DT Midstream, Inc. (NYSE:DTM) Q2 2023 Earnings Call Transcript

David Slater: Yes, I think the only thing that we’re including right now is the $15 million that we detailed. So, that’s what I’ll call, predevelopment capital to derisk the project. And again, like I said earlier, when we FID the project, we’ll provide a lot more granular disclosure on total CapEx budget and a refinement on timing.

Operator: We’ll take our next question from Spiro Dounis at Citi.

Spiro Dounis: First question is on CapEx. The sequential decline on CapEx into ’24 from ’23 looks a bit more sizable now. So just curious how you’re thinking about the plans to backfill with other projects from here now it sounds like funding within cash flow is a hard stop for you. So maybe that’s sort of the most you fill in a year. And to the extent you do generate excess cash flow beyond the dividend safe to assume right now that’s entirely getting allocated towards leverage? Or could we see some other uses?

David Slater: Yes. Let me start, and then I’ll pass it over to Jeff. But I think you’re understanding it correctly. The Ohio project was in the 24% committed capital. And really, it was just as we refined with our customer, and there was a modest timing shift, it benefited us, well, by moving us out of winter construction, which de-risk the execution side of this project. But what it had the effect of doing as we move forward a few months and it moved into the ’23 window. So, that shift is really just a timing shift of committed capital. So, you’re right. It takes a big chunk of committed capital out of 2024. And the ’23 free cash flow run rate, you guys know what that is. So yes, there’s a bunch of uncommitted capital free cash flow sitting in ’24. And Jeff, maybe I’ll pass it over to Jeff here to provide commentary on or high-level thoughts today on that uncommitted free cash flow.

Jeff Jewell: Yes, just like David said, again, given our highly contracted cash flow and contracting that we do, I would — our cash flow between the years is going to be pretty close to the same. And so like David said, what we’ve got is on a committed level as well within that cash flow. And then with our — as you can see on that slide, we kind of talk about it on Page 8. We’ve got a lot of potential organic backlog that’s out there that we’re reviewing and evaluating at this time, and we’ll provide updates either third quarter at the end of the year, most likely, of additional projects as a part of that. But you’re right we’re going to keep that inside the cash flow inside the leverage that we’ve talked about.

David Slater: I think the key thing is that, we expect to be back to four or less on a proportional basis, which is a higher threshold than when we spun the Company because that floor was originally measured on an on-balance sheet basis. So yes, I expect there’ll be a combination of incremental organic opportunities that emerge before year-end, but I also expect they’ll be kind of go towards the balance sheet as well.

Spiro Dounis: Got it. Helpful color. Second one, quickly just related to natural gas storage. I’ve seen a lot of your peers kind of lean into that more aggressively, economics there been improving. Curious if you’re thinking about your ability to expand on that front? And if that’s something that maybe is already considered inside that long-term capital plan?

David Slater: Yes. Storage has been a bright spot in the portfolio for the last six months. We did lean on that pretty good in the second quarter and termed up at some pretty attractive rates. Some of the capacity that’s just naturally rolling from year to year in the portfolio, so that was step number one. I’d say you’re alluding to step number two is looking for expansion opportunities. Our team is assessing that right now. And just stay tuned on that, more to come as we get a better sense as the market going to hold at these higher values and where potential expansion opportunities would exist.