Thank you for standing by. My name is Briana, and I will be your conference operator today. At this time, I would like to welcome everyone to the DT Midstream First Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. I will now turn the call over to Todd Lohrmann, Director of Investor Relations. You may begin your conference.

Good morning, and welcome, everyone. Before we get started, I would like to remind you to read the safe harbor statement on Page 2 of the presentation, including the reference to forward-looking statements. Our presentation also includes references to non-GAAP financial measures. Following the successful issuance of debt at NEXUS pipeline, we are modifying our adjusted EBITDA calculation to reflect full proportional EBITDA from our equity method investees. Please refer to the updated definition of adjusted EBITDA and the reconciliation to GAAP contained in the appendix as well as the definitions and reconciliations of our other non-GAAP financial measures. The appendix also contains details on the debt balances and interest expense at our equity method investees. 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. I am pleased to report we had another strong quarter with both business segments delivering great results that are in line with our full year plan. As I communicated on our year end call, we expect growth to be weighted towards the second half of the year as we bring projects online. Standing here today, I am confident in our full year guidance range for 2023 and early outlook range for 2024. All of our key growth projects remain on budget and on schedule. And during the quarter, we made significant progress derisking these projects by completing major construction activities and firming up project costs. Approximately 80% of our overall growth project capital costs have been locked in through our spending to date and committed procurement contracts. And I'd like to give a big thanks to the entire team for their dedication as they work to ensure these projects meet the expected in-service dates for our customers. I also want to commend our employees for their excellent safety performance with no recordable safety incidents so far this year. We are continuing to advance our CCS opportunity in Louisiana, following the acceptance of the Class VI well permit application by the EPA. We have completed seismic surveys and continue to evaluate geological characteristics in support of our application. Last Friday, the EPA announced they are opening a public comment window on a proposal to grant the State of Louisiana's request for primacy over Class VI injection wells. We are very encouraged by this announcement and will continue to work closely with both the EPA and the state of Louisiana as we advance the project towards a final investment decision. I want to take a moment to address the natural gas fundamentals and share our observations on producer activity levels. We are starting to see rig reductions in response to the low gas price environment. Recently announced customer activity reductions in our footprint are fully contemplated in our guidance and our long-term view on the market remains very constructive. The resource areas served by our assets are Tier 1 with a long runway of highly economic drillable well locations. There was also a high drilled and uncompleted well inventory in the basins that we operate in, especially in the Haynesville, where the DUC inventory has grown significantly. On the demand side, LNG feed gas is at record levels, following the return of Freeport LNG and the next wave of new export facilities is quickly approaching. Power demand for natural gas is running well above last year and the potential increased power burn, especially if we have a hot summer, could accelerate the tightening of the market. Our asset footprint with wellhead to market connectivity serving the two best dry gas basins provides advantages in this very dynamic market. Our pipelines serve growing and durable demand centers and the pipeline segment has increased from approximately 50% of our business mix in 2021 to close to 65% today. We continue to add to our backlog of organic business development opportunities with a focus on short-cycle, rightsized growth investments. We recently added two new producers to our Haynesville system and at our storage complex, we are contracting into a favorable pricing environment. Now I'll pass it over to Jeff to walk you through our quarterly financials and outlook.

Thanks, David, and good morning, everyone. In the first quarter, we delivered overall adjusted EBITDA of $225 million. Our Pipeline segment results reflect continued strong performance at our storage complex and our pipeline joint ventures, offset by reduced short-term revenues following a strong fourth quarter. Our Gathering segment results were in line with the fourth quarter, except for the $2 million impact from transferring our Michigan gathering asset to the Pipeline segment, following the service conversion and the start of the new 20-year transport contract. Operationally, total gathering volumes across both the Haynesville and the Northeast averaged approximately 3 billion cubic feet a day in the first quarter. We expect gathering volume growth to be back half-weighted this year, which is driven by the in-service of our expansion projects and timing of customer activity. Growth CapEx for the quarter was $227 million as we made significant progress derisking our organic growth projects. We are maintaining our full-year growth CapEx range of $575 million to $650 million. Our total committed growth capital remains approximately $800 million and is slated for organic growth projects. The committed total, which is inclusive of our 2023 investment implies a significant step down in capital spend in 2024. We recently took the opportunity to further optimize our balance sheet with the issuance of $750 million of new investment-grade debt at NEXUS pipeline, with DTM’s proportional share being approximately $375 million. Funds from the transaction will be distributed in early May and will be used to support organic growth and pay down our revolving credit facility. This transaction will free up additional liquidity and provide interest expense savings. Overall, we are very pleased with the results of this financing. We remain committed to the strength of our balance sheet and our four times long-term leverage ratio ceiling. As Todd mentioned, we are modifying our adjusted EBITDA metric, which impacts our adjusted EBITDA guidance. The updated 2023 guidance can be found on Page 6 in the earnings presentation. This update to our guidance solely reflects the change in our adjusted EBITDA metric and does not reflect any changes to the base business. I'll now pass it back over to David for closing remarks.

So in summary, we feel really good about our full year guidance range for 2023 and our early outlook range for 2024. Our construction projects have been significantly derisked and are primarily backed by take-or-pay contracts. We continue to have a healthy business development inventory of organic growth projects and expect that improving market fundamentals over the course of the year will yield additional opportunities. We can now open up the line for questions.

Your first question comes from the line of Spiro Dounis with Citi.

First question, you guys mentioned that the natural gas prices to some degree have an impact on rigs here in the near term. But just curious if you sort of think out, it sounds like your outlook really hasn't changed when we think longer term. And so I know one thing you are pursuing was an expansion of LEAP towards 3 Bcf a day at some point. Just curious if you could maybe just walk us through customer interest levels on continuing that expansion now versus maybe a quarter or two ago and how you are thinking about the timing of that potential expansion?

So we continue to have really active dialogue with a series of customers on the next phase of LEAP expansion. As we sit here today, we're mid-2023 and that 2025, 2026 next wave of LNG is quickly approaching. One of the advantages that we offer the market is our ability to expand in what I'll call bite-sized increments, just like Phase 1, 2, and 3 were. So we continue to have a lot of customers interested in incremental LEAP capacity. Again, I think just recognizing the environment, we're in a bit of a weak moment in the commodity cycle right now. I think most of those customers are very self-aware of that. And I expect when everything lines out and they are prepared to make the next incremental commitment. So we feel real good about our competitive position. We've done really well in what I'll call the first wave of the expansion work. We punched above our weight and we're able to contract a large portion of the market share, and I expect the same thing will happen in the second wave.

Second one, maybe just going to the new EBITDA methodology. Two-part question on this one. First, I guess, what was the thinking of not sort of keeping it the way it was and reducing that EBITDA by the interest levels, especially now that you're going to have a little bit more JV debt, it would seem like that gap or that variable between EBITDA to cash flow will be a little bit bigger now? And then the second part of that question, as we think about the 2024 preliminary outlook that did not change to reflect this methodology, it looks like. Any sort of reason behind that or just sort of too early?

So I'll take the first piece and then David will help on the 2024. For us, it was pretty simple. We just want to make sure that we're being transparent and simple. That's a well-known approach when you've got material JV debt that you sort of moved to a proportional reporting method, and that’s what we're trying to do. Obviously, with NEXUS, that was a material change in our JV debt, so that's why we're doing it now. We really like the JV debt being able to finance at that level because we're able to do it at an investment grade, nonrecourse. As you're seeing the rate that we got, we're just thrilled with that rate. We can do it at a lower cost. So that's kind of why we made the change at this time.

Yes, maybe I'll pick up on the second half. It was always contemplated that at the right time in the evolution of that pipe, we would put JV level debt on it. This is really us executing the plan. In terms of 2024, there are puts and takes every quarter on forward-looking guidance, and this is no different. We have puts and takes in 2024. It hasn't changed our view on our confidence in our 2024 guidance, and it's been our practice that we'll refresh 2024 typically at the end of the current year and as we bring it into the current prompt year cycle. So that's just kind of been our practice, Spiro. So no concerns there.

Your next question comes from Michael Blum with Wells Fargo.

I just want to clarify a couple of things. On Slide 11, you mention your long-term leverage ratio ceiling of four times. Can you explain if you would consider exceeding that in the short term if you believe you can return to below four times within a reasonable timeframe, or is that ceiling of four times a strict limit?

Thank you for your question. You're correct that our commitment is to a long-term leverage ratio of four times, which includes the proportion. We are confident in this target because we have a strong number of demand contracts, stable cash flows, and no direct commodity exposure. This is why we are comfortable with the four times limit. However, you are correct about our current investment profile; we expect to temporarily exceed that four times by the end of this year. Nonetheless, we believe that with our plans, we will be able to reduce our leverage to the mid-3s over the next few years as things develop.

And then I just wanted to ask about the increase in storage rates. I'm wondering if you can just quantify, maybe uplift in terms of either contribution or just like rate of change, how much upside are you seeing in storage rates?

Yes, Michael, we've just seen a really strong storage market present itself over the last five to six months. We've had a significant amount of capacity rolling in our portfolio, just the way we have that portfolio structured. So the commercial team has been doing an excellent job here in the first quarter, renewing a number of contracts and capturing these higher rates. We're probably seeing rates that are 40% to 60% higher than we've seen perhaps last year in the storage market. We're really encouraged by that. A couple of years ago, we were sort of in the trough, if I can use that term, in the storage market. It was a pretty weak storage market. We were intentionally terming out capacity in that weak market. As the market has materially improved, I think it’s a function of just a higher volatility in the energy complex here in North America, we're looking to take advantage of that and contract up and term out to the extent that we can inside our storage business. So that's a bright star in the portfolio at the moment, and it's always nice to have a diversified portfolio.

And then just last one for me. Just I apologize if I missed this, but have you declared the dividend for the first quarter?

We have not, but we expect that will be coming shortly. We have a board meeting later this week. So stay tuned on that one.

Your next question comes from Robert Mosca with Mizuho.

So I was just wondering if you could provide any additional color on those two producers you signed up in the Haynesville. And then also, I think a couple of years back, you announced some contracts with new customers on Blue Union. Just wondering if you could update us with respect to, I guess, the tenure and bond commitments on those or expectations, and could that be a potential headwind to Haynesville volume in the short term?

So we signed up two new customers. Over the last couple of years, it was one of our strategic objectives as we wanted to bring on more new customers onto the Haynesville platform and start to diversify that platform a little bit. These two new customers are both smaller private producers. They're long-term contracts with dedications to our network. What was really encouraging for me to observe is the value that these new customers see in our network; we have a wellhead to market network in the Haynesville. So they really saw a lot of value in that where they could deal with one company, just plug into the network and they're ready to go. We expect those two customers to come on towards the end of the year. We're just encouraged by the efforts of the team to be able to do that, and we continue to add counterparties to the network, diversify the network, and grow the network.

And maybe just on those contracts that you signed a couple of years back, I'm not sure if those were kind of more short-term offload agreements, or were those long-term contracts as well?

Those customers are still on the system and they're actually growing their volume on the system. Yes, I would characterize them as long-term customers on the system.

Could you provide details about the specific projects related to the 20% of committed CapEx that is considered derisked, and share if you are experiencing any variations from the initial $800 million budget?

So let's just start at the highest level. We're very confident in our capital costs on all of our projects, both in the north and in the south. Eighty percent of that capital has been derisked/locked in. The open portion, the 20% that’s open, is primarily related to the install cost. So it's labor and the mechanical of putting it together. All the projects are running on schedule. Our construction team has done a fabulous job in a very difficult environment with significant cost pressures and delivery schedule pressures to hold the budget and hold the schedule for our customers. I feel really good about the derisking on the capital side. Just as a reminder, the gathering side of our business now represents about 35% of our business. Seventy-five percent of the wells that need to be drilled and brought online to support the expansion work have either been drilled and completed or are being drilled as we speak. It gives us a lot of confidence in that portion of our business, which is just one piece of our total business in terms of what we're going to deliver here in 2023.

Your next question comes from Alex Kania with Wolfe Research.

Maybe two questions. First, just hopefully a quick one. A lot of talk on Haynesville activities, but just is there any kind of changes in tone that you're hearing from your Appalachian producer counterparties there in the gas environment? And the second one, maybe just with respect to CCS. Can you remind us just what the timetable may end up being right now just with respect to the federal EPA process or maybe how you see the primacy discussions moving forward on Louisiana, just to maybe get a sense of when you could potentially get to an FID timing decision?

I'll start with Appalachia. Those percentages that I just quoted previously in terms of the activity we're seeing that supports our growth this year cover our total gathering business. It reflects both Appalachia and Haynesville. We continue to see our customers performing what we would expect them to perform in terms of our expansions in Appalachia. We continue to see the activity. There's a moderation occurring in Appalachia but probably not to the same extent that we're seeing in the Haynesville. My sense is it's primarily related to costs. There's a lot of inflationary cost pressure in the Haynesville more than in Appalachia. Producers are sending a little signal into the service sector in the Haynesville that they need to bring their cost in line. I expect that will play out over the summer with a cost acknowledgment and adjustment that will support continued drilling in the back half of the year. Market fundamentals appear to be improving towards the second half of the year. Strong price signals in the out years are healthy for producers to drill into. Regarding CCS in Louisiana, we've publicly stated the timing for us is sort of the back end of 2025. Our project involves capturing emissions from our own facilities in the Haynesville, then piping it and sequestering it. We've been working closely with the Louisiana Department of Natural Resources and the EPA with the expectation that, at some point, the primacy would shift to Louisiana. Both parties have been fully aware of all the work that has been done and that we're planning to support the application.

Your next question comes from Robert Mosca with Mizuho.

Just a quick follow-up here. Just wondering if you could address the decline in Haynesville volumes quarter-over-quarter, what drove that?

Yes, Rob, it wasn't anything more than just the timing of well completions. I think we had a similar phenomenon last year. The first half of the year tends to be a little lower, and we tend to see the ramps in the second half of the year. That seems to be the pattern of our largest customer. It was fully contemplated in our plan and in our guidance. So we're very happy with Q1. We are on track for our full year guidance based on our Q1 results.

There are no further questions at this time. David Slater, I turn the call back over to you.

Well, thanks, everybody, for joining us today. We certainly appreciate your support and interest, and I look forward to seeing many of you later in the month at EIC. Have a great day.

This concludes today's conference call. You may now disconnect.