DT Midstream, Inc. (DTM) Q4 2022 Earnings Call Transcript

DT Midstream, Inc. (NYSE:DTM) Q4 2022 Earnings Conference Call February 16, 2023 9:00 AM ET

Company Participants

Todd Lohrmann - Director, IR

David Slater - President and Chief Executive Officer

Jeff Jewell - Chief Financial Officer

Conference Call Participants

Michael Blum - Wells Fargo

Marc Solecitto - Barclays

John Mackay - Goldman Sachs

Jeremy Tonet - JP Morgan

Alex Kania - Wolfe Research

Operator

Ladies and gentlemen, convey you for opinionated by. My sanction is Brent and I will beryllium your convention usability today. At this time, I would for illustration to invited everyone to nan DT Midstream Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] Thank you.

I would now for illustration to move nan telephone complete to Mr. Todd Lohrmann, Director of Investor Relations. Sir, please spell ahead.

Todd Lohrmann

Good morning, and invited everyone. Before we get started, I would for illustration to punctual you to publication nan safe harbor connection connected page 2 of nan presentation, including nan reference to forward-looking statements. Our position besides includes references to non-GAAP financial measures. Please mention to nan reconciliations to GAAP contained successful nan appendix.

Joining maine this greeting are David Slater, President and CEO; and Jeff Jewell, Executive Vice President and CFO.

I'll now move it complete to David to commencement nan call.

David Slater

Thanks Todd, and bully morning, everyone, and convey you for joining and for your liking successful DT Midstream.

During today's call, I'll recap our awesome accomplishments successful 2022, item our caller disclosures and supply an update connected our awesome improvement projects that we are presently executing on. I'll adjacent pinch immoderate remarks connected nan macro fundamentals and past move it complete to Jeff to reappraisal our financial results and caller disclosure details.

So pinch that, we had a very successful twelvemonth successful 2022, and I'd for illustration to thank each of our labor for their exceptional capacity passim nan year. We delivered afloat twelvemonth adjusted EBITDA of $830 million, which exceeded our revised guidance range, and represents 14% maturation from our 2021 original guidance.

Commercially, we executed connected galore integrated maturation opportunities that will present semipermanent maturation and worth creation. Foremost, among these are expanding our LEAP plus successful nan Haynesville by 90% to 1.9 Bcf a day, expanding our Appalachia gathering strategy by 20% terming retired contracts connected NEXUS and our Washington 10 Storage analyzable astatine charismatic rates and filing our Class VI good licence for our Louisiana CCS project. We besides closed connected nan Millennium pipeline acquisition, which makes america a mostly proprietor successful nan asset.

On nan building front, we successfully executed our Stonewall and Appalachia gathering description s, nan Michigan Gathering Conversion Project, and a information of our Blue Union description . Finally, we published our inaugural sustainability report, and we're recognized for our exceptional customer service, receiving nan apical ranking successful nan MASTIO Customer Service Study for midstream companies.

Looking up to 2023 and beyond, I'm highly assured successful our early maturation and financial strength. Jeff will supply nan specifications connected our caller financial disclosures, including our accrued 2023 adjusted EBITDA guidance and a beardown early outlook for 2024, our accrued quarterly dividend and our updated five-year superior outlook.

Before I walk it off, I'd for illustration to quickly reside nan earthy state fundamentals, fixed nan caller pullback successful earthy state prices. Firstly, we stay highly assured successful our plan. Our portfolio is good contracted pinch semipermanent take-or-pay agreements, our gathering assets service Tier 1 assets areas that are well-positioned connected nan drilling costs curve, and we person nary nonstop commodity exposure.

Our assets supply outlook capacity to premium request markets, which are expected to turn importantly betwixt now and nan extremity of nan decade. Our customers proceed precocious levels of activity crossed some of our regions and are looking guardant to nan completion of our description projects. Over our 20 positive twelvemonth history, we person a proven way grounds of beardown capacity and downward value cycles and are highly assured successful nan durability of our business moreover successful this little commodity value environment.

I'll now move it complete to Jeff to locomotion done our financials and our caller disclosure details.

Jeff Jewell

Thanks David, and bully morning, everyone. In nan 4th fourth of 2022, we delivered adjusted EBITDA of $227 million, which is simply a $20 cardinal summation from nan 3rd quarter. Pipeline conception results were driven by nan 4th fourth use of nan Millennium Pipeline acquisition, higher short-term revenues astatine nan pipeline associated ventures and Washington 10 Storage and continued precocious levels of short-term optimization astatine LEAP. In total, nan Pipeline conception results included astir $7 cardinal of favorable optimization and short-term gross that resulted from nan wide ground differentials crossed galore of our assets.

Gathering conception results were driven by higher gross astatine Appalachia gathering system, offset by little revenues astatine Susquehanna gathering and nan effect of a planned attraction outage astatine 1 of our Blue Union treating facilities. Operationally, we deed an all-time precocious this 4th successful full gathered volumes, which averaged astir 3.1 cardinal cubic feet a day, driven by nan in-service of description projects successful some regions and partially offset by little volumes astatine Susquehanna.

Now onto our caller disclosures. We are expanding our 2023 adjusted EBITDA guidance to $880 cardinal to $920 million, which reflects nan spot and durability successful our guidelines business, arsenic good arsenic nan expected publication from our integrated maturation projects. The midpoint of our revise scope represents 14% maturation from our 2022 original guidance. Similar to 2022, our scheme for 2023 is built connected nan anticipation that volumes and EBITDA will beryllium stronger successful nan backmost half of nan twelvemonth arsenic we execute connected our description projects. We will besides proceed to activity opportunities to optimize nan mini amounts of uncontracted capacity connected our assets.

Due to our assurance successful our portfolio, we are besides providing an early outlook for 2024 adjusted EBITDA of $920 cardinal to $970 million, which represents a 9% yearly maturation complaint from our 2022 original guidance. Our maturation scheme is underpinned by afloat contracted description pinch precocious levels of take-or-pay and nary nonstop commodity exposure.

We stay committed to a increasing and durable dividend and person declared a quarterly dividend summation to $0.69 per share, which represents an 8% summation from our anterior quarterly dividend. Our 2023 superior finance guidance of $605 cardinal to $690 cardinal reflects a heavier building play arsenic we execute connected our contracted maturation project. The squad is disconnected to a awesome commencement this twelvemonth pinch each projects connected fund and connected schedule.

We are besides providing our caller five-year superior outlook of $1.7 cardinal to $2.2 billion. This caller outlook is supported by beardown contracted rate travel and a backlog of charismatic integrated projects. Our updated five-year superior outlook tin beryllium afloat self-funded pinch nary incremental indebtedness aliases equity issuances, and we expect to people delever arsenic nan business grows, which will supply further equilibrium expanse capacity and further worth creation optionality.

Preserving our equilibrium expanse spot and financial elasticity continues to beryllium our apical priority, pinch nan eventual extremity of achieving an finance people rating. We stay committed to our semipermanent leverage ratio ceiling of 4 times and person strategical options to delever further via task financing astatine our pipeline associated ventures, which are presently nether leveraged. And arsenic of year-end, we had astir $700 cardinal of disposable liquidity and nary indebtedness maturities until 2027.

Our determination model for deploying distributable rate travel is designed to maximize shareholder worth pinch our option, including deploying superior to accretive integrated maturation projects that fresh our finance criteria, return of superior to shareholders done dividends aliases buybacks aliases paying down debt.

I'll now walk it backmost complete to David for much specifications connected our maturation opportunity group and closing remarks.

David Slater

Thanks Jeff. We proceed to spot important maturation opportunities crossed our existing plus footprint. Active discussions proceed for further description s of LEAP, and we precocious executed a five-year word hold connected 500 cardinal per time of existing capacity. This statement hold demonstrates nan beardown marketplace support for this wellhead to h2o pathway and its connectivity to increasing LNG markets.

We besides proceed to spot momentum for description s crossed our Appalachia assets arsenic request for pathways of beardown end-user markets remains high. We expect that our power modulation level will go a meaningful contributor to nan business towards nan extremity of our five-year scheme pinch nan near-term privilege of advancing our CCS task towards a last finance determination and information and hydrogen hub opportunities successful Appalachia.

So, successful summary, we had an exceptional twelvemonth successful 2022. We person an breathtaking twelvemonth successful beforehand of america arsenic we execute connected our maturation projects, which will alteration beardown EBITDA maturation done 2024 and beyond. Our full squad looks guardant to continuing our way grounds of capacity for our customers and shareholders.

We tin now unfastened up nan statement for questions.

Question-and-Answer Session

Operator

[Operator Instructions]

Your first mobility comes from nan statement of Michael Blum pinch Wells Fargo. Your statement is open.

Michael Blum

Thanks. Good morning, everyone. I wanted to commencement connected nan CapEx budget. So, you mentioned nan heavier building period. I'm wondering if you tin conscionable supply a small much detail. I'm assuming, descent 14 is benignant of what captures nan project, but conscionable wondering if there's thing much to that? And then, tin you besides conscionable punctual america connected what you're targeting for returns?

David Slater

Sure, Michael. Good morning. This is David. Yeah. So, this year, we'll beryllium up of CapEx twelvemonth arsenic galore of our projects are executing benignant of astatine nan aforesaid clip this year. Just arsenic you whitethorn recall, we reduced our integrated superior guidance successful erstwhile years, and this is astir nan timing of erstwhile we're really spending nan superior for nan building of these caller assets. So, this twelvemonth is going to beryllium a lumpy twelvemonth for us.

You tin benignant of spot it if you look astatine nan five-year CapEx revised guidance that $800 cardinal is committed contracted integrated investments. And you tin spot that this year, nan bulk of that $800 cardinal is being deployed. So that's conscionable nan inheritance astir nan CapEx disclosure present for 2023.

In position of looking forward, we proceed to attraction connected integrated opportunities. As we look to punishment immoderate of those projects, we're ever looking for accretive multiples and accretive to nan equity holders erstwhile we punishment and deploy that superior for integrated opportunities. We're good alert that we person 2 superior businesses here, nan Pipeline gathering successful each 1 of those segments benignant of person a different worth thresholds astir nan superior deployment. So, we're perpetually looking astatine that and make judge that we support a disciplined superior allocation authorities here.

Michael Blum

Great. That helps. I admit it. Second mobility I wanted to inquire was conscionable connected M&A. Obviously, you did nan Millennium deal. Wondering it conscionable seems for illustration location could beryllium much assets successful your backyard for waste successful nan adjacent future. Just funny for your appetite for M&A? And yeah, I'll time off it there.

David Slater

Sure. I deliberation our first attraction for superior deployment is integrated opportunities. And we person been blessed complete nan past mates of years pinch an abundance of opportunities that nan squad is executing on. There is galore much early shape opportunities that we're pursuing. So that will beryllium our number 1 privilege for superior allocation.

The measurement I deliberation of M&A, M&A is action worth for us, has to compete pinch integrated superior allocation and we person to guarantee accretion -- shareholder per portion accretion for immoderate M&A transaction. So that's really I deliberation astir it. I deliberation astir it arsenic action value. The marketplace presents these opportunities from time-to-time, and we can't really foretell erstwhile they're going to come. For us, it's really conscionable support that subject of superior allocation, if it makes consciousness and if it fits strategically, it's accordant pinch our finance thesis, and it creates a clear statement of show to shareholder worth accretion. We'll see it. But nan scheme that we're laying retired present coming successful our guidance does not require immoderate M&A activity.

Michael Blum

Got it. Thank you very much.

Operator

Your adjacent mobility comes from nan statement of Marc Solecitto pinch Barclays. Your statement is open.

Marc Solecitto

Hi. Good morning. Maybe conscionable to commencement connected nan Haynesville outlook. I wonderment if you could springiness america immoderate colour connected your expectations for basin maturation present complete nan adjacent mates of years. And then, you had a adjuvant descent location wherever you show nan breakeven connected your gathering acreage, and past obviously, you person nan indirect contractual support connected LEAP. But funny if you could possibly conscionable elaborate connected nan visibility, whether it beryllium MVCs aliases different factors and nan embedded assumptions you person successful nan expected measurement ramp connected Blue Union complete nan adjacent mates of years?

David Slater

Sure, Marc. Good morning. Thanks for nan question. Yeah. So, I'm conscionable going to measurement backmost a 2nd and possibly reside conscionable nan precocious level fundamentals pinch benignant of nan existent commodity value situation that we're seeing. So, I'll opportunity it this way, our guidance reflects nan astir existent accusation that we person from each of our customers. So, it's very caller and very current.

What we are watching successful nan basin is continued subject by nan producers. They were very disciplined successful nan $8 value environment. They proceed to beryllium very disciplined successful nan $3 value environment. That being said, conscionable nan assets value successful nan Haynesville is Tier 1 North America. There is tremendous magnitude of assets that is highly economical astatine sub $2 value levels. So, erstwhile I look astatine benignant of nan existent rig activity, which is still sitting astir that 80-rig level, you've heard what immoderate of nan nationalist producers person said recently. They are being disciplined, slowing down nan maturation rate, but still growing. I would reference immoderate of nan comp banal disclosures that I'm judge everyone's following. Even though that shaper is lowering rigs, they are still projecting a patient maturation -- measurement maturation successful nan basin.

We were seeing measurement maturation crossed our assets successful what -- pre nan higher value situation that we person for nan past 12 months. We were seeing maturation from our halfway shippers moreover erstwhile nan basin was moving astatine 50-ish rig. So, I'm highly assured successful nan value of nan assets and nan assets that we serve, we expect to spot growth.

Marc, you alluded to nan LEAP contracts, and arsenic astir investors know, our gathering description s that were successful formation connected wed into our LEAP description s that we're successful formation on. As we said previously, our LEAP contracts are each request based contracts. So, there's a important economical inducement for our shippers to capable those contracts, and that's precisely what we expect, and that's each been reflected successful our 2023 and 2024 guidance.

Marc Solecitto

Great. That's helpful. And past if we look astatine nan Gathering segment, volumes were up successful 4Q. EBITDA was down a little, and you referenced immoderate planned treating capacity made successful 4Q. Can you talk astir really overmuch of nan sequential diminution successful EBITDA was connected nan OpEx broadside versus separator dilution from nan treating maintenance? I'm funny if you person nan treating capacity description connected Blue Union coming connected later this twelvemonth successful 4Q, really what that does for nan separator floor plan and your Gathering maturation connected Blue Union here?

David Slater

Yeah. So, I'll return that successful 2 parts, Marc. So first, what you said was accurate. In position of Q4, we -- 1 of nan reasons why I deliberation we won nan number 1 midstream institution successful North America is because of nan reliability of our assets. That's very important to america and very important to our customers. We person planned attraction astatine our largest treater successful nan Haynesville successful Q4. So, yes, you're precisely right. There is simply a costs constituent to that planned maintenance, and there's a gross effect of that planned maintenance, but it's very important for america to do that to clasp reliability for our customers.

In position of looking forward, yes, we will beryllium bringing gathering and treating accommodation connected -- successful 2023 and 2024 and volumes will ramp arsenic those accommodation travel online. And I'll conscionable time off it astatine that.

Marc Solecitto

Got it. Appreciate nan time.

David Slater

Thank you, Marc.

Operator

Your adjacent mobility is from nan statement of John Mackay pinch Goldman Sachs. Your statement is open.

John Mackay

Hi. Good morning. Thanks for nan time. I wanted to conscionable spell backmost to nan spending guidance and really it benignant of factors into this caller five-year outlook. Like if we're looking astatine 2023 and reasoning astir benignant of free rate travel and past nan dividend connected apical of that, it's a adjacent magnitude of outspend this year. So, I guess, is nan connection that we'll spot a adjacent magnitude of outspend this year, but for 2024 positive that should reverse beautiful materially. I'm conscionable trying to deliberation of benignant of that outspend versus your comments connected nary incremental maturation -- nary incremental indebtedness aliases equity? Thanks.

David Slater

Thanks John. I'll start, and past I'm going to walk it complete to Jeff to possibly supply a small much color. But John, I deliberation nan champion measurement to understand this is conscionable nan lumpiness of nan measurement nan business and nan timing of nan CapEx spend. I deliberation it's nary much than that. And I deliberation successful erstwhile years, we've backed down our CapEx guidance arsenic we were shifting walk and really delaying walk to thief it really improves nan returns of nan projects erstwhile we do that. This twelvemonth is simply a dense year. We person a large bump present successful nan CapEx related to each nan contracted integrated opportunities that we're successful formation executing on.

If you look astatine our deck, and I'm going to mention you to descent 13 and descent -- actually, it's descent 12 and descent 13. You tin spot that $800 cardinal of existing committed integrated investment, nan immense mostly of that is getting spent this year. So, erstwhile you look astatine nan quality betwixt those 2 numbers, that's what contracts nan committed for early years. So, you're precisely right. What's committed coming will beryllium overmuch little adjacent twelvemonth than what we're executing connected this year. So truly, this is simply a timing issue.

I'll walk it complete to Jeff to talk astir nan ins and outs of nan equilibrium expanse arsenic it relates to this.

JeffJewell

Yeah. And bully morning, John. This is Jeff. Yeah. So, again, this is successful statement pinch -- conscionable travel connected what David said, this is successful statement pinch our scheme that our ceiling is 4 times connected our leverage, and we're very comfortable pinch that. And past arsenic we move into 2024 and beyond, we proceed to see, arsenic we've been communicating before, that deleveraging down into nan mid to debased 3 arsenic you get into nan later portion of 2024. Also, things that we person disposable to us, immoderate of them are very beardown contracted rate travel and nan like, but we've besides sewage nether leverage astatine our JVs. And truthful that's thing that again we're looking astatine each nan various devices that we person disposable to america because again, those are -- would beryllium finance people benignant of imaginable vehicles that we could besides utilize arsenic we deliberation astir our equilibrium expanse and maintaining nan beardown posture that we have. So that's benignant of really we're viewing it.

John Mackay

Okay. I admit that. Thanks for nan color. Maybe conscionable one, I'd emotion to perceive an update connected NEXUS. Just really recontracting is going? Whether aliases not you've made immoderate advancement connected immoderate of nan benignant of smaller scale, let's telephone it, benignant of description opportunities, peculiarly pinch MVP seeming to proceed to lag?

David Slater

Yeah. Great question, John. Yeah. We proceed to spot nan NVP limb successful nan market. And my consciousness is, nan marketplace has benignant of moved connected from location and NEXUS had a phenomenal twelvemonth successful 2022. And I'm judge arsenic you guys put done each nan details, nan financial details, you'll spot that arsenic well. So, we're very happy pinch really that plus has been benignant of -- really we had it positioned and really we've repositioned it contractually successful this caller marketplace building that's successful beforehand of america correct now.

So, arsenic I said successful my opening remarks, we proceed to spot this very beardown desire wherever pathways retired of Appalachia to nan beardown marketplace centers that each of our assets serve. So that pathway saw a batch of activity successful 2022. We expect much going guardant successful 2023 and 2024.

I'm going to inquire for a small much clip earlier I supply much colour astir immoderate of nan activity that we're doing astir NEXUS. But I'll conscionable opportunity this, John, what we've talked astir successful nan past, we are continuing to activity connected and execute around, which is really tin we creates much capacity connected NEXUS without going done a FERC process. And nan squad is moving intensely connected that correct now and I'm very optimistic that we're going to person immoderate affirmative results from those efforts.

John Mackay

All right. Appreciate it.

Operator

Your adjacent mobility comes from nan statement of Jeremy Tonet pinch JP Morgan. Your statement is open.

Jeremy Tonet

Hi. Good morning.

David Slater

Good morning, Jeremy.

Jeremy Tonet

I conscionable want to pivot to nan CapEx a small bit, if I could. And I conscionable wanted to cognize if you could springiness america immoderate consciousness for a small spot much item arsenic acold arsenic what bucket wherever nan CapEx is going, beryllium it gathering versus interstate versus power modulation aliases Haynesville aliases Appalachia aliases moreover circumstantial task benignant of scoping size, conscionable trying to excavation successful a small spot more.

David Slater

Jeremy, I'll effort to break that into 2 answers. One is nan committed capital. So, what we contractually person committed coming and nan immense mostly of that is presently focused connected nan Haynesville. So, it's LEAP and it's nan gathering description s that were successful formation connected that are going to provender LEAP. And I'd opportunity astir apt nan weighting is heavier towards nan Pipeline conception than it is towards nan Gathering conception successful position of nan superior deployment, and I'll time off it astatine that.

If we look astatine that five-year guardant look, truthful nan -- I telephone it nan $2 billion, nan midpoint location of nan guidance. In position of really I deliberation astir wherever that will get deployed, I afloat expect a chunk of that's going to spell into nan power transition. And successful nan opening comments, we benignant of -- we're putting that towards nan backmost extremity of our five-year plan, but nan CCS task is maturing successful Louisiana. We revenge a Class VI good exertion past year. We're successful heavy consultation pinch nan agencies correct now arsenic we advancement that project. So, we expect that, that task will advancement to a constituent wherever we'll FID it. When we FID it, we'll supply nan investors much colour astir nan CapEx and immoderate much of nan details, but emotion very bully astir that project, very optimistic.

There's tons of absorbing things happening successful our Northern region, particularly successful and astir Appalachia pinch various hydrogen hub applications that we're participating in. So, we're emotion really optimistic there. It's very overmuch successful statement pinch our halfway competencies and a batch of tangential relationship to our existing plus footprint and customer base. So, again, I deliberation those are still early rhythm projects, but I do expect a chunk that we'll deploy into that segment.

Jeremy Tonet

Got it. That's helpful. Maybe picking up pinch nan CCS broadside there. I admit this is simply a later day successful nan decade, but conscionable want to spot thoughts you had astatine this point. With regards to nan full addressable marketplace aliases moreover much specifically arsenic it relates to nan Haynesville, it seems for illustration economies of standard could really thief economics here. And so, there's a number of different treaters successful nan Haynesville. So, really do you spot this benignant of unfolding? It seems for illustration you'd beryllium focused connected your ain emissions first, but past if there's others successful proximity, would you look to activity pinch them? Would they beryllium JV partners? Or do you deliberation you supply -- conscionable supply nan work for them? Just trying to get immoderate consciousness that you mightiness beryllium capable to stock pinch really that could create complete time?

David Slater

Yeah. That's a awesome question. So, you're right. Our attraction to day has been connected our ain emissions and cleaning up our ain emissions. And we provided immoderate colour astir this task that we're targeting 1 cardinal metric tons a twelvemonth successful position of the, what I'll call, nan retention aliases nan sequestration capacity of nan formation.

We are very overmuch reasoning to creation and create a task that has an extended runway that will spell beyond our ain soul needs. And you're right, location are different neighbors successful our vicinity that person akin plans, but they whitethorn not person nan attraction that we person of CO2, and you're very meticulous successful your connection that standard is important here. You person to person standard for nan economics to container retired pinch nan 45G taxation credit. So, I position that arsenic an opportunity that will come. That will beryllium for illustration a Phase 2 opportunity for america arsenic erstwhile we return attraction of our ain needs, look astatine perchance offering to 3rd parties. I deliberation it's premature to foresee really that third-party business would evolve, whether it would beryllium a fee-for-service, whether it would beryllium a imaginable JV partner. I deliberation nan marketplace still needs to germinate a small spot astir that.

But nan different breathtaking portion astir CCS that we see, it's transportable to different geographic areas and footprint, peculiarly up present successful nan Northern portion of our footprint. Any opportunities for CCS, we person tons of early shape conversations going pinch clients wherever this would beryllium astir apt nan astir economical measurement for them to mitigate their c emissions. So, again, our extremity established nan [indiscernible], get this task FID, return attraction of our ain needs and past replicate and export that to different jurisdictions wherever you person precocious concentrations of customers, wherever this is an economical solution for them to decarbonize and you person nan correct earth science successful nan region to accommodate it. So, very excited astir this, rather frankly. I deliberation this is going to beryllium an emerging area for america and others that will really thief nan state arsenic we navigate nan pathway to a little c future.

Jeremy Tonet

Got it. If I could conscionable prime up connected -- portion of nan past portion location pinch your Northern footprint successful CCS and customer outreach there. Is that -- is this internal? Or is this wrong nan lipid and state industry? Or is this extracurricular nan lipid and state manufacture arsenic acold arsenic customer conversations are concerned?

David Slater

It's each of nan above, Jeremy. It's some soul successful position of sector, but there's a batch dense manufacture up present -- and that's a batch of CO2. And again, erstwhile you look astatine nan existent taxation authorities and nan superior investments that immoderate of these industries have, this is simply a very viable and economical pathway for them to materially decarbonize their operations. So, there's tons of conversations successful each sectors of nan economy, nan powerfulness sector, nan business sector, nan chem sector, nan ag assemblage wherever this is very applicable. So, yeah, that's what makes maine truthful excited about, Jeremy.

Jeremy Tonet

And conscionable -- sorry.

David Slater

No, spell ahead.

Jeremy Tonet

And conscionable to clarify, erstwhile you opportunity up here, are you saying Michigan aliases Appalachia Northeast?

David Slater

Yeah. My apologies. I'm sitting astatine Detroit. So, erstwhile I opportunity up here, I'm referring to nan Northern footprint. So, what I'll telephone from New York correct done to nan Midwest wherever each of our assets are.

Jeremy Tonet

Got it. Very helpful. Thank you.

Operator

Your last mobility comes from Alex Kania pinch Wolfe Research. Your statement is open.

Alex Kania

Thanks. Good morning. You mentioned conscionable nan progressive discussions still going connected pinch incremental LEAP description . Would you beryllium capable to person immoderate benignant of colour reasoning astir what nan opportunity is possibly moreover pinch respect to timing? Do you deliberation that it's adjacent to presume that would beryllium thing that whitethorn beryllium coincide much pinch nan LNG capacity coming into play successful nan backmost half of nan decade? Or is location a chance that could hap earlier? And past possibly if you could conscionable talk a small spot conscionable astir what you're proceeding pinch respect to LNG terminal improvement correct now?

David Slater

Thanks for nan question, Alex. Well, possibly I'll conscionable commencement pinch conscionable benignant of going backmost to what I said connected nan earlier remarks, for 1 of our anchor shippers, we extended 0.5 Bcf a time of their statement for 5 further years, and that makes that statement beryllium a 15-year word contract. So, I deliberation that really said volumes to america of nan value of this plus is connectivity, wherever it's connecting nan basin to nan LNG corridor and nan -- conscionable nan spot successful nan LNG marketplace present North America play that, that customer wanted to do that pinch us. So, we're very encouraged by that.

In position of nan adjacent activity of description connected LEAP, arsenic I said successful my opening remarks, we're successful progressive conversations pinch a number of clients astir that. We were making a batch of headway complete nan past twelvemonth successful position of conscionable incrementally expanding. As you would expect, these are large commitments pinch customers that typically lucifer up pinch commitments downstream of our assets. So, they are semipermanent contracts that person to beryllium put together. And I ever liken ourselves to -- we're successful nan -- we're astatine nan precocious schoolhouse creation and everyone's uncovering their creation partners and we're facilitating it by connecting nan 2 counterparties together pinch nan asset.

So, it takes time. So, I don't want to foretell nan clip here. I deliberation we conscionable springiness that nan clip that it takes for a bully logical business to transact, and we're assured that there's going to beryllium much to come. Our plus is well-positioned. And nan measurement we're doing nan description , we person a runway retired to 3 Bcf a time pinch this asset. And we tin proceed to grow successful right-size increments, which I deliberation is very unique successful nan basin versus immoderate of nan different projects that are retired location that require ample standard commitments earlier they tin FID. So, we're really encouraged astir our position. We're successful nan ground. We're flowing state today. And we're incrementally expanding this twelvemonth and adjacent year. So, we consciousness really bully astir wherever we're sitting pinch LEAP correct now, and for illustration I said, I do expect more. It's conscionable -- we'll fto nan marketplace determine nan timing. So.

Alex Kania

Great. Thank you.

Operator

There are nary further questions astatine this time. I will now move nan telephone backmost complete to Mr. David Slater.

End of Q&A

David Slater

Thank you, everybody. We genuinely admit your clip and attraction and liking successful DT Midstream. Have a awesome day.

Operator

Ladies and gentlemen, convey you for participating. This concludes today's convention call. You whitethorn now disconnect.