Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- DT Midstream Inc (DTM, Financial) reaffirmed its 2024 adjusted EBITDA guidance range and 2025 early outlook range, indicating confidence in its financial performance.
- The company successfully placed its Phase three expansion into service early and on budget, increasing capacity and expanding its Haynesville system.
- DT Midstream Inc (DTM) executed agreements to connect three producers in East Texas, further diversifying supply access.
- The carbon capture and sequestration project in Louisiana is progressing as planned, with positive third-party evaluation results.
- The company announced a new clean fuels gathering project, expected to provide significant tax credit and environmental benefits.
Negative Points
- Gathering volumes were down in both the Haynesville and Northeast regions compared to the prior quarter, impacting overall performance.
- The company experienced lower seasonal revenues from its pipeline joint ventures.
- There was a planned maintenance outage at one of the Haynesville treating plants, affecting gathering segment results.
- The short-term natural gas market remains choppy and sensitive to weather forecasts, creating uncertainty.
- DT Midstream Inc (DTM) is taking a cautious approach to the second half of the year due to the current price environment.
Q & A Highlights
Q: Can you provide more details on the potential projects related to data center opportunities?
A: We are excited about the number of opportunities driven by incremental power demand, predominantly from data center development. While we are under confidentiality agreements, these projects are mostly lateral opportunities into these locations, with potential incremental opportunities on the main lines. We are confident in our commercial team's ability to commercialize these opportunities.
Q: Are the new clean fuels gathering projects located near your existing footprint?
A: Yes, the new clean fuels gathering project is located in and around our existing footprint. This project involves capturing fugitive coal bed methane, which has significant environmental benefits. We will provide more details as we finalize the development plan.
Q: Are you seeing any changes in producer activity levels in the Haynesville region?
A: We are taking a cautious approach due to the current choppy short-term market. While we see early signals of incremental demand, we expect a more constructive pricing environment in 2025 and beyond. We are confident in our full-year guidance and expect a rebound in the fourth quarter.
Q: Can you provide an update on the Interconnect Project into Mountain Valley Pipeline?
A: The project, anchored by an anchor customer, has opened up opportunities for other shippers on our Appalachia network. We are in active dialogue with these shippers, and if they participate, it could result in an upsizing of the project.
Q: How much of your remaining EBITDA guidance range is sensitive to gathering volumes?
A: We have significant minimum volume commitments (MVCs) that protect the downside in our gathering segment. The incremental revenue for the second half of the year will likely be price-driven. We are confident in hitting our guidance but are taking a cautious approach due to the current price environment.
Q: Are you seeing reduced demand for incremental LEAP expansions due to competing projects?
A: Competing projects are expected to be in service by late 2025. We aim to capture another wave of expansion before these projects are completed. The three new producers accessing our system recognize our advantage, and we are confident in commercializing our Phase Four LEAP expansion.
Q: How are you viewing M&A as a way to boost growth?
A: Our long-term growth guide of 5-7% does not require M&A to achieve. M&A is viewed as an option to accelerate growth if opportunities make economic sense. We are confident in our ability to hit our growth rate with purely organic activities.
Q: Can you provide more details on the clean fuels opportunity?
A: The demand for clean fuels is growing rapidly, and we see this as an emerging segment with significant opportunities. This particular project fits well within our geography and skill set. We will provide more details as we refine the scope and commercialize this opportunity.
Q: How does achieving an investment-grade credit rating benefit DTM?
A: Achieving an investment-grade credit rating will reduce financing costs, reclaim collateral, open up our portfolio to investment-grade-focused investors, and provide a positive halo in commercial negotiations. We have set our capital structure to achieve this cleanly when it occurs.
Q: What are your latest thoughts on gas storage along the US Gulf Coast?
A: There is a clear need for more storage to support LNG expansion. We are actively looking at greenfield opportunities and partnering with customers to develop storage solutions. The market consensus is that more storage is needed, and we are working to find the right projects to move forward.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
