DTM - Earnings call transcript Q2 2021

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Operator

Welcome to the DT Midstream Second Quarter 2021 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I will now turn it over to our speaker today, Todd Lohrmann, Director of Investor Relations. Thank you. Please go ahead.

Todd Lohrmann

everyone. welcome, and morning, Good

Before we to X to you forward-looking would the started, the safe I statements. to read reference Page including like harbor presentation, remind the get statement of on

to references to reconciliations in includes also contained presentation non-GAAP measures. to GAAP Please appendix. financial the the refer Our

Joining and to turn and it to are David Jeff CFO. Jewell, President morning me and now Slater, Executive the I'll call. start this David CEO; Vice President over

David Slater

today. and after Thanks, excited everyone, from thanks, I'm Todd. us inaugural call very be joining earnings DTE. morning, a our hosting Good to for spin-off quarterly successful

We happier involved I research have as am the the with team companies, has the the company for I us continue stand-alone personally and and thank well see employees over to like of investors. performance. positioned with for business job your contributions, this both continued our the Because many just Boards DTM been I'd of including we to our operating getting point today. DTE, are analysts pleased and its done, debt now, and be people a to not successful equity success. spin, both along month strong a of could in

on start X. Let's Slide

end operating of and delivered both earnings are both ranges. business guidance on For a the segments of year, the EBITDA strong with first to and XXXX our track half we growth upper the adjusted across to bias achieve

this pre-spin. announced delivering combined Our when first per which in of that share, the Directors that quarter the paid Board officially $X.XX is year. we of dividend Energy, dividend, our quarterly will dividend of DTM is described higher with approved of and place combined DTE in be yesterday fourth

our growth We are beyond trajectory highly confident XXXX. also in

and XXXX increasing are our outlook EBITDA operating -- for 'XX early early earnings. for our affirming adjusted We outlook

turn X. Let's Slide to

unique opportunity offers DTM for As stand-alone investors. C-corp, a

country, in dry providing X platforms are key markets the from basins serve asset gas Our to the premier wellhead-to-market well positioned services.

self-funded clean for a and low significant have growth agenda. sheet balance with leverage no our maturities We supporting years, X

flow we are committed net underpinned now governance cash results. long-term emissions leading will strong ESG cover take-or-pay to C-corp generation who by and it Jeff, Our pass is I'll XXXX. over to by best-in-class with program zero our a contracts. financial carbon And

Jeff Jewell

Thanks, start everyone. and David, good I'll Slide on morning, X.

results $XXX adjusted XX-XX We adjusted million, roughly EBITDA XXXX deliver which continue EBITDA million. year-over-year our $XX higher adjusted to million, half strong gathering gathering. and million business both pipeline of Pipeline was and from $XXX was EBITDA first was was and segments, split between $XXX

which were Our earnings XXXX higher by $XXX first The and LEAP of and volumes. operating were Gathering gathering higher increases Lateral Pipeline million, driven in-service half operating EBITDA adjusted earnings year-over-year. was year-over-year the $XX in million

both on we XXXX. discuss half to include guidance ranges. strong expenses. new across year be by end driven and year-over-year of public the is to growth the Now Based let's and portfolio our year higher at are full EBITDA Slide potential performance offsetting turn our This strong of both operational the company a guidance year-to-date performance, operating XXXX earnings with adjusted reaffirming X our and

distributable to by both driven cash Moving X. Year-to-date, segments. Slide performance flow strong across is

a million XXXX efficiency $XXX of range cost We be guidance small million due revising to $XXX timing. to capital are to project and our amount

billion X-year billion remains unchanged. to $X.X Our agenda of growth $X.X

for flows, and we We maximize have allocate shareholders. flexibility financial significant our value will with to cash our

slide talk to the about on to next Moving XXXX.

XXXX, our confident are to achieving targets. ahead growth highly we Looking in

turn expect cost. it representing and million million operating with full to by $XXX expect XXXX X% XXXX year $XXX operating XXXX to from raising guidance, are We I'll to $XXX be we company We of over between million, XXXX outlook our to expense growth a line in earnings interest EBITDA earnings back EBITDA, now which driven includes David. Therefore, X% to grow adjusted now to offsetting for adjusted $XXX public favorability. million.

David Slater

Jeff. Thanks,

In the Growth on Blue driven declines In X% which the Gathering XXXX, system a Northeast, on over other volumes for record the areas. Slide of growth a strong by the in to prior on Union, second saw we we overall and Moving was quarter in day month volumes the the of recently Appalachia during X. from high higher Haynesville production of quarter. growth July. gathered hit gathering System, the X.X volume production offset volumes, representing Bcf

know, you which take-or-pay our contracted has minimized results. portfolio agreements, impact contributions high As on from the volumes of

are confident XX, I'll why growth. XXXX and our discuss so Let's Slide in turn we to

support higher our of with growing 'XX to XXXX. growth and Blue on on Union, production and growth. NEXUS. in highly our to producer continue on expansions. accretive expansions contractor delivering and continue terms contract contract Appalachia summary, growth highly LEAP In we Gathering, from are organic we including rates see base, Also, expansions assets into gathering and We number confident on strong treating And growth, longer third-party are new contracted the

Slide Moving to XX.

transactions Looking executing growth. beyond developing to busy team multiple been XXXX, accretive our solidify has and commercial

We fundamentals with counterparties At as Gulf to which Haynesville Coast have strong achieving portfolio adding contract increasing contract made extending executed includes assets. of counterparties Union, in significant progress enhance and agreements across demand and X new diversification, and segments Blue improve have the our the of new in rates. our priorities, both value tenor the supply strategic portfolio we

across rates the and completed DT a In to regulatory NEXUS we convert continue Gathering to capacity the our we improved led received connections. Millennium ruling to At in with X has of extended Michigan, System, renewals. Appalachia portion to and with a contract X years X lateral tenors NEXUS also also gathering our portfolio. shippers. expand market and positive gas. Emerging constraints assets Appalachia for contract contract tenors, extend X/X have new of about We benefited has serve

be half a end upper track adjusted delivered of XXXX. let's on first Now to ranges. operating wrap summary, Slide at guidance earnings up to We EBITDA I'll the for turn strong our XX, great In we expect and and and call. are the results

can We are into for also open positioned that, the distinctive with now we up And continued line well for growth questions. XXXX.

Operator

[Operator Instructions] from comes Tonet of JPMorgan. of Jeremy your question And the first line

Jeremy Tonet

I wanted could -- wondering might not are the your you're provide more given in start just prices, maybe on kind in or your bit going up to see, move I'm XXXX, you hearing. bit to -- into a customer producers detail footprint more prices a if kind if but of to what recent on gas you what this year reactions higher drill in of off these looking response producer conversations

David Slater

Sure, Jeremy.

Let me provide some color around that.

deploying sector and positive and This at all to the price customers' producer of favorable announcements certainly public's team to disciplined stronger that's improve flow to environment rating have financial is discontinued provides that sheets. for foundation cash just capital, it's level. increase like We've going their higher over that watching We QX cash continued customers. they off them in a for improve the think So to balance trend I'll start ensuring been supportive And sheets. seeing our your financial free and time. position has improves our approach the It we're very been. the And probably highest a the definitely flow their their balance sector.

positive. as So we that view very

portfolio disciplined business side growth, is to different. of continue sector. Jeremy. in a in that's our our call growth the The little a public see I'll private We And what

portfolio inside activity side. private more see we happening think the I our on

different And talked a price to the in on term. the seem little be They done. to call this of But believe this favorably here supportive view terms this business longer some private our behavioral bit stronger a will for about inclined on more But we've of seems of activity side. of very deck. into contracting to be that, we've be and very the we some that accelerate already new there response

Jeremy Tonet

And pivot CapEx do Got I it. to allocation capital? there. about walk think call, That's of how this versus shareholders us to you capital first How want of these on the return competing kind helpful paths to I versus see And being different through just wanted kind you deleveraging. very have guys you towards just policy. then

David Slater

Jeremy. question, Great Yes.

have agenda in really really spot now, it's our sheet around of that time. which clear terms will a of robust flow, with and We balance us us in front around line cash have growth primarily be coming sight self-funded a of in and opportunities a clean naturally a over on our good having growth We're footprint. from will organic and right existing delever

shareholders. we return a look to right past. you about other those that So about projects that really delevering disciplined talked an the more to deploying we criteria don't accelerated now options ways are meet through very through that either in capital investment that shareholder And to capital mechanism in extent feel we've meet maximize to that will cash deploying the or criteria, that value. projects at the To positive growth to

the the So And term. look very be robust have deliver always will to returns at favorable long we in to we really in we this opportunities that shareholders. front fortunate feel portfolio again, of a blessed that we're going of that us believe and will shareholder maximize value very for

Jeremy Tonet

like itself cash well flow. given retained That's it. Got continue the that helpful. It lends seems to as deleveraging

a And lend last able guys wondering CCS you Haynesville, there. just it be you I'm bit. in itself wanted there. quick. like some might have that one The see, talk towards I the guess, that might about to that amine So seems treaters helpful to the opportunities real if

David Slater

can, Yes. I Jeremy. sure

I to a to we the our we over develop carbon like down very working to a We're the we off good the focus very an project treaters, too XX months into what think actively yes, lower next of specifics, Haynesville the to us a as actively X puts ground. think, probably here future. area that. CCS as call get with said project are pursuing early that in view but in investment that in Haynesville. the It's I on previously, position the in get And I'll opportunities a situation amine

sort We at in looking a up Michigan, also similar CCS. structured are around of project projects

attention lot geographic now. competencies organization competencies. And It's it COX, footprint, a that So an in and that terms our store inside and inside right it's great of natural a our it. that to it pipe of in I feel is assets being capture is our and getting able our great area lot of aligns

of to come us. project Jeremy, as but area advances that, more definitely So for the an focus on

Operator

of line of question Spiro next the your from Credit comes Suisse. Dounis And

Spiro Dounis

still or the Congrats on that maybe It and start just you're quarter the target. with want meaningful yet XXXX first growth out reduction I maintain Jeff, in growth took a CapEx. pretty David to spinout. EBITDA able to the

optimization just still the maintain So some growth reduction I there. color know maybe a and of you on able nature little outlook. the timing -- to more that and exact mentioned you're curious But how

David Slater

sure can. Yes. I very It reduction. modest a was

simple. really it's pulled it just we It's $XX million think or And I around some back timing. so.

of the some under EBITDA. coming And in and right still now the delivering budget projects are

the So with delivering I next that. is think way a at to capital accretive really strong of it very year I generate we're deployment growth look EBITDA

Spiro Dounis

Perfect.

sticking $X.X with CapEx one, a the looking Second billion X-part of question the of X-year here. billion, to $X.X range theme, sort out

the are low a are first, to grow in that certain when develop development very need Is or determine end you at about then to So these think more are what that high nature? of sort stages And you target that aspirational hit these second, this represents, that going Or you? to of you rate? projects a visible think various what's are to range? in of range and

David Slater

first probably LEAP that LEAP played we're active conversations very us say that which expansion, or now, very I'd X which would X are years be plan expansion. the Yes. the a visible projects out of in the over to X-year around right

deck in to in strong currently more the project X and NEXUS connections. like we the a platforms in lateral our our see our Appalachia. X particularly up we network, footprint to north, north. of portfolio. that's gathering robust But building where in continue bringing the a market number a see on and continue both in continue in Haynesville business we is I the inbound around expansions in And Birdsboro think across We inquiries to the the see And lateral really pipeline much expansions really asset few connections, referenced developing

those in those are those visible very portions to active that say that so development here but And very areas areas little yes, deploy capital trying -- are I'm directly the you cycle us your will of will to just a question, give that agenda. capital to answer the we color I'd and absorb X very that we're the -- are And large around.

Operator

next line Mizuho. Mosca comes Your from question of the Robert of

Robert Mosca

perhaps provide executed in Just were those the on is any volume potential those volumes in Union those anything newly LEAP the you'd of Blue XQ? to there onto expectations, way And signed of agreements, eventually? wrap

David Slater

question. aggregate, from press. diversified. very commitments of Yes, are XXX the agreements those is In diversified amongst just a hot The Rob. day Indigo piece there's counterparties. million allocation to capacity off Great Yes, of those

I'll near term, volumes, So And if represent the XXX day X flow yes, volumes, incremental others of at expect, that million we call, in are, the a what of about much LEAP. all truly not least on those those of capacity. to

Robert Mosca

it. Got

on Anything And NGL-rich the the of and to gathering shift producers Is shift in that -- to curious just Susquehanna. respect areas? driving you're what's provide hear helpful. electing in seeing Northeast helpful. growth be then That's to Okay. that would the volumes, on more Appalachia with just to the presumably decline you some production

David Slater

Yes.

the timing year. just it's more think drill out timing, of have plans people's over how I played

system. AGS, seeing growth dry So we're and a AGS is definitely on

flat. both Haynesville Susquehanna both then this the segment. the as gathering all results relatively ahead we'll And assets assets, this the north, was system, see Michigan and the there. And high going Haynesville, when very we're that's in be declines there. production We're kind is it's dry seeing production. those The why encouraging a seeing. running with holding Appalachia in to gathering in growth probably aggregate say when which put to in And so together. Union And then plan happy going segment sort we're on we pipeline Appalachia to Tioga, in some flat So Blue the of the really we're be numbers I'm did you is flat hit Haynesville. encouraging. we year very month of the segments, of the gathering system, other

Operator

Bernstein. Salisbury Your next question Ann of Jean comes from the line of

Jean Ann Salisbury

assets. Just a couple your about

appreciate of So X.XX kind volume I Haynesville that Bcf/d gathering disclosed. the you

said is I capacity X that that that Bcf/d. the of gathering think you've system

CapEx, it you CapEx? than my some other backbone guess basically that is is can that, the should way another with little to maybe I the about X.X well So Bcf/d connect grow is, -- question think very there. already But

David Slater

Blue Jean. Yes, system. gathering is system Union complex The a

it optimize possible they're that simplify sure our looking creating wouldn't such that the described will always that is I company. what say to all you the accretion the So of make I way systems it. to But we're we maximum

to we utilizing areas system drill pockets there would expect over as that do the it continue system to of certainly you you some the time. if is we or rationally Indigo see expansions capital, where As those areas will areas, the lot best Union, open I deploying they But built in as to require that deploy of expect gets Blue runway system that to expansions in and SWN will attention especially most the a such, of out, in be in continue very first, attract economic And areas and, drilling tend resource the are rock. may acreage.

Jean Ann Salisbury

the that ask you was market Is X only Okay. to you it of [indiscernible] it to Bcf/d of was would so but could incremental NEXUS point My it? sense. sort enough X.X market because over the NEXUS. the it be didn't that X.X. that on you then I of like XXX. of XXX flow X.X -- wanted So XXX then to be -- to X.X just connections contracts flowing about some That Bcf/d, between makes And on is way because you right that that Is X.X, for have demand. Or this like the understanding kind new built about think X.X? figure the originally discussed,

David Slater

Yes.

that. with help me Let

is level set just -- NEXUS. the off, just capacity on what First let's

the the early stations. to compressor We construct project referencing was X.X original elected cycle. life of are capacity the So one design in not the that you

is nameplate change. on and the NEXUS So X.X actual capacity

just So say incremental two, kind number on number point I'd one. that's the point of XXX.

contracts. It's really contracting that nice those we're We're that's seeing a And are investment-grade that the customers longer-term out that all months. the So a activity strong encouraged last over we're signals primarily on price strong by rate there's seeing occurred that coming customers expansions couple suite -- into capacity. of of stepped of Appalachia.

the we way annually, think amount agreements reducing simply that right just with out annual that seasonally a been that we've sell extending of that market playing capacity seeing the right that market -- is market. anchor now. expect We're those in we exit given we NEXUS fundamentals and the selling of Appalachia about long the have now. we're didn't will and of has and to the the offer that contract agreements portion I those long the the will to to out are pipe been I'd at favorable dynamics capacity it managing continue rates So term team term capacity taking And on probably in extend term that tremendous capacity. say contract the inbound interest material only are and the

Jean Ann Salisbury

Okay.

that's XXX, seasonal agree for future? is but to think I the flows right not by replacing the still it? compressor adding like a there really market in could this incremental which on you it very was add So there's that that's just if a about way that more good, with Is station contracted,

David Slater

how That's Yes. to exactly about think it.

station is of and that build looking incremental chose that team to that certainly basin. the we it So at create evaluating that certainly could we is capacity build, And continuously. out something the not and

Operator

Seaport And your question the [Operator from next of Instructions] Global. line comes Sunil of Sibal

Sunil Sibal

So I questions. follow-ups a just had of from couple previous

you that you these So seeing what first, signed on contracts of give you a the us versus you're kind rates in what on Haynesville, previously? sense had recent could contracts of new

David Slater

Yes.

I'll just level. a maybe So high keep it at

we when did over we're parties bringing years our new system. we opportunities third of one was those by So the priorities really ago. strategic encouraged onto saw X That number the that one, and acquisition

are robust seeing lot the activity. Haynesville that's right rigs XX Haynesville. the now a running the in of in -- there With activity We're

in as providing earlier, the said will be this time, So million the contracts growing aspirations. are of in just parties, Rockcliff, environment those a Comstock not been public information we I XXX more and are Tellurian their and public details at think But have the MDQs aggregate competitive growth the day, and actively contract all X around incremental given those on Haynesville. nature I about

them to happy with grow certainly as customers work time. plans and and solidify So over closely very their want to we're have them as

Sunil Sibal

CCS looked to in pivoting addition technology. you've fit some terms kind technologies just alternative just stream got out which realize was that ESG with at Then goals, Understood. that there. I I assets gas existing -- curious of the taking treating if of other their from you in to had if kind some any amine and of you thoughts COX the have well

David Slater

just by we certainly think to X -- source using the Haynesville electricity of their look have desire footprint hydrogen to XXXX focus as evaluating reduce closely for thus, the parties opportunity footprint. our hydrogen When certainly our of feedstock. zero about power and to can look going with we as compression be a are electric and the there's some for blend when I'm opportunities a industrial other We're That's is our of But for lots having inside to to something a across our -- emissions lots focus. customers, where going that -- our very here. explore of with hydrogen to our used that's are, well great clean expansions across current and pipeline large of why also great how conversations related second portfolio be their making area think both us, to our of electric footprint an about footprint, we -- that across As net we're back I emissions guess compression. at up aspirations we our in area be there's there and, there's CCS primary and sure different

why position want different a now. so a a a around our lot in So what that future, that we've developing we area. call I'll -- in utilizing want development. the assets There's areas very establish we of we we're very right I of amounts of it's to new to technology, technological America, a strategic lower exciting around really lots North use early today is really carry days, as We footprint be It's and got carbon think, our exciting, large areas. deploy exists those that And are DTM come going part exploring don't around. risk of proven perspective in My what but I a to be and of again, of technologies, that this, from capital. so to we priorities one want some perspective, call proven CCS I'll that's on technology is

Sunil Sibal

One that. of follow-up Understood. kind on

billion outlay, or are that? a much of us things a the that these out, capital they there of laid these give evaluations evaluating you're FID? So $X.X if you some get that upside $X.X sense of have is on potential to capital that could of component Or doing that to billion you're how would ESG that spend meaningful

David Slater

describe would Yes. I capital areas. The think emerging per wouldn't terms it into that capital of this would I that it deployed in that I way these think incremental new about And it agenda it's about point, at get se. as will -- agenda, some of

new definitely as And But to get question, little thinking mature, updating a be early projects investors. them to start little think these will platform. further on that. be we towards we will to that providing along our the just and much and guidance how certainly will forward that's we what I call that. really a of that it's But this as move I'll go we up, detailed provide great yes, on around you firm a

Operator

further there And are no this time. at questions

David Slater

And you. everybody want for to joining And weekend. and thank today. please Well, a safe I stay just thank have great us

Operator

conference concludes for Thank call. participating. this you today's And

now may disconnect. You

DT Midstream (DTM) 8 Aug 212021 Q2 Earnings call transcript