Earnings call transcript Q2 2023

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Operator

Welcome to the DT Midstream Second Quarter 2023 Earnings Call.

I will now turn it over to our speaker today, Todd Lohrmann, Director of Investor Relations. Please go ahead.

Todd Lohrmann

Good morning, and welcome, everyone.

Before we get started, I would like to remind you to read the safe harbor on Page 2 of the presentation, including the reference to forward-looking statements.

references financial includes also presentation to measures. non-GAAP Our to these. refer to containing reconciliations the Please GAAP

this are CFO. me Jewell, Joining morning Executive and and Vice Jeff CEO, President and David Slater, President

to I'll it now call. over David turn start to the

David Slater

thank Thanks, for everyone, joining. you Todd, morning, and good and

on over in on call, update it Louisiana. before Jeff close some touch commentary I'll current our provide I'll including market financial turning projects, today's our financial then growth During and to review our the fundamentals results to on an our CCS project performance. on

XXXX. had with that, our strong So us year early business the continues plan, for for year perform we confidence with another line EBITDA quarter our full and adjusted and in in giving to XXXX full outlook

expect be second reminder, as to year the a towards of bring weighted new online. As we half we projects the growth

to an by made a Ohio, I that cap has from originated new am to acquired we producer. committed since small That it been investment gathering acreage area. large private final on developing Utica. opportunity, to greenfield announce very who in the is held with producer, acreage investment move opportunity decision this grade a a excited we dedication This a

first build-out provide go The XXXX. and a XXXX. backbone over of And in million been committed of feet of our of always shifting in capital cubic agreement system has and a opportunity service This natural million a commercial $XXX the plan forward day half second now into of months initial the for in development XXXX. with restructured into finalized the XXX gas are this XXXX gathering early will half from capacity schedule place, approximately few we

economic project rich long-term being commitments from underpinned current that protect system a transport returns. is by fully under wells window highly market contract will are in the volume with The gas new and prices, investment the Utica. These our of gathering wells associated drilled minimum

development, is the resource expected an production with there as ramp-up will over be any to to As acreage new occur delineated. period is typical XX- time a XX-month

meaningful until XXXX. we such, don't expect a As EBITDA contribution

expect we position sizable term, downstream ratio NEXUS. build-out a customer's Longer across assets, larger such with acreage a as the scale

accretive economic the long-term So in boxes contract customer DTM, with this resource, checks growth, producer that our highly opportunity MVC's all for our mix, for follow-on significant organic assets. existing strong summary, diversifies opportunities and

transition platform, our energy emerging CCS continue our progress Louisiana. In opportunity to we in

targeting initial sequestration. Our seismic the is survey COX XD geology are for data permanent indicates we favorable

to quarter filed to year During $XX Class V expect of well in the the we year. characterization we fourth We this application, these activities. quarter, million drill our plan for this which permit approximately spend

we half are first Assuming characterization favorable, of project FID the would well the in XXXX. plan to results the then

conventional emerging in our Overall, our we organic great business opportunities across energy progress continue portfolio platform. advancing business lines both and transition our make to

Turning am and that to report all now projects currently budget projects to our on schedule. happy under on construction, remain I

Pipeline project. pull we We the in QX this and have Phase is early we forward I'd doing dedicated our of X team acknowledge QX and that potential running expect if on schedule, into to like with to currently current ahead date for exceptional expansion work LEAP excellent thank late an XXXX expansion, and Louisiana made in-service progress pace. maintain our our on

producer to moment Finally, gas activity the our a to address and take I want assets. natural across market fundamentals

is weak prices. in as levels activity in This to production We deferral moderating and disciplined reflected manner producers given fully short-term the in a our some both near-term observing continue all guidance. of operate are basins,

beginning stabilize. of With gas. for occurring power extreme this a is levels following high seen of in LNG has demand this deliveries current improvements. surplus created price to the across weeks, storage gas have resulting On price the natural note, have feed few portions some near-term maintenance. weather all weakness, large strong is positive over to returned reduce we the country, reductions summer the past driving that hot And rig

prices the to wave the the as of range favorable in XXXX demand. LNG $X.XX gas XXXX anticipates market and and $X look For next in

positioned Our assets participate in are this well to growth.

I'll now over our it through Jeff outlook. to and walk pass you quarterly to financials

Jeff Jewell

Thanks, in good with David, overall second EBITDA morning, year and line full our of which million, the plan. delivered adjusted In everyone. quarter, we $XXX is

winter-related with $X pipeline were in Our our ventures. our million Gathering quarter, joint results segment with impact year. the below the for lower were line plan the quarter the and segment Pipeline first consistent revenues reflecting of results from first

Haynesville due volumes second on In to quarter and outage volumes down weather-related quarter X.X up compared day a were compared Appalachia second Operationally, total were in the quarter first the to both higher across volumes Haynesville, the averaged to approximately the treating feet quarter. the April Northeast, second In volumes to quarter in and outage Northeast, in a gathering gathering. May. due billion cubic planned the first a

normalized have per volumes volumes averaging to X.X Bcf subsequent with Haynesville's outages these approximately day. July

XXXX in capital mentioned, project. Ohio As we XXXX for our of a portion CCS David previously Utica and are opportunity new into our our accelerating committed initial investment

by result, a XXXX our our $XXX million. committed lowering to increasing million to XXXX and growth growth we are CapEx As million, guidance $XXX $XXX CapEx

customers' billion acceleration XXXX remains approximately our by growth CapEx of billion maintaining as solely reflects investment Our We we growth fits plan, $X.X timing plan. driven accelerated of $XXX over $X.X unchanged. an committed capital within increased the five-year our range. CapEx development longer-term timing and our CapEx to This are XXXX, XXXX million guidance

cash growth expect to the heavier our XXXX, investments of the Following completion in dividends. CapEx spend within flow after we fund

ceiling sheet a us. ratio our of a leverage our policy The strength continual balance is long-term for focus Xx and of

ceiling debt leverage at ratio includes our proportionate of now share method our investees. equity Our

at exceeding long-term We expect end XXXX to approximately temporarily our ceiling. X.Xx,

organic expected balance investment on year end is program leverage capital As we our the year, around this complete heavier sheet to our X.Xx.

in also very dividend, to at pay and Today, our remain down credit share liquidity, bolstering used we of declaration from per our quarter, cash facility. the flows. were which were million. funds dividend and the financing in to distributed line we with Further Also $XXX the NEXUS is revolving the announced strong remains received at which growing unchanged $X.XX approximately committed and our

now back to I'll remarks. David for over pass closing it

David Slater

Thanks, Jeff.

summary, XXXX guidance range we and early good are in year So full XXXX. for outlook our feeling for about

Our key investments growth are on organic opportunities. we and track, to new advance continue

it regional excited our in integrates our new about are We and growth as the Utica platform customer into diversifies base our assets. further

anchored energy Mitsubishi. hydrogen is CCS developing, by in project partnership our Louisiana also with transition development Our our and platform nicely

competencies leveraging platforms. grow this will a core We and our business disciplined and thoughtful manner, existing business in

questions. now We can line open up for the

Operator

from Tonet at first question Instructions] JPMorgan. our [Operator Jeremy We'll take

Ratan Reddy

Ratan for on Reddy is Jeremy. This

I details to first the system? walk us one, the my capital to develop as talk there For as any could if CCS you just well cost around economics wanted on project. Wondering, through

David Slater

Sure. This laid deck. our a We is development David. on out in project schedule CCS our

point there. maybe you I'd So,

think, As for has the reduces this this project, COX strategic we've project emissions One, historically, I us. for significantly it said, two on Company. drivers our direct

significant our Net a Zero. to it's towards march So, contributor

the existing economic for very tax with a it's also credits, However, project investors.

is cycle, the refinement we'll when where think so. disclosures we refinement detailed based FID out capital. In and more terms more that capital, of project, we've that in on the providing, around the at plan we we're disclosures more But on laid development in schedule current I and on to do we're at the the providing deck provide disclosures the

Ratan Reddy

XXXX? with Okay. wanted leverage a below hit you the earlier or you guys leverage, staying Great. guess, bit CCS then at -- in any CapEx through, I XXXX walk one, And LEAP to call. Xx I the about second and/or on in my Could which for on us talked thoughts or expansion

Jeff Jewell

this Jeff, Joel. our Yes, pretty is. we've clear. Again, plan that's is Yes. been what Yes,

Our currently at in other XXXX, get the of items our part we're will inside for for seeing XXXX our is And Xx a as cash committed as capital ceiling we what that be long term flow of into play. and XXXX.

in be we'll remember, that end And for we'll sheet, at year, where or then good proportional at an the of be XXXX. X.Xx at Xx this at feel like And we this balance the again, we is year. below at level are. like that's on the So

a standpoint. are comfortable we very where So again, from we're leverage

Operator

move next Blum Fargo. Michael to We'll Wells at

Michael Blum

MVCs get certain cover Just you wanted Ohio about cited. and to just investment when you of multiple going that hit that Utica ask to you'll volume to will do to to Xx think you're amount the that confirm a that? need the to receiving assuming not you that to I'm the you investment be get

David Slater

that Michael, will MVC returns will the multiple. EBITDA segment that Actually, protect for Xx our deliver threshold that

-- this So, environment. protected investment it's market a it's very and a in

Michael Blum

flows that the XXXX. saying you're to XXXX cash really in clarify, impact really in to and show just not up will But it. Got

David Slater

they with yes, XXXX rate on to they've there's development construct start get kind the That's schedule will period the And along activity level late XX- producer correct. is ramp you our higher should year development, to 'XX that then, got MVCs develop in see their We'll a at start and 'XX. volume. resource then XX-month ramp full the when in run as producers' EBITDA. bringing and But that that volumes an to impact rate. higher on of ramp run here And us

Michael Blum

to the that -- for 'XX, million 'XX of the committed And 'XX early CCS Perfect. additive? Okay. project. and project and of if would CapEx in the 'XX, ask then or include just FID inclusive is does be about that that project -- wanted you CCS $XXX The

David Slater

the $XX right million thing only the think that now we I Yes, including that detailed. is we're

to capital the project. on when predevelopment refinement again, more project, So, a we disclosure and budget granular that's I'll And timing. lot a I earlier, derisk the said CapEx provide what we'll call, like FID on total

Operator

question from We'll our next Dounis take at Citi. Spiro

Spiro Dounis

into a more sequential decline First The on sizable now. 'XX question CapEx looks CapEx. is from on 'XX bit

to a curious for projects the now stop funding plans it cash other here how within thinking flow like you're sounds just is with about So you. from hard backfill

the to towards to right entirely most that's sort a excess cash you we could safe Or So uses? see that's year. other now And you of do flow leverage? getting extent allocated the dividend the some in beyond fill generate maybe assume

David Slater

Yes.

it But Let moving was me the effect in timing us, this of the Ohio as XX% then out refined you're well, over there by Jeff. to a capital. the and of The move shift, 'XX just really, and had side as was de-risk few start, we into our was it modest we winter customer, of think us and moved I understanding correctly. it it a doing it pass it But with what benefited which forward And window. committed the project. months project execution construction, I'll

shift a committed is shift of just timing that So, capital. really

takes rate, out guys And flow It cash is. committed you right. you're run So, free big capital know the chunk 'XX a of of that what XXXX.

sitting to here on provide over Jeff So Jeff, commentary yes, I'll maybe uncommitted free to free or cash that of capital flow. it thoughts 'XX. in And flow on a today uncommitted bunch cash there's high-level pass

Jeff Jewell

and flow the I cash that contracted highly our cash our we -- the to given again, flow do, going contracting years between close said, to David like is same. just Yes, would pretty be

that most flow we're year, the the updates inside quarter And And a additional about that to we've organic reviewing either we'll on leverage a X. cash of of within so well can as We've third like cash it of level about. as and evaluating backlog with talked at inside see this that going we got time, of our talk is a that you're that's and -- Page right out David then projects we've said, provide what that on likely, that. But as we're of committed there at flow. you part kind the on got the potential keep end slide, lot

David Slater

key back originally proportional basis. basis, the sheet or because that, that floor is when which threshold measured on Company on the a we less was be think than a expect on-balance an four higher I is thing spun we to to

a expect before the opportunities of be towards balance I as expect kind well. emerge they'll I go combination but incremental yes, year-end, So be there'll that of sheet also organic

Spiro Dounis

color. it. Got Helpful

long-term natural expand Second if a maybe if And of capital something one, gas peers that on already more kind inside you're of considered into that lot front? thinking quickly there improving. your I've your seen plan? been ability that to related just is that lean aggressively, to Curious that's economics about storage.

David Slater

a We lean that did spot and quarter last portfolio termed Storage good attractive months. at pretty rates. bright the second up six Yes. in some been has for the in on pretty the

you're capacity rolling from the year to to looking the just naturally of number alluding expansion I'd for year in so step number portfolio, step say was two is Some that opportunities. one. that's

as assessing that, is would and we going team stay And a sense hold market tuned as where just opportunities right on better potential to that to come Our exist. these now. the more higher at values expansion get

Operator

Wolfe next to Research. Stanley We'll go Keith at

Keith Stanley

you and where any are next start the high-level commentary facilities producers approaching could on? just with system Is I the And it maybe strengthening meaningfully? how any the curve the it they're saying of volumes flattish? up some directionally on color see about over Is on your First, coming with what Haynesville forward on LNG activity year?

David Slater

the I That growth. Why should start don't back the at the towards post volume of first just Sure. question? looking growth end with We're the in volume click We're all year. expecting expansion.

have a next XX over the of expansions we coming So, series LEAP months.

also gathering expansions each series We a support other. that of both on in flight are and those

So, we fully will complete our online. and projects volumes as those ramp expect come

our the I'd we're producers What seeing, Haynesville of is say, rational in a behavior. generally from number

going November, when when low you the With pausing that current you activity, cash prices, short-term price into the forward ramping even of seeing have and look forward of look to the or as deferral as curve, especially we're activity significant early winter. you at

my And in very got around said Haynesville then in comments, and drill for in Cal Cal I healthy XXs $X, producers XX into. you've $X.XX opening as to numbers around

the with market think what the seeing the market and match behaviors telling sort them them is that telling they very and I they're production is ramp activities up being of 'XX, need to rational. is that are So in the forward that 'XX. their shaped, their way to producers They're adjusting curve

lot positioning in of sort to levels that. a we're we're drilling them but is of growing. being themselves DUC And And maintained, inventory all seeing cases, seeing of do

and price. that react I I to the to torque sort forward them of able some terms adjust telling producers in of could are what building quickly So use is the to into system, be think curve if word,

Keith Stanley

Great.

Second just a CCS project. question, one the maybe basic on

confidence takes to than to a next talk later guess, Can how Class and XXXX. you of project you can to you're about just for FID plans you I year think you're expecting So permitting little full the well line, half time getting longer permit planning permitting the talk the by and in would VI first in the approval if expected?

David Slater

probably Permitting CCS biggest is question. Great for anybody's mark now. right question the project

up. the both So just the with EPA dialogue back let me regular D&R. and We're having Louisiana

an not As There's may that around Louisiana will occur. there's clarity the you know, that timing primacy. when expectation on receive

both track running we're keeping informed. parallel now, agencies So, this right fully

now In terms project. of the our derisking right project, we're laser-focused on

So what's activity. year. well the will later and Once seismic the shoot, FID geological that sequester the Class next V validate formation well characterize permit in. Two, the the of drilling character we the we're other ultimate early to year to be key derisking of on next characterization that, want to expect significant this side then we project

Our that with apprised have. as best with on be be keeping that? information on through hopeful in We'll Is especially about think that out everyone our her deck very opportunity currently Class we as view be if again, X. is And could the an everybody. information that's get best well primacy the to the determined I accelerate And all VI to work incremental authorization We're we laid will impact to transparent of shifts our view we'll to there Page schedule. is, Louisiana. to there timing with agencies. that regulatory be But committed that we of get kind

Operator

Mosca We'll Mizuho next to move Securities. Robert at

Robert Mosca

as side? Just perhaps wondering, you consider your to thoughts the a just the you future And reform view get a wondering, expansion. Utica feed if could on potential item? I to any gating latest project permitting if Do be NEXUS way expansion still

David Slater

Yes.

around just what's we reform. start through incremental also IRA let's as that's very dialogue supportive in So We're Washington the with and occurring permitting of to-date the happened reform. permitting speak

concept optimistic. perspective, all doesn't like it this be from take clarity done of for infrastructure area really on what steps a and more permitting There completion. more energy and be needs need we agnostic to seems from that to scheduling Washington work an matter we're in infrastructure So a to the sort to project

work that important being very of very supportive Washington, So, in that's done work.

through able back right markets NEXUS. open to our project a great and is know, to to So the has to right direct here with Eastern some And we're in be NEXUS Midwest, as pathway upper that Michigan. we're building very across Canada optimistic Utica Chicago project, you directly interconnect that

that that's So, something that around. aware and is dialogue is of there our customer occurring certainly

upfront we strategic this value see in So that nice investment. a as

past In very system. that at as way. terms the on and talked utilization been I optimizing the available it previous we're hydraulics just of NEXUS, and I'll think winter, chockful. system it's capacity for the This calls, about looking to that we've four the now pipe's that service of closely in hydraulics the three say or been maximize in years

utilization. very running high very, Just at

alluding of Rob, at so that to sharing the two, will one And on at is to expansion public Step it is but that we're point, what There's more be working pipe. on you're that. is we certainly we And when that. optimize on hydraulically. step decide information permanent nothing doing a this to look

Robert Mosca

Great. in That's which something to project agreement 'XX. commercial you it about you think pull underpinning restructured, I Utica the question, allowed it that helpful. And my was remarks, your said the second prepared into

modifying that more there maybe asset any is made your appealing for simply build concessions Or earlier? schedule? the that wondering need production you to made where Just were customers it to the construction accelerate

David Slater

they The there schedule investment say a smaller shifted And grade the independent their large producer. from is ownership cap happened producer I'd acquired ownership what to changed. those obviously a when changed assets. after development

acreage both of the of with going companies restructuring tandem we're were to customer difficult we environment. that and the economics aligned a in making in a commodity activity, are was and our in Part and how terms area, new develop contract it's just this sure readdressing like

on operating this we're agreement in. important significant capital the lot this a opening we're And of deploying against were features as that that acreage the resource the protect that of and that of So, in this there's to development, so. said I remarks, kind my agreement reflect MVCs times

Operator

And remarks. Slater are time. to closing further like the this David turn no call questions there to would at I for back

David Slater

much today. your joining and your We interest thank goes us in Midstream, DT much. appreciate you well, and Thank very for certainly day hope you and the support all very

Operator

today's Thank And you participation. this conference call. conclude does for your

You may now disconnect.

DT Midstream (DTM) 1 Aug 232023 Q2 Earnings call transcript