Ladies and gentlemen, thank you for standing by. My name is Brent and I will be your conference operator today. At this time, I would like to welcome everyone to the DT Midstream Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] Thank you. I would now like to turn the call over to Mr. Todd Lohrmann, Director of Investor Relations. Sir, please go ahead.

Good morning, and welcome everyone. Before we get started, I would like to remind you to read the safe harbor statement on page two of the presentation, including the reference to forward-looking statements. 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.

Thanks Todd, and good morning, everyone, and thank you for joining and for your interest in DT Midstream. During today's call, I'll recap our major accomplishments in 2022, highlight our new disclosures and provide an update on our major development projects that we are currently executing on. I'll close with some remarks on the macro fundamentals and then turn it over to Jeff to review our financial results and new disclosure details. So with that, we had a very successful year in 2022, and I'd like to thank all of our employees for their exceptional performance throughout the year. We delivered full year adjusted EBITDA of $830 million, which exceeded our revised guidance range, and represents 14% growth from our 2021 original guidance. Commercially, we executed on numerous organic growth opportunities that will deliver long-term growth and value creation. Foremost, among these are expanding our LEAP asset in the Haynesville by 90% to 1.9 Bcf a day, expanding our Appalachia gathering system by 20% terming out contracts on NEXUS and our Washington 10 Storage complex at attractive rates and filing our Class VI well permit for our Louisiana CCS project. We also closed on the Millennium pipeline acquisition, which makes us a majority owner in the asset. On the construction front, we successfully executed our Stonewall and Appalachia gathering expansions, the Michigan Gathering Conversion Project, and a portion of our Blue Union expansion. Finally, we published our inaugural sustainability report, and we're recognized for our exceptional customer service, receiving the top ranking in the MASTIO Customer Service Study for midstream companies. Looking ahead to 2023 and beyond, I'm highly confident in our future growth and financial strength. Jeff will provide the details on our new financial disclosures, including our increased 2023 adjusted EBITDA guidance and a strong early outlook for 2024, our increased quarterly dividend and our updated five-year capital outlook. Before I pass it off, I'd like to quickly address the natural gas fundamentals, given the recent pullback in natural gas prices. Firstly, we remain highly confident in our plan. Our portfolio is well contracted with long-term take-or-pay agreements, our gathering assets serve Tier 1 resource areas that are well-positioned on the drilling cost curve, and we have no direct commodity exposure. Our assets provide outlook capacity to premium demand markets, which are expected to grow significantly between now and the end of the decade. Our customers continue high levels of activity across both of our regions and are looking forward to the completion of our expansion projects. Over our 20 plus year history, we have a proven track record of strong performance and downward price cycles and are highly confident in the durability of our business even in this lower commodity price environment. I'll now turn it over to Jeff to walk through our financials and our new disclosure details.

Thanks David, and good morning, everyone. In the fourth quarter of 2022, we delivered adjusted EBITDA of $227 million, which is a $20 million increase from the third quarter. Pipeline segment results were driven by the fourth quarter benefit of the Millennium Pipeline acquisition, higher short-term revenues at the pipeline joint ventures and Washington 10 Storage and continued high levels of short-term optimization at LEAP. In total, the Pipeline segment results included approximately $7 million of favorable optimization and short-term revenue that resulted from the wide basis differentials across many of our assets. Gathering segment results were driven by higher revenue at Appalachia gathering system, offset by lower revenues at Susquehanna gathering and the impact of a planned maintenance outage at one of our Blue Union treating facilities. Operationally, we hit an all-time high this quarter in total gathered volumes, which averaged approximately 3.1 billion cubic feet a day, driven by the in-service of expansion projects in both regions and partially offset by lower volumes at Susquehanna. Now onto our new disclosures. We are increasing our 2023 adjusted EBITDA guidance to $880 million to $920 million, which reflects the strength and durability in our base business, as well as the expected contribution from our organic growth projects. The midpoint of our revise range represents 14% growth from our 2022 original guidance. Similar to 2022, our plan for 2023 is built on the expectation that volumes and EBITDA will be stronger in the back half of the year as we execute on our expansion projects. We will also continue to seek opportunities to optimize the small amounts of uncontracted capacity on our assets. Due to our confidence in our portfolio, we are also providing an early outlook for 2024 adjusted EBITDA of $920 million to $970 million, which represents a 9%…

Thanks Jeff. We continue to see significant growth opportunities across our existing asset footprint. Active discussions continue for further expansions of LEAP, and we recently executed a five-year term extension on 500 million per day of existing capacity. This contract extension demonstrates the strong market support for this wellhead to water pathway and its connectivity to growing LNG markets. We also continue to see momentum for expansions across our Appalachia assets as demand for pathways of strong end-user markets remains high. We expect that our energy transition platform will become a meaningful contributor to the business towards the end of our five-year plan with the near-term priority of advancing our CCS project towards a final investment decision and participation and hydrogen hub opportunities in Appalachia. So, in summary, we had an exceptional year in 2022. We have an exciting year in front of us as we execute on our growth projects, which will enable strong EBITDA growth through 2024 and beyond. Our entire team looks forward to continuing our track record of performance for our customers and shareholders. We can now open up the line for questions.

[Operator Instructions] Your first question comes from the line of Michael Blum with Wells Fargo. Your line is open.

Thanks. Good morning, everyone. I wanted to start on the CapEx budget. So, you mentioned the heavier construction period. I'm wondering if you can just provide a little more detail. I'm assuming, slide 14 is kind of what captures the project, but just wondering if there's anything more to that? And then, can you also just remind us on what you're targeting for returns?

Sure, Michael. Good morning. This is David. Yeah. So, this year, we'll be ahead of CapEx year as many of our projects are executing sort of at the same time this year. Just as you may recall, we reduced our organic capital guidance in previous years, and this is around the timing of when we're actually spending the capital for the construction of these new assets. So, this year is going to be a lumpy year for us. You can sort of see it if you look at the five-year CapEx revised guidance that $800 million is committed contracted organic investments. And you can see that this year, the bulk of that $800 million is being deployed. So that's just the background around the CapEx disclosure here for 2023. In terms of looking forward, we continue to focus on organic opportunities. As we look to sanction any of those projects, we're always looking for accretive multiples and accretive to the equity holders when we sanction and deploy that capital for organic opportunities. We're well aware that we have two primary businesses here, the Pipeline gathering in each one of those segments sort of have a different value thresholds around the capital deployment. So, we're constantly looking at that and make sure that we maintain a disciplined capital allocation regime here.

Great. That helps. I appreciate it. Second question I wanted to ask was just on M&A. Obviously, you did the Millennium deal. Wondering it just seems like there could be more assets in your backyard for sale in the near future. Just curious for your appetite for M&A? And yeah, I'll leave it there.

Sure. I think our first focus for capital deployment is organic opportunities. And we have been blessed over the last couple of years with an abundance of opportunities that the team is executing on. There is many more early stage opportunities that we're pursuing. So that will be our number one priority for capital allocation. The way I think of M&A, M&A is option value for us, has to compete with organic capital allocation and we have to ensure accretion -- shareholder per unit accretion for any M&A transaction. So that's how I think about it. I think about it as option value. The market presents these opportunities from time-to-time, and we can't really predict when they're going to come. For us, it's really just maintain that discipline of capital allocation, if it makes sense and if it fits strategically, it's consistent with our investment thesis, and it creates a clear line of sight to shareholder value accretion. We'll consider it. But the plan that we're laying out here today in our guidance does not require any M&A activity.

Got it. Thank you very much.

Your next question comes from the line of Marc Solecitto with Barclays. Your line is open.

Hi. Good morning. Maybe just to start on the Haynesville outlook. I wonder if you could give us any color on your expectations for basin growth here over the next couple of years. And then, you had a helpful slide there where you show the breakeven on your gathering acreage, and then obviously, you have the indirect contractual support on LEAP. But curious if you could maybe just elaborate on the visibility, whether it be MVCs or other factors and the embedded assumptions you have in the expected volume ramp on Blue Union over the next couple of years?

Sure, Marc. Good morning. Thanks for the question. Yeah. So, I'm just going to step back a second and maybe address just the high level fundamentals with sort of the current commodity price environment that we're seeing. So, I'll say it this way, our guidance reflects the most current information that we have from all of our customers. So, it's very fresh and very current. What we are observing in the basin is continued discipline by the producers. They were very disciplined in the $8 price environment. They continue to be very disciplined in the $3 price environment. That being said, just the resource quality in the Haynesville is Tier 1 North America. There is tremendous amount of resource that is highly economic at sub $2 price levels. So, when I look at sort of the current rig activity, which is still sitting around that 80-rig level, you've heard what some of the public producers have said recently. They are being disciplined, slowing down the growth rate, but still growing. I would reference some of the comp stock disclosures that I'm sure everyone's following. Even though that producer is lowering rigs, they are still projecting a healthy growth -- volume growth in the basin. We were seeing volume growth across our assets in what -- pre the higher price environment that we have for the last 12 months. We were seeing growth from our core shippers even when the basin was running at 50-ish rig. So, I'm highly confident in the quality of the resource and the resource that we serve, we expect to see growth. Marc, you alluded to the LEAP contracts, and as most investors know, our gathering expansions that were in flight on marry into our LEAP expansions that we're in flight on. As we said previously, our LEAP contracts are all demand based contracts. So, there's a significant economic incentive for our shippers to fill those contracts, and that's exactly what we expect, and that's all been reflected in our 2023 and 2024 guidance.

Great. That's helpful. And then if we look at the Gathering segment, volumes were up in 4Q. EBITDA was down a little, and you referenced some planned treating capacity made in 4Q. Can you talk about how much of the sequential decline in EBITDA was on the OpEx side versus margin dilution from the treating maintenance? I'm curious if you have the treating capacity expansion on Blue Union coming on later this year in 4Q, really what that does for the margin profile and your Gathering growth on Blue Union here?

Yeah. So, I'll take that in two parts, Marc. So first, what you said was accurate. In terms of Q4, we -- one of the reasons why I think we won the number one midstream company in North America is because of the reliability of our assets. That's very important to us and very important to our customers. We have planned maintenance at our largest treater in the Haynesville in Q4. So, yes, you're exactly right. There is a cost component to that planned maintenance, and there's a revenue impact of that planned maintenance, but it's very important for us to do that to retain reliability for our customers. In terms of looking forward, yes, we will be bringing gathering and treating facilities on -- in 2023 and 2024 and volumes will ramp as those facilities come online. And I'll just leave it at that.

Got it. Appreciate the time.

Thank you, Marc.

Your next question is from the line of John Mackay with Goldman Sachs. Your line is open.

Hi. Good morning. Thanks for the time. I wanted to just go back to the spending guidance and how it kind of factors into this new five-year outlook. Like if we're looking at 2023 and thinking about kind of free cash flow and then the dividend on top of that, it's a fair amount of outspend this year. So, I guess, is the message that we'll see a fair amount of outspend this year, but for 2024 plus that should reverse pretty materially. I'm just trying to think of kind of that outspend versus your comments on no incremental growth -- no incremental debt or equity? Thanks.

Thanks John. I'll start, and then I'm going to pass it over to Jeff to maybe provide a little more color. But John, I think the best way to understand this is just the lumpiness of the way the business and the timing of the CapEx spend. I think it's no more than that. And I think in previous years, we've backed down our CapEx guidance as we were shifting spend and actually delaying spend to help it actually improves the returns of the projects when we do that. This year is a heavy year. We have a big bump here in the CapEx related to all the contracted organic opportunities that we're in flight executing on. If you look at our deck, and I'm going to refer you to slide 13 and slide -- actually, it's slide 12 and slide 13. You can see that $800 million of existing committed organic investment, the vast majority of that is getting spent this year. So, when you look at the difference between those two numbers, that's what contracts the committed for future years. So, you're exactly right. What's committed today will be much less next year than what we're executing on this year. So truly, this is a timing issue. I'll pass it over to Jeff to talk about the ins and outs of the balance sheet as it relates to this.

Yeah. And good morning, John. This is Jeff. Yeah. So, again, this is in line with -- just follow on what David said, this is in line with our plan that our ceiling is four times on our leverage, and we're very comfortable with that. And then as we move into 2024 and beyond, we continue to see, as we've been communicating before, that deleveraging down into the mid to low three as you get into the later part of 2024. Also, things that we have available to us, some of them are very strong contracted cash flow and the like, but we've also got under leverage at our JVs. And so that's something that again we're looking at all the various tools that we have available to us because again, those are -- would be investment grade sort of potential vehicles that we could also utilize as we think about our balance sheet and maintaining the strong posture that we have. So that's kind of how we're viewing it.

Okay. I appreciate that. Thanks for the color. Maybe just one, I'd love to hear an update on NEXUS. Just how recontracting is going? Whether or not you've made any progress on some of the kind of smaller scale, let's call it, kind of expansion opportunities, particularly with MVP seeming to continue to lag?

Yeah. Great question, John. Yeah. We continue to see the NVP leg in the market. And my sense is, the market has sort of moved on from there and NEXUS had a phenomenal year in 2022. And I'm sure as you guys put through all the details, the financial details, you'll see that as well. So, we're very happy with how that asset has been sort of -- how we had it positioned and how we've repositioned it contractually in this new market structure that's in front of us right now. So, as I said in my opening remarks, we continue to see this very strong desire where pathways out of Appalachia to the strong market centers that all of our assets serve. So that pathway saw a lot of activity in 2022. We expect more going forward in 2023 and 2024. I'm going to ask for a little more time before I provide more color around some of the work that we're doing around NEXUS. But I'll just say this, John, what we've talked about in the past, we are continuing to work on and execute around, which is how can we creates more capacity on NEXUS without going through a FERC process. And the team is working intensely on that right now and I'm very optimistic that we're going to have some positive results from those efforts.

All right. Appreciate it.

Your next question comes from the line of Jeremy Tonet with JP Morgan. Your line is open.

Hi. Good morning.

Good morning, Jeremy.

I just want to pivot to the CapEx a little bit, if I could. And I just wanted to know if you could give us any sense for a little bit more detail as far as what bucket where the CapEx is going, be it gathering versus interstate versus energy transition or Haynesville or Appalachia or even specific project kind of scoping size, just trying to dig in a little bit more.

Jeremy, I'll try to break that into two answers. One is the committed capital. So, what we contractually have committed today and the vast majority of that is currently focused on the Haynesville. So, it's LEAP and it's the gathering expansions that were in flight on that are going to feed LEAP. And I'd say probably the weighting is heavier towards the Pipeline segment than it is towards the Gathering segment in terms of the capital deployment, and I'll leave it at that. If we look at that five-year forward look, so the -- I call it the $2 billion, the midpoint there of the guidance. In terms of how I think about where that will get deployed, I fully expect a chunk of that's going to go into the energy transition. And in the opening comments, we sort of -- we're putting that towards the back end of our five-year plan, but the CCS project is maturing in Louisiana. We filed a Class VI well application last year. We're in deep consultation with the agencies right now as we progress that project. So, we expect that, that project will progress to a point where we'll FID it. When we FID it, we'll provide the investors more color around the CapEx and some more of the details, but feeling very good about that project, very optimistic. There's lots of interesting things happening in our Northern region, especially in and around Appalachia with various hydrogen hub applications that we're participating in. So, we're feeling really optimistic there. It's very much in line with our core competencies and a lot of tangential correlation to our existing asset footprint and customer base. So, again, I think those are still early cycle projects, but I do expect a chunk that we'll deploy into that segment.

Got it. That's helpful. Maybe picking up with the CCS side there. I appreciate this is a later date in the decade, but just want to see thoughts you had at this point. With regards to the total addressable market or even more specifically as it relates to the Haynesville, it seems like economies of scale could really help economics here. And so, there's a number of other treaters in the Haynesville. So, how do you see this kind of unfolding? It seems like you'd be focused on your own emissions first, but then if there's others in proximity, would you look to work with them? Would they be JV partners? Or do you think you provide -- just provide the service for them? Just trying to get any sense that you might be able to share with how that could develop over time?

Yeah. That's a great question. So, you're right. Our focus to date has been on our own emissions and cleaning up our own emissions. And we provided some color around this project that we're targeting 1 million metric tons a year in terms of the, what I'll call, the storage or the sequestration capacity of the formation. We are very much thinking to design and develop a project that has an extended runway that will go beyond our own internal needs. And you're right, there are other neighbors in our neighborhood that have similar plans, but they may not have the concentration that we have of CO2, and you're very accurate in your statement that scale is important here. You have to have scale for the economics to box out with the 45G tax credit. So, I view that as an opportunity that will come. That will be like a Phase 2 opportunity for us as once we take care of our own needs, look at potentially offering to third parties. I think it's premature to foresee how that third-party business would evolve, whether it would be a fee-for-service, whether it would be a potential JV partner. I think the market still needs to evolve a little bit around that. But the other exciting part around CCS that we see, it's transportable to other geographic areas and footprint, particularly up here in the Northern part of our footprint. Any opportunities for CCS, we have lots of early stage conversations going with clients where this would be probably the most economical way for them to mitigate their carbon emissions. So, again, our goal established the [indiscernible], get this project FID, take care of our own needs and then replicate and export that to other jurisdictions where you have high concentrations of customers, where this is an economic solution for them to decarbonize and you have the right geology in the region to accommodate it. So, very excited about this, quite frankly. I think this is going to be an emerging area for us and others that will really help the country as we navigate the pathway to a lower carbon future.

Got it. If I could just pick up on -- part of the last part there with your Northern footprint in CCS and customer outreach there. Is that -- is this internal? Or is this within the oil and gas industry? Or is this outside the oil and gas industry as far as customer conversations are concerned?

It's all of the above, Jeremy. It's both internal in terms of sector, but there's a lot heavy industry up here -- and that's a lot of CO2. And again, when you look at the current tax regime and the capital investments that some of these industries have, this is a very viable and economical pathway for them to materially decarbonize their operations. So, there's lots of conversations in all sectors of the economy, the power sector, the industrial sector, the chem sector, the ag sector where this is very applicable. So, yeah, that's what makes me so excited about, Jeremy.

And just -- sorry.

No, go ahead.

And just to clarify, when you say up here, are you saying Michigan or Appalachia Northeast?

Yeah. My apologies. I'm sitting at Detroit. So, when I say up here, I'm referring to the Northern footprint. So, what I'll call from New York right through to the Midwest where all of our assets are.

Got it. Very helpful. Thank you.

Your final question comes from Alex Kania with Wolfe Research. Your line is open.

Thanks. Good morning. You mentioned just the active discussions still going on with incremental LEAP expansion. Would you be able to have any kind of color thinking about what the opportunity is maybe even with respect to timing? Do you think that it's fair to assume that would be something that may be coincide more with the LNG capacity coming into play in the back half of the decade? Or is there a chance that could happen earlier? And then maybe if you could just talk a little bit just about what you're hearing with respect to LNG terminal development right now?

Thanks for the question, Alex. Well, maybe I'll just start with just kind of going back to what I said on the earlier remarks, for one of our anchor shippers, we extended 0.5 Bcf a day of their contract for five additional years, and that makes that contract be a 15-year term contract. So, I think that really spoke volumes to us of the importance of this asset is connectivity, where it's connecting the basin to the LNG corridor and the -- just the strength in the LNG market here North America period that, that customer wanted to do that with us. So, we're very encouraged by that. In terms of the next wave of expansion on LEAP, as I said in my opening remarks, we're in active conversations with a number of clients around that. We were making a lot of headway over the last year in terms of just incrementally expanding. As you would expect, these are big commitments with customers that typically match up with commitments downstream of our assets. So, they are long-term contracts that have to be put together. And I always liken ourselves to -- we're in the -- we're at the high school dance and everyone's finding their dance partners and we're facilitating it by connecting the two counterparties together with the asset. So, it takes time. So, I don't want to predict the time here. I think we just give that the time that it takes for a good rational business to transact, and we're confident that there's going to be more to come. Our asset is well-positioned. And the way we're doing the expansion, we have a runway out to 3 Bcf a day with this asset. And we can continue to expand in right-size increments, which I think is very distinctive in the basin versus some of the other projects that are out there that require large scale commitments before they can FID. So, we're really encouraged about our position. We're in the ground. We're flowing gas today. And we're incrementally expanding this year and next year. So, we feel really good about where we're sitting with LEAP right now, and like I said, I do expect more. It's just -- we'll let the market decide the timing. So.

Great. Thank you.

There are no further questions at this time. I will now turn the call back over to Mr. David Slater. End of Q&A:

Thank you, everybody. We truly appreciate your time and attention and interest in DT Midstream. Have a great day.

Ladies and gentlemen, thank you for participating. This concludes today's conference call. You may now disconnect.