10-QPeriod: Q2 FY2015

EXPAND ENERGY Corp Quarterly Report for Q2 Ended Jun 30, 2015

Filed August 5, 2015For Securities:EXEEXEELEXEEWEXEEZ

Summary

EXPAND ENERGY Corp (EXE) reported a significant net loss of $4.09 billion for the three months ended June 30, 2015, a stark contrast to the $230 million net income in the same period of the prior year. This downturn was largely driven by a substantial $5.015 billion impairment of oil and natural gas properties, indicating a significant write-down in the value of its assets due to lower commodity prices. Total revenues also saw a sharp decline, falling to $3.033 billion from $5.152 billion in the prior year's quarter, primarily due to significantly lower prices for oil, natural gas, and NGLs. Despite the revenue drop, the company's production volumes remained relatively stable year-over-year, with a slight increase in oil and natural gas production, though NGL production saw a decrease. The company has also recently announced the elimination of its common stock dividend, signaling a focus on cash preservation and financial flexibility amidst challenging market conditions.

Financial Highlights

44 data points
Beta

Revenue

$3.52B

Net Income

-$4.11B

-116.7% Net Margin

EPS (Diluted)

$-6.27

Total Assets

$28.60B

Cash & Equivalents

$2.05B

Free Cash Flow

$314.00M

Financial Statements
Beta
Revenue$3.52B
Operating Expenses$9.03B
Operating Income-$5.51B
Interest Expense$71.00M
Net Income-$4.11B
EPS (Basic)$-6.27
EPS (Diluted)$-6.27
Shares Outstanding (Basic)662.00M
Shares Outstanding (Diluted)662.00M

Key Highlights

  • 1Reported a net loss of $4.09 billion for Q2 2015, a significant decrease from a net income of $230 million in Q2 2014.
  • 2Recorded a substantial impairment charge of $5.015 billion on oil and natural gas properties, reflecting asset value decline due to lower commodity prices.
  • 3Total revenues decreased by approximately 41% to $3.033 billion from $5.152 billion in the prior year's quarter.
  • 4Average realized prices for oil and natural gas declined significantly year-over-year, with oil prices falling from $97.49/bbl to $51.21/bbl and natural gas from $2.76/mcf to $0.75/mcf.
  • 5The company has eliminated its quarterly cash dividend on common stock to conserve cash.
  • 6Total debt remained substantial at $11.54 billion as of June 30, 2015, though long-term debt, net, slightly decreased.
  • 7Despite lower commodity prices, the company maintained a stable production volume, with a slight increase in oil and natural gas production.

Frequently Asked Questions

The primary driver of the significant net loss of $4.09 billion was a substantial impairment charge of $5.015 billion on the company's oil and natural gas properties. This impairment reflects the declining value of these assets due to the sharp decrease in oil and natural gas prices.

The decline in commodity prices has severely impacted the company's financial performance. It led to a significant reduction in total revenues, a substantial impairment of assets, and negatively affected average realized prices for oil, natural gas, and NGLs. This also led to a major shift from net income in the prior year to a net loss in the current period.

The company is focusing on financial discipline, profitable and efficient growth, exploration, and business development. Key actions include eliminating the common stock dividend to preserve cash, reducing capital expenditures, and potentially evaluating further asset sales or joint ventures to increase liquidity and reduce financial complexity. They are also aiming to balance capital expenditures with cash flows and achieve investment grade metrics.

As of June 30, 2015, the company had total debt of $11.54 billion, with long-term debt, net, at $10.65 billion. While this is a substantial amount, it represents a slight decrease from the previous year. The company's revolving credit facility remains undrawn, providing liquidity, and it was in compliance with its financial covenants.