DTM - Earnings call transcript Q3 2024

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Operator

Thank you for standing by, and welcome to the DT Midstream Third Quarter 2024 Earnings Conference Call. [Operator Instructions]

I'd now like to turn the call over to Todd Lohrmann, Director of Investor Relations.

You may begin.

Todd Lohrmann

Good morning, and welcome, everyone.

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

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

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

David Slater

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

our on the gas touch some results, and provide activity I'll progress to on call, today's the growth market with financial an update it performance over outlook. then Jeff latest and overall During turning observations on close development to commercial before financial initiatives. review on our I'll our

we operationally, So to support had team continues projects quarter new growth. our future another the strong commercialize and organic that starting off,

performance year-to-date to strong XXXX range increase to guidance Our EBITDA to enabling adjusted is million. million our $XXX us $XXX

reaffirming EBITDA XXXX also We adjusted range. early are our outlook

By are continuing our platforms, beyond. projects asset backlog, project continued integrated existing scale organic we leveraging our the positioned in and 'XX from for growth and to well from advance

final decision us record strategic since expand Fitch capacity a water also month on further investment a to wellhead LEAP expansion, reached was Our ratings the day strong have company million XXX LNG by grade, spun increase system we cubic which integrated corridor. goal X we we that investment recognized this will excited who morning, announce earlier feet to our the and Phase of track per that are performance we had upgraded to a by have XXXX. This in

and total expansion, incremental and in completed capacity the from demand-based increases to via established by itself our highlights Coast takeaway of is Bcf quickly out markets interconnectivity. capacity customers. growing as demand LNG into Our This first basin back rightsized, X.X compression our X.X X customers' will be with with Haynesville signals Gulf in premier project Haynesville needs of and expect to we serve expansions to day underpinned and mode. for system's contracts growth as shifts XXXX, serve both long-term and half per new also timely leader the LEAP which overall ability the has Haynesville and system This the looping the capacity capital-efficient

provide morning, additional are upsizing previously Appalachian disclosed we capacity announce strategic markets. Mountain access we connecting with which Pipeline the and this increase This project the system, to also customers pleased are growing to our on of that our to Valley Stonewall Mid-Atlantic the will interconnect basin our

This project, feet which XXX is project long-term and anchored by outlet a capacity day on by is cubic the agreement project have expect to service in privately we with that this large increases half producer, in per economics, underpinned Stonewall by demand-based first contract a XXXX. a protects held million of

to that we have updated advance. we projects opportunities network. center commercialize addition new to and a our will across data In number remain these as of the discussions in And you active keep power reached opportunities FID,

in project sequestration Louisiana. and capture carbon our to Turning

well, structure As pre-FID our quarter team confident engineering mentioned storage the second the of we detailed in we our design suitability The continues the formation related and on the validated site. have pipeline of call, geological storage and facilities. are COX

VI be guidance year. the waiting the end received expect permit the for are to application, from Louisiana We prior clarification DENR will which and regulatory Class still we our of

a deployment milestone we disciplined be this decision, of to now final half we the first will minimizing that a continue investment project, reach of expect until execution We come our XXXX. in capital in

continued to in but very has gas fundamentals. to our We've address moment the short-term natural market durable. portfolio a take to like I'd choppiness remained market, see Finally, the

moving inventories the environment for storage with off constructive will that and are average, more we growing a supportive LNG gas and recently We XXXX beginning X-year signals provide demand beginning work in towards producers. seeing the surplus expect to

market, term, this demand the which from demand. to onshoring, In and we export by footprint long data of being support power to will further gas expect DTM infrastructure located the commercial increased and utilization natural with grow, industrial strategically demand and to center and well development growing all LNG natural expanding gas asset continue of positioned high driven serve

growth So opportunities with and for ramped performance XXXX from in project as backlog continue to the in pleased continued our I'm prepare the from beyond. very summary, demand team we our and commercialize

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

Jeffrey Jewell

David, adjusted good million, representing decrease delivered third quarter. from a million $X $XXX In everyone. prior the Thanks, quarter, overall we morning, and EBITDA of the

greater Pipeline segment quarter X results service a second from Phase our the was $X placed than which contribution million full in June. expansion, reflecting were quarter, Our in LEAP

items the decreased result for results quarter repeat of did not million segment $XX $XX with Gathering third in second a quarter. quarter, second in by onetime when adjusted compared million approximately the to the that favorable line

total the with the day averaged Gathering Haynesville quarter Operationally, feet compared system. Appalachia prior while Northeast, quarter, volumes volumes lower the primarily Haynesville volumes lower on our in third billion a across slightly the and up gathering Northeast cubic to due X.X to the in both the the approximately in

gathering quarter maintenance expense. we compared In as in to expect volumes third a ramp well quarter, as the incremental the fourth

considering opening we range $XXX guidance his to performance year-to-date expectations $XXX to in our our adjusted remarks, fourth raising following are mentioned and EBITDA million. our million the strong for XXXX David quarter, As

are call. we and plan early our reaffirming XXXX outlook EBITDA to adjusted XXXX formal addition, In our year-end provide on our guidance

cash distributable due interest lower million to We taxes. to are also $XXX range cash and our $XXX to flow guidance million raising

is X interconnect facilities. our gathering by we including our committed. upsize Phase our unchanged new new remains our LEAP driven of reflect $XXX clean approximately are in XXXX increasing capital and growth of reaching Stonewall with committed capital $XXX to growth projects committed committed XXXX million fuels capital new expansion, reaching XXXX with FID, MVP build-out This committed, approximately FID Our projects increase and million

This guidance timing full our cash capital and flow reduction driven million our reduction high is million growth growth reducing we range projects, represents of and XXXX. $XXX expect $XX are to spend XXXX in free to end $XXX XXXX to to within by range. year which continue the million, a of in We

strength to are are balance pleased We to rating preserving sheet, an our earlier and committed be we of the rating to very Fitch by credit this investment-grade month. upgraded

upgrade with In from the addition to outlook we on positive remain Fitch, also Moody's.

loan. of we further full off and $XXX $XXX through balance the we the the level in used to Within term quarter, balance on at million Millennium pay issuance debt our million project new the proceeds optimized sheet Pipeline, our

our sheet and X.Xx was proportional our no X on-balance leverage now debt have At for leverage X.Xx, with at the quarter, years. end of we the maturities

per EBITDA also Finally, committed per year in to pass adjusted back line share, third from announced long-term quarter. closing of We dividend remain it of unchanged quarter our today, growing our we $X.XXX the to to with the dividend growth. I'll prior the remarks. over at X% declaration for X% now David

David Slater

Jeff. Thanks,

summary, in how are confident continuing guidance is are pleased very year outlook and and for feeling to with the XXXX. in So range early progress we increased for XXXX our

budget over which the continue investments short-cycle growth will track X Our on contribute next years. growth and schedule, meaningful on to

our flow the thoughtful remains cash plan, our and to capital growing our X-year within of approach line EBITDA. balance on allocation disciplined dividend and our over Our with spending focus with in

significant located the of questions. we As portfolio, across the platform. We continue growth strategically see through our we can and asset our integrated opportunities enabled by scale emergence the energy to look now for open and of up transition the footprint line

Operator

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

Jeremy Tonet

not Just going wanted talk starts forward read-throughs to shift the this to the kind increase early year. of can juncture, update follow macro operating know to at as 'XX to XXXX this for on look, And any but thoughts just I as base up on the you're leverage that. asset high-level across you about guidance And focus on improves?

David Slater

Jeremy. Sure,

I'd off, this first incredibly through say just kind the as -- cycle. say been year I'd durable has gone the portfolio of we've commodity So

it's happy we're as played navigating how and increase guidance year's QX. us the So to were we with into allowed very out the

get a is seeing clearly terms announcement at customers think XXXX, in activity in to But signaling XXXX growing say market announced is the derivative least in I year market. feel of demand until terms items we'll X better our we And our their of making As in interest some the volumes kind in the Haynesville, sit on coming. tight levels. we renewed a somewhat the of of encouraging incremental and sentiment I think alluded end I'd any as Phase that today from of you the LEAP to, to again of core information of adjustments get the

of in couple is our as again, the encouraging if XXXX how our going next position. have contracted growth sort of for that say next trajectory you if capital, filled FID opportunity we that's look growth very year way. slate we've kind it a that's projects really that in on and And in a we're of cementing I It execute at hand, already years can full and to of

on the So that's that's coming and what opportunity and growth some reflect as incremental our look I across call forward me commercial us aspirations giving I'll optimism portfolio. to

Jeremy Tonet

lead into Got it. is the there not of That's producers helpful customer It enough in some might and to wider on an get opportunities, Henry there. I concern, connectivity the think, about seems are item and Louisiana connectivity, a to I the could that looking Hub think maybe incremental side for there. hub specifically And speaking like basis. be

you wondering Just present this DTM. view and opportunities for this to subscribe if what could

David Slater

Jeremy. Great question,

of adamant side why to And our that supply system most we've in Haynesville say terms with premier the today with confidence on our can it's we're it's the network kind on the I wellhead in period. And network. of interconnected so interconnectivity both demand now think side. really the water been I and that's Haynesville

of been very advantage Gulf markets Gulf that clearly take from downstream the foundational of the market opportunities can customers And having the last system. robust the along our Coast kind opportunities, so you entire Coast. over that all industrial years those to been of we've to our build-out and whether or hearing of it's customers LNG X That's what directly connectivity said the along

customers something anchor and can to our opportunities watching market of a are that mover. first want So those closely, advantage that and have it's infrastructure take they clearly be

Operator

Blum question line the Fargo. Michael Wells of next Your from from comes

Michael Blum

opportunities all potential and about the X more to I I'm Just just get been these center are that us solutions. of wondering, data give a sense meter developing. a believe can faster, timing process does on. how behind what's I if regulatory the onerous? they're on little more projects. the going you You've trying talking make wonder color

David Slater

Michael. Yes. good And Sure. morning,

that detailed it's it's so those, definitely active moving this direction. in The as in quarter, advanced opportunities But to I move not those yet. discussed previously direction. in have critical continue opportunities We're -- the number discussions in speed we calls, development forward. enough agreement to It's we to of they moving the a we've say these and plans. So continue very advance power with previous site a talked commercial think is underpinning consideration of right on about the a right

regulatory So favorable in key that's to the the ground viability. put treatment, can in more you I under site think that infrastructure extent consideration a

And developer not detail and so I'll opportunities . -- opportunity looking for are on call those a that has as construct. us and lost with the when what that's are been aligned regulatory intrastate do feasible development to

developers So locations, the yes, they of site. part ultimately, I and are part these be as of equation when site will different commercialize trolling think decision-making for the it that's the

Michael Blum

to slightly about to also you trending Northeast QX, it. just Appalachia your in to volumes. Can Can the Got what And ramp volumes. a last lower seeing clarify? They've then few there? I Haynesville then ask Is you're you're been And referring that comment speak expecting quarters. or wanted that both? or you just

David Slater

Yes.

and And south. both for the year been remarkably both been in think volumes I softer of of basins QX has those has very to do volumes. some that in saying and QX. sort year this expect in the for which definitely profile yes, recovery Haynesville in We've in the north kind see QX expecting encouraging. we've I seen all us, a we're resilient been modest dipping

our more 'XX this focused rate our on there'll year, shaping that customers going up and year a I we're for that our constructive with a a from attention think that hearing next producer thesis be And of customers. again, general of coming out much market lot is exit for more into

Operator

Chen next Theresa of question from the from Barclays. Our line comes

Theresa Chen

how On demand fund, end base processes can how remind putting you should competitive the these this us scope to the and the much projects? the power center And can of assets? data needle aside, book we relative just move your size

David Slater

Theresa. question, Great Sure.

Birdsboro primarily these built in the plant. our past in to lateral Texas the site lateral as past, where off discussed looking locations. we we're analogy as a -- I've the think is we've these I Eastern opportunities at that project, power into And used a these

CapEx of on So call an us, our it million for $XXX the investment size, $XX range given opportunity our depending rightsized And in terms between very growth of lateral. in driving million that's investment and again, the for distance plan. us

that's just kind interstate thinking load into now, off will long-term thinking again, the, how system. opportunity as right about it backbone really the that thinking it. these of And that well on about also but the puts infrastructure. as become resilience So about call, markets durability pipeline I'll also we're lateral assets be additional put it as And that what and we're served it, we're

So effect it's got a portfolio. the entire knock-on across

helpful, was that Hopefully, there. stop I'll Theresa. So

Theresa Chen

provide on outlook Moody's? the heels the just next additional on general then in Fitch steps and color you with upgrade, credit can your And of

Jeffrey Jewell

Yes.

mentioned, So on outlook us. is upgraded positive like is Moody's has and where on we you S&P Fitch neutral. are,

positive we're what they're the them, Chesapeake. again, is, merger course, of SWN just, with and seeing reviewing and So of the both with happened that momentum

on determinations to on before of that year. probably into or year we're first they X of they're going we're related still end their the of the the the thinking end that what same before sort to the make probably of X So the the quarter do us. But path

Operator

Sachs. Mackay Your next from question line comes from of the John Goldman

John Mackay

recovery. I bit little when I'd ramp towards appreciate really I to little to we'll gas talk think on wanted the just year-end if macro production of to production a year 'XX when year-end guess the on those and levels. we comments get almost little might a could ramp a and production need we of ago then be -- bit. bit go that I a maybe the that, the we kind start you curious through kind you a the to flesh back back peaks when that to and can saw really view above break about

David Slater

Yes, I question. John, to answer the more And wish question, million-dollar insightful that's you're that I asking. a had that

think I well customers get waiting our cycle year-end we're into with somewhat for as key their planning patiently as XXXX. they

lot a out North average is how showing we're Again, XXXX, showing function the constructive forecast across up of think plays winter. weather North kind this a I 'XX incremental think is XX-year in producers combination the of looking a I we're of this at America what that across will If in for America. seeing. that with out, plays a demand backdrop demand in up be generally

day relates to a we're X the Haynesville, Specifically as the it down about Bcf peak. from

is shippers the out it want My pipeline to truly for online when those to be towards anchor that of arrives. is served got in incremental facilities reasons. expected next Haynesville to drilling really significant personal again, perhaps going of are you've some -- that you've that that Basin. early other just service 'XX. a are into view has need companies to One be And coming that LNG capacity X be couple the number a of does of building come of next year, infrastructure got demand end back And that's year to

the curious leads think, believe ramps. that And as that 'XX think I be constructive and going year producers I as the all better Haynesville, The a to to we're are is as and for end and to So get be the is volume trajectory, more we in year we seeing should information. get TBD. timing me you of

John Mackay

back some a call, NEXUS a earlier it had or terms us NEXUS kind definitely Maybe opportunities expansion where to like capacity? would probably conversations great. What the timing follow-up. I specific goes look sits could just be in but thoughts. the we've of Could of I you in perspective? cost update quick know this of appreciate from just there potential remind on

David Slater

of X, to under the elected really of and is different we've upsized categories on the capital to we've system capacity. how XXX system Yes. built FERC years design our optimize ago, X it actually having really used being filings is I'll expand. looking X day. experience physical simple, based of What doing probably a an I'm it's hydraulically, where we just season summarize response. very investment, NEXUS capacity increase couple call, to at kind a since and really I'll reassessing And X you've had we're we the there any million just was the open of that do favorable belt into numbers engineering it make seen without going about the what the to years to able We to, about round did regulatory

us that's #X, now. was and behind that step of kind of So kind

look number compression and that million really would X expansion next it's expansion. at likely to be Step And up a NEXUS, will likely XXX that's to and million range. in for day XXX a capital-driven be the a

further, to NEXUS. come John, that update we on as So on more but is, that advance the that's

Operator

line [Operator from Instructions] comes Stanley Keith Your Wolfe from next Research. question of the

Keith Stanley

last you this growth on the to to X%. something new want again plan backlog earlier with puts medium-term that X% year? X-year target earnings? since backlog any details is the outlook I and and color on the project provided give with it you of you'd gave update confirm, QX QX So time earnings, to takes and you And to

David Slater

highly we've year, more that. a of backlog around things . and here around as that of won't a you right nothing, commercializing. yes, call, of the But provide the been won't were sit Keith, changing play changing. long-term refresh. meticulously the we'll we our We on backlog is kind in just that that's just of now, confident I'll we're more outlook last today And bunch details is long-term Sure. outlook changing the in year-end the be and do be kind yes, granularity we tell that we'll

refresh we've into again, commercializing and new dropped should disciplined spun moving backlog, the backlog, way get working just play backlog. forward. our likely you things organic those doing that that continue company. the rate It's to yes, expect growth been since that company run the we a we'll just opportunities, some So driving execution that through And

on should the expect you what year-end that's So call.

Keith Stanley

Great. Thanks that for clarification.

Or The know the second not that going new on still, the sets how centers, Supreme XXX(d) clarity carbon customers just rule? on discussions, Is your they a EPA I impacted fresh decision plants Court's point? data question, data might that a gas pretty but knowing the at stay with need customers? all, some back this cap that they capture solution at center to has want is for utilization comfortable and if something are to

David Slater

Yes.

I being counterparties think in the yet out, saying, Court is we're at think the not the that's they And touch still going or adjudicated be that's lower to lower are that looking most on and to added may I said that court. be not. because it's dealt the of what And kind court. of got with how depending plays it in back again Supreme

Right behavior now, that moment. driving at not as seeing we're the

and it the I these the it. the everybody attention opportunities. that change not paying think or is But regarding velocity having nature seeing watching it to we're conversations of we're

Operator

from line of Your Dounis next the Spiro question comes from Citi.

Spiro Dounis

in The Jeff, like talked nicely maybe staying about CapEx up is cash with positive here. first It free you But looks kind start of question XXXX 'XX. to and the just flow 'XX outlook. filling

line sense could what you're So from get or maybe add projects of just over just X? quarter more you're And the projects the types in next to looking next headroom thinking how of a if year. you curious provide the here about to

David Slater

you that, Spiro, blanks. in crack if you morning. can to jump Hey fill the at Jeff, let me take Good And in a need and

those we've place. flow free we've one, the I one . number inside financial boundaries been that just that's X-year mean in clear of sort put operating with our plan. So of really cash over

and really good In that in executed puts rate XXXX, chunk years. contracted terms next of getting CapEx of high confidence couple the of our growth a deployment over

that's real positive So a sign.

commercializing wonderful opportunities. getting The last that the just those commercial team X a backlog has been doing after job and over months

of I'm that answer refresh is move on year-end the Keith, to for gave, we'll back the to going you kind that Again, backlog which I call.

see But across suffice significant that going do say we this our opportunities footprint. not it we're themselves that on So presenting call. to continue organic to to

the a Jeff, are And place organic to long think on see so to that's call. environment. if this opportunities. that you'll I add again, you that? refreshed I don't year-end we great current And market in anything not want organic know short be And in, to opportunities,

Jeffrey Jewell

No, No. David.

that's think I on, Spiro. spot

changing. are financial not Our policies

bottom think I line. that's the

Spiro Dounis

great. Got it. That's

Second there. question, you still, this David, of sort kind topic, just a of sort just organic long backlog on mentioned growth of

curious Just on relative the attractiveness M&A the about thinking side. how here you're

have backlog, equity of organically, but that the ignore course, here. You to currency hard strong

out a sense asset are So more that look attractive maybe little ago candidates just there didn't year curious, now? any that there suddenly make a

David Slater

Yes. Good question.

with very strategy kind just I'll the we've the with we're one, really publicly exposure refresh disciplined since clear company. M&A flows, of cash the thesis has is we And our in commodity in maybe the no that what spun focused a contracted significant pure-play been said consistent is, about think investment demand-based I entire and execution. gas-only number past company, highly we're on which contracts company durable Highly midstream portfolio portfolio. underpin

is that opportunities on . or light our the any would star strategy the and present come that north way So themselves. guiding

all in our have run in that in company. So flip in it terms our is reflected to we price, And the reflected job on interest any that and would that investors that's say of for think midstream and you company. a and how gets our of gets M&A. goal also I'd the obviously stock And anybody side, about high-quality

guiding would any in are don't We're anybody with our be those moves and our that And principles. mean I to execution, that of be won't with any going we I see that consistent inconsistent strategy. So changing. very surprise

Operator

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

Robert Mosca

that quarter? closed, wondering that is puts And LEAP SWN your and were announced Union updated X, you're and and if there's Blue mentioned, outlook acreage? Chesapeake customers on expansion potentially shifts commercial to could in whether Phase expand related benefit just last those with any takes production the was any on that now you So expecting

David Slater

Rob. morning, Good

to couple questions try in that. there. of a I'll unpack You got

let's start expand. first So with off,

publicly about now. congratulate we're integration to post-close going closing And like them with them excited what for call the I'd through working really going forward. merger. They're I'll Firstly, activity right

I'm Just that them in a you their sitting near asked, through here to to the all little provide and be on they'll sure call, but we plan down go update term Rob. an questions with color, more to those give

patiently again, those get to and for the I'll sit them we down waiting activity through what we're So so call conversations. have post-close can

That being in we I'm the in premium acreage for Haynesville. their them mean that said, rock confident highly that the what gather I acreage basin. And portfolio most the literally is economic by in that, it's

really And investments the think, that's I of decisions, our is that And to decisions. gravity it's around big at a guides it's that's in just but their we're that gravity wonderful that So that in acreage have move allocation in to that that part acreage. the capital market. of I terms ultimately, terms of basin, acreage position a infrastructure good the their they a look and

just them like decade. have for forward with a over working look we to So

people forward very with relationship that new people going key We will to with have work we continue we a will close entity. key And work in the them. with our the be also

I'll feel publicly of tomorrow, we talk you disclosures. public give we'll update and more. side to about let on other I'm able the sure So be say positive real their a better no it about that. them We'll

trying I'm Rob, sorry, I'm on LEAP, believe, one. that another that's customers you had remember, I and question to related LEAP. to our So

Robert Mosca

sorry, yes, David. Yes,

related Blue that expansion announced any way to in quarter? that's Union Just last the wondering if you

David Slater

say it, you good probably That's I -- didn't it. a said

safe a assumption. probably that's So

markets expect been are network all the customers cognizant our with of the the the same And have you We customers. as at the would competing for network. on of end

what don't. disclosed, of ability when publicly bite-sized network want respectful. to be feature So call don't call customized customers network we've That's and the to very the that of water wellhead can the a what been those and really timely customers' our interconnectivity to our -- network. yes, get But of increments been the the very needs. to we And in grow I'll network I attractive

Haynesville, announce to we continue through harvesting to in what growth. we're call, coming even think see as I very, these And continue challenged the I that year a would expansions we

start the Phase very commercial after next by tranche on So that. capacity task our encouraged of working compete for. and team LEAP We'll can that get we to X

Robert Mosca

Got like CCS And of quarters. one it. a for maybe it pushed project, expectation out last is That's the FID was maybe me for very helpful. seems the couple

Just anything call out to there?

David Slater

call in we Louisiana encouraging out is meticulous collaboratively the be think I their the that for. execution and our really with to holding we continue move are regulatory to along, No, I them I'll thing controllables we're I'll We're yes, accountable if the But to control only requirements. on working them those waiting what DENR pattern words. application and a, in call, complete use can obviously

very kind move through is that I'll orders create forward durable the you that sense regulatory highly be so My of they're trying regulatory can these to once and process. projects move judicious sailing with what call clear

in-service contact for to waiting close but our It things along. move hasn't changed with are in obviously date, we we're them. Louisiana patiently So

Operator

That concludes turn the closing remarks. Slater our question-and-answer back session. I for call now over to will David

David Slater

and call We of have everybody, and you a certainly for your for support again, and thank Well, Midstream, DT day. in the appreciate interest great your joining participation us.

Operator

Thank conference today's concludes your you participation. This for call.

disconnect. now You may

DT Midstream (DTM) 29 Oct 242024 Q3 Earnings call transcript