Expand Energy (EXE) could benefit from rising Gulf Coast gas demand, value creation from the Twin Eagle deal, greater LNG exposure, low-cost drilling inventory and a flexible approach to buybacks and debt reduction, RBC Capital Markets said in a note Thursday.
Expand Energy could see stronger visibility for Gulf Coast demand than in Appalachia, with the region expected to add about 20 Bcf/d of gas demand by around 2030, led by LNG projects and growing power needs tied to AI, the investment firm said.
The Twin Eagle acquisition could strengthen Expand Energy's marketing business and access to customers, while increasing and accelerating the company's marketing and commercial expansion, RBC said.
Expand Energy's Haynesville assets and roughly 2,000 identified drilling locations could support long-term production growth, while recent low-cost leasing has also extended its inventory in Haynesville and Appalachia, according to the research note.
The investment firm said the company plans to use free cash flow more flexibly, including buying back shares when valuations are attractive, reducing debt and maintaining its base dividend.
RBC kept its outperform rating and $131 price target.
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