DT Midstream(US:DTM)2022-10-28 17:19Financial Data and Key Metrics Changes - The company reported an adjusted EBITDA of $207 million for Q3 2022, reflecting strong performance in both pipeline and gathering segments [13] - The adjusted EBITDA guidance for 2022 has been increased to a range of $810 million to $825 million, influenced by the Millennium Pipeline acquisition and strong base business performance [7][14] - The capital guidance range for 2022 has been adjusted to $860 million to $910 million, accounting for the Millennium Pipeline acquisition and efficiencies in organic growth projects [14] Business Line Data and Key Metrics Changes - The pipeline segment contributed approximately 55% to the overall results in Q3 2022, with expectations to increase to nearly 60% in 2023 [10] - Total gathering volumes averaged over 3 billion cubic feet per day in Q3 2022, marking a 15% increase from Q3 2021, driven by expansion projects [14] Market Data and Key Metrics Changes - The company is experiencing strong interest for capacity out of Appalachia, particularly on the Stonewall and NEXUS systems, as takeaway constraints persist for producers [12] - A new 5-year agreement was executed on NEXUS at attractive rates, indicating ongoing demand in the market [12][24] Company Strategy and Development Direction - The company is focused on organic growth opportunities, with a final investment decision made on the phase 3 Haynesville system expansion, which will add 300 million cubic feet per day of capacity [7] - The Millennium Pipeline acquisition is seen as a strategic move to increase ownership in a fully contracted pipeline, aligning with the company's investment thesis [9][49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver stable and durable returns for 2023 and beyond, citing strong operational and financial performance [18] - The company is actively engaged in local discussions regarding its CCS opportunity in Louisiana, with plans to file a Class VI well permit application by the end of November [22] Other Important Information - The company has successfully optimized capital outlays for ongoing projects, maintaining cost and schedule integrity [10] - The revolving credit facility has been upsized to $1 billion, extending the term to 2027, which enhances balance sheet strength and flexibility [16] Q&A Session Summary Question: Clarification on base business improvement and guidance for 2023 - Management indicated that a refreshed look at 2023 guidance will be provided during the year-end call, as customer planning often extends into the next year [20] Question: Update on CCS in Louisiana and local engagement - Management confirmed that they are accelerating the Class VI well permit process and are actively engaging with local officials and landowners [22] Question: Details on the 5-year agreement on NEXUS - The agreement is with an investment-grade counterparty, valued at $50 million per day [24] Question: Factors driving the increase in 2022 guidance - Management noted that the timing of expansions and favorable conditions across the portfolio contributed to the guidance increase [28] Question: Gathering segment margins and volume trends - Management explained that gathering volumes are increasing, but margins may vary based on the type of gathering services provided [31] Question: Update on Haynesville volumes and future expectations - Management indicated that the exit rate for Q3 will likely reflect strong volumes in Q4, with no surprises expected [32] Question: Thoughts on Millennium acquisition and future M&A - Management emphasized the strategic rationale behind the Millennium acquisition, highlighting strong fundamentals and the potential for future M&A opportunities [49][55] Question: Dividend growth in line with cash flows - Management confirmed that dividends will continue to grow in line with cash flows, reflecting the company's commitment to total shareholder return [51]