Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- DT Midstream Inc (DTM, Financial) increased its 2024 adjusted EBITDA guidance range to $950 million to $980 million, reflecting strong year-to-date performance.
- The company announced a final investment decision on the LEAP Phase 4 expansion, which will increase capacity by 200 million cubic feet per day, supported by long-term contracts.
- DT Midstream Inc (DTM) was upgraded to investment grade by Fitch Ratings, achieving a strategic goal set since the company's spin-off in 2021.
- The company is expanding its Stonewall system to connect with the Mountain Valley Pipeline, increasing capacity by 100 million cubic feet per day.
- DT Midstream Inc (DTM) is actively pursuing new power and data center opportunities, indicating potential future growth in these areas.
Negative Points
- The company's gathering segment results decreased by $10 million compared to the second quarter, due to non-repeating favorable one-time items.
- Northeast gathering volumes were lower, primarily due to reduced volumes on the Appalachia Gathering system.
- The carbon capture and sequestration project in Louisiana is awaiting regulatory clarification, delaying the final investment decision to the first half of 2025.
- The company faces choppiness in the short-term natural gas market, although its portfolio remains durable.
- DT Midstream Inc (DTM) has not yet reached commercial agreements for its potential data center projects, indicating ongoing uncertainty in this area.
Q & A Highlights
Q: Can you provide insights on the guidance increase for this year and any forward-looking thoughts for 2025 and 2026?
A: David Slater, President and CEO, explained that the portfolio has been durable through the commodity cycle, allowing for increased guidance as they approach Q4. While they will wait for more information from core customers before adjusting 2025 guidance, the LEAP Phase 4 announcement signals renewed interest in growing volumes, particularly in Haynesville, due to anticipated incremental demand.
Q: What are your thoughts on Louisiana connectivity to Henry Hub and potential opportunities for DTM?
A: David Slater emphasized the importance of their Haynesville network's interconnectivity, making it the most interconnected system in the region. This robust downstream connectivity allows customers to capitalize on market opportunities, such as industrial and LNG markets along the Gulf Coast.
Q: Can you provide an update on the potential data center projects and their regulatory implications?
A: David Slater noted that discussions on data center projects are progressing, with speed being a critical factor in site development. Favorable regulatory treatment for intrastate development is a key consideration, and while no commercial agreements are finalized, the opportunities are moving in the right direction.
Q: What is the outlook for Northeast volumes, and what are your expectations for Q4?
A: David Slater acknowledged a softer profile for the year, with volumes dipping in both basins. However, he expects a modest recovery in Q4 in both the north and south, with a more constructive market anticipated for 2025.
Q: How does the Supreme Court's decision on EPA 111(d) impact discussions with data center customers?
A: David Slater stated that while the decision is being monitored, it has not yet driven behavior changes or affected the velocity of discussions regarding data center opportunities. Customers are aware of the need for potential carbon capture solutions but are waiting for further legal developments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
