Prepared remarks
Welcome to the DT Midstream Second Quarter 2026 Earnings Call. I will now turn it over to our speaker today, Todd Lohrmann, Director of Investor Relations. Thank you. Please go ahead.
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. Please refer to the reconciliations to GAAP contained in the appendix. Joining me this morning are David Slater, Executive Chairman and CEO; Chris Zona, President and COO; and Jeff Jewell, Executive Vice President and CFO. So with that, I'll go ahead and turn the call over to David.
Thanks, Todd, and good morning, everyone, and thank you for joining. During today's call, I'll highlight our key accomplishments for the quarter and discuss the constructive market fundamentals driving demand across our footprint. I'll then turn it over to Chris and Jeff to review our commercial activity, project execution and financial performance and outlook. So with that, midway through the year, we continue to execute our focused strategy while delivering strong results. The organization is firing on all cylinders, giving us confidence in our full year plan and the future. We're successfully converting strong demand from LNG, power generation and data center development into new commercial opportunities and organic growth across our footprint. And with today's announcements, we have now commercialized 60% of our $3.4 billion organic project backlog with more than 80% of this being committed to pipeline projects. The momentum we're seeing across our business is underpinned by durable market fundamentals that will support growth for many years to come. The market environment continues to reinforce the critical role of natural gas infrastructure with both domestic and global demand growth highlighting the importance of reliable, secure and affordable energy supply. A study released earlier this year by the INGAA Foundation concluded that North America will require over $1 trillion of new pipeline infrastructure investment over the next 25 years, highlighting the significant need to connect supply to growing demand centers and supporting the strong investment thesis in natural gas pipeline infrastructure in North America. Internationally, growing LNG demand and ongoing supply disruptions are favoring U.S.-sourced LNG exports as a secure and reliable procurement strategy. We continue to believe this dynamic will support additional LNG-related infrastructure investment along the Gulf Coast, creating expansion opportunities across the natural gas value chain, including on our Haynesville system. Natural gas also remains the most reliable and affordable domestic energy source available at scale and plays a critical role in supporting future power demand growth. Our interstate gas pipeline footprint is strategically located to serve this growth, and we continue to advance multiple opportunities across our system supported by these favorable market fundamentals. I'll now turn it over to Chris to walk you through the commercial activity and construction projects that are converting this demand into growth across our footprint.
Thanks, David. Good morning, everyone. As David indicated, the second quarter was another active quarter for us commercially, and we are announcing today that we've reached FID on approximately $300 million of new organic growth projects from our capital project backlog. Unpacking the new investment projects, the first is an expansion of our Haynesville system, which increases our access to East Texas supply, expands our LEAP pipeline by 200 MMcf per day and is supported by new long-term agreements with two producer customers. The expansion brings total capacity of LEAP to 2.3 Bcf per day through a combination of incremental compression and looping with an expected in-service date during the second half of 2028. This project highlights our commercial capability to provide timely, competitive customer solutions and the unique advantages of our Haynesville system, which combines premier basin connectivity, direct LNG market access and efficient scalable infrastructure. The next project we are moving forward with is the first phase of modernization on Viking, which will improve the reliability of this critical capacity serving the Twin Cities in Minnesota and is expected to be in service in Q4 2028. This investment reflects the continued modernization opportunities we see across our interstate pipelines with the first phases of Guardian, Midwestern advancing as planned, including the recent FERC approval of the filing for Guardian Phase 1. During the quarter, we also executed a new long-term gathering agreement supporting a 100 MMcf per day expansion of our Appalachia gathering system, which will be in service in Q4 2027, delivering supply into NEXUS and Texas Eastern. This is a demand-based contract, reflecting growing producer activity in the region. Finally, we commercialized another new interconnect on NEXUS this quarter, which will have a capacity of 380 MMcf per day and will provide supply for a natural gas-fired power generation facility to power a new data center in Ohio. Combined with the interconnect we announced on the first quarter call, we are adding over 0.5 Bcf of demand pull to the mainline of NEXUS. Taken together, these new projects highlight the breadth of organic opportunities we continue to see across our footprint and our ability to commercialize these, all of which are supported by long-term contracts and durable customer demand. Looking beyond today's announcements, we continue to see a robust set of future expansion opportunities across our footprint. Projects such as the MIST expansion on our Midwestern pipeline and Vector 2030 expansion are advancing through the commercialization process, and we remain encouraged by ongoing customer discussions and the demand outlook supporting these opportunities. On MIST specifically, we see the project likely coming in multiple phases with southbound and northbound expansions. We are advanced in the process of commercializing binding agreements with the next milestone being a binding open season. Overall, these opportunities reinforce our confidence in the long-term growth potential around our assets reflected in our capital project backlog, and we will keep you updated as we continue to move them forward. Turning to our construction projects, we successfully filed the FERC 7(c) application for our Guardian G3 expansion project in June, and all of our other in-flight growth investments remain on track and on budget. Finally, operationally for the quarter, total gathering volumes for the Haynesville averaged 2.2 Bcf per day, an all-time record throughput on our system for a quarter. In the Northeast, volumes averaged 1.38 Bcf per day. Looking ahead to the third quarter, we expect Haynesville volumes to be in line with the second quarter and Northeast volumes to be lower due to timing of producer activity. I'll now pass it over to Jeff to walk you through our quarterly financials and outlook.
Thanks, Chris. And good morning, everyone. In the second quarter, we delivered adjusted EBITDA of $305 million, representing a $3 million decrease from the prior quarter. Our Pipeline segment results were $14 million lower than the prior quarter, driven by seasonally lower revenues from our joint venture pipelines and higher revenue on Stonewall. Gathering segment results were $11 million greater than the prior quarter, reflecting higher volumes on Blue Union. Growth capital investment for the second quarter was $86 million, which is in line with our plan, and we expect a ramp in growth capital over the balance of this year. As you look to the second half of the year, we expect the third quarter to be in line with our full year guidance, but to be lower than the strong second quarter, driven by maintenance across our gathering network. And as Chris noted, Northeast volumes are expected to be lower due to timing of producer activity. We are confident in our full year outlook and thus are reaffirming our 2026 adjusted EBITDA guidance range and our 2027 adjusted EBITDA early outlook. The new investments that reached FID this quarter will increase our 2026 and 2027 committed capital to approximately $425 million in 2026 and approximately $560 million in 2027. Our balance sheet is very healthy and in a strong position with two of the rating agencies recently raising our leverage downgrade thresholds, Moody's from 4.0 to 4.25x on a proportionate basis and Fitch from 4.0 to 4.5x for on-balance-sheet. Finally, today, we also announced that our Board of Directors approved our second quarter dividend of $0.88 per share, unchanged from the prior quarter, and we remain committed to grow the dividend in line with adjusted EBITDA. I'll now pass it back over to David for closing remarks.
Thanks, Jeff. So in summary, we remain confident in delivering on our guidance, continuing our strong track record of disciplined execution while advancing organic growth opportunities across our footprint. Our team is executing well, focusing on our customers' growing needs, which our high-quality pure-play natural gas pipeline portfolio is positioned to serve. The long-term outlook for natural gas infrastructure in North America remains highly constructive, supported by growing LNG and power demand and the increasing need for reliable, affordable and secure energy. And with that, we can now open up the line for questions.
Questions and answers
And your first question comes from the line of Theresa Chen.
Would you elaborate on the commercialization progress and process for MIST at this point, specifically on the size and scope of the phasing approach and how you see the competitive landscape evolving over the next few months?
Theresa, this is David. Good to hear from you. And I'll start, and Chris, maybe you can jump in and fill it in a bit. But I'd say I'm just going to elevate the conversation for a second and just remind everybody, we're focused on the customer need and the customer need is the ultimate driver. So that demand growth and the timing of that demand growth is the driver behind the commercialization timeline for MIST. I think as Chris alluded, and I think as we've discussed in the past, the project seems to be phasing into a southerly and a northerly type expansion. In terms of size and scale, Chris, maybe you want to add a little color to that?
Yes, sure, David. And I would say that it's a bit early here for us to really disclose anything related to size and scope of that. I mean, as David mentioned, we're really focused on the customer needs. And I think in our view, the first phase could be in service as early as end of 2029. But again, that's all going to be dictated by what the customer needs are. And the commercialization process, we are working on the binding precedent agreements, and that's going well. I'll just say, given the amount of demand in the area, we remain very encouraged by what we're seeing in the conversations that are ongoing. So I think that's kind of where we sit today.
Yes, Theresa, I think we said in the past, and maybe I'll just reiterate it here, is that from a size and scale perspective, I think we've always compared this to G3 as something similar in size and scale as G3. But like Chris said, this is very fluid. And as it crystallizes or as the MIST rises, we'll give you more detail. So stay tuned.
Understood. And maybe on the supply options for this project, what factors are influencing your decisions and development process here? Can you just help lay out the different options between REX, Borealis or other alternatives and what you're seeing there? And then maybe specific to Borealis relative to MIST in particular, given its potential role as a supply source, but at the same time, there's the debate on future PGT lateral expansions that could also expand to some of the similar markets targeted by MIST South. So can you just help clarify to what extent you see MIST and Borealis as complementary versus competitive over the long-term?
I think here's how to think about it, Theresa, is that Midwestern is the last mile to the load center. And the one benefit or positioning that Midwestern has in the market is it has multiple supply sources into that pipe. It's a north-south pipe, Chicago to Nashville. It can be fed by Vector. It can be fed by Alliance. It can be fed by REX. It can be fed by Texas Gas, and it can also be fed in the South by Tennessee Gas. So we've got a very diverse supply path optionality that's embedded in the pipeline. That's one of the features that makes this asset very attractive from a customer perspective — a lot of supply optionality and flexibility. So that's how the pipe operates today. That's how I expect it will continue to operate in the future. So we're somewhat agnostic to the supply pathway. So if Borealis commercializes, that's great. We would expect that would add additional supply to the southern end of the system. If REX does an expansion, that's great too; it will put supply right in the middle of the system. And obviously, we're working on a Vector expansion that puts supply on the north end of the system. So that's a feature that I think puts us in good standing with the customers in terms of, as they look at developing and as the demand grows, customers want to have multiple supply optionality to serve their demand and Midwestern offers that.
Your next question comes from the line of Jean Ann Salisbury.
If Enbridge's project Beacon to expand Algonquin into New England moves forward, does that materially increase the need for Millennium Pro or maybe another third-party pipeline option that sources gas from Appalachia?
Jean Ann, great question. Beacon is sourcing its supply from Millennium, a point called Ramapo on Millennium. So we're very supportive of the Beacon project. As that project commercializes, those shippers are speaking directly with Millennium to bring incremental supply to the receipt point on that project. So you can almost think of the two projects as tandem projects. They're very complementary to each other. So I think the short answer is yes, as Beacon commercializes, that's going to drive incremental opportunity on Millennium.
Very clear. And then as the gas pipelines in the Permian come online over the next couple of years, there could be a lot more Permian gas coming to the LNG corridor. Is there some risk that you see that maybe less Haynesville gas will need to go to the LNG than was previously thought and more will kind of go towards the Southeast? And does that change your outlook for getting to the full 4 Bcfd on LEAP over time?
I think our view on the Permian is supported by some of our actions here over the last couple of years, where we've been really intentional about enhancing our connectivity to Carthage. We believe Carthage will be one of the landing zones for Permian gas as it pushes easterly. And Permian gas is chasing both LNG demand and domestic demand as well. So the expansion that Chris talked about this morning is going to enhance our connectivity to Carthage for the reason that you just described. In terms of the demand growth over the next five to ten years, it's incredibly robust. It's going to need all of that Permian gas and it's going to need significant incremental Haynesville gas. So we're in a robust demand environment right now where all basins will need to grow. And I believe that will drive opportunities across the entire pipeline ecosystem.
Your next question comes from the line of Spiro Dounis.
I wanted to start with '27 CapEx quickly. The slide seemed to point to maybe a step change there. I realize no numbers are involved, but it seems like a nice gap up. So I'm curious what's changed since your last update? How much of that is an acceleration of projects into '27 versus maybe new opportunities you're potentially seeking here?
Spiro, I think it's as simple as the projects that we FID-ed. We give two years forward detailed view of the CapEx. And what you're seeing here on that slide is really the portion of CapEx related to those projects that we announced today and how much of that falls in 2026 and 2027.
Understood. Second question, hoping to not get you to repeat yourself, but I just wanted to go back to your competitive advantage in and around MIST and in that region. A lot of in-flight projects from competitors are announced in that neck of the woods. And so I'm just curious, it sounds like you're agnostic in some cases, but could you maybe just put a finer point on how you see your competitive advantage there and maybe what more of a blue sky scenario is for DTM? Is this in a situation where everybody wins? Or is this more of a net zero game?
That's an interesting question. I'm probably going to repeat what I said earlier: for existing infrastructure, it's like real estate, location, location, location. So where the demand manifests, if you're the asset in the ground that's nearest to that demand, you're going to have an advantage. Midwestern is sort of the last mile to the demand where the demand is manifesting. How the supply navigates to Midwestern is to be determined. The big advantage that Midwestern has is that it's not married to one supply pathway. So you don't have to sign up for the big ticket, for lack of a better word. You can take out the last mile, you have lots of supply optionality and then you can diversify your supply sourcing strategy. So that's the way I would think about it. How things evolve upstream of Midwestern back into the various basins, those dominoes are yet to fall.
Your next question comes from the line of Keith Stanley.
First, I wanted to clarify on MIST. David, when you say you expect it to be comparable to G3 in size and scale, are you referring to the capacity of the project or more the amount of capital investment?
Yes and yes. I think that's how I framed it a couple of quarters ago. It's size and scale similar to G3 on a lot of different metrics.
Okay. Second question, any early conversations you could point to with utilities on the need for a Guardian G4? I think WEC had said they plan to update next quarter on some of their plans around the nuclear plant and the like. Do you think G4 could start to get commercialized later this year once the utilities update their plans? Or is that more likely a 2027 event?
If we talk about that Wisconsin, greater Wisconsin market, they're following a very rigorous regulatory process right now. I would point investors to that regulatory process. I think you're correct that we're somewhat a derivative of that regulatory process. So yes, I think that could be the case. And that's fairly true across our footprint. When I look at Slide 8 in our deck, our entire asset footprint is kind of lit up like a Christmas tree right now. We've never seen that before while we've owned these assets. It's such a strong demand pull market environment and the regulatory processes that are unfolding across all these states across our entire footprint are foundational to our assets and all these expansion opportunities, whether it's what's happening in New England and New York or Wisconsin or Michigan or Ohio. They're all framed and driven around the regulatory processes because the majority of our demand pull interest is coming from regulated entities. It's a very exciting time. Those investments, once they move through the regulatory framework, are incredibly durable. We're very excited about what's unfolding right now around our footprint.
Your next question comes from the line of Julien Dumoulin Smith.
This is Alex Demetriou on for Julien. Just a question on the Haynesville and where Henry Hub is currently. Are you guys seeing anything in the way of price-related curtailments in the Haynesville? Or are you mostly insulated through MVCs? And then maybe just generally, how are conversations trending post Iran? And could you see a potential for LEAP expansions beyond these kind of 200 Ms that you've historically done?
Alex, Chris here. I'll take that one. So let me start with, do I see potential for incremental LEAP expansions? Absolutely. Based on the project we just announced on the expansion on the Haynesville system, it's pretty clear that the optionality we have from the supply side in the Gulf Coast market access with LEAP and the ability to expand that in these bite-size increments is attractive to the market. I don't need huge obligations to incrementally expand; that is very attractive. I expect that'll continue going forward as well. On the volume side, we see run volumes on our Haynesville system — some producers will decline, but there's a lot of other producers that will keep their volumes high and actually achieve a little bit of growth. So we're going to be flat going into Q3. I don't see that changing right now. We've got all of our customers' forecasts baked into our guidance here, and I don't see any material changes to that.
Got it. That's helpful. And then just switching gears to Guardian. You guys have talked about Iowa being a state to watch for data center demand and how that could be beneficial for Guardian. Do you see that as a potential avenue to necessitate an expansion that's sort of separate to G4? And from your perspective, what do you think you would need to get more constructive on the Iowa backdrop generally?
When we say the greater Wisconsin area, we should say Iowa and Wisconsin — that's what we're referring to when we make those comments. So I would mirror the comments that had the Wisconsin label on it. It's really Wisconsin and Iowa. We need to monitor and observe the regulatory process there with the utilities. As I said earlier, we are a derivative of that activity.
Your next question comes from the line of Jeremy Tonet.
Maybe picking up on Guardian and appreciate there's a lot of uncertainties as you outlined there. But if I'm thinking the possibility or order of magnitude of what this could look like, would G4, if I'm thinking about scope, CapEx, EBITDA and so on, could that look like G3? Or how should we think about the realm of possibility here?
You're asking me to look in the crystal ball. We are very bullish about what's happening in that part of the country right now, but I don't want to get ahead of it. If you observe the utility conversations closely, I'd say the market share we were able to acquire through this round of expansions, I would expect we would be able to hold a similar market share in the next round of expansions. Maybe that's the way I'll describe it. I don't want to get too far over the horizon to try to predict exact numbers or size and scale. I can tell you that capital costs of projects are going up over time, not down. But we'll let the demand crystallize first in those geographies, and then we'll look forward to the competition to get our fair share of that demand.
Got it. That's helpful. Maybe if we just turn to NEXUS here. It seems like a pretty good-sized interconnect as you talked about for the quarter. If you could just remind us, where is the pipe at capacity-wise, where it could go in the future and how we should think about growth — EBITDA growth in the future here?
The capacity of the pipe today is about 1.4 Bcf per day, and the pipe is effectively fully contracted today. There are some shorter-term contracts that roll every couple of years which puts NEXUS in an enviable position as one of the limited available capacities out of the Appalachia Basin that's available to be contracted for longer-term. NEXUS sits on probably the vast majority of that. We've been working the Northwestern Ohio market, bringing demand to the mainline. Step one is get it connected to the mainline. Step two is then provide service to that demand center off the mainline. Over time, you'll generate opportunities on the network to service that demand. In terms of NEXUS in particular, we can expand NEXUS quite easily with compression. When we built the asset eight years ago, we did not construct one of the compressor stations, but the yard is there, the headers are sitting there. So we're in a really good position to drop incremental compression on the asset to expand it. We would hope that as we monetize the existing capacity that's available to be monetized long-term that would be step one. Step two would be triggering an expansion. The market is ripening. We want to be strategic and patient as we address the market demand that's materializing.
Your next question comes from the line of Saumya Jain.
So following the prior recontracting of the Midwestern pipeline capacity, what percentage of the remaining portfolio is up for renewal over the next 12 to 24 months? And how do the pricing dynamics look for that?
I'm going to pass that one to Chris because I don't have the answer in front of me.
Good question. I know our current capacity — we've completely resubscribed, but I'd have to go back and look and see what's coming up in the next 24 months. I don't have that in front of me here. But I would tell you this: in our last renewal period, we had a lot of contracts that were year-to-year, very short-term. We did some tariff modernization on Midwestern. Subsequently to that, we moved to basically five- to twenty-five-year extensions. My expectation is that the market completely understands the value of that capacity longer-term, and I expect renewal tenor to continue to increase in turn. That's the way I would look at it.
Midwestern is a great example of the value of assets in the ground. The fact that we had one customer in particular want a 25-year renewal on their contract capacity is a strong indication of what's evolving in the market area and how some of these assets truly are irreplaceable. If you did replace it, the cost would be three to four times versus the asset in the ground today. The market is acknowledging that and recognizing it. As I said earlier in the call, there's an incredible demand pull opportunity manifesting across the entire footprint. We need to be thoughtful and strategic about how we contract into that strong demand pool.
Okay. Great. And then your recent Guardian expansion filing noted projects serving five local utility shippers. Is there any more color you can provide on these customers? And would you likely pursue similar customers and also 20-year contracts with G4?
On G3, our customer base is pretty much set for that project. For G4, a lot of the market support and the market need is going to be utility based. We expect G4 market support to look very similar to G3.
Your next question comes from the line of John Mackay.
David, you mentioned a lot of the supply for the Midwest projects is still TBD. But I'd love to hear your thoughts on whether there's any opportunity for you to feed some of that with Haynesville supply and/or maybe helping to reroute some supply coming from farther west.
That's a perceptive question and strategically we spend a lot of time thinking about it. If forecasters are even close, there's 30 to 40 Bcf of demand that will manifest in North America over the next 20 years. That's going to cause all current basins to lift production — Appalachia, Haynesville, Permian and others. How do you get that supply from those basins to where the demand is? That's a material uplift in demand that drives expansions on major interstate pipelines out of these basins. We want to participate in that either directly with our assets or potentially with other new projects. It's early to talk about specifics, but it is a top priority and we're focused on it. The footprint is lit up with opportunities. What you're asking — how to get that incremental production to consumption — will drive very large incremental investments, potentially new pipelines in addition to expanding existing pipelines. It's a super exciting time, but still early in the game.
Makes a lot of sense. Maybe my quick follow-up and second question will just be understanding it's early days. It is effectively a problem that needs to be resolved. In your mind, from this top-down macro perspective, when do you need to see the market coming out with these solutions? Is this 2030 in-service type of timeline? Maybe just frame that up for us.
I think you're correct that those projects will be large FERC projects requiring significant contractual support and commitment and will go through a full regulatory process. If we look back to projects like NEXUS or Rover, it's a multiyear journey from concept to commercialization to construction to turning the valve. NEXUS was conceived around 2011 and we didn't turn the valve until seven or eight years later. These projects can take a long time to percolate and mature. The demand is showing up, and as it does, the forces of supply and demand kick in. The earliest these projects could click in is likely the early 2030s; three to four years is a reasonable estimate for the fastest timelines.
Your final question comes to the line of Theresa Chen.
I just wanted to go back to the Haynesville quickly. Given recent consolidation-related headlines across the Haynesville to Gulf Coast corridor, how do you view the strategic merits and probability of further consolidation in the region in general? How do you view the market evolving from here? And how would this potentially impact future expansions on existing assets, including your own?
If there is additional consolidation, at the highest level that shrinks the competitive landscape. We're confident in our competitive position and not afraid of competition. If the landscape shrinks, that's one less competitor on the playing field. Right now, everything is growing, and the organic opportunity set in front of us is as robust as I've ever seen in my career. We're very focused on commercializing that, which adds a lot of value to equity. M&A in this environment has a higher bar; it's a much higher bar to do M&A given the strong organic opportunities. Those are my thoughts on consolidation at a high level.
I will now turn the call back over to David Slater for closing remarks.
Well, thanks so much for joining us today. These were a series of great questions, some really good macro strategic questions. I think the message here is that we continue to experience an incredibly robust market. We so much appreciate our investors and your interest and the support that you've had for us over the years. So thank you very much, and have a good day.
Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.