WELLS FARGO MIDSTREAM AND UTILITIES SYMPOSIUM
DECEMBER 7, 2023
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This presentation contains statements which, to the extent they are not statements of historical or present fact, constitute "forward-looking statements" under the securities laws. These forward-looking statements are intended to provide management's current expectations or plans for our future operating and financial performance, business prospects, outcomes of regulatory proceedings, market conditions, and other matters, based on what we believe to be reasonable assumptions and on information currently available to us.
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Forward-looking statements are not guarantees of future results and conditions, but rather are subject to numerous assumptions, risks, and uncertainties that may cause actual future results to be materially different from those contemplated, projected, estimated, or budgeted. Many factors may impact forward-looking statements of DT Midstream including, but not limited to, the following: changes in general economic conditions, including increases in interest rates and associated Federal Reserve policies, a potential economic recession, and the impact of inflation on our business; industry changes, including the impact of consolidations, alternative energy sources, technological advances, infrastructure constraints and changes in competition; global supply chain disruptions; actions taken by third-party operators, processors, transporters and gatherers; changes in expected production from Southwestern Energy and other third parties in our areas of operation; demand for natural gas gathering, transmission, storage, transportation and water services; the availability and price of natural gas to the consumer compared to the price of alternative and competing fuels; our ability to successfully and timely implement our business plan; our ability to complete organic growth projects on time and on budget; our ability to finance, complete, or successfully integrate acquisitions; the price and availability of debt and equity financing; restrictions in our existing and any future credit facilities and indentures; the effectiveness of the Company's information technology and operational technology systems and practices to detect and defend against evolving cyber attacks on United States critical infrastructure; changing laws regarding cybersecurity and data privacy, and any cybersecurity threat or event; operating hazards, environmental risks, and other risks incidental to gathering, storing and transporting natural gas; natural disasters, adverse weather conditions, casualty losses and other matters beyond our control; the impact of outbreaks of illnesses, epidemics and pandemics, and any related economic effects; the impacts of geopolitical events, including the conflicts in Ukraine and the Middle East; labor relations and markets, including the ability to attract, hire and retain key employee and contract personnel; large customer defaults; changes in tax status, as well as changes in tax rates and regulations; the effects and associated cost of compliance with existing and future laws and governmental regulations, such as the Inflation Reduction Act of 2022; changes in environmental laws, regulations or enforcement policies, including laws and regulations relating to climate change and greenhouse gas emissions; ability to develop low carbon business opportunities and deploy greenhouse gas reducing technologies; changes in insurance markets impacting costs and the level and types of coverage available; the timing and extent of changes in commodity prices; the success of our risk management strategies; the suspension, reduction or termination of our customers' obligations under our commercial agreements; disruptions due to equipment interruption or failure at our facilities, or third-party facilities on which our business is dependent; the effects of future litigation; the qualification of the spin-off of DT Midstream from DTE Energy ("the Spin-Off") as a tax-free distribution; the allocation of tax attributes from DTE Energy in accordance with the agreement that governs the respective rights, responsibilities and obligations of DTE Energy and DT Midstream after the Spin-Off with respect to all tax matters; and the risks described in our Annual Report on Form 10-K for the year ended December 31, 2022 and our reports and registration statements filed from time to time with the SEC.
The above list of factors is not exhaustive. New factors emerge from time to time. We cannot predict what factors may arise or how such factors may cause actual results to vary materially from those stated in forward-looking statements, see the discussion under the section entitled "Risk Factors" in our Annual Report for the year ended December 31, 2022, filed with the SEC on Form 10-K and any other reports filed with the SEC. Given the uncertainties and risk factors that could cause our actual results to differ materially from those contained in any forward-looking statement, you should not put undue reliance on any forward-looking statements.
Any forward-looking statements speak only as of the date on which such statements are made. We are under no obligation to, and expressly disclaim any obligation to, update or alter our forward- looking statements, whether as a result of new information, subsequent events or otherwise.
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Midstream Investment Thesis
Clean assets, clean balance sheet, clean story
Integrated and | Highly contracted | Strong balance sheet | |||
well-positioned | |||||
cash flows | with low leverage | ||||
assets | |||||
• | Haynesville / Appalachia | • | Long-termtake-or-pay | • | Self-funded investment |
dry gas focus | contracts | program | |||
• | Assets providing wellhead | • Committed to a durable | • | No significant near-term | |
to market service | and growing dividend | debt maturities | |||
• | Directly serving growing | • | No direct commodity | • Low and declining leverage | |
LNG export demand | exposure |
Mature environmental, social and governance leadership
- Executing on energy transition projects
- Committed to 30% emissions reduction by 2030 and net zero by 2050
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DT Midstream Asset Footprint
Integrated platform in the leading dry gas basins serving growing domestic and LNG demand
Pipelines connect world-class basins to high-quality markets
- ~900 miles of FERC-regulated interstate pipelines that have interconnections with multiple interstate pipelines and LDCs
- Gas storage assets with 94 Bcf of capacity
- ~600 miles of intrastate and lateral pipelines
- DTM assets currently provide ~2.3 Bcf/d of access to LNG export terminals
Gathering assets serve the most prolific dry-gas basins in North America
- Dry gas gathering assets serving growing gas production in the premier, low-cost production areas of the Marcellus / Utica and Haynesville
- ~700 miles of pipe, 106 compressor units with 215,000 horsepower and ~2.2 Bcf/d of treating capacity
LNG facilities
Operational Under development
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Consistent track record of growth through commodity cycles
DTM has highly contracted cash flows and no direct commodity exposure
Historical Adjusted EBITDA1 growth
(millions)
+20% CAGR
$841
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
Natural gas price | Natural gas price | ||||||||
down cycle | down cycle | ||||||||
1. | Definition and reconciliation of Adjusted EBITDA (non-GAAP) included in the appendix; years prior to 2022 exclude proportional interest from equity method investees | 5 |
Significant LNG Export Demand Growth Expected Over the Next Decade
~11 Bcf/d of Louisiana Gulf Coast area LNG export growth through 20331
US LNG export capacity
(bcf/d) | ||||||||||
32 | ||||||||||
28 | +16 Bcf/d | |||||||||
24 | ||||||||||
20 | ||||||||||
16 | ||||||||||
12 | ||||||||||
8 | ||||||||||
4 | ||||||||||
02023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 |
Sabine Pass | Calcasieu Pass | Plaquemines | ||
Cameron | Golden Pass | Delfin | ||
Port Arthur Corpus Christi
Cove Point Freeport
Rio Grande Elba Island
1. Represents growth from annual average level in 2023 | 6 |
Source: Wood Mackenzie North America Gas Investment Horizon Outlook - October 2023 |
Strong Long-term Production Outlook in Both Basins
Haynesville & Appalachia production are expected to experience significant growth over the next decade
Historical production | Production forecast | |||||||||
(bcf/d) | Haynesville | Appalachia | (bcf/d) | Haynesville | Appalachia | |||||
60
50
40
30
20
10
+18 bcf/d | ||
67 | ||
27 | ||
49 | ||
15 |
0 | ||
2018 | 2019 | 2020 |
DUC | Haynesville | |
2021 2022 2023
415 663 751
34
40
inventory1 |
Appalachia |
666 875 747
2023 | 2033 |
1. Drilled but uncompleted (DUC) wells data reflects year end inventory. Data through October 2023 | 7 |
Sources: EIA, S&P Global Commodity Insights, & Wood Mackenzie North America Gas Investment Horizon Outlook - October 2023 | |
Capital Allocation Approach
Preserve balance sheet strength
- Deleveraging into mid-3x's (proportional) / low 3x's (on-balance sheet) over the 5-year period
- Committed to long-term 4x leverage ratio ceiling
Durable and growing dividend
• +15% dividend increase since the Spin-Off
• 2.4x dividend coverage, with financial policy of a 2x coverage ratio floor
Invest in accretive organic growth projects
• Deploy capital at attractive 5-8x build multiples1
- Strong organic growth project backlog
$ | Maintain financial flexibility | |
• Strong value creation optionality to pursue the most accretive use of excess cash flow (i.e., growth investments, | ||
increased dividend, share buybacks, and/or debt reduction) | ||
1. New project build multiples differ based on business segments (i.e., pipeline vs gathering) | 8 |
2023-2027 Overall Growth Capital Outlook
Opportunity for excess free cash flow allocation in 2024
2023-2027 capital outlook
(Growth capex) Committed capital
$1.7 - $2.2 |
billion |
~$0.8 billion |
committed capital |
in 2023/2024 |
$700 - $750 |
million1 |
2023 guidance | 2024 | Additional organic | 2023 - 2027 |
growth opportunities | guidance |
Committed to preserving balance sheet strength and achieving an investment grade credit rating
- Investments in 2024 will be funded via cash flow after dividends
- Excess cash flow in 2024 will likely be deployed towards debt reduction if additional growth opportunities do not reach a final investment decisions
- Expect to end 2024 with an on-balance sheet leverage ratio of 3.6x or lower
- Proportional leverage ratio2 of 4.0x or lower
1. DTM's investment in 2023 is net of a ~$60 million customer contribution | 9 |
2. Leverage ratio is inclusive of proportional debt at our joint venture equity method investees | |
Strong Organic Opportunities Across Our Existing Footprint
Asset | 2023-2027 commercial focus | Overview |
LEAP | • | Active discussions for expansions up to ~3 Bcf/d | • Connecting growing Haynesville supply with growing LNG | ||
demand | |||||
Stonewall | • | Active discussions with existing and new customers for | • | Providing incremental Appalachia pipeline takeaway to East | |
expansion opportunities | Coast LNG and Gulf Coast markets | ||||
Pipeline | |||||
• | Generation Pipeline interconnection | • | Providing Ohio utility and industrial corridor access to NEXUS | ||
NEXUS | |||||
• | New supply connections; hydraulic optimization | supply | |||
Millennium | • | Recently completed open season for potential expansion | • | Enabling additional supply into New York and New England | |
opportunity | markets through compression expansion | ||||
Blue Union | • | Active discussions for gathering and treating expansion | • | Serving growing production from existing customers; step out | |
opportunities | expansions to connect new customers | ||||
Gathering | Appalachia Gathering | • | Active discussions for further expansion | • | Serving growing production from existing customers |
Ohio Utica | • | Initial buildout of new trunkline and gathering network | • | Emerging resource development in Ohio Utica | |
Tioga | • | Active discussions regarding full-scale development | • | Supporting new drilling activity in undeveloped acreage | |
Carbon Capture and | • | Continue to advance Louisiana CCS opportunity towards | • | Permanently sequestering CO2 from DTM treating assets; | |
final investment decision | supported by 45Q tax credit | ||||
Sequestration | |||||
Energy | • | New project development | • | Leveraging strong expertise to advance CCS in new regions | |
Transition | • | Advance hydrogen hub project concepts | • | Commercializing hydrogen transportation, storage and | |
Hydrogen | • | Work with strategic partner to identify and advance | |||
production | |||||
development opportunities | |||||
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DT Midstream Inc. published this content on 07 December 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 December 2023 17:56:28 UTC.