thoughts on the Western Haynesville. As we look at some of the state data, it appears that the industry's trending to around a 2 Bcfs per 1,000 lateral foot EUR for some of the more recent vintages of wells. I'm curious how you all are seeing early time productivity trends in the basin, how you're thinking about breakevens for the asset, and then maybe any thoughts on your capital program as you head into 2027 and the long-term resource potential here. Obviously, you're in at a very low entry price, so just wanted to wrap all those things together for the Western Haynesville.
Yeah. Matt, thanks for the question. If I just recap what we've done this year, we have one horizontal production well online. We drilled a second appraisal well about 15 mi to the north. What we have is a resource-dense reservoir. It has a lot of the characteristics you would look for in a shale reservoir in terms of it being significantly overpressure. They have a really thick interval, but it's deep. When it's deep, it means it's going to be more complex to develop. I still think there's a lot to be learned. I think we've proven through the years with our experience in the Haynesville, the ability to go unlock value from these highly complex reservoirs. It is a high-cost reservoir today.
It does not compete within our portfolio in the near term, just given the strength of our inventory in Louisiana and really across the entire portfolio for that matter. In terms of how you might peg a breakeven, I think we think about it as this place is going to need greater than $4 gas right now in order to compete. We're happy to be very methodical about how we appraise it.
We like the call option that it creates for us, especially in light of the growing demand that we see across the U.S. Gulf Coast, East Texas, whether that's LNG, it's data centers, industrial demand. We think there's going to be a call on gas for it. We'll be methodical. We expect to drill probably two wells in 2027 there. The fact that we have the depth of inventory that we do really affords us the flexibility to appraise it and be smart with how we allocate capital in the business over the next couple of years.
Thank you. Our next question comes from the line of Josh Silverstein of UBS. Your line is open, Josh.
Yeah. Thanks. Good morning, guys, and welcome on board, Danny. Marcel, you had mentioned you were talking to customers across the natural gas value chain. I was curious how those conversations may differ in the Gulf Coast versus Appalachia and with you guys having access to both basins, how those conversations may be evolving. Is it across them or are they separate? I was curious what the early discussions have been there. Thanks.
Yeah. Josh, this is Josh. The great thing about the Twin Eagle platform is we have access to transportation supply customers across the entire North America. That really is a differentiator. It is all about creating an advantage supply position and accessing premium markets. What I would say is we are really following where the demand is as opposed to being focused on one basin or another. Twin Eagle has built a great origination team. They have long-standing relationships with over 1,000 customers, and so we are continuing to leverage those relationships.
We have definitely seen a dynamic shift in how those conversations are going. I think existing customers, it is really about longer-dated contracts with more volumes. I think that is what Expand has brought. It is about credit and credibility as they are engaging in these newer conversations. In addition, we are having new customers show up, and these are larger name customers that see the strength of our combined platform that we built. To respond to your question, this is about accessing new supply and demand across all of North America as opposed to being focused on one particular basin.
Got it. Thanks for that. We are just curious on capital allocation for fourth quarter and into next year. Post the Twin Eagle acquisition, obviously, debt went up, and it seems like you want to go and start working that down. The stock has been weak this year and closer towards 52-week low. How do you balance buybacks, shareholder returns, and debt reduction going into next year? Thanks.
Yeah. Thanks, Josh. Our capital allocation priorities are, number one, our D&C capital, number two, our dividend, number three, our balance sheet, and number four, what we have left goes to growth opportunities, which could include share buybacks if we see value in that. What we said on the second quarter call, that after the Twin Eagle acquisition, which put some additional debt on the balance sheet, we have taken a more balanced approach. We want to get our leverage down from where it is now. At the same time, we keep the option open to be opportunistic in share buybacks if we see good value there. You should expect us to continue doing that as we go to Q4 and into the early parts of next year.
Thank you. Our next question comes from the line of Devin McDermott of Morgan Stanley. Your line is open, Devin.
Hey, good morning. Thanks for taking my question and echo the congrats to Danny. There were, as I am sure you are aware, a sizable transaction announced between two of your peers earlier this week. Now that you have the management team set at Expand, I would love to hear your perspectives. Mike, you can take this, or Danny, Marcel, feel free to chime in as well. Perspectives on the M&A landscape, both in terms of upstream consolidation or how you would evaluate further opportunities beyond the wellhead, like Twin Eagle. Just to contextualize how you are thinking about the Expand portfolio today and anything else you think you might need to strengthen the integrated platform.
Thanks for the question, Devin. This is Danny. First, I will say congrats to EQT and Range on their deal. As I look at Expand, I think we have a great portfolio of assets and opportunities in front of us and really a reach across all of North America. I do not think the transaction announced yesterday really impacts our plans internally. We are going to stay focused on what we are doing over here to deliver value for our shareholders. More broadly, I would say that, while we are happy with the existing portfolio of assets and opportunities we have got, and we will be working hard to realize value from that, I am a big continuous improvement guy, and that includes improving all aspects of the business, including the portfolio.
I am sure along those lines, we will be open to inorganic opportunities to do that, but we will be very disciplined in our focus on that. When you think about that, anything we do has to make the company better and deliver strong risk-adjusted, full-cycle value. In order for us to do those things and to hit a market clearing price, it is clearly going to have to be something that has a lot of synergies that we are very, very confident that we can capture. I think that is how we will think about that. Great portfolio. We have got a lot of things to do internally, but we will stay open to opportunities to improve the business.
Got it. Makes a lot of sense. Maybe sticking with the theme on continuous improvement, for my follow-up, you all have a track record in driving efficiency gains, pushing down the break-even of the business. In the context of a little bit of inflationary pressure into 2027, and maybe this one is for Josh, could you talk about some of the items you are exploring to potentially offset some of those pressures, outlook or further efficiency gains, and maybe comment on some of the outperformance and well productivity in Southwest PA or Appalachia as well?
Yeah, sure. The way we like to talk about it inside the organization is round one of the integration between Chesapeake and Southwestern was really centered around the Haynesville, and we made a ton of progress. If you think about our results from 2024 and into 2025, we've really doubled down on our continuous improvement efforts across our Appalachia business. In fact, when you look at our Southwest Appalachia drilling performance from 2025 to 2026, we've seen a 20% improvement in our footage per day. It's about a 10% improvement in our cost per foot in our drilling performance, and it's really just about leveraging the learnings across the entire portfolio and sticking it into that asset. I think you'll continue to see those continuous improvement efforts on the more traditional methods, drilling wells faster, completing wells more efficiently.
We continue to dial in our completion designs in the Haynesville as well. We expect to see about a 2%-3% improvement in well productivity year- over- year. That's really taken advantage of the investment that we made in our own sand supply, which again, comes with a cost at about 1/3 of what you pay for a commercial ton of sand. We think that has continued to open up opportunities, improve returns on our overall wells. We continue to find opportunities to exploit artificial intelligence within the business as well, and we see that unlocking additional value in the year to come. We'll be excited to talk about that more in the future.
Great. Thanks so much.
Thank you. Our next question comes from the line of Scott Hanold of RBC. Your line is open, Scott.
Yeah, thanks. If I could maybe play a little bit off the M&A theme, and talk about just sort of your, or we'll call it ground-game organic land acquisition activity. It's been a little bit more robust this year. Can you talk about the opportunity set with that, you see next year, and especially as it relates to how you think about the budget overall and where you want to be given the macro backdrop?
Yeah, sure, Scott. This is Josh. This past year, in 2026, you'll spend about $250 million on organic lease acquisitions. We've had a lot of success, and what I love about it is we're seeing success across all of our operating units, Haynesville, Appalachia, alike. We've added some incredibly valuable locations this year, highlighting roughly 3,000 acres that we were able to acquire in the State of Pennsylvania, up in Bradford County. Those are some of our most competitive locations that we'll add. We spent around $15 million acquiring those leases. We had a rig sitting on the lease within a couple of months of taking it. Those wells will come online likely early next year.
We'll end up delivering about 1 million cubic feet per foot of lateral productivity, some of the most productive wells in the region that we will probably see over the next several years. So highly valuable and accretive locations that we brought in. That ground game is ingrained in us. That's something that we expect to carry on into next year. What we love about our financial position and the strength of the balance sheet that we have is we can be opportunistic when others are struggling to find capital to support their development programs. We see that as a competitive advantage. The cross-basin reach that we have is the other advantage that we see, and so we'll be opportunistic as we head into 2027 with our leasing program.
Okay. So it sounds like a very similar run rate, maybe next year is a good starting point for us?
Yeah. But again, those can come and go. Just as an example, in the fourth quarter of this year, we do not expect to close any material transactions. Again, that is a goal right now, and something we would like to update the market on when we come back in February.
Okay, thanks. My second follow-up question, or my follow-up question is just going to Twin Eagle and just thinking about some of the larger, we will say, more headline type of commercial type of announcements, whether it is LNG or industrial or whatnot. If you can give us a sense of with Twin Eagle, and your new platform, when should we expect to see some larger, more impactful announcements that you guys could put in place for maybe the longer-term demand growth in gas?
Yeah. As I kind of said, Scott, we are two weeks in at the end of the quarter with the integration. But we already see some early signs, so we can give you a more holistic update after we have done the fourth quarter. The Twin Eagle business, of course, there is a lot of blocking and tackling and small wins there, so we will not announce every single deal as we go in there. But there is a portfolio with power customers, there is a portfolio with C&I customers, as I already talked about it. You add that to the portfolio that we already had as Expand with LNG, power, and other portfolios. So all of that we will continue to work at, but the integration value is already pretty obvious to us.
We said for the fourth quarter, $80 million of EBITDA of the combined marketing and commercial business, which was our kind of business with the Twin Eagle business. And then in 2027 and 2028, that synergy that we have talked about is primarily on the top line, kind of growing business, both getting more money for our molecules out of the Expand system, extending customer relationships on the Twin Eagle side, and with the footprint that we have both in storage and transportation, just to capture more value from volatility when it occurs. That is what is driving that number ultimately, and you should see that kind of rolling in as we are progressing.
Understood. Thank you.
Thank you. Our next question comes from the line of Kevin MacCurdy of Pickering Energy Partners. Your line is open, Kevin.
Hey, good morning. Maybe we can start with an update on the hedge strategy, which has been very successful this year. With the potential for demand to pick up in late 2027 and in 2028, how do you guys kind of think about adding on hedges for that part, for those out quarters? Are you done hedging for the early part of 2027?
It's a great question. I think just on the purpose of our hedge strategy, we're really trying to protect against the downside while we leave ourselves open to participate in the upside, and that's been our consistent hedging strategy. The way that we've looked at the market earlier in 2026, where we saw the fundamentals kind of being misaligned with the forward strip, we decided to hedge more aggressively, both in 2026 as well as into 2027. You kind of see the result of that in Q3, where prices on the strip have been weak, and a hedge program paid over $300 million relative to that, and that's kind of the sign of that protection. You look into 2027, we're already 55% hedged for all of 2027 with a $365 million kind of price on average.
That gives us that downside protection, and it gives us the option to choose what we do with production during that year. The way that we roll in the hedges, that is a bit more tactical. We take a combination of swaps and collars and three ways to kind of roll that in, and we roll those in progressively so that we do not pick a price point at any particular point in time and kind of bet that the market will not move. We continue to kind of roll that in and align our view of hedging relative to our view on the fundamentals. But always kind of with an eye on protecting against the downside and leaving the upside open.
Great. I appreciate that. That was a good answer. As a follow-up, I know we have hit the marketing questions quite a few times here, but maybe I will just try another one on. What line of sight do you have on the $150 million of incremental EBITDA by year-end 2028? Any thoughts on exactly how that progresses between now and the end of 2028?
Yeah. Let me start with that, and I will ask Josh to maybe add. So we have a good line of sight, and that just comes from obviously the work that we did during due diligence as we kind of were framing the acquisition itself as well as the first couple of weeks. Give us a lot of confidence just from customer feedback from the teams on the ground that are kind of hearing that, and as well as what we see. So we feel confident about that number. Maybe Josh, it is good to get some additional color from your side.
Yeah. I would just kind of reiterate. I think there is a high level of confidence in our ability to deliver that, and the exact timing of it, I think, is a little bit uncertain, but it will roll through over the next two years, without a doubt. The conversation in deal flow is high. So to Marcel’s point, our origination teams are incredibly busy, to try to identify new customers and add duration and volume to existing contracts. So again, we expect the team to be successful and exceed this target is the ultimate goal.
I appreciate that answer. Thank you.
Thank you. Our next question comes from the line of Charles Meade of Johnson Rice. Your question please, Charles.
Yes. Good morning, Danny and Mike, and to the rest of the Expand team there. Danny, I want to kind of go back to, I think, the first question you fielded, and I recognize that this is day three on the job, but I'm thinking about you've had a window, a non-op window in to look in on Marcellus operations for at least the last two years at your former seat. So when I think about your assets in your former seat and Expand assets, obviously, they're both U.S. onshore unconventional, but within that framework, they seem to me like they're at opposite ends of the spectrum on maturity, runway, macro dynamics, that sort of thing. So I'm curious, can you identify any kind of practices or philosophies that you developed or found useful in the Bakken that would be new or different for the Expand team?
Well, it's good to hear from you, Charles, and thanks for the question. I'd say as I think about my experience over at Chord and what might be transferable from there and my time at that organization over here, I'd say there's lots of things. Maybe the most significant of which is just foundationally challenging assumptions on how you do business and looking to improve. So I think about what we did over my time at Chord, challenging our development assumptions, challenging our assumptions on where inventory was and where it could be, and then certainly leveraging the advantage of the platform that we created for the benefit of our organization and shareholders.
All of that, I think, is really a bit irrespective of what basin you're in. Foundationally, both organizations are producing a commodity. Now, there's different macro associated with that commodity, but in a commodity business, I think there's lots of similarities. I think I'll bring those similarities to bear over at Expand and look forward to working with the team to leverage our platform here.
Got it. That is helpful, Danny. Thank you. My follow-up, perhaps for Josh. Josh, I think you addressed some of this in response to an earlier question, but regarding the curtailments and TILs in 4Q, are there any things you're looking at beyond, I'd say, the two big ones, which are weather and pipeline maintenance, that could affect how your curtailments and TILs progress over Q4? What do you have contemplated right now in your guide in those two dimensions?
Yeah, maybe kind of answer this in reverse. Included in our guide, and you'll notice there's a relatively wide range of production expectations from 7.4 Bcf- 7.6 Bcf a day for Q4. Really what that's implying is that we're going to retain a significant amount of flexibility in the program. We do have curtailments coming into the fourth quarter in Northeast Appalachia. We are actively having discussions around the timing of new turn-in-lines. We're going to be disciplined with how we introduce volumes. Again, the goal is to always align our production with the most constructive price environment. Clearly, weather is an overhang on the markets right now. Production, we typically see a little bit of a pop heading into the winter months. We see that regularly in Appalachia.
I think there's an expectation we could expect to see a seasonal pop in Haynesville with some of the private producers as well. I think that is also an overhang on the market today. If you think about the longer term, I think really the market's going to be watching for where storage ends up, and this is by region across the U.S. If we end up at an elevated levels of storage coming into next spring and summer, that's really going to create another overhang on the market. I just need to remind you, what we're focused on is long-term value creation. What we see again is roughly 13 Bcf a day of new demand coming by 2028. We really see year of 2027 be one of transition. We're going to be flexible with our business and put ourselves in a position to respond when the demand shows up.
That is helpful detail. Thank you, Josh.
Thank you. Our next question comes from the line of Betty Jiang of Barclays. Your line is open, Betty.
Hi. Good morning. I have a question on the long-term marketing margin expansion. In the slide, you guys talked about the $250 million that's tied to new demand growth, particularly LNG. Can you just talk about your strategy to capture that opportunity? Is it more about adding LNG offtake and building capacities on the global spread, or and how does Twin Eagle fit into that strategy?
Good. Hey, thanks for the question, Betty. When we think of the LNG market, we really see that as an international gas market. Our strategy around LNG is to tie our domestic kind of production to international pricing, which provides diversification. Obviously, when you look at LNG prices at the moment, a significant premium over Henry Hub. What our strategy is around LNG is to build a reasonable portfolio around LNG liquefaction and offtake, and then a portfolio of customers that take that LNG as we go in. We have signed a Delfin agreement earlier this year, which is for 1.15 million tons of LNG offtake starting in 2031 towards the end of 2032. You should expect us to add more to that LNG portfolio, that it is ultimately quite a sizable portfolio and provides us with access to those international markets and diversification away from Henry Hub.
Got it. That makes sense. Then maybe just a follow-up on how you guys think about the production management into next year. To what extent could 2024 be a playbook? Would you consider again, the DUCs and deferred TILs to maintain a higher productive capacity into a stronger long-term demand outlook?
Yeah, Betty. I think the answer to that is just yes. I think we have proven an ability to go create value to our productive capacity strategy. That is inclusive of base curtailments, building DUCs, building up an inventory, deferred turn-in-lines. We are going to be very mindful of where the markets are and broader supply-demand fundamentals and look for opportunities to create more value from the production that we produce.
Got it. Thank you.
Thank you. Our final question comes from the line of Phillip Jungwirth of BMO. Your line is open, Phillip.
Thanks, and also wanted to extend my congrats to Danny. When you think through the gas supply or data center opportunity and how Twin Eagle increases your scope across much of North America, is there a good way to think about the ultimate benefit to Expand for any supply deals that are outside areas where your core upstream positions are located versus if you were to announce a project within the Gulf Coast or Appalachia footprint? Just separately, we have seen fewer projects in Northeast PA, but you do have a large acreage footprint here. So just wondering if you see much potential in this area.
Yeah. No, I think you go right to the heart of the benefit of being integrated with Twin Eagle and our own capability, right? That comes then in two forms. One is where we have equity gas, obviously, there is a lot there. But in some of those areas, and you mentioned Pennsylvania, data centers go slow, the development of data centers. But data centers are going to be everywhere in the country, and so when you start looking west into Ohio, of course, we see more data centers coming in, and we can get gas there. But even further west, there is going to be data centers all over the U.S. And having the capability that came with Twin Eagle to connect really coast to coast allows us to kind of go after those projects.
Gas in some of those areas needs to come from far, some of it needs to come from the north, some of it needs to come from the east. With our capability with Twin Eagle, we can connect all of that and be competitive on all the data centers throughout. It is very much an integral part of how we think of reaching those customers that are further away from the production basins.
Okay, great. Permian gas de-bottlenecking has obviously been a headwind for price. A lot of this gas does get stuck around Houston. We do have three pipes, though, Blackcomb, Trident, Mustang, all starting up here in the next, call it 12, 18 months, to move gas into the LNG corridor. Just as you look out 12, 18 months, how do you see these higher flows kind of impacting realized price for Expand, if at all, in the Haynesville? Do you think there is enough LNG demand pull between now and then to largely offset incremental supply?
Yeah, Phillip. I think the view is that this is expected. We expected pipes to get built and get over and around the City of Houston, which is where a large part of the gas has been bottlenecked for the last several years. This is really no surprise to us. When we look out longer term and look at the broader supply-demand fundamentals, what we see is that Permian gas, though there is a significant amount, will not be able to meet the upcoming demand. It will periodically, and that is what you see in a year like we are entering into in 2027.
If we look out over the next, call it four to six years or so, we expect the Haynesville is going to need to grow by somewhere around 5 Bcf a day in order to match the demand. As the marginal molecule, we expect that to be the mechanism at which price gets set. That is why we remain highly constructive on our broader portfolio, the gas markets in general, and the option that we have created in a place like the Western Haynesville for ourselves.
Thank you.
Thank you. I would now like to turn the conference back to Danny Brown for closing remarks. Sir?
Thanks, Lateef. For those that joined our call this morning, thank you for your time and your interest in our organization. To the Expand team, I look forward to working with you to deliver the full potential of Expand for our shareholders. To our investors, I look forward to listening to and engaging with you along the way. Thanks again.
This concludes today's conference call. Thank you for participating. You may now disconnect.