David Slater: Yeah, Jeremy. The two way that we laid out in the guidance, we feel really confident in that two way. And like I mentioned earlier with John’s question, we’ve certainly calibrated to what I’ll call the current realities in the commodity space that may affect some of our customers and factored in the behaviors that we saw last summer when we experienced some really weak cash prices. So that’s baked into the guidance two way. So I feel very confident that we’re going to be in between those goalposts. In terms of some of the incremental activity in the portfolio, getting the Blue Union and LEAP system more deeply integrated to the Haynesville basin has been a strategic priority for us. That Carthage Interconnect is an example of that, just getting it more deeply tied to the entire breadth of the basin, lots of customers sitting over there that are looking for incremental egress down into the Gulf region and we’re very bullish that interconnect that it will drive incremental activity and potentially help support incremental LEAP expansion.
Jeremy Tonet: Got it. Thank you for that. And just want to see, I guess, over time, how you see capital allocation evolving for the company you have the CapEx stepped up a bit this year, and it seems like there’s still more opportunities. Also, it seems like there is M&A potential out there in the market and which would argue for leaving some balance sheet capacity. So I just wonder how you see balancing these competing priorities.
David Slater: Yeah. The way I think about it, and as we laid out in the deck, we’ve got this really robust organic backlog of opportunities and everything that we detailed in the disclosure are actively being worked. So we’re in a really advantaged position of having that deep organic backlog, which typically drive higher returns for capital deployment. So our priority will be to deploy capital there and monetize those higher returns. That will be priority number one. We announced 7% dividend increase. Our plan and our goal is to continue to grow that dividend and make it very durable for investors, so people have confidence in it. That’s currently our primary tool to return capital to shareholders. In terms of M&A, lots of assets in the market, lots of activity happening in the space, especially upstream, I don’t think that’s going to abate.
I think we’re in a consolidation mode right now. Lots of bolt-on opportunities in around us. Those will just have to compete with the organic opportunities that we’re pursuing. We’re very aware of all those bolt-on opportunities around us. We’ll assess them and hold them to the standard of our organic. And if it makes sense, we’ll pursue. That’s one of the reasons why Jeff’s kept the balance sheet as clean and pure as it has and why we continue to strengthen the balance sheet to have that dry powder sort of in the covered if opportunities present themselves.
Jeremy Tonet: Got it. That’s helpful. I’ll leave it there. Thank you very much.
David Slater: Thanks a lot Jeremy.
Operator: We’ll go next to Spiro Dounis at Citi.
Spiro Dounis: Thanks, operator. Good morning, guys. First question, maybe a two part one on the LEAP expansion. First, can you walk us through the scope of getting that extra one Bcf a day out of the pipeline and how much of that is going to ultimately be dependent on new LNG FIDs? And the second part of the question is, we think about the Phase IV part of the expansion that you’re potentially moving forward soon, is any of that impacted right now by some of the litigation going on right now in Haynesville?
David Slater: Good morning, Spiro. Great questions. So I’ll unpack that. For our Phase IV, we’re in some detailed conversations with a handful of shippers. These are long-term shippers with a long view on the basin and LNG export. I think those conversations are really driven by the commercial value that the system offers. It’s like, I talked about earlier with Jeremy, it’s interconnectivity to numerous supply points in the basin and it’s egress capacity to multiple market areas out of the basin, both to the South, but also in the north. It’s very well connected. And I think the customers are recognizing that a lot of optionality for them to move their product to market. And I think that’s driving the conversation more than some of the drama that’s unfolding in the basin with some other pipelines.
So that’s my perspective on that, Spiro. In terms of extending the runway from 3 Bcf a day to 4 Bcf a day, that’s sort of evolved organically driven by a couple of things. We’re — we’ve completed Phase I and Phase II and we’re now — has scheduled on Phase III. So we’re getting a much better feel from an engineering perspective, how the system is operating, where potential incremental gas is coming in on the system that affects the hydraulics of the system. As we have inbound requests for capacity and running different studies, it’s become clear to us that we actually can expand this beyond 3 Bcf a day up to the 4 Bcf a day neighborhood. So that’s obviously been well received in the market. We have no limitations on that right now, like some other projects have.
So we have a clear runway to expand on a relatively short notice with relatively low execution risks to that higher number. And if you look at what’s under construction and FID (ph) in terms of incremental demand coming over the balance of this decade, there’s definitely a need for significant incremental pipeline capacity. We laid that out in our deck, and I’d point you to that slide, just to look at the numbers.
Spiro Dounis: Got it. That’s helpful color. Thanks for that, David. Second question just going to the CapEx backlog of over $1.3 billion. You sort of laid out ’24 and ’25 pretty clearly, and then it seems like the capital spending in ’26, ‘27, maybe is around that sort of $300 million level. I’m curious if you look at that backlog and sort of tether that to the 5% to 7% EBITDA growth outlook, does that level of spending gets you 5% to 7% or is there an assumption there that you would be adding on more?
David Slater: No. That — if you do the simple math on the EBITDA multiple, that will get you the 5% to 7% growth rate.
Spiro Dounis: Got it. Helpful, guys. Thanks for the time.
David Slater: Yeah. No problem.
Operator: [Operator Instructions] We’ll move next to Robert Mosca at Mizuho Securities.
Robert Mosca: Hey. Good morning, everyone. Wondering if you could speak to the viability of some of those Northeast pipeline expansions you flagged in that CapEx slide. Just understand there might be a commercial desire, but perhaps your thoughts on how they could navigate the regulatory backdrop in the Northeast?
David Slater: Sure, Rob. I’d say Millennium is probably one of the best examples of that. They’ve — they’re in an open season process that had an open season on expansion that ties into the Algonquin expansion that I think Enbridge has talked about publicly recently. So both those two projects are sort of hand in glove. And both of them are in active discussions with shippers as we speak. So they’re very real. They’re active. There’s clearly an incremental demand need in that area. There’s obviously a lot of political drama around this topic around the reliability topic. But they’re very real, and they’re being — we’re in active conversations with long-term shippers around this as we speak.
Robert Mosca: Got it. Appreciate it, David. And then my second question, been some consolidation on your acreage in the Haynesville. Can you talk about maybe base case assumptions on how it affects your volume outflow and growth plan in that region just outside of having a stronger credit customer?
David Slater: Yeah. I mean, that’s a great question that I think until that merger closes and the new entity emerges. When we look at it and you look at the acreage overlap, just looking at the acreage map, you can see the kind of the industrial engineering rationale around that merger. The acreage is side by side. I think it’s going to enable them. And I think Chesapeake has said this publicly, it will enable them to drill longer laterals, more efficient capital deployment to release the same quantity of gas. So I think once the merger happens, there should be a good opportunity for us to sit down with the new entity, look at the dedications that we have, the swing dedications. Look at where maybe there’s pockets of acreage at Island within that dedication that maybe has the Chesapeake label on it.
I suspect there’ll be opportunity, but it’s really going to be a question post-merger as to having more clarity on what those incremental opportunities may be. We’re certainly bullish the transaction from a credit counterparty exposure. It’s a significant uplift for us. And I think is one of the key items in our journey to investment grade for DTM.
Robert Mosca: Got it. Appreciate the time, everyone.
Operator: Next, we’ll go to Sunil Sibal at Seaport Global.
Sunil Sibal: Yes. Hi. Good morning, and thanks for all the clarity on the call. So first question on your investment grade ratings targeted by year-end 2024. So I was just curious, are there any specific milestones that the rating agencies have laid out for you for 2024 that help them get there or is it just basically executing on the ’24 guidance.
David Slater: Sunil, I’d say there are a couple of things that the agencies have made very clear. And I think when you read the reports that they’ve published on us, they allude to them in the reports. So I’d say the first item would be we’re currently on positive outlook at Finch (ph). They all mentioned Southwestern achieving investment grade, which the original plant for Southwestern was to achieve investment grade this year. So I think the merger is an accelerant to that. The agencies have already publicly stated that the new merged entity would be investment grade. So I think that’s a catalyst that accelerates our journey to investment grade. It’s one of the key measures that the agencies have mentioned in terms of our move from where we are to investment grade.
And then the other item is what you alluded to, which is just continuing to have a disciplined execution of the detailed plans that we share with the rating agencies since we spun the company. And we’re definitely doing that, and we’ll have an opportunity to sit down in the spring to do our annual checkup, and we’ll be demonstrating again to them that we continue to execute on that plan and deliver the outcomes that they were expecting. So I think we’re well positioned to achieve that later in the year.
Sunil Sibal: Got it. And then on the $1.3 billion backlog that you laid out on the projects. I was curious if you could talk a little bit about some puts and takes, which might pull that backlog either up or might lead to some pruning in the backlog as you go along?
David Slater: Yeah. That’s another good question. I’d say the one area that has been evolving in the backlog. So I’d say our two core areas, pipeline and gathering lots of projects in different stages of the development cycle. Some you can see we’re — we brought a few in service, some are — we’re under construction on a few. Some are in what I’ll call late-stage development and some further out our earlier stage development. But the fundamentals around every one of these projects that we detailed are strong, and we’ve got line of sight to these expansions. So that’s what I’ll call our current core business platforms. The one that’s emerging, the energy transition, that one is emerging. We laid out a lot of detail in the deck around our Louisiana carbon capture and storage project.
