DT Midstream, Inc. (NYSE:DTM) Q3 2023 Earnings Call Transcript

John Mackay: That’s great. I appreciate all that detail there. Maybe just looking in quickly on the interconnect following-up with an earlier question. I guess just curious from our side, are you expecting this to bring on kind of material incremental volumes onto LEAP above what you were expecting or is this kind of more about adding flexibility for your existing shippers and kind of existing flows?

David Slater: I think it’s all of the above, John. I mean the interconnect with the Gillis Access project, I think is very strategic long-term and puts us in a really strong competitive position to serve that growing demand, adding supply to the Blue Union system just puts more product on the system, more customers on the system diversifies our customer base. And all of that strengthens the competitive position of the entire Haynesville asset footprint and gives us tremendous flexibility to offer lots of different services to the different customers. So it’s — I expect it’s going to be positive in the short-term, but it’s also going to be very positive in the long-term in terms of making this network a very attractive network when people have choices as to how they want to move their gas process and treat their gas and ultimately deliver their gas to the different market hub delivery points out of the basin.

John Mackay: That’s great. Appreciate the time today.

Operator: The next question is from Spiro Dounis with Citi. Your line is open.

Spiro Dounis: Thank you. Good morning David, good morning Jeff. Wanted to just go back quickly to the Haynesville Gathering volumes. You’ve addressed a little bit of this I want to put a finer point on it. Saw them kind of bounce back in 3Q versus the maintenance in 2Q. Just curious as we go forward you’re thinking about that cadence from here as these lead phases come online is that going to draw incremental gathering volumes in or are you sort of moving them off other systems on to LEAP?

David Slater: Yes, great question. It’s going to be both. It’s going to draw in incremental volumes onto the network. And it’s going to have volumes that are currently being delivered to other third-party pipes likely stay on the network in the future. So, it actually does both Spiro.

Spiro Dounis: Okay. And I think you had mentioned that Phase 1 kind of came on and filled quickly based on what you just said it sounds like these next phases you’re expecting something similar there as well?

David Slater: We’re highly optimistic, so the answer is yes. Yes, the — how quickly that first phase filled was — I think it even surprised us a little bit how strong the demand pool was. And if you look at the pricing in the market you’ll see that price signal being broadcast in the market. The pricing signal is saying we need more gas at Gillis. So, fundamentally that’s very encouraging for Phase 2 and Phase 3.

Spiro Dounis: Great. And then just a second question. David you talked about the right price signal for producers. And I’m sure there’s no magic number but you also talked about this range looking forward in kind of the $3.50 to $4.25 range is supportive. I guess is that kind of the pricing range that we should be thinking about? And if that’s already prevalent I guess what are we waiting for to see producers start to mobilize here?

David Slater: Yes, I think that is the price band that is going to trigger what I’ll say producers are kind of getting back on the gas pedal so to speak. All of that is premised on a balanced market fundamentally supporting that price. But I’d say just like there was a delay on producer reaction to that that low $2 price that showed up in February timeframe. I expect there will also be a delay on the uptick in the pickup. I think producers are going to want to see the durability of the current pricing. And this is just my opinion. And I’m sure, I would ask this question to the public producers, as well. But I suspect, they’re going to want to see a couple of months of that price sticking in the market, before they sort of pour more capital into the drill bit.