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DT Midstream Inc (DTM) Q1 2024 Earnings Call Transcript Highlights: Financial Growth and ...

GuruFocus Research
·3-min read

  • Adjusted EBITDA: Q1 2024 reported at $245 million, a $6 million increase from the previous quarter.

  • Capital Investment: Committed $265 million to $295 million for 2024; approximately $140 million for 2025.

  • Dividend: Declared Q1 dividend of $0.735 per share, maintaining a growth target of 5% to 7% per year.

  • Gathering Volumes: Averaged approximately 3.1 billion cubic feet per day in Q1, consistent with the previous quarter.

  • Revenue Protection: Revenues underpinned by take-or-pay contract structures.

  • Free Cash Flow: Capital plan for the year remains within free cash flow after dividends.

Release Date: April 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Q & A Highlights

Q: Could you elaborate on how AI and data centers could potentially benefit DTM, particularly in relation to Nexus and its latent capacity? A: David J. Slater - DT Midstream, Inc. - President, CEO & Director: The market is currently underestimating power demand, particularly in the Midwest and Mid-Atlantic, where data center investments are concentrated. We've received numerous inquiries about our network's incremental capacity, which is expected to emerge in the next few years. Data centers require base load power, predominantly supplied by natural gas-fired generation, which we expect will drive additional generation in these regions. We are optimistic about this trend as it signals strong fundamentals for Nexus and Vector, and the new Stonewall interconnect with Mountain Valley Pipeline.

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Q: Can you provide more details on the Southern Louisiana Logistics dynamics and the potential for LEAP expansions to connect to LNG export facilities? A: David J. Slater - DT Midstream, Inc. - President, CEO & Director: The Gillis Access project, which has been operational for a few months, opens up an additional 6 Bcf a day of demand growth that LEAP can serve. LEAP is well interconnected at Gillis with various pathways to LNG terminals. The project is strategically positioned to meet the growing LNG demand, despite the complex network of pipelines in the area.

Q: With the expected decrease in Haynesville activity, how will this impact DTM's plans for 2024? A: David J. Slater - DT Midstream, Inc. - President, CEO & Director: The actions taken by our producers are aligned with our full-year plan, which anticipated some delays in completion activity in Haynesville. Jeff Jewell added that while the second and third quarters are expected to be lower, the fourth quarter should see an increase in volumes and EBITDA, aligning with our 2024 guidance.

Q: How far ahead of schedule is the LEAP Phase 3 project, and what are the timelines for future LEAP expansions? A: David J. Slater - DT Midstream, Inc. - President, CEO & Director: The LEAP Phase 3 project is modestly ahead of schedule, with expectations to complete in Q3. For Phase 4, the market needs to pivot favorably for producers to make further commitments. We are closely working with customers and expect to participate actively once the market conditions improve.

Q: Can you share insights on the initial public read of the Class V test well results for the CCS project and the potential for DTM to lean further into CCS opportunities? A: David J. Slater - DT Midstream, Inc. - President, CEO & Director: The test well results were very positive, confirming our expectations about the geology suitable for sequestration. This project is a complete source to sync development, and we're seeing growing interest from third parties, particularly with new EPA rules for gas-fired power plants. We are methodically derisking the project while exploring further opportunities in CCS.

Q: What are the implications of the recent court decision on pipeline crossings in Louisiana for DTM, and how do you see this affecting the industry? A: David J. Slater - DT Midstream, Inc. - President, CEO & Director: The ruling was favorable and aligned with our expectations, not impacting our current or planned phases. We support state-level legislation to clarify servitude agreements for the future. Our integrated system approach, similar to offshore activities, positions us well amidst industry challenges.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.