Summary

• Expand Energy delivered a strong Q1, with revenue up 43.47% and EPS up 90% YoY, driven by a temporary spike in gas prices.
• Despite undervaluation versus peers, EXE faces near-term headwinds from low Henry Hub prices, expected production cuts, and weak Q2 guidance.
• Strategic uncertainty persists due to the interim CEO and lack of clarity on future leadership and direction post-merger integration.
• I maintain a Hold rating on EXE, anticipating financial normalization and limited upside until gas prices recover or a clear catalyst emerges.

Investment Thesis

Expand Energy (EXE) reported strong financial results for Q1. The company was lucky with rising gas prices in the United States in the winter due to Winter Storm Fern. Taking advantage of the moment and increasing production, Expand Energy increased revenue by 43.47% yoy and EPS by +90% yoy, ahead of market expectations and consensus forecasts. The shares reacted with a slight increase but then fell back to previous levels. The problem is that the Henry Hub price remains below $3, and the EIA forecasts a price of $2.83 in Q2. Accordingly, it is expected that the results for Q2 will be much worse than for Q1. This situation leads to the fact that the company is forced to reduce production, as it is not profitable for it to sell large volumes of gas at such a price. The company trades at discounts to peers on all major multiples, and there is a clear undervaluation of the shares. However, drivers are needed to reduce these discounts and increase the share price. The key driver is rising gas prices in the United States, which is unlikely at the moment. In addition, there remains uncertainty related to the appointment of a new CEO and his vision for the future of the company. Therefore, I expect the stock price to remain at the current level in the coming months and assign the company a Hold rating.

Gas Price Weakness Drives Near-Term Uncertainty

My last article about the company was published at the end of November last year. Since then, there have been several important events that I would like to highlight. Several important corporate events took place inside the company: the company moved its head office from Oklahoma City to Houston, as Houston is now the main energy center of the United States, and it is more

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