Q1 2024 DT Midstream Inc Earnings Call
Audra: 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 first quarter 2024 earnings conference call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise.
Good morning, My name is Andre and I will be your conference operator today.
Andre: At this time I would like to welcome everyone to the D. T. Midstream first quarter 2024 earnings Conference call. Today's conference is being recorded all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press the star key followed by the number one on your tower.
Audra: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. At this time, I'd like to turn the conference over to Todd Lohrmann, Director of Investor Relations. Please go ahead.
Andre: Phone keypad, if you would like to withdraw your question Press Star one again.
Andre: At this time I'd like to turn the conference over to 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 Statement on page 2 of the presentation, including the reference to forward-looking states. Our presentation also includes references to non-GAAP financial measures; please refer to the Reconciliations to GAAP contained in the appendix. Joining me this morning are David Slater, President and CEO, and Jeff Jewell, Executive Vice President and CFO. I'll now turn it over to David to start the call.
Todd Lohrmann: Good morning.
Andre: Everyone.
Todd Lohrmann: Before we get started I would like to remind you to read the safe Harbor statement on page two of the presentation.
Todd Lohrmann: <unk> the reference to forward looking statements.
Todd Lohrmann: Our presentation also includes references to non-GAAP financial measures.
Todd Lohrmann: Please refer to the reconciliations to GAAP contained in the appendix.
Todd Lohrmann: Joining me this morning are David Slater, President and CEO, and Jeff Jewel Executive Vice President and CFO.
David J. Slater: I'll now turn it over to David to start the call.
David J. Slater: Thanks, Todd, and good morning, everybody, and thank you for joining us. During today's call, I'll touch on our financial results, provide an update on the latest commercial activity, and construction progress on our growth project. I'll then close with some commentary on the current market fundamentals before turning it over to Jeff to review our financial performance and outlook. So, with that, we're off to a great start in 2024, giving us confidence in our full-year plan. We're reaffirming our 2024 Adjusted EBITDA Guidance Range and our 2025 Adjusted EBITDA Early Outlook Range.
David J. Slater: Thanks, Todd and good morning, everybody and thank you for joining.
David J. Slater: During today's call I'll touch on our financial results.
David J. Slater: Provide an update on the latest commercial activity and construction progress on our growth projects.
Jeffrey A. Jewell: I'll, then close with some commentary on the current market fundamentals before turning it over to Jeff to review, our financial performance and outlook.
Jeffrey A. Jewell: So with that we're off to a great start in 2024, giving us confidence in our full year plan. We are reaffirming our 2024 adjusted EBITDA guidance range and our 2025 adjusted EBITDA early outlook range.
David J. Slater: Our construction and commercial teams continue to make great progress on our backlog of organic growth projects, setting the company up for continued success. This morning, we are excited to announce a new expansion on our Stonewall system, which includes additional mainline capacity, incremental compression, and a new interconnect with Mountain Valley Pipeline. This project will provide a new production outlet to the Mid-Atlantic market, which we expect will become a fast-growing region with new data centers and AI-powered demand load emerging.
Jeffrey A. Jewell: Our construction and commercial teams continue to make great progress on our backlog of organic growth projects.
Jeffrey A. Jewell: Setting the company up for continued success.
Jeffrey A. Jewell: This morning, we were excited to announce a new expansion on our Stonewall system, which includes additional mainline capacity incremental compression and a new interconnect with mountain Valley pipeline.
Jeffrey A. Jewell: This project will provide a new production outlet to the mid Atlantic market.
Jeffrey A. Jewell: Which we expect will become a fast growing region with new data center and AI powered demand load emerging.
David J. Slater: The project is anchored by a 15-year agreement with a large investment grade producer, which includes an acreage dedication and a minimum volume commitment. In conjunction with our new Stonewall development, we have also upsized our Appalachia Gathering System Phase 3 expansion. The capital investment to support both these projects was already contemplated as highly probable as part of our capital guidance, and our capital plan for the year remains within our free cash flow after the dividend.
Jeffrey A. Jewell: The project is anchored by a 15 year agreement.
Jeffrey A. Jewell: With a large investment grade producer, which includes an acreage dedication and a minimum volume commitment.
Jeffrey A. Jewell: In conjunction with our new Stonewall development, we have also upsized, our Appalachia gathering system phase III expansion.
Jeffrey A. Jewell: The capital investment to support both these projects was already contemplated as highly probable as part of our capital guidance.
Jeffrey A. Jewell: And our capital plan for the year remains within our free cash flow after dividends.
David J. Slater: Staying in Appalachia, initial volumes began flowing on our Ohio Utica system in March. As a reminder, we expect production volume to ramp up over an 18 to 24 month period as our customer executes on this development plan and delineates this emerging play, and our revenues are fully protected under a take or pay contract structure. The Liquids Rich Ohio Utica resource play is highly economical in today's price environment and further diversifies our gathering segment.
Jeffrey A. Jewell: Staying in Appalachia initial volumes began flowing on our Ohio Utica system in March.
Jeffrey A. Jewell: As a reminder, we expect production volume to ramp over an 18 to 24 months period as our customer executes on its development plan and eliminates this emerging play.
Jeffrey A. Jewell: And our revenues are fully protected under our take or pay contract structure.
Jeffrey A. Jewell: The liquids rich, Ohio, Utica resource play is highly economic at today's price environment and further diversifies our gathering segment.
David J. Slater: We expect this emerging basin to continue to grow and are observing increased drilling activity from both our anchor customer as well as other producers in the region. Turning from Appalachia to the Haynesville, we are pleased to announce the completion of our new interconnect between our Haynesville system and the Gillis Access project. This strategic interconnect will provide greater optionality to LEAP customers, directly connecting the system to approximately six BCF a day of expected new LNG export demand growth and further strengthening our competitive position.
Jeffrey A. Jewell: We expect this emerging basin to continue to grow and are observing increased drilling activity from both our anchor customer as well as other producers in the region.
Jeffrey A. Jewell: Okay.
Jeffrey A. Jewell: Turning from Appalachia to the Haynesville, we are pleased to announce the completion of our new interconnect between our Haynesville system and the <unk> access project.
Jeffrey A. Jewell: This strategic interconnect will provide greater optionality to lead customers directly connecting the system to approximately six Bcf a day of expected new LNG export demand growth and further strengthening our competitive position.
David J. Slater: Our Blue Union-Carthage area connection was also completed in mid-April, offering additional supply access, increasing our ability to further diversify customers on our Hainesville system. Our LEAP Phase 3 expansion remains ahead of schedule and on budget. And once completed, we'll bring the system's total capacity to 1.9 BCF a day. We remain in active discussions for LEAP Phase 4 expansion and are well positioned in the basin to grow and have proven our ability to serve our customers in a timely and efficient manner.
Jeffrey A. Jewell: Our Blue Union Carthage area connection was also completed in mid April.
Jeffrey A. Jewell: <unk> additional supply access increasing our ability to further diversify customers on our haynesville system.
Jeffrey A. Jewell: Our lead phase III expansion remains ahead of schedule and on budget.
Jeffrey A. Jewell: And once completed will bring the system's total capacity to one nine Bcf a day.
Jeffrey A. Jewell: We remain in active discussions for leap phase four expansion.
Jeffrey A. Jewell: And are well positioned in the basin to grow and have proven our ability to serve our customers in a timely and efficient manner.
David J. Slater: While Hainesville producers have acted rationally to respond to short-term prices, there is strong recognition of the coming demand starting next year and the long-term need for production access to the Gulf Coast market. Turning to our energy transition platform and our carbon capture and sequestration project in Louisiana. In the first quarter, we successfully drilled our Class 5 test well. Completing the Class V test wall was an important milestone in the development process as we continue to de-risk the project with minimal capital expenditure. Early results indicate that the sequestration site meets or exceeds our initial view of the geology, and we remain on track for our second half 2024 FID.
Jeffrey A. Jewell: While haynesville producers have acted rationally to respond to short term prices.
Jeffrey A. Jewell: There is strong recognition of the coming demand starting next year and the long term need for production access to the Gulf Coast markets.
Jeffrey A. Jewell: Turning to our energy transmission platform in our carbon capture and sequestration project in Louisiana and.
Jeffrey A. Jewell: In the first quarter, we successfully drilled our class five tests well.
Jeffrey A. Jewell: Completing the class five tests, while it was an important milestone in the development process as we continue to Derisk the project with minimal capital spend earlier.
Jeffrey A. Jewell: Early results indicate that the sequestration site meets or exceeds our initial view of the geology.
Jeffrey A. Jewell: And we remain on track for a second half 2024.
Jeffrey A. Jewell: Sure.
Jeffrey A. Jewell: Following the recent EPA announcement of new regulations, mandating, a 90% reduction or capture of Cotwo emissions from new natural gas plants, we are poised to capitalize on this rapidly expanding market for carbon capture and sequestration.
David J. Slater: Mandating a 90% reduction or capture of CO2 emissions from new natural gas plants, we are poised to capitalize on this rapidly expanding market for carbon capture and sequestration. Our Louisiana carbon capture and sequestration projects methodical approach underscores our proficiency in development and execution, and establishes us as a credible first mover capable of providing complete source-to-sink carbon capture solutions.
Jeffrey A. Jewell: Louisiana carbon capture and sequestration projects and methodical approach underscores our proficiency in development and execution and.
Jeffrey A. Jewell: And establishes us as incredible first mover capable of providing complete source to sink carbon capture solutions.
David J. Slater: Finally, I want to take a moment to address the natural gas market fundamentals and producer activity across our footprint. As we described on our year-end call, our guidance for 2024 was based on producers' plans that reflected the gas price environment at the time, which was impacted by warm winter weather. The activity that we are observing to this point remains in line with our plan for the year.
Jeffrey A. Jewell: Finally, I want to take a moment to address the natural gas market fundamentals and producer activity across our footprint.
Jeffrey A. Jewell: As we described on our yearend call our guidance for 2024 was based on a producer's plans that reflected the gas price environment at the time, which was impacted by warm winter weather.
Jeffrey A. Jewell: The activity that we are observing to this point remains in line with our plan for the year in the Haynesville drilling has commenced on 90% of the wells that we've included in our 2024 plant.
David J. Slater: In Haynesville, drilling has begun on 90% of the wells that we've included in our 2024 plan. And in Appalachia, drilling has begun on nearly 60% of the wells included in our 2024 plan. Looking ahead, gas prices in 2025 and 2026 remain in the $3.50 to $4.00 range, which we believe reflects the new LNG demand and will support production growth on our assets. This has been closed in on 2025, with potential for an earlier response if hot summer weather increases a call on natural gas for power demand.
Jeffrey A. Jewell: And in Appalachia drilling has commenced on nearly 60% of the wells included in our 2024 plan.
Jeffrey A. Jewell: Looking ahead gas prices and 25 and 2026 remain in the $3 50 to $4 range.
Jeffrey A. Jewell: Which we believe reflects the new LNG demand and will support production growth on our assets has been closed in on 2025.
Jeffrey A. Jewell: With potential for an earlier response of hot summer weather increases a call on natural gas for power demand.
David J. Slater: Like the rest of the sector, we're closely monitoring the developments around expanding demand to support data center and AI growth. While it's still early days, it's an exciting development, as emerging power demand is expected to increase the call on natural gas for fire generation, supporting the need for natural gas and natural gas infrastructure for decades to come. Additionally, many of our assets serve the regions that are expected to see this power demand growth fueled by data centers and AI deployment. I'll now pass it over to Jeff to walk you through our quarterly financials and outlook.
Jeffrey A. Jewell: Like the rest of the sector, we're closely monitoring the developments around expanding the band to support data center and AI growth.
Jeffrey A. Jewell: While it's still early days, it's an exciting development.
Jeffrey A. Jewell: As emerging power demand is expected to increase the call on natural gas fired generation.
Jeffrey A. Jewell: Supporting the need for natural gas and natural gas infrastructure for decades to come.
Jeffrey A. Jewell: Additionally, many of our assets are the regions that are expected to see this power demand growth fueled by data centers and AI deployment.
Jeffrey A. Jewell: I will now pass it over to Jeff.
Jeffrey A. Jewell: To walk you through our quarterly financials and outlook.
Jeffrey A. Jewell: Thanks, David, and good morning, everyone. In the first quarter, we delivered overall adjusted EBITDA of $245 million, representing a $6 million increase from the prior quarter. Our pipeline segment results were in line with the fourth quarter 2023, reflecting higher firm revenue on leap offsetting lower short-term revenue. Gathering segment results were $6 million greater than the fourth quarter 2023, reflecting lower overall O&M and a ramp up in contribution from the Ohio Utica Gathering System. Operationally, total gathering volumes across both the Haynesville and Northeast averaged approximately 3.1 billion cubic feet per day in the first quarter, in line with the prior quarter.
Jeffrey A. Jewell: Thanks, David and good morning, everyone in.
Jeffrey A. Jewell: In the first quarter, we delivered overall adjusted EBITDA of $245 million.
Jeffrey A. Jewell: Representing a 6 million increase from the prior quarter.
Jeffrey A. Jewell: Our pipeline segment results were in line with the fourth quarter 2023.
Jeffrey A. Jewell: Reflecting the higher firm revenue on leap offset by lower short term revenue.
Jeffrey A. Jewell: Gathering segment results were 6 million greater than the fourth quarter 2023.
Jeffrey A. Jewell: Reflecting lower overall, O&M and a ramp up in contribution from the Ohio Utica gathering system.
Jeffrey A. Jewell: Operationally total gathering volumes across both the Haynesville and northeast averaged approximately $3 1 billion cubic feet per day in the first quarter in line with the prior quarter.
Jeffrey A. Jewell: Our financial plan and 2024 guidance assume that gathering volumes and adjusted EBITDA will be lower in the second and third quarters due to planned maintenance in Haynesville, as well as the expected timing of producer activity. Volumes in EBITDA are expected to increase in the fourth quarter, driven by incremental contributions from our new projects and a more constructive market environment for producers. As David mentioned, we are confident in our full-year outlook and reaffirming our 2024 adjusted EBITDA guidance range and our 2025 Adjusted EBITDA Early Outlook, reflecting the strong positioning of our assets.
Jeffrey A. Jewell: Our financial plan in 2020 for guidance.
Jeffrey A. Jewell: Assume that gathering volumes and adjusted EBITDA will be lower in the second and third quarters.
Jeffrey A. Jewell: Due to planned maintenance in the Haynesville.
Jeffrey A. Jewell: As well as expected timing of producer activity.
Jeffrey A. Jewell: Volumes and EBITDA are expected to increase in the fourth quarter.
Jeffrey A. Jewell: Driven by incremental contributions from our new projects and a more constructive market environment or producers.
Jeffrey A. Jewell: As David mentioned, we are confident in our full year outlook and reaffirming our 2024 adjusted EBIT guidance range.
Jeffrey A. Jewell: And our 2025 adjusted EBITDA early outlook, reflecting the strong positioning of our assets.
Jeffrey A. Jewell: We've increased our committed capital in 2024 and 2025 to reflect new organic projects reaching FID, with $265 to $295 million committed in 2024 and approximately $140 million committed in 2025. This increase is reflective of projects from our prior BRAC log that were already contemplated in our guidance, and we will continue to expect to spend within free cash flow in 2024 and 2025. If incremental growth investments do not reach FID in 2024 or 2025, we will evaluate the most accretive options for the excess cash flow, with our current view that it will likely be deployed towards debt reduction.
Jeffrey A. Jewell: We've increased our committed capital in 2024, and 2025 to reflect new organic projects, reaching FID.
Jeffrey A. Jewell: With $265 million to $295 million committed in 2024 and.
Jeffrey A. Jewell: And approximately $140 million committed in 2025.
Jeffrey A. Jewell: This increase is reflective of projects from our prior backlog there were already contemplated in our guidance.
Jeffrey A. Jewell: And we will continue to expect to spend within free cash flow in 2024 and 2025.
Speaker Change: Yes, if incremental growth investments do not reach <unk> D. In.
Speaker Change: In 2024 or 2025, we will evaluate the most accretive options for the excess cash flow.
Speaker Change: With our current view that it will likely be deployed towards debt reduction.
Jeffrey A. Jewell: We are committed to preserving the strength of our balance sheet and achieving an investment-grade credit rating and are looking forward to our annual meetings with the rating agencies in early May. Finally, today we also announce the declaration of our first quarter dividend of 73.5 cents per share, unchanged from the prior quarter. We remain committed to growing the dividend 5% to 7% per year in line with our long-term adjusted EBITDA growth. I'll now pass it back over to David for his closing remarks. Thanks.
Speaker Change: We are committed to preserving the strength of our balance sheet and achieving an investment grade credit rating.
Speaker Change: And are looking forward to our annual meetings with the rating agencies in early may.
Speaker Change: Finally today, we also announced the declaration of our first quarter dividend of <unk> 73, and a half cent per share unchanged from the prior quarter.
Speaker Change: We remain committed to growing the dividend, 5% to 7% per year in line with our long term adjusted EBITDA growth.
Speaker Change: I'll now pass it back over to David for closing remarks.
David J. Slater: Thanks, Jeff.
David J. Slater: So, in summary, we are very pleased with the start of the year and are feeling confident in our full-year guidance for 2024 and early outlook range for 2025. Our short-cycle growth investments continue to track on budget and on schedule, with some projects running ahead of schedule, resulting in meaningful growth contributions in 2024 and 2025. Our approach to capital allocation remains thoughtful and disciplined, with our focus on spending within cash flow over the balance of our five-year plan and achieving an investment-grade credit rating.
David J. Slater: So in summary, we're very pleased with the start of the year and are feeling confident in our full year guidance for 2024.
David J. Slater: Early outlook range for 2025.
David J. Slater: Our short cycle growth investments continue to track on budget and on schedule with some projects running ahead of schedule, resulting in meaningful growth contributions in 2004 and 2025.
David J. Slater: Our approach to capital allocation remained thoughtful and disciplined with our focus on spending within cash flow over the balance of our five year plan and achieving an investment grade credit rating.
David J. Slater: As we look across the portfolio, we continue to see significant growth, with our integrated and strategically located asset footprint, BuildingTorque, and our capital investment program laying a strong foundation to build upon.
David J. Slater: As we look across our portfolio, we continue to see significant growth opportunity, where they're integrated and strategically located asset footprint building torque and our capital investment program laying a strong foundation to build upon.
Speaker Change: We can now open up the line for questions.
Audra: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. We'll go first to Jeremy Tonet at J.P. Morgan.
Speaker Change: Thank you we will now begin the question and answer session. If you have dialed in I would like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question simply press Star one again.
David J. Slater: We'll go first to Jeremy Tonet at Jpmorgan.
Jeremy Bryan Tonet: Hi, good morning.
Jeremy Bryan Tonet: Just wanted to kind of start off with some of the commentary you laid out with regard to AI and data centers and how that could be beneficial potentially for DTM, and specifically as it relates to Nexus. Seems like there's a good amount of latent capacity there, so just wondering if you could help us think through when this might kind of, you know, come to fruition, those types of opportunities.
Jeremy Bryan Tonet: Morning, Jeremy.
Jeremy Bryan Tonet: Just wanted to kind of start off with some of the commentary you laid out with regards to AI and data centers and how that could be beneficial potentially for <unk>, specifically as it relates to next it seems like there's a good amount of latent capacity. There. So just wondering if you could help us think through where.
Jeremy Bryan Tonet: And as Mike kind of.
Jeremy Bryan Tonet: Come to fruition those types of opportunities.
David J. Slater: Jeremy, thanks for that question. And yeah, we're, yes, our high-level view is that the market right now is under forecasting power demand, especially in that Midwest and Mid-Atlantic area. When you look at where a lot of the investments for data centers are happening, they're happening in those geographies. And we've been seeing a lot of inbound inquiries. As you alluded to on our network for incremental capacity that's emerging here in the next couple of years, these centers are popping up everywhere.
Jeremy Bryan Tonet: Jeremy Thanks for that question and yes, we are.
Speaker Change: Yes, our high level view is that.
Jeremy Bryan Tonet: Market right now is under forecasting power demand.
Jeremy Bryan Tonet: Especially in that mid West mid Atlantic area. When you look at where a lot of the investments for data centers or are happening. They are happening in those geographies, we've been seeing a lot of inbound inquiries.
Jeremy Bryan Tonet: As you alluded to on our network for incremental capacity that's emerging here in the next couple of years. These centers are popping up everywhere.
Jeremy Bryan Tonet: And.
David J. Slater: And it's a very short cycle turnaround in terms of when they when they announce a center and when that demand shows up on the grid. And in terms of incremental generation to supply that, it's baseload demand, so it's going to fall upon natural gas fire generation predominantly to serve that incremental load. So we're very excited about it.
Jeremy Bryan Tonet: It's a very short cycle turnaround in terms of when they when they announced a center and when that demand shows up on the grid.
Jeremy Bryan Tonet: And in terms of incremental generation to supply that its baseload demand. So it's going to fall upon.
Jeremy Bryan Tonet: Natural gas fire generation predominantly to serve that incremental load.
Jeremy Bryan Tonet: So we're very excited about it I think it's going to also drive some incremental generation.
David J. Slater: I think it's going to also drive some incremental generation in these regions. A lot of that has already been announced in the Mid-Atlantic region and Southeast. I expect more of that to come in the Midwest. So, yeah, we're seeing the early signals of those demands and those companies that are looking to make those investments, looking for incremental fuel supply to those locations. So we're optimistic, you know, again, I feel like the market is underestimating this demand, and as that becomes more visible across the segments, it's going to be very favorable.
Jeremy Bryan Tonet: In these regions.
Jeremy Bryan Tonet: There's a lot of that's been announced already in the mid Atlantic region and southeast.
Jeremy Bryan Tonet: I expect more of that is coming in the Midwest.
Jeremy Bryan Tonet: So yes, so we're seeing the early signals of those demands and those.
Jeremy Bryan Tonet: Companies that are looking to make those investments looking for incremental fuel.
Jeremy Bryan Tonet: Supply to those locations so we're optimistic.
Jeremy Bryan Tonet: Again, I feel like the market is under forecasted this demand.
Jeremy Bryan Tonet: And as that becomes more visible.
Jeremy Bryan Tonet: Across the segments.
Jeremy Bryan Tonet: It's going to be very favorable with strong fundamentals around nexus around vector.
David J. Slater: It's strong fundamentals around Nexus, around Vector, you know, the announcement we made this morning on Stonewall for the interconnect with Mountain Valley. I think that's, you know, a derivative of what's happening in the Southeast Mid-Atlantic region, where people are seeing a demand for natural gas a couple of years out that's going to significantly expand. So we're bullish, it's early days, but we're definitely seeing those fundamental signals coming across the dashboard right now.
Jeremy Bryan Tonet: Announcement, we made this morning on install all for the interconnect with Mountain Valley.
Jeremy Bryan Tonet: Thats.
Jeremy Bryan Tonet: At derivative of what's happening in the southeast mid Atlantic region.
Jeremy Bryan Tonet: Other people are seeing a call on natural gas a couple of years, so that's going to significantly expand.
Jeremy Bryan Tonet: So we're we're bullish it's early days, but we're definitely seeing those.
Jeremy Bryan Tonet: Fundamental signals coming across the dashboard right now.
Speaker Change: Got it that's very helpful. Thank you for that and maybe just pivoting over towards the leap.
Jeremy Bryan Tonet: Got it. That's very helpful. Thank you for that.
Jeremy Bryan Tonet: And maybe just pivoting over towards the LEAP system, just wondering if you could help us understand a bit better Southern Louisiana logistics dynamics. And once the gas gets to Gillis, where does it go from there? Can it get to the LNG export facilities, or are there future, I guess, expansions needed to connect there? Just wondering how you're seeing that come together and demand for LEAP expansions.
Speaker Change: System.
Speaker Change: Just wondering if you could help us understand a bit better southern Louisiana logistics dynamics in once the gas gets the gillis.
Speaker Change: Where does it go from there can it get to the LNG export facilities or are there future.
Speaker Change: The expansion is needed to connect there just wondering how you're seeing that come together in demand for leap expansion overall.
David J. Slater: Yeah, I think the best illustration of that, Jeremy, is the Gillis Access Project. So that's in service and has been flowing gas now for a couple months. That opens up an incremental 6 PCF a day of demand growth that LEAP will have the opportunity to serve. So that's some new infrastructure that's being put in place to directly serve the new LNG demand that's coming. But, you know, LEAP is very well interconnected at Gillis with numerous pathways into the expanding LNG terminals.
Speaker Change: Yes, I think the best illustration of that Jeremy is the Gillis access project. So thats in service and been flowing gas now for a couple of months.
Speaker Change: That opens up an incremental six bcf a day of demand growth.
Speaker Change: Yeah.
Speaker Change: Leif will have the opportunity to serve so that's some new infrastructure, that's being put in place to directly serve new LNG demand is coming.
Speaker Change: But.
Speaker Change: Leap is very well interconnected.
Speaker Change: Gillis with with numerous.
Speaker Change: Pathways into the expanding LNG terminals so.
David J. Slater: So it's complicated down there. There's a lot of pipe, you know, the last mile of pipe. But that's why the Gillis Access Interconnect was so strategic for us because it's one of those, you know, what I'll call last mile projects that are significantly expanding the ability to get incremental gas to these facilities.
Speaker Change: It's a complicated down there there is a lot of pipe.
Speaker Change: Last mile of fiber.
Speaker Change: But that's why they give us access interconnect was so strategic for US is that it's it's one of those what I'll call last mile projects that.
Speaker Change: Significantly expanding the ability to get incremental gas to these facilities.
David J. Slater: We've got it. That's helpful there. Just a quick last one, if I could. Haynesville activity is very much in focus, and it looks like Haynesville might be down 10 percent in the second quarter versus the first quarter here. Just wondering if you could walk us through, I guess, you know, if that pattern holds, what type of impact that has on...
Speaker Change: Got it that's helpful. Just a quick last one if I could the haynesville activity very much focused and it looks like haynesville might be down 10% second quarter versus first quarter. Here. Just wondering if you could walk us through I guess, if that pattern holds what type of impact that has on TTM.
David J. Slater: Yeah, another good question, and I may have Jeff sharing the answer here, but I'll just start with this: the actions that our producers are taking are in line with our full-year plan, and we expected that there would be some delays in completion activity in Haynesville. A lot of producers in the public have said that, and Jeff, maybe you can describe how we're thinking about that on a high level in our 24 plan.
Speaker Change: Yes, another good question.
Speaker Change: And I may have Jeff.
Jeffrey A. Jewell: Sure on the answer here, but I'll just start with.
Jeffrey A. Jewell: The actions that our producers are taking are in line with our full year plan.
Speaker Change: We expected that there would be some delays in completion activity in the Haynesville a lot of producers have publicly said that Jeff maybe you can describe how how we're thinking about that at a high level on our 124 plan, yes, sure and good morning, Jeremy Yes, So Jeremy we positioned ourself.
David J. Slater: Yeah, sure, and good morning, Jeremy. Yeah, so Jeremy, the way we positioned ourselves for 2024 is we took the latest information from our producers, and then we also built in a little bit of extra softness as a part of the 2024 guidance that we've provided. And then, as part of my prepared remarks that we did today, we sort of described that the second and third quarters are going to be lower than what we are.
Jeffrey A. Jewell: For 2024 is we took the latest information from our from our producers.
Jeffrey A. Jewell: And then we also built in a little bit of extra softness as a part of the 2024 guidance that we've provided.
Jeffrey A. Jewell: And then as part of my prepared remarks that we did today, we sort of described it the second and third quarter.
Jeffrey A. Jewell: To be lower than what we are.
Jeffrey A. Jewell: We're seeing here in the first quarter.
Jeffrey A. Jewell: And that would be towards the end of the year there in the fourth quarter is when we were expecting.
Jeffrey A. Jewell: <unk> volume to start picking up in the fourth quarter positioning themselves into the 10 to 25.
Jeffrey A. Jewell: The key point, though is we're still very comfortable with.
Jeremy Bryan Tonet: Got it. Very helpful. I'll leave it there. Thank you.
Jeffrey A. Jewell: With our 2024 guidance range that we provided.
Speaker Change: Got it very helpful. I'll leave it there thank you.
Jeffrey A. Jewell: Thanks.
Jeffrey A. Jewell: We'll move next to Olivia Olivia <unk> at Goldman Sachs.
Olivia Helferdy: We'll move next to Olivia Helferdy at Goldman Sachs.
Olivia Helferdy: Hi, good morning. Thank you for taking my question. Maybe we could go back to LEAP for a minute.
Olivia: Hi, Good morning. Thank you for taking my question and maybe we could go back to Lee for a minute phase III has been tracking ahead of schedule for the past couple of quarters can you walk us through how far ahead of schedule of the project is tracking and maybe what you would need to see to potentially accelerate that timeline.
David J. Slater: Phase 3 has been tracking ahead of schedule for the past couple of quarters. Can you walk us through how far ahead of schedule the project is tracking and maybe what you would need to see to potentially accelerate that timeline? And more generally, on LEAP project timelines, looking forward to the Phase 4 plus expansions, could you walk us through a rough timeline of when you would need to FID if targeting a 2025 or 2026 in-service?
Jeffrey A. Jewell: And more generally on leap project timeline is looking forward to the phase four plus expansions could you walk us through a rough timeline of when you would need to F. I E. If targeting at 2025 or 2026 in service.
David J. Slater: Sure, Ken, Olivia, and thanks for the question. I'll start with phase three of the expansion. Yeah, the project is running, and honestly, it has a schedule right now. You know, we're very happy with how the construction team's been executing. We're ahead of schedule and on budget in terms of additional granularity on that. I'd say we'll stick with our current disclosures that we expect that to come in in Q3, but, you know, you can infer from what I'm saying where that may come in at.
Speaker Change: Sure Ken Olivia and thanks for the question, so I'll start with phase III expansion.
Speaker Change: Yes. The project is running modestly ahead of schedule right now.
Speaker Change: And.
Speaker Change: We're very happy with how the construction teams have been executing we're ahead of schedule and on budget in.
Speaker Change: In terms of additional granularity on that I'd say, we'll stick with our current disclosures that we expect that to come in Q3.
Speaker Change: But you can infer from what I am saying, where in Q3 that may come in at.
David J. Slater: In terms of phase four, what I'll say is the producers are behaving very rationally right now in this low commodity price environment. They're expecting the market to pivot here in Q3 and Q4. So we're seeing a lot of torque building right now in Haynesville with our assets and how we're positioned. You know, we've been able to execute expansions over the last 18 months. There's going to be incremental capacity required to serve the incremental demand that is, you know, under construction and on the eve of going into service here later this year.
Speaker Change: In terms of phase four.
Speaker Change: What I'll say is.
Speaker Change: Producers are behaving very rationally right now with this low commodity price environment they are expecting.
Speaker Change: Market to pivot here in Q3 and Q4.
Speaker Change: So we're seeing a lot of torque building right now in the Haynesville with our assets and how we're positioned.
Speaker Change: We've been able to execute expansions over the last 18 months.
Speaker Change: There is going to be incremental capacity required to serve the incremental demand is.
Speaker Change: Under construction and on the Eve of going into service here later this year. So we feel very confident in our positioning.
David J. Slater: So we feel very confident in our positioning. Producers are being rational in this low-price environment where they don't want to make an incremental commitment until they see the market pivot and turn. We are working closely with those customers and fully expect to participate when that market pivots and turns, and they're financially in a position to make incremental commitments, so I'll just leave it at that.
Speaker Change: Producers are being rational in this low price environment, where they don't want to make an incremental commitment until they see the market pivot and turn.
Speaker Change: We are working closely with those customers and fully expect to.
Speaker Change: Participate when that market pivots in turns and they are financially in a position to make incremental commitments. So I'll just leave it at that.
Olivia Helferdy: Got it. It's super helpful.
Speaker Change: Got it Super helpful. Thank you and maybe we can pivot to Ccs do you have any details that you can share on the initial public read for the class five test well results.
David J. Slater: And maybe we can pivot to CCS. Do you have any details that you can share on the initial public read for the class 5 test well results? And then, I guess looking forward, we've seen a couple of recent updates from peers on the potential to further pursue additional CCS opportunities. So to what extent do you see DTM further leading into CCS? And what would you need to see on lower carbon opportunities more broadly for that to take more capital share versus the planned 60-20-20 split currently among pipeline gathering and energy transition spend? Sure.
Speaker Change: And then I guess looking forward, we've seen a couple of recent updates from peers on the potential to further pursue additional ccs opportunities. So to what extent do you see TTM further leading into Ccs and what would you need to see on lower carbon opportunities more broadly for that to take more capital share versus the plan.
Speaker Change: 62020 split currently among pipeline gathering and energy transition spend.
Speaker Change: Sure well, let's start with with our current project and maybe I'll provide a little more color.
David J. Slater: Sure, well, let's start with our current project and maybe I'll provide a little more color around how that test well played out. So part of drilling the test well was we did... (inaudible) planning to sequester into, and all that came back very favorable and as expected. So we're very pleased with the results of that test well, and you know, it's this methodical approach that we're taking to this development, de-risking the capital that we have at risk, leveraging our expertise in natural gas storage development and pipeline development around this particular opportunity. And just to remind everybody, this is a source to sink development.
Speaker Change: Around half of that.
Speaker Change: Well played out so.
Speaker Change: Part of drilling the test well as we did.
Speaker Change: Injection testing in the formation and.
Speaker Change: Those tests were very positive.
Speaker Change: Also log the entire strata above and below the formation that we're.
Speaker Change: Planning to sequester into and all of that came back very favorable and as expected. So.
Speaker Change: We're very pleased with the results of that test well and.
Speaker Change: Yes.
Speaker Change: It's this methodical approach that we're taking to this development.
Speaker Change: Derisking derisking the.
Speaker Change: The capital that we have that risk leveraging our expertise from natural gas storage development.
Speaker Change: And pipeline development around this particular opportunity and just to remind everybody. This is a source to sink development.
David J. Slater: So we're capturing the CO2 off our treatment plant, piping it to the sequestration site, doing the injection well, and doing the permanent sequestration. So we're doing all three components. And as I alluded to in my opening remarks, we're observing the need for that. The Carbon Capture and Sequestration Solution, all three pieces, that market is expanding right now, especially with these new rules the EPA is proposing for gas-fired power plants. But we're also seeing inbound interest from industrial clients as well that have large CO2 emissions.
Speaker Change: Capturing the cotwo off our treatment plants.
Speaker Change: Typing it to the sequestration site.
Speaker Change: Viewing the injection well and doing the permanent sequestration. So we're doing all three components.
Speaker Change: And as I alluded to in my opening remarks.
Speaker Change: We're observing the need for that.
Speaker Change: Carbon capture and sequestration solution all three pieces the market is.
Speaker Change: That market is expanding right now, especially.
Speaker Change: With these new rules the EPA is proposing for gas fired power plants.
Speaker Change: We're also seeing inbound interest from industrial clients as well that have.
Speaker Change: Large cotwo emissions. This approach is a very.
David J. Slater: This approach is a very rational approach for them, so we're seeing that third-party business emerging. It's early days, but strategically, our view is: let's go through our own development, do it for ourselves, prove out our ability to do it in a very thoughtful, rational way, and position ourselves for third-party opportunities, especially around our geographic areas of focus. So that would be in Louisiana; that would be in the northern part of the country, in the Midwest region. And again, these regions have great geology for CCUS, and we believe it will be a good counterparty to many of those customers that are looking for that service to provide it.
Speaker Change: A rational approach for them. So we're.
Speaker Change: We're seeing that third party business emerging it's early days, but <unk>.
Speaker Change: Strategically our view is.
Speaker Change: Let's go through our own development.
Speaker Change: Do it for ourselves prove out our ability to do it.
Speaker Change: <unk> thoughtful rational way and positioned ourselves for third party opportunities.
Speaker Change: Especially around our geographic areas of focus so that would be in Louisiana that would be in the.
Speaker Change: In the northern part of the country in the Midwest region and again these regions have great geology for.
Speaker Change: <unk> and.
Speaker Change: We believe it will be a good counterparty to many of those customers that are looking for that service to provide it.
Olivia Helferdy: Great, I'll leave it there. Thank you again for the time. Thanks a lot.
Speaker Change: Great I'll leave it there. Thank you again for the time, thanks, a lot of lithium.
Spiro Michael Dounis: Thanks a lot, Olivia.
Speaker Change: We'll move next to Spiro Dennis at Citi.
Spiro Michael Dounis: We'll move next to Spiro Dounis at Citi.
Spiro Michael Dounis: Thanks, Operator. Morning, team. Maybe just to go back to LEAP Phase 4, David. I understand your point on producers being rational here in this price environment, but I'm curious if you see any potential to upsize that expansion, or at the very least underwrite, you know, towards the higher end of that 200 to 400 million Q2 today range, just given that some of your competitor pipelines might be delayed.
Spiro Michael Dounis: Thanks, operator.
Spiro Michael Dounis: Maybe just to go back to leap phase four David understand your point on producers being rational here in this price environment, but just curious if you see any potential to upsize that expansion or at the very least underwrite.
Spiro Michael Dounis: The higher end of that $200.
Speaker Change: Thank you for you today range, just given that some of your competitor pipeline might be delayed.
David J. Slater: Yeah, what you just said, Spiro, is a reality that's playing out down there right now. There are lots of challenges for some of these new greenfield projects. You know, so, what we're doing is we're just staying very close to the market, and these are real demands that are coming. They're under construction.
Speaker Change: Yes, which you just said sphere is a reality that's playing out down there right now theres lots of challenges for some of these new greenfield projects.
David J. Slater: So what we're doing is we're just staying very close to the market and.
Speaker Change: These are real demands that are coming they are under construction.
David J. Slater: It's unfortunate that, you know, in the backdrop, we have this really weak price environment, but it truly is building torque down there right now in the system. And, you know, just to remind the audience here, we're really the only project or one of the few projects that have been able to expand capacity into that market segment over the last 18 months. So we've got a great track record of getting stuff done, getting it done on time, in fact, early in most cases.
Speaker Change: It is unfortunate that in the backdrop, we have this really weak price environment, but.
Speaker Change: It truly is building torque down there right now in the system.
David J. Slater: And just to remind the audience here, we're really the only project or one of the few projects that have been able to expand capacity into that market segment over the last 18 months. So we've got a great track record of getting stuff done getting it done timely in fact early in most cases.
David J. Slater: So that gives the market a lot of confidence when they're looking at who I wanna ride on in terms of the next wave of expansion. So we're really trying to leverage that. I think everyone's looked at the numbers, and everyone sees the magnitude of the incremental demand that's coming. So there's a lot of opportunity here. You know, we're confident that we're going to get our fair share. Can we upsize beyond the two to four hundred?
David J. Slater: So that gives the market a lot of confidence when they are looking at.
David J. Slater: Hello, I Wanna right on in terms of the next wave of expansion. So we're really trying to leverage that.
David J. Slater: I think everyone has looked at the numbers everyone sees the magnitude of the incremental demand that's coming so theres, a theres a lot of opportunity here and.
David J. Slater: We're confident that we're going to get our fair share can we upsized beyond the 2% to 400.
David J. Slater: My aspiration would be to do that, but I think it's going to come just like the first 900 of expansion have come in nice bite-sized chunks. We have the ability to do that because we're incrementally expanding an existing system. And we also have the ability to do that all the way upstream to the wellhead. Our system is an integrated system. And again, we've been able to demonstrate that we can do well-headed treatment, treatment expansions, and then treatment to all the regional market centers the basin serves. So...
David J. Slater: My aspiration would be to do that but I think it is going to come just like the first 900 of expansion has come and nice bite size chunks, we have the ability to do that because we're incrementally expanding an existing system.
David J. Slater: And we also have the ability to do that all the way upstream to the wellhead our system as an integrated system.
David J. Slater: And.
David J. Slater: Again, we've been able to demonstrate we have been able to do wellhead to treatment treatment expansions and then treatment to all of the regional.
David J. Slater: Market centers of the basin serves so.
David J. Slater: I don't feel optimistic, but this price environment is definitely putting a pause on people making their final decisions. So we're being patient. We're, you know, being patient and optimistic, and we believe we have a great service and a good track record of execution.
David J. Slater: Feel optimistic but.
David J. Slater: This price environment is definitely putting a pause on people, making their final decisions. So we're being patient.
David J. Slater: Being patient and optimistic and we believe we have a great service and a good.
David J. Slater: Good track record of execution.
Spiro Michael Dounis: Got it. A helpful call there, David.
Speaker Change: Got it helpful color there David.
Spiro Michael Dounis: Second question, maybe just going to the Stonewall Interconnect with MVP. Sounds like the timing for that is 2026, and it looks like a good chunk of that is being underwritten by MVCs. I know there is some concern around bottlenecks at the end of MVP, and so I'm just curious how you're thinking about actual volume flows in 2026. Do you see any bottlenecks? Is this going to be a phased in approach? Is there any color there?
Speaker Change: Second question, maybe just go into the Stonewall Interconnects with MVP.
Spiro Michael Dounis: It sounds like the timing for that is is 2026 and it looks like a good chunk of that is underwritten by <unk>.
Spiro Michael Dounis: There is some concern around bottlenecks at the end of MVP and so just curious how you're thinking about actual volume flows in 2026 do you see any bottlenecks or you're just going to be a phased in approach just any color there.
David J. Slater: Yeah, I mean, we're really happy with what we announced this morning. You know, we always think that if MVP gets built and it's on the doorstep of being completed, that it's going to unlock incremental opportunity for that integrated system, the Stonewall and Appalachian Gathering system. And that's exactly how it's played out.
Speaker Change: Yes, I mean, we're really happy with.
David J. Slater: With what we announced this morning.
David J. Slater: We always viewed that if MVP gets built and it's on the doorstep of being completed.
David J. Slater: It's going to unlock incremental opportunity for that integrated system, the Stonewall in Appalachian gathering systems.
David J. Slater: And that's exactly how it's played out.
David J. Slater: So I think from an MVP perspective, this interconnect will provide supply diversity to all those shippers. It'll also open up incremental producers to compete for that market. So we believe across our whole network, it's an incremental positive. As you alluded to, in this environment, this arrangement that we have with the anchor is backed by significant firm commitments so we are confident that we'll realize our returns on this project. In terms of how we expect that to be utilized when it comes in service in 2026, again, I think that the demand in the Mid-Atlantic region is really strong and robust, and, again, in my view, likely under-forecasted right now.
David J. Slater: So I think from a.
David J. Slater: And BP perspective, this interconnect will provide supply diversity to all those shippers.
David J. Slater: It'll open up incremental.
David J. Slater: Producers to compete for that market.
David J. Slater: So we believe across our whole network, it's an incremental positive.
David J. Slater: As you alluded to in this environment.
David J. Slater: This arrangement that we have with the anchor.
David J. Slater: It's backed by significant firm commitments.
David J. Slater: So that we are confident that we will realize our returns on this project in.
David J. Slater: In terms of how we expect that to be utilized and when it comes into service in 2026 again.
David J. Slater: I think that the demand in the mid Atlantic region is really strong and robust and again my view likely under forecasted right now.
David J. Slater:
David J. Slater: So again may there be some timing issues here in terms of how that capacity is ultimately utilized.
David J. Slater: So again, may there be some timing issues here in terms of how that capacity is ultimately utilized? I think time will tell, but from a financial perspective, we're protected with those firm charges that we have embedded in the contract structure, so even if it's a lower utilization on day one economically, it's not going to matter to us.
David J. Slater: Time will tell but from a financial perspective, we're protected.
David J. Slater: With those firm.
David J. Slater: <unk> is that we have embedded in the contract structure that.
David J. Slater: Even if it's at lower utilization on day, one economically it's not going to matter to us.
Spiro Michael Dounis: Got it. I'll leave it there for today. Thanks as always, guys.
Speaker Change: Got it I'll leave it different today. Thank you as always guys. Thanks.
Speaker Change: Thanks, a lot Carol.
Keith T. Stanley: We'll move next to Keith Stanley at Wolf Research.
Spiro Michael Dounis: We'll move next to Keith Stanley at Wolfe Research.
Keith T. Stanley: Hi, good morning. I wanted to follow up on the data centers and the inquiries you're getting for new capacity. Is that mainly to serve newly proposed gas-fired power plants that would serve data centers, or do you see this going more as you have existing gas plants that need to increase pipeline capacity, and so there's volume increases kind of across your existing gas pipeline.
Keith T. Stanley: Hi, good morning.
Keith T. Stanley: Wanted to follow up on the data centers and the inquiries you're getting for new capacity is.
Keith T. Stanley: Is that mainly to is that mainly the newly proposed gas fired power plants that would serve data centers, where do you see this going more as you have existing gas plants that need to increase pipeline capacity and so there is volume increases kind of across your existing gas pipelines.
David J. Slater: Keith, we're seeing both phenomena playing out, which is kind of why I think, generally speaking, the market is under forecasting the power demand load. These data centers are baseload, right? They're 24-7.
Keith T. Stanley: Keith we're seeing both phenomenon, playing out, which which is kind of well.
David J. Slater: I think.
David J. Slater: Generally speaking the market is under forecasting the power demand load. These data centers are base load right. There are 24 seven.
David J. Slater: Base Load Power and their huge load centers. I personally believe that's going to translate pretty directly back through to the gas fire generation fleet. I mean, renewables are already factored into the demand curve, and this incremental base load demand will trigger a much higher utilization, I believe, in the gas-fired fleet in these micelles. So we're seeing it on both dimensions, the existing fleet and the 2B, the next wave of incremental capacity being contemplated.
David J. Slater: Baseload power and they're huge load centers.
David J. Slater: I personally believe thats going to translate.
David J. Slater: Pretty directly back through to the gas fire generation fleet and.
David J. Slater: In the renewables are already.
David J. Slater: Factored into the.
David J. Slater: The demand curve and this incremental baseload demand will will trigger a much higher utilization I believe.
David J. Slater: In the gas fired fleet.
David J. Slater: In these micelles, so we're seeing it on both dimensions, the existing fleet and the to be the next wave of incremental capacity.
David J. Slater: <unk> contemplated.
Speaker Change: Got it thanks.
Keith T. Stanley: Got it. Thanks.
Keith T. Stanley: Second question, just wanted to touch base on the Louisiana pipeline crossing issue and, you know, the most recent court decision, I guess, you know, kind of went in your favor. One of your peers has now argued that certain Haynesville takeaway pipelines should have been FERC regulated as long-haul pipelines. Do you see any implications at all for LEAP on this, depending on how that goes at FERC, or any other thoughts you have just on this topic and how it could play out?
David J. Slater: Second question just wanted to.
Keith T. Stanley: Touch base on the Louisiana pipeline crossing issue.
Keith T. Stanley: And.
Keith T. Stanley: The most recent court decision I guess.
Keith T. Stanley: Kind of went in your favor.
Keith T. Stanley: One of your peers is now argued that certain haynesville takeaway pipelines should've been FERC regulated as long haul pipelines.
Keith T. Stanley: Do you see any implications at all for leap on this depending on how that goes at FERC or any other thoughts you have just on this topic and how it could play out.
David J. Slater: Yeah, there's been tremendous drama, right, that has been playing out in the basin for the last 18 months. So I'll start with our particular ruling. We're very positive, and it's favorable to us. It's what we expected.
Speaker Change: Yes, there has been tremendous as Rama right that has been playing out in the basin for the last 18 months.
David J. Slater: So I'll start with.
David J. Slater: With our particular.
David J. Slater: Ruling were very positive and is favorable to us it's what we expected.
David J. Slater: That being said, it doesn't impact phase one. It did not impact phase one. It will not impact phase four. So we're You know, we pursued that more out of our long-term view for the industry, what's right and wrong in these servitude agreements and the interpretation of those servitude agreements. That's all I'll say about that.
David J. Slater: That being said it doesn't impact it did not impact phase one it will not impact phase four.
David J. Slater: So we're.
David J. Slater: We pursued that more out of our.
David J. Slater: Our long term view for the industry, what's right and wrong.
David J. Slater: In these servitude agreements and the interpretation of those servitude agreements. So that's all I'll say about that that process is still unfolding in the courts and we will continue to play out.
David J. Slater: That process is still unfolding in the courts and will continue to play out. In terms of our perspective, we're not stepping into the drama that's playing out in the basin because it's not impacting us. We're very supportive of the legislation that's rolling through Louisiana at the state level that's looking to clarify some of this for the future, and in terms of our Haynesville system. We have an integrated system, and the best analogy I'll use is offshore activity in the Gulf of Mexico, where you have an integrated system that reaches out to the wellheads, gathers from all the wellheads, treats, and then brings it onshore to the major market pipe.
David J. Slater: In terms of our perspective, we're not stepping into the drama that's playing out in the basin, because it's not impacting us.
David J. Slater: We're very supportive of the legislation that's rolling through the Louisiana.
David J. Slater: At a state level, that's looking to clarify some of this.
David J. Slater: For the future and.
David J. Slater: And in terms of our Haynesville system.
David J. Slater: We have an integrated system and.
David J. Slater: The best analogy I'll use as offshore activity in the Gulf of Mexico, where you have an integrated system that reaches out to the wellheads gathers from all the Wellheads and trees, and then brings us onshore to the major marketplace.
David J. Slater: Our system's no different than that. It's integrated. And as you all have seen over the last 18 months, there's almost a one-for-one relationship between wellhead and treatment expansions and LEAP expansions. Our systems have been operational for over five years, and we've never had this issue emerge before. So again, I'm not going to step into the drama, but there are lots of volleys going back and forth over the net, if I can use that analogy, and I don't expect that to stop until the competitive process plays out. I'll just leave it there.
David J. Slater: Our system is no different than that.
David J. Slater: It's integrated and.
David J. Slater: As you all have seen over the last 18 months there is almost a one for one relationship between wellhead and treatment expansions and lease expansions.
David J. Slater: So.
David J. Slater: Our systems have been operational for over five years.
David J. Slater: And we've never had this issue emerge before so again I'm not going to step into the drama but.
David J. Slater: There's lots of volume going back and forth over the net if I can use that analogy and I don't expect that will stop until the competitive process place plays out and let's leave it there.
David J. Slater: Okay.
David J. Slater: Very helpful. Thank you. We'll go next to Robert Mosca at Mizuho Security.
Speaker Change: Very helpful. Thank you.
David J. Slater: Yeah.
Robert Mosca: We'll go next to Robert Moskow at Mizuho Securities.
David J. Slater: Yeah.
Robert Mosca: Hi, good morning, everyone. Just one from me. It seems
Robert Mosca: Hi, Good morning, everyone. Just one from me it seems like the Stonewall expansion timeline may have accelerated a little bit here I'm wondering whether you think there is some potential for similar acceleration from the northeast.
Robert Mosca: We'll go next to Robert Mosca at Mizuho Security.
David J. Slater: Yeah, let me talk maybe at a high level about Appalachia and, you know, just this acceleration that you're referring to. So I'd say when I look at Appalachia and look at our footprint, you know, Ohio and Utica were really bullish at play.
Robert Mosca: And also wondering how much of the expectation for increased domestic demand in the mid Atlantic is baked into your Capex outlook right now.
David J. Slater: Okay.
David J. Slater: Yes, let me, let me talk maybe at a high level about Appalachia and this acceleration.
David J. Slater: You're referring to.
David J. Slater: So I'd say when I look at Appalachian look at our footprint.
David J. Slater: Ohio Utica.
David J. Slater: We're really bullish that play.
David J. Slater: As I alluded to in my opening remarks, we're seeing incremental activity showing up around that acreage, so we're optimistic that we're going to see continued growth there, possibly an acceleration of growth there. So I'll start with that.
Robert Mosca: As I alluded to in my opening remarks, we're seeing incremental activity showing up around that acreage.
David J. Slater: So we're optimistic that we're going to see continued growth there potentially an acceleration of growth there so I'll start with that.
David J. Slater: How this Mid-Atlantic market plays out here over the next twelve to eighteen months as this demand becomes clearer. I know Mountain Valley is looking at an expansion. EQT, Echotrans, Merger, I think have to..., settle out, and we'll get better clarity on the timing around those potential opportunities and if there'll be an upstream impact, an incremental upstream impact on Stonewall. So I think that will all play out
David J. Slater: How this mid Atlantic market plays out here over the next 12 months to 18 months is as this demand becomes clearer.
David J. Slater: I know mountain Valley is looking at an expansion.
David J. Slater: The <unk>.
David J. Slater: PTT Echo trance merger I think has to settle out.
David J. Slater: We'll get better clarity on the timing around those potential opportunities and yes, there'll be upstream impact.
David J. Slater: Incremental upstream impact on Stonewall.
David J. Slater:
David J. Slater: So I think that will all play out, but I think the fundamentals are all constructive.
David J. Slater: But I think the fundamentals are all constructive. And that's, I guess, my view when I look at the fundamentals, both on the supply side and on the demand side. They seem to be very constructive around our asset positioning and our asset footprint. It was alluded to earlier in the call that there's, you know, some hydraulic capacity that we're looking to unlock from Nexus. And again, that all plays into this outlook that we're seeing right now, where we're seeing strong fundamentals in certain parts of the basin emerging.
David J. Slater: I guess my view is that when I look at the fundamentals both on the supply side and on the demand side.
David J. Slater: They seem to be very constructive around our asset positioning and our asset footprint.
David J. Slater: It was alluded to earlier on the call that there is.
David J. Slater: Some hydraulic capacity that we're looking to unlock out of Nexus and again that all plays into this outlook that we're seeing right now are seeing strong fundamentals in certain parts of the basin emerging and then this this demand pull that's emerging in the in the load centers.
David J. Slater: And then this demand pull that's emerging in the load centers. You know, we have a nice interconnected, integrated asset footprint that we can use to take advantage of all of that and piece together solutions for both producer customers and for power generators on the other side. We're very optimistic right now that that's going to continue to play out over the next couple of years in the portfolio.
David J. Slater: We have a nice interconnected integrated asset footprint that we can use to take advantage of all of that and piece together solutions for both producer customers and for power.
David J. Slater: Power generators on the other side so.
David J. Slater: We're very optimistic right now that that's going to continue to play out over the next couple of years in the portfolio.
Speaker Change: Alright, I appreciate the time.
David J. Slater: Rob.
Sunil K. Sibal: We'll move next to Sunil Sibal at Seaport Global Securities.
David J. Slater: We'll move next to Sunil Sibal at Seaport Global Securities.
Sunil K. Sibal: Okay.
Sunil K. Sibal: Hi. Good morning, everybody, and thanks for all your comments and clarification on the call.
Sunil K. Sibal: Hi, good morning, everybody.
Sunil K. Sibal: Thanks for your comments and clarity of the court.
Sunil K. Sibal: So first of all on the investment grade credit ratings I think previously you've talked about.
Sunil K. Sibal: So, first of all, on investment-grade credit ratings, I think previously you've talked about, you know, end of the year, 24, early 25 as the goal. And I was just trying to see, based on your comments going into discussions with rating agencies in the next few months, what should we think about that? Do you see kind of an acceleration of the timeline, or is the previous timeline still kind of a good one? Good question to think about.
Sunil K. Sibal: End of the quarter.
Sunil K. Sibal: For liquidity five is the goal.
Sunil K. Sibal: And I was just trying to see based on your comments going into discussions with the rating agencies in the next few months, how should we think about that do you see kind of an acceleration of that timeline.
Sunil K. Sibal: The previous timeline.
Sunil K. Sibal: Kind of a good.
Sunil K. Sibal: Good.
Sunil K. Sibal: Trying to think about.
David J. Slater: Good morning, Sam. Yeah, so I think your timeline that, you know, later 24, 25, you know, that's our original plan. That's, you know, what we've been talking to you guys about for the last few years. So we're set up to have our annual meeting. It's going to be the first week of May. It's like next week.
Sam: Yes, good morning.
David J. Slater: Yes, So I think your timeline that later 'twenty four 'twenty five that's our original plan. That's what we've been talking to you guys about for the last few years. So we're.
David J. Slater: Set up to have our annual meeting is going to be the first of <unk>.
David J. Slater: We may just like next week, we're meeting with all three of the rating agencies.
David J. Slater: We're meeting with all three of the rating agencies. So, again, we're anticipating those are going to be very positive discussions, and so we'll get more clarity from them on, like, what is that final, final... Now related to acceleration, maybe pulling forward either a positive outlook or even up to being upgraded investment grade, it's the Chesapeake swim transaction like we've talked about. We think that's probably the biggest thing that could accelerate when that deal gets done here in the second half of this year. So that's kind of what our plan is. Our plan gets us there according to the timeline, and then the merger is what will... We see that as an accelerant towards the plan.
David J. Slater: So again, we're anticipating those are going to be very positive discussions.
David J. Slater: Discussions and so we'll get more clarity from them on like what is that final final fees.
David J. Slater: A related to acceleration of maybe pulling forward either positive outlook or even up to being upgraded to investment grade.
David J. Slater: The Chesapeake swim.
David J. Slater: Transactions like we've talked about we think thats, probably the biggest thing that could accelerate.
David J. Slater: That deal gets done here in the second half.
David J. Slater: This year, so that's kind of what our plan is our plan.
David J. Slater: As there are according to the timeline and then.
David J. Slater: Merger as what would we see that as an accelerant towards the plan.
Sunil K. Sibal: understood. And thanks for that.
Speaker Change: Understood and thanks for that and then.
Sunil K. Sibal: And then one clarification on your latest project in the northeast. It seems like, you know, do you see this as a kind of an incremental demand, per se, with regard to the takeaway capacity or the... just the fact that, you know, producers kind of are lining up to fill up the MVP. So I'm just kind of curious, you know, how, based on your discussions, how do you see MVP? You know, volumes progressing as it comes online in the next month or so.
Speaker Change: One clarity on your latest project.
Sunil K. Sibal: In the northeast.
Sunil K. Sibal: So it seems like.
Sunil K. Sibal: Yes.
Speaker Change: See this is it.
Sunil K. Sibal: Incremental.
Speaker Change: Let's see.
Sunil K. Sibal: The takeaway capacity.
Sunil K. Sibal: Just the fact that <unk>.
Sunil K. Sibal: So it's kind of well on lining up to fill up the MVP. So I'm just kind of curious you know how we.
Sunil K. Sibal: Based on your discussions how do you see MVP.
Sunil K. Sibal: Volumes progressing as it comes online.
Sunil K. Sibal: And the next month or so.
Sunil K. Sibal: Okay.
David J. Slater: Yeah, I'll take that one, Sunil. I'd say for our project, which, just to remind everybody, comes online in 2026, I'd say the initial thinking is that there is more diversity of supply for the existing. Mountain Valley Contracts. In the early days when it comes online, but I think a longer view would also, That would be another pathway if there is a Mount Valley expansion and, I think, The owners of Mountain Valley are talking about an expansion, that this is another pathway to serve that incremental demand and again provide some diversity of supply into that asset longer term. So I actually think it's both, you know, one in the short term and the other in the longer term. Hopefully, that answered your question.
Speaker Change: Yes, I'll take that one Neil.
David J. Slater: I would say for our project, which just to remind everybody comes online in 2026.
David J. Slater: The initial thinking there is more diversity of supply for the existing mountain valley contracts.
David J. Slater: In the early days when it comes online, but I think our longer view would also.
David J. Slater: That would be another pathway. If there is a mountain valley expansion and I think the.
David J. Slater: Owners of Mountain Valley here, we're talking about an expansion. This is another pathway to serve that incremental demand and again provide some diversity of supply into that asset.
David J. Slater: Longer term, so I actually think it's bowls, one in the short term and the other one in the longer term.
David J. Slater: Hopefully that answered your question.
Sunil K. Sibal: Understood, thanks.
Speaker Change: Understood. Thanks.
Audra: And that does conclude our Q&A session. I will now turn the conference back over to David Slater for closing remarks.
Audra: And that does conclude our Q&A session I will now turn the conference back over to David Slater for closing remarks.
David J. Slater: Well, thank you very much for joining us today. And we certainly appreciate your interest in DT Midstream and look forward to seeing many of you at the EIC conference coming up in a few weeks.
Audra: Yes.
David J. Slater: Well. Thank you very much for joining us today and we certainly appreciate your interest in <unk> midstream and look forward to seeing many of you at the ESC conference coming up in a few weeks.
Audra: And this concludes today's conference call. Thank you for your participation. You may now disconnect.
Speaker Change: Have a great day.
Audra: And this concludes today's conference call. Thank you for your participation you may now disconnect.
Audra: Yeah.
Audra: Okay.
Audra:
Audra: [music].
Audra: