DT Midstream (DTM) 16 Feb 242023 Q4 Earnings call transcript

Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the DT Midstream Fourth Quarter 2023 Earnings Conference Call. Today's conference is being recorded. [Operator Instructions]

would Director turn of I to conference time, Lohrmann, Todd Investor this like the to over At Relations.

Good morning, and welcome, everyone.

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

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

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

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

During spun performance provide accomplishments close the today's projects company and turning before the financial with our to call, and I'll update growth we on remarks the discuss in to outlook. our XXXX, DTM XXXX accomplishments organic review over then our some it an team and future has Jeff I'll outlook. since on made

year which represents So delivered We with of full year-over-year. midpoint and EBITDA XXXX guidance million, ended that, XX% our adjusted $XXX growth strong. exceeded

We completing team history. successfully performance. And to I'd the also to like in excellent our their years year of for like team recordable, largest record. company's the on also thank the of We OSHA our projects and executed finished one on I'd ahead commend schedule only budget. program safety the with for these construction on one best safety

LEAP Gulf and and expansions X X in Coast. our which along Phase the directly served contracted placed are growing early, we fully notably, LNG Most service markets the

With on schedule. currently construction ahead Phase activities these X, to is completed, running focus expansions which of able we're

to coming XXXX. demand us added capacity, we wave beginning to serve additional the pipeline Union, LNG putting On supply in position an advantaged ramp and quickly in Blue treating

and capacity. sell able Appalachia Ohio, early Northeast. the completed new line successfully began through hydraulic mainline optimization our take-or-pay NEXUS, Ohio expansion X to we're collecting to Turning initiatives. On which agreement. was under our Utica added completed additional we trunk revenue gathering system project In our Phase capacity We

agreements, an including supply Blue Gillis interconnect team Throughout our and development year, new Utica the Union LEAP. Ohio business Carthage on our several on commercial in area, the with the project, new project Access a successfully executed interconnect

that we the at expansion project Appalachia during of business fourth the Union new quarter, The pipeline over system, a the which gathering agreements remains a progressing X Blue finalized an $X.X organic system. result gathering to XXXX. Phase in focused on will currently Tioga expansion our system and through sits development team on Additionally, backlog billion expansion

to Phase are are expansion advanced we X million a feet we LEAP, discussions now in million which XXX a and for On day. estimating be XXX cubic between

Haynesville It potential X to our and from our customers, share. provides We value expandable. tremendous to to Gulf region, the and in market have is to Bcf market our future confident X easily on superior fully corridor. the updated offers supply and we asset integrated also Bcf access feel connectivity LEAP and additional LEAP Coast gain current ability LNG into a today expansion operating system a This day. the day

impact construction. permitting will fully by via served directly business administration, near be Biden LNG LNG material announced is pause All our and see which the growth no Regarding term. the permitted LEAP demand the under to we in

for We allies security and our region Coast U.S. for remain to Energy a critical geopolitical priority for and LNG Gulf a continue the export allies. view the premier the will international as U.S. long-term European source supply

by carbon and and emissions the LNG is build-out solution intermittent displacing internationally reliable the reduce largest, Additionally, of to most renewable coal supporting cost-effective energy.

and Our priorities. positioned support assets long-term these fundamentals well to are energy

our drilling storage update X on currently on received to a In well permit, we the capture our carbon like storage of site. project confirm our Louisiana. and and our now Class we are geology view I'd in early favorable characterization an provide well to January,

the expertise. pipeline credit and project, leveraging tax methodical, extensive been storage, approach development has our our Throughout

to risk a derisking at reaching minimize Our site decision. goal our while is capital systematically our investment storage final COX before

with actively collaborating DENR, engaged local closely been outreach. have community and experts, geology in Louisiana We

our phased philosophy, development we our Adhering at COX are pipeline equipment disciplined plant capture include X approach to will transport Phase this to a and dedicated to a COX site. storage pursuing to compression southernmost treating our installing captured constructing project. and

capture X COX Midstream We plant expected in be the to second of DT X Phase second on go service expect treating from and service XXXX. to Phase is half XXXX. a in in will

streams the tax will the credit As provide for XXQ a project. reminder, revenue the

moment to Since I made years. the very since company. significant portfolio. achieved achievements has It's while spun we've the we on to the high-quality a natural the reflect X spin-off, exciting Finally, growth take a a pure-play maintaining asset gas want DTM team been

EBITDA We peers. midstream have annual delivered which X% adjusted outpaced gas-focused growth has

consistently dividend, also announced the have grown of We including X%. today's increase

at which mix the Driving business and grown represented business less than represent segment of natural this ranking growth our having segment has of pipeline XX% gas as in to about mix group. Pipeline DTM X/X natural peer highest high-quality our has spin been our gas today, the

when continues of in a XXXX. X we high spun level be portfolio of tenor well-contracted takers the contract years, average contract same with tenor the Our and to an as company

commodity peer exposure, no group. We feature a our direct unique among also have

in gas growing positioned Our integrated grounded X portfolio wellhead-to-market serve market project a is growth fundamentals. to that world-class dry demand asset and features from supportive organic basins long-term markets backlog is pipeline deep

year. achieve onset achieve from goals and very that to spin credit grade the the our rating, we of One this position a was investment are in an of strong to

balance sheet We have in strong leverage position. comfortable and a our current very maintained with financial flexibility a

made has a today. in since strong great program and also very is the position ESG strides spin Our

X having MSCI a This our the We AA, have rating as possible. at rating rating rating. with our improved notches positions best-in-class DTM current second-highest

incident Our each improvement consistently rate for recordable cumulative year XX% since safety improved a total has spin.

peers. among sector giving hours basis our Our and is volunteer community a employee per on leading

not continued to and accomplishments have who performance team achieved excellent work our could great these have hard individual dedication the professionalism. of members without from demonstrate been All and

a Additionally, the that received distinction Mastio them the unwavering in top to apart, recognized service study been best-in-class strong the we ranking team's independently customer customer companies. the fostering has of sets where commitment delivering within service relationships, satisfaction consistently sector, customer midstream as and

truly the future work store Their what communities proud I In delivering our to dedication forward very summary, the group, is our and It DTM exceptional with foundational future to and of customers and has is team. am honor for company. to results an business for performance shareholders, the this in I look to success.

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

Thanks, David, and good morning, everyone.

up of driven year which segment. XXXX the is overall our prior $XXX million, XX% EBITDA over delivered we mentioned, David As by Pipeline adjusted

For third was the EBITDA of fourth $X $XXX of over quarter, the million, we which increase million quarter. delivered overall adjusted an

segment our results. Reviewing quarterly

rates Our joint at our over higher increased Pipeline ventures prior and $XX our by driven Washington new Storage quarter, of million contracts was up revenues the the at pipeline early XX segment LEAP expansions, our on in-service facility.

Our Bcf both Operationally, a for a the and the the Northeast. Haynesville third lower million partially in quarter, X.X gathering $X in Gathering a by total driven the adjustment segment the around day to feet averaged across $X XX% cubic volumes volumes the million higher XXX Northeast. Haynesville, and volumes recognized offset reserve from growth than quarter results were day, in the environmental by due modestly million quarter, up quarter around the in prior lower third Northeast

XXXX Now looking forward to and beyond.

have outlook in well current we are As early we done the as the year next year. as providing past, guidance an for

Additionally, providing long-term a we are growth target.

$XX reflecting million a is adjusted guidance $XXX $XXX For million midpoint outlook. range XXXX, our from million, to EBITDA early our prior XXXX increase

is $XXX with guidance midpoint. Our billion, XXXX the X% EBITDA early the increase million adjusted over to for representing outlook a midpoint range $X.XX XXXX

to our incremental investments of by as term, XXXX our well Our our adjusted as level strong take-or-pay customers. EBITDA is strong we from organic growth advantaged by are be adjusted our XXXX EBITDA growth sheet to contribution which asset balance and of X%, for guidance supported major backlog, contracts. and is positions, targeting high Longer supported the X% expected

million. growth to guidance is $XXX XXXX million capital Our $XXX

$XX of FID. We currently of XXXX spend have growth overall working approximately a to investment For we organic level growth of expect and a committed as advance XXXX, similar million number to opportunities XXXX. are in

increase represents X% declared $X.XXX a increase. a Our dividend which to has Board per share, quarterly

expect dividend growth X% we our line long-term of adjusted X%. in increase forward, target EBITDA with annually Going to the to

leverage From a positioning progress towards balance on an sheet and obtaining our investment-grade credit rating. perspective, we pleased are with

for for Our is the Xs plan to delever XXXX the on-balance into low into sheet and proportional debt. through debt mid-Xs

agencies we of shared improve. have execute have rating our the for XXXX. the expect with continues investment-grade continued the credit to largest We rating credit an and to by attain customers Therefore, profile the we on end plans to

for it back pass And remarks. with that, over I'll closing David to now

Thanks, Jeff.

our full in for in are XXXX summary, early guidance we confident outlook XXXX. and highly So year for

of from our downward the history, and performance we a DTE post track spin-off Over spin-off, of record cycles. even have commodity strong price course in pre both proven

pure-play is contracted gas agreements. Our take-or-pay natural with portfolio long-term well

the no significantly have and grow provide between expected end our now which premium assets commodity and We pipeline capacity are to critical integrated decade. exposure demand markets the to of

consisting midstream a we long-term and opportunities sizable value deliver which grow We a have as will EBITDA shareholders. tangible of organic reliable, project our dividend provide to traditional growing backlog and transition energy

for we open line that, now can with the And up questions.

[Operator Goldman to Sachs. go at We'll first Mackay John Instructions]

gas Maybe on start I'll the just macro.

shut-ins to around seeing Northeast 'XX baked I not we're now. and You terms $X.XX what producer gas Obviously, right just you are Would levels to fourth from curious hearing whether the footprints any in both see the your -- you've guys your hear quarter. guide guess from customers, have from exposure into the guys activity on or what of you the And you're Haynesville. be now. right seeing

price a mirroring is that's forecast seems that be folks' had this winter. center front yes, the commodity most mind we've right topic And on now, weather to and the that's

that our reflects information what have current guidance, I'd is from guess of the customers. I we our say current most John, all

protects we item other significant across MVC here segment Gathering have that is that our protection the mention downside. I'd The

You did in very had see last some our year modest taken in asked learning potential last and year. guide for shut-ins this in about We pricing when summertime. year reflected saw a portfolio, that we've we the our that and shut-ins weak for

the of environment. would our is describe aware guidance way I So we're current the very price

of of our all very their reflected close XXXX and are plans. customers And all our that's to We guide. in

X% of EBITDA guidance looking to to All right. That's X%. Maybe clear. long-term new the growth just

You similarly? about Gathering? take have coming years. from kind of hit of also grow thinking Should outer XX% continue you're Pipelines effectively that from now. mix towards If kind they does when pipelines on long-term the both mentioned looking rate, Anything you share to we're that

Great question, Yes. John.

obviously and carries increase been It's that's And It focused from revenue been portfolio. very So today, intentional. about portfolio stable here a yes, mean, as X/X the very segment a when Pipelines is company. growing in of I spun sit we've multiple. we significant most higher our that the on the we segment.

of In in refer towards terms the is John. forward, Slide that the description And a backlog the XX X% laid the XX% segment. Pipeline capital pointed approximately you growth to broke X% out nice and it we of out segment. I'd by backlog the to on of We deck,

continue our proportionately about same So portfolio grow in represents the it the at it to plan is today. as to size

subsector All the as on right. I And appreciate all well. new detail the breakdown

to We'll Tonet question JPMorgan. Jeremy our move next at from

bit wanted Just for 'XX little guidance about more. talk range to the a

you type versus If of the guess you also of producer the maybe would what could that EBITDA low do what end Carthage connector, to high maybe drive And amount subject What year? impact I end into having shifting? in there. activity be see dive could

commodity summer cash Yes, the that in out our the calibrated of with some that affect in saw earlier space question, that in when confident behaviors X-way. realities guidance, we to some like we we've we feel current in the John's the prices. really factored the last X certainly really mentioned I'll I customers Jeremy, experienced laid may we and what ways call that And weak

that's So X-way. guidance into the baked

goalposts. So I between feel be very to going confident we're in that those

into us. That getting more terms entire some integrated the has Union tied drive sitting are activity interconnect, customers the to we're expansion. Haynesville just strategic of it to In an a will of deeply region, portfolio. LEAP looking that potentially support LEAP basin deeply the the and over help of and there Carthage egress and Blue down incremental the very basin. that, of incremental priority for Interconnect system bullish the example breadth is it of Gulf more Lots that incremental Getting been the incremental in that for activity

Also, seems I over it out more market, just seems sheet balance see have. it. like this would Got how you capacity. for leaving time, and stepped M&A for some still opportunities. there's argue the allocation in and up which is And it wanted capital to guess, year, potential company evolving like a see, bit CapEx the there you there

balancing how wonder just I these So you competing see priorities.

in robust it, Yes. And about of deck, that as in The the I disclosure organic got way think out opportunities. being backlog worked. we we've actively laid and the we everything detailed this really are

a in drive advantaged organic deep backlog, really we're position having So of for capital higher which that returns deployment. typically

priority monetize be number those there So will one. priority and our be will deploy That returns. capital to higher

X% announced We increase. dividend

plan Our confidence to continue return in shareholders. primary dividend make to to our durable goal so investors capital people is currently and to it that tool our very grow it. have and That's for

happening lots think In terms I that's the in of in to space, M&A, don't of going market, abate. activity the upstream. lots especially of assets

we're to of the that around have compete bolt-on think consolidation Those I just in we're with Lots right now. opportunities will opportunities pursuing. organic us. a mode

of dry Jeff's sort hold opportunities kept continue them the That's have makes and them sheet, sense, balance why we'll sheet the of the to the one that if those if very of organic. of to aware around powder balance cupboard we why as opportunities and standard And We're in assess we'll bolt-on reasons themselves. pure to strengthen our all us has the it he present as and clean pursue.

next Citi. Dounis at We'll go to Spiro

a maybe expansion. on LEAP X-part question, First the one

us pipeline, new extra walk is of how dependent can through of getting to of First, going that out a you on day much X FIDs? scope be the that ultimately LNG Bcf and the

The soon, we Phase part the X think of right part impacted with any potentially that expansion now litigation the now about as on going second you're of in forward the question of Haynesville? is, the is the by that moving And right

unpack Spiro, great questions, that. I'll so

on our in long-term For export. are some shippers view with and LNG we're the a X, detailed long with basin shippers. a conversations of These Phase handful

system by commercial that driven think value really I those conversations the are the offers.

interconnectivity pipelines. the south And but It's I conversation for to in think a of drama egress areas numerous basin, -- well to unfolding the customers I lot in basin than capacity points earlier talked that, supply north. like connected. multiple recognizing are some market. I their market about the it's to of some It's to product in the Jeremy, that's the that's move them and the of to with it's out And the more think basin optionality also driving very other both the with

that's perspective my So that, Spiro. on

runway by from that's X to couple on of Phase schedule ahead the and Bcf X day X. extending now of completed of Bcf X we've X -- and terms In a things. a a sort day, evolved Phase Phase driven We're organically we're of

the affects gas So incremental much is the we're is in engineering perspective, coming the operating, system of from hydraulics a feel that how system, an where potential the better on getting system.

Bcf inbound have the actually X day studies, a that clear we and to Bcf capacity a different we As day requests us to running can for this it's X beyond expand up become neighborhood.

well the in market. obviously been So that's received

like other have. limitations projects that We now, have no right some on

on a expand So with higher risks relatively runway notice have clear relatively number. a we execution short that to low to

just terms to under you And numbers. in FID-ed balance over if look and of and a laid the the pipeline We this to slide need construction what's you decade, for of there's deck, that significant point out demand that incremental look capacity. incremental I'd definitely our at at in coming

just to $X.X it. Got helpful color. question backlog David, of going That's second billion. over CapEx the

outlook, You sort 'XX at you is 'XX, sort like clearly, you an in curious, of of to is the level out gets be does spending that backlog that seems I'm that 'XX maybe more? level. on to X% capital Or and that tether X%? the $XXX spending around then laid and there look X% that EBITDA X% there of assumption you and if it growth to of sort million adding pretty 'XX would

X% the if get simple the That you you will EBITDA rate. -- X% No. on the to that do multiple, math growth

next We'll Instructions] Securities. move at Mosca to Mizuho [Operator Robert

the but Northeast thoughts the desire, Understand commercial pipeline in you might slide. could of could the some your there to a perhaps of regulatory you speak CapEx how if in they backdrop viability on flagged those navigate be Northeast. Wondering expansions that

say that that. I'd an season of on about best into They the think Millennium the Algonquin examples season process. in Rob. They've Sure, the of ties an -- that talked I one open had is open has they're probably expansion publicly recently. expansion Enbridge

in as both active of discussions we of those sort and both So shippers them X are speak. projects are with hand-in-glove,

They're of real. around real, being active conversations with clearly but this -- There's very reliability topic, in around and long-term incremental an as that lot topic area. speak. a very demand they're this drama they're we're obviously So around There's need political we active. shippers they're the in

Got Haynesville. David. case stronger-credit then volume how it. having region, And second acreage about base Appreciate on outlook maybe just in it, the your some growth on a consolidation you your talk outside customer? plan of that Can been in my question, affects assumptions and it

that that's I we side-by-side. can the you and and entity is merger of think, it at acreage great industrial mean, rationale the the I Yes. new engineering question until acreage just look that kind The the around overlap, map, a you -- when see that at merger. looking look acreage at the emerges closes

enable going has think I them, gas. quantity of it's same this the it said to laterals, drill and release capital think deployment to them longer I will more enable Chesapeake to publicly, efficient

I entity, dedications. dedications sit be have, maybe it's with as where it. So to clarity may opportunity, incremental the to on an a be island a of there'll be. there's SWN more the down the but within we once maybe those what I there having going to opportunity pockets the opportunities has that post-merger think on really acreage, good suspect new that Chesapeake at the look for question Look that merger should label us happens, at dedication, be

transaction for significant bullish. credit is in DTM. our I from certainly And We're us. think a one The exposure, journey a of for investment it's key grade items to counterparty uplift the

Seaport Next, we'll Sunil at Sibal Global. to go

XXXX. your question first targeted year-end on So by investment-grade ratings

is just curious, there? for are XXXX there them basically out milestones executing So 'XX was the have that specific that just I laid guidance? that you Or for get help any agencies on rating it

reports are there that agencies when them made us, on say have And that published the the couple read I'd of in Sunil, think things they've clear. reports. very I allude they the to a you

be currently all positive achieving Finch. on So Southwestern at first was I'd would which investment item grade, we're the for original achieve outlook investment Southwestern year. say to grade this They mentioned plan the

have So agencies stated merger entity accelerant would new is an the I that the investment that. The already grade. think to publicly merged be

to So accelerates that key that the It's we from the a move to are grade. one mentioned of our grade. agencies investment where I catalyst have terms think investment that's measures of in journey our

is to with And that. the the have then down we alluded to since the expecting. other And doing the rating plan in be And to an spring we'll on what we'll just sit share continue the is a have execute item to, outcomes checkup, that definitely agencies opportunity the detail them were disciplined our again that we're that continuing which we plans and to we they you company. of spun deliver to execution and demonstrating that do annual

year. achieve to we're think the later positioned that in I well So

curious backlog you you on if and out talk then pruning in it. which bit up backlog the laid backlog about you to could might or go some that And little projects, that lead as either a some I billion puts the along. Got the $X.X takes might pull was on

the say one backlog. has evolving That's Yes. question. the area been another that I'd in good

Pipeline So the projects cycle. stages I'd lots core of Gathering, in of and our say development areas, X different

we a few. you a few are we're -- service, Some -- can under some see brought we're in on construction

these stage that strong, are we've I'll call to and these we every fundamentals development out are got late-stage Some one expansions. in and what the projects detailed are earlier But some of further around of line sight development.

So that's business current I'll what platforms. core call our

out laid storage our project. that's in Louisiana one growing The is carbon lot other transition, We and segment. emerging are deck around and opportunities that are one of energy capture But emerging. a detail in emerging, that the the that there

lot capital intuition that other grows over there if any reallocation the quicker or happening of opportunities. laid say on be the incentives the a I'd tax segments. verge really my really out been energy quicker more attracts it's investment time, would transition to the of with than It forward segment is that some just feels especially stepping quickly, of some like of accelerants that have are these

clarification in CCS of that might one you just Or set on it as that? is for more So success widening of you? CCS be opportunity that. you beyond kind mean achieve Do

Yes.

beyond I just Louisiana the think CCS. more there's

demonstrating CCS think very a capable us, project CCS Louisiana is in execute we market for I to that a disciplined the to are way.

fuels out to X low-carbon over the And carbon really look and laid as business space is very interesting real taking we for growing out capture really think the parties that's next third I quickly. expertise years. had a which storage our third-party is I and CCS a growing us

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

everyone Well, thank everyone and your next forward Friday, for thank look very this meeting interest appreciate much you conference. you Have investors, very in the We time enjoy morning, greatly DTM. person weekend. much I your your and at great to on a as and for

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

You may now disconnect.