Title: Friday POW! — Expand Energy (EXE)
Show: Haymaker (Substack) — Friday Pick of the Week
Guest: David Hay / The Haymaker Team
Date: 2026-05-29 (PAID)
URL: https://haymaker.substack.com/p/friday-pow-6cc
Length: written post (no timestamps)
Note: Summary of the paid Friday POW! post; key figures and the thesis preserved. No audio/timestamps.

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Pick of the Week: Expand Energy (EXE). The stock trades ~$93–95 (52-week range $81.66–123.35), a market cap of roughly $22.5B, and is down about 24% from its high. Expand Energy is the largest independent US natural-gas producer, formed by the October 2024 merger of Chesapeake Energy and Southwestern Energy. We are adding it as our Pick of the Week and to the Buy list — we will add them to the main list next week.

Q1 2026 results were excellent: revenue of $4.39B (+24%, beating the $3.53B estimate), EPS of $3.83 (vs $3.70 expected), net income of $1.16B, and free cash flow of $1.7B. Gross debt was cut by $1.3B in the quarter — meeting the full-year debt-reduction target in a single quarter. Net debt fell to $2.805B from $4.409B at December 31. This is rapid deleveraging.

Production runs 7.44 Bcfe/d (93% gas), about 6.3% of total US gas output, spread across Appalachia and the Haynesville. 2026 guidance is ~7.5 Bcfe/d with 11–12 rigs and $2.85B of capex; Haynesville breakevens are below $2.75. Management targets $500M of incremental EBITDA from marketing and infrastructure optimization over the next 3–5 years. The company owns its own sand mine, carries investment-grade ratings, and holds more than 20 years of Tier-1 inventory.

The strategic re-positioning: Expand signed a 20-year LNG sale-and-purchase agreement with Delfin FLNG on April 22, 2026 (1.15 Mtpa beginning 2031) — a foundational LNG contract that moves the company toward an integrated gas-plus-LNG model with exposure to international pricing.

Valuation: forward P/E around 10, 2026 EV/EBITDA of ~4.2x on ~$6B of forward EBITDA, a 76.5% gross margin. The base dividend is $0.575/quarter ($2.30 annualized, ~2.45% yield); $150M of buybacks year-to-date; $290M returned to shareholders in Q1. FCF yield is about 14.9% ($3.2B FCF vs ~$21.5B cap), normalizing to a ~10–15% range even at $3.50–4.00 mid-cycle gas.

Two demand drivers underpin the call. First, AI data-center power: gas is the continuous, dispatchable fuel that data centers need. Second, LNG export: US Gulf Coast export capacity is set to roughly double to ~28 Bcf/d by 2030, and Haynesville Louisiana gas sits near every Gulf terminal. Goehring & Rozencwajg note that US gas trades at an 85–90% discount to global prices — an anomaly that is likely to be rectified by much higher US pricing rather than persist.

Analyst consensus is a Buy (21 Buy / 5 Hold / 0 Sell) with a target of $130–132 (~33–36% upside). The target implies a re-rate to ~5.5x forward EBITDA — still below sector acquisition multiples.

Risks: gas-price risk (Henry Hub below $2.50 would compress FCF) and the Delfin FID/2031 timeline is not guaranteed. Governance items to note: HQ moving from Oklahoma City to Houston mid-2026; a new CFO, Marcel Teunissen (April 2026); and an interim CEO. The stock is below its 200-day moving average (~$105); beta 0.34; next earnings ~July 28. Buyers at current levels.