DT Midstream (NYSE:DTM) reported first-quarter financial results on Thursday. The transcript from the company's first-quarter earnings call has been provided below.
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Summary
DT Midstream reported a strong start to 2026, driven by high demand and cold weather, reinforcing their full-year plan.
The company announced investments in two new pipeline projects: Vector Pipeline expansion and Millennium R2R, supported by long-term contracts.
DT Midstream is engaged in active commercial discussions for potential pipeline expansions in response to strong market demand.
Q1 2026 adjusted EBITDA was $308 million, a $15 million increase from the previous quarter, with growth capital investment at $72 million.
The company reaffirmed its 2026 adjusted EBITDA guidance and highlighted strategic expansions to meet growing energy demands.
DT Midstream emphasized the importance of US LNG as a stable energy supply source amidst geopolitical developments.
The company maintained its quarterly dividend of $0.88 per share, aligning with adjusted EBITDA growth.
Full Transcript
OPERATOR
Welcome to the DT Midstream First Quarter 2023 Earnings Call. My name is Rebecca and I will be your conference operator today. All lines have been placed on mute to prevent any background noise. After the Speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press STAR followed by the number one on your telephone keypad. If you would like to withdraw your question, press Star one again. I will now turn it over to our Speaker, Todd Lormar, Director of Investor Relations. Please go ahead
Todd Lormar
Good morning and welcome everyone. Before we get started, I would like to remind you to read the safe harbor statement on page two 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.
David Slater (Executive Chairman and CEO)
Thanks Todd and good morning everyone and thank you for joining. During today's call I'll touch on our financial results and provide an update on the latest commercial activity and our growth projects. I'll then close with some commentary on the current market fundamentals before turning it over to Jeff to review our financial performance and outlook. So turning to our financial results, we're off to a strong start in 2026 fueled by a strong demand and cold winter giving us confidence in our full year plan. We continue to advance organic opportunities from our 3.4 billion project backlog in a very strong market environment that supports our future growth. We are announcing today that DTM has approved investment in two new projects in our pipeline segment. The first is a mainline expansion of Vector Pipeline which increases the total capacity of vector by approximately 400 million cubic feet per day and is anchored by investment grade utility customers under 20 year negotiated rate contracts with a Q4 2028 expected in service. The next project DHAM has approved investment in is Millennium R2R which is supported by long term contracts with two utilities and an existing power plant for 70 million cubic feet per day of capacity and is expected to be fully in service in Q1 2027. These investments are supported by strong market fundamentals backed by utility and power generation customers and will serve the growing demand in the upper Midwest and New York and New England markets. In addition, we have entered into an agreement to build a pipeline lateral to serve a new utility scale power development located just off Midwestern Pipeline in Indiana where the developer plans to construct a 900 megawatt power plant which we expect to serve under a 20 year demand based contract for approximately 265 million cubic feet per day of capacity. This project is subject to our customer reaching FID in the power plant which we expect to occur in 2026. Our expected lateral pipeline and service date is in the first half of 2028. Also on Midwestern, we recently recontracted approximately 30% of the system's capacity with term extensions ranging from 5 to 25 years, reflecting the importance of this critical capacity and how the market values it. Finally, we commercialized a new interconnect on Nexus this quarter which will have a capacity of 250 million cubic feet per day and will provide supply for a behind the meter natural gas fired power generation facility to power a new data center in Ohio. Adding this load to the mainline of Nexus strengthens the asset over the long term. We are also seeing strong market interest for additional pipeline projects in the Midwest and Northeast and are advancing these potential opportunities towards commercialization. Midwestern Pipeline closed a successful non binding open season at the beginning of April for both northbound and southbound expansions to increase capacity by up to 1.5 billion cubic feet per day and I'm pleased to report that the open season was oversubscribed. Vector Pipeline also recently closed a non binding open season for the 2030 expansion project to to increase westbound capacity into Chicago by 300 to 500 million cubic feet per day which received very strong customer interest and was also oversubscribed. Our next steps with these two projects are to optimize the pipeline and facility design based on the customer requests and then to work with our customers to reach binding commitments. We will keep you updated as we continue to progress these opportunities. Turning to our construction activity, our Midwestern gas transmission power plant lateral to serve AES Indiana's gas fired power plant was placed in service on time and under budget with commercial operations expected to begin in Q2 this year. All of our other in flight growth investments remain on track and on budget. Finally, I'd like to take a moment to address the recent market movements and the global geopolitical situation. The first quarter of 2026 was a volatile period for the market with significant cold weather in January driving extreme prices across the country, highlighting capacity constraints in the North American market driven by demand growth, followed by geopolitical developments in the Middle east that are contributing to the broader energy market instability. These events have renewed both domestic and global focus on reliability and security of supply. Internationally, the discussion has largely centered on oil, yet curtailed and constrained LNG volumes from the Middle east region have underscored the value of US LNG as a stable and dependable supply source. We believe this dynamic will favor increased LNG exports from the US Gulf coast and create additional expansion opportunities for US based supply which our Haynesville system is very well positioned to serve. With its high degree of both receipt and delivery connectivity. Our LEAP pipeline is currently running full at its design capacity of 2.1 billion cubic feet per day and has the ability to expand to 4 billion cubic feet per day. Turning to the domestic front, we are seeing growing energy reliability and affordability concerns across many regions. With much of the pipeline infrastructure operating at maximum capacity, many regions cannot access low cost supplies of natural gas produced domestically in our prolific production basins, which highlights the need for incremental natural gas pipeline and storage investments to unlock these low cost supplies. In the Midwest and Northeast, power demand fundamentals continue to strengthen. Driven by data centers and other large load customers, utilities in these regions are converting potential opportunities into signed load more quickly than previously expected, with multiple gigawatts of contracted demand now backed by binding agreements and capital plans that materially increase peak load projected through the end of the decade. With large load tariff frameworks in place to protect affordability, this level of growth is evolving rapidly. As construction is underway, energy is flowing to some projects such as Phase one of Microsoft's Mount Pleasant Data center in Wisconsin, reinforcing our growth outlook for increased gas fired generation and natural gas demand. Our interstate gas pipeline footprint is strategically located in this region to serve this growth and the strong response to the recent open seasons on Midwestern and Vector pipelines support these fundamentals. I'll now pass it over to Jeff to walk you through our quarterly financials and outlook.
Jeff Jewell (Executive Vice President and CFO)
Thanks David and good morning everyone. In the first quarter we delivered adjusted EBITDA of 308 million, representing a 15 million increase from the prior quarter. Our pipeline segment results were 14 million higher than the prior quarter, driven by seasonally higher EBITDA from our joint venture and Interstate pipelines and higher revenue on Stonewall and Leap. Gathering segment results were 1 million greater than the prior quarter, reflecting higher volumes on Blue Union and Appalachia gathering. Growth capital Investment for the first quarter was 72 million, which is in line with our plan and we expect a ramp in growth capital weighted towards the second half of this year. Operationally, total gathering volumes increased in both regions from the fourth quarter. Haynesville volumes averaged 2.09 bcf per day, driven by new volumes and recovery from upstream maintenance completed in the fourth quarter. In the Northeast, volumes averaged 1.42 bcf per day, driven primarily by the Stonewall Mountain Valley pipeline expansion that was placed into service at the beginning of February. As we look at the balance of the year, we expect the second quarter to be in line with our full year guidance, but to be lower than the strong first quarter driven by seasonality across our interstate pipelines, including JVs, a rate step down on Guardian Pipeline and typical seasonal planned maintenance. We remain confident in our full year outlook and reaffirm our 2026 adjusted EBITDA guidance range and our 2027 adjusted EBITDA early outlook. As David mentioned, DTM has approved investment in the Vector 2028 pipeline expansion and we expect total DTM investment of 80 to 100 million for the project. DTM has also approved investment in a millennium R2R project which will be completed under our existing regulatory authorization. We've increased our committed capital in 2026 and 2027 to reflect these new investments. 2026 is approximately 400 million and 2027 is approximately 440 million. Finally today we also announced that our Board of Directors approved our first 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.
David Slater (Executive Chairman and CEO)
Thanks, Jeff. So in summary, we remain confident in delivering on our guidance, continuing our track record of strong performance we've maintained since we spun the company in 2021. Our high quality pure play natural gas pipeline asset portfolio is very well positioned to take advantage of growth opportunities across our network as we execute on our large organic project backlog. The fundamentals supporting natural gas infrastructure remains stronger than ever with a broader realization of the key role US LNG will need to play as a reliable and stable global energy supply and accelerating power generation needs in the Midwest and Northeast, including data center driven load. And with that we can now open up the line for questions.
OPERATOR
At this time I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for a moment to compile the Q and A roster. Your first question comes from the line of Michael Bloom with Wells Fargo. Your line is open.
Michael Bloom (Equity Analyst)
Thanks. Good morning everyone. Wanted to start with the MIST project. Wonder if you can just give us a little more detail in terms of where you see progress to fid Anything you can say in terms of the size of the project, how it's scoping in terms of capital. And then would you expect this project to be expanded in phases or you think it's going to be one big expansion?
David Slater (Executive Chairman and CEO)
Morning, Michael. Great question. I'd say let me start at the highest level and then I'm going to pass it over to Chris for a few of the details. Really strong market interest in that open season. You know, we were offering both northerly pathways and southerly pathways. I think as we've talked in the past, Midwestern follows a corridor of power generation between Chicago and Nashville. So there's tremendous power generation assets and infrastructure in that corridor. You know, we can talk about what we announced today on the power generation side on Midwestern. I, you know, I think the big takeaway is that we've attached, you know, 565 million a day of power generation load to Midwestern in the last 12 months, which is material. So really strong market interest. Very consistent with our thesis, our fundamentals thesis that we've been sharing with the investors. And maybe I'll pass it over to Chris Zona to talk a little more detail around what I'll call the nuts and bolts of the project.
Chris Zona (President and COO)
Yeah, sure. Thanks, David. Yeah, and so it's early. I'll start with that, Michael. You know, right now, you know, we are in the process of, okay, we, we've got the fantastic response here to the open season again, you know, electric and gas utilities, data center development, generation, power generation, all the above. And recall really this NIST expansion is really trying to put a box around, you know, the needs in the, in the early cycle here, the 2930 time frame and how do we help kind of quantify what that really looks like for those customers and then, you know, go through the detail engineering, get through the kind of solution and then progressing those conversations to FID or you know, binding PAs that can lead to FID. And that's the process that will be in here in the next few months here with the shippers. We've already started those conversations and we've already had our customership for meeting started this week. And I expect you over the next few months we're going to be going through that in more detail. But again, as David mentioned, really exciting demand on both the northbound path and the southbound path.
Michael Bloom (Equity Analyst)
Great, thank you for all that. Appreciate it. Then, you know, interesting comment on this. Interconnect on Nexus to server behind the meter project. You know, there's, we're starting to see some pushback from, you know, to data center Development from, you know, both politicians and some local communities. So curious. Just get your latest thoughts in terms of how you think the behind the meter opportunity set is shaping up. I know that was something you talked about a long time ago and it sort of went quiet a bit, but maybe, maybe it's picking back up.
David Slater (Executive Chairman and CEO)
Yeah, I think our, our view on the, what I'll call the aggregate power demand, low growth. Generally speaking, the utilities are winning more than the independent developers. I'll just start there. We're seeing that across the footprint. Ohio, this particular project in Ohio is well into construction and will go commercial very shortly. And that's just an example of, I think, what we've talked about in the past where we weren't particularly interested in building the lateral to this facility, but bringing the demand to the main line of Nexus. You know, it adds, you know, 250 million a day of demand onto the main line of Nexus, which obviously fundamentally strengthens that asset over time. So we're very excited to have that demand on the main line. And you know, the, the whole dialogue around these data centers has really been around the affordability as it relates to, you know, what I'll call the retail power customers in, in each one of the states that we serve. And we're watching a lot of the developers being very sensitive to that reality and making sure that it's very clear that these investments are going to actually lower cost to the retail customers and not increase cost to the retail customers. And you're seeing that playing out in many of the state regulatory forms. It's a very positive development from our perspective because it's helping to frame these investments and these growth opportunities in a constructive, positive light for these states and these communities and ultimately the retail customers. So I think they're doing them in the proper way right now. They're articulating the value that's created for the, all the stakeholders, including, you know, the local retail stakeholders. I think that's the proper way to approach these, these growth, growth stories here.
OPERATOR
Your next question comes from the line of Teresa Ching with Barclays. Your line is open.
Teresa Ching (Equity Analyst)
Going back to Midwestern, following the strong demand post the non binding open season, are you seeing enough demand for up to 1.5ft of capacity going both north and south the entire way through? And given the competition from other pipelines in the northern part of Midwestern, just from a market dynamics perspective, do you think there's enough demand to absorb multiple large scale expansions? And if not, what do you think are the key Competitive advantages of nist.
David Slater (Executive Chairman and CEO)
Yeah, Theresa, great question. So we're not going to get into the granular details of, you know, where the demand is on the line for I guess obvious reasons. Do I think the market is robust to absorb a lot of expansions? Yes, I think we've laid out that our view is that there's a 5 to 8 pcf a day addressable growth opportunity in this region. So yes, there is room for multiple pipeline expansions. You know, I think the competitive dynamics, it's somewhat like real estate, it's location existing pipelines that are in the right location adjacent to these demand centers, the growing demand centers are, are going to have a advantage expanding an asset in your existing footprint where you know you have, you know you're not greenfielding a brand new line, you will have an advantage. So these are some of the criteria that I think will over time kind of play out as this market expansion unfolds over the next, you know, the back end of the decade here we feel really positive about our asset footprint, the connectivity that we have in the portfolio to provide not only, you know, the lateral to the demand center, but you know, as we've talked about in the past, the domino effect across the portfolio where we can provide transportation capacity back towards the basin, the supply basin, augment that with storage out of our Michigan facilities. So there's a whole value chain proposition here with some of these customers. So we're really excited about the opportunity. Like I said, on the year end call, this is very fluid. It's progressing the way we expected, probably progressing faster and stronger than we expected. And we're just very encouraged. I think our job now is to just unpack all these, all this interest that we've received like Chris described, engineer out the optimal solutions and then progress and commercialize that. So hopefully I answered your question.
Teresa Ching (Equity Analyst)
That's great color. Thank you, David. And turning to your Painsville footprint, clearly there is a call for us LNG highlighted by the war in the Middle East. Echoing the point you made in your prepared remarks, can you talk about your visibility in commercializing incremental expansions on leap? Also following very recent positive upstream data points from one of your key customers. Can you talk about LEAP strategic positioning here, visibility you have on additional expansion at this point, but also keeping in mind that the area is fiercely competitive?
David Slater (Executive Chairman and CEO)
Yeah, I mean I think, I think the fundamentals, that's the gravity that's going to drive incremental activity and the fundamentals are extremely strong. Like I stated in my prepared remarks, LEAP pipeline is running like absolutely full. So at its, at its design conditions. So that also is a strong indication that the asset is valued and highly utilized. I'm gonna, I'm gonna hand over to Chris for some commentary on what I'll call sort of the to and fro of the competitive nature in the basin. But, and maybe you can provide some comments on that. Sure, sure, David.
Chris Zona (President and COO)
Yeah, so I, I think one of the things, Teresa, that's I'll say is, is a recognized widely by the market when you look at DTM's assets is the connectivity in the basin. Right. So when you compare the amount of outlet capacity that we have through our Blue Union system, the ability to reach other outlet markets through Leap, that's I'll call it a distinctive advantage that we do have in the basin. And that optionality provides a lot of value for our customers. So I'll start with that. I think the other piece too is when you look at our ability, our capability here to expand LEAP in alcohol bite sized expansions, you know, very, you know, a couple hundred million a day, we can do that and I would say extremely competitive pricing in the basin and in a timely manner as we have done here, you know, for the last few LEAP expansions. And again, I think that is a, an advantage that we will also hold here in the region. And there are a lot of activity around that as well.
David Slater (Executive Chairman and CEO)
And maybe I'd add to that that, you know, from my perspective, we're seeing a very active commercial dialogue occurring right now around the assets, Chris. And that is usually a good signal that we're kind of approaching the next wave. I'll call it the next wave of expansion opportunity.
Teresa Ching (Equity Analyst)
great to hear. Thank you both.
OPERATOR
Your next question comes from the line of Jeremy Tunit with JP Morgan Chase. Your line is open.
Jeremy Tunit (Equity Analyst)
Good morning. Jeremy wanted to come back to Mist if I could and kind of come at a slightly different, maybe simpler angle and just wondering, you know, there's still items to be settled as you said, you know, a number of things coming together here, but just at a very high level. If we think about the scope of the project, would we think of this somewhat similar to, you know, if Guardian is around a half a B and this is 1 1/2 B, this is three times the scale. Can we, you know, make a high level thought around that or just any color There would be great.
David Slater (Executive Chairman and CEO)
Yeah, Jeremy, I mean, I'd say it was a very, very strong signal we received from the market given that we were oversubscribed on a very large expansion that we kind of went out there with, you know, one half BCF a day, effectively is the capacity of the existing system. So, you know, the fact that we saw an oversubscription is just a strong indication of the depth of the demand growth that's occurring in that corridor. So I'll start there. Obviously, there's a lot of work to do between here and fiding a project. You know, we have to engineer out, like Chris said, all the details, customers gave us, all the details of what they're interested in, locationally, where the supply is coming from, where the demand, you know, where the demand is on the system. So there's work to do here, but it's certainly we're starting, starting in a very positive situation. I mean, that is just a really strong demand signal. Very consistent with the fundamentals that we've been talking about. Size and scale. I think it's a little early for us to try to put size and scale to it, but, you know, let's just, let's just make it up. If, if we're 50% successful. Yes, it would be north of what Guardian, you know, the, the current G3 expansion in terms of size and scale. So, like I said, really positive position right now. Our job is to do the work that needs to be done and reel it in and commercialize it. But it's just, it's very consistent with what we've been saying at the highest level about what we're observing in the whole region. Just very strong demand growth.
Jeremy Tunit (Equity Analyst)
Got it. That makes sense. No, twice the size. We'll take that. That works well. Just curious, I guess, and the answer might be it's too early in the year, but if I look at your results and I annualize it, you'd already be over the high end of the guide. And, you know, granted, there was some help maybe in the quarter, but doesn't seem like there's necessarily a ton of seasonality in the business. And so just wondering if there's some other headwinds developing across the balance of the year we should be contemplating here.
David Slater (Executive Chairman and CEO)
Yeah, maybe I'll start at the high level, Jeremy, and then I'm going to ask Jeff to kind of fill in the details for you. But at the highest level, if we think we were going north of the high end of our guidance, we would tell you that. So let's start there. The winter was very strong, and I somewhat alluded to it in our, in my opening remarks. I mean, we had a really cold winter that illuminated capacity constraints across the entire country for our assets we broke all time high utilization like daily flows across almost every one of our assets in the first quarter, which is unprecedented. I haven't seen that in my, really my entire career. So that is a really strong signal of how demand has crept into the network. And then you had all this extreme price volatility all over our footprint, which was also highly unusual. So what does that mean in terms of our Q1 results? Our commercial team was doing what they're hired to do, which is eking out every opportunity across the asset footprint in a very volatile basis environment. So some of the results of Q1 are a derivative of that phenomenon that played out across the network. So that's very seasonal and you shouldn't expect that to repeat. And Jeff, maybe you want to just touch on some of the additional details as to why we don't think that quarter is going to repeat for three more quarters. Sure will.
Jeff Jewell (Executive Vice President and CFO)
And good morning, Jeremy. Yeah. So Jeremy, like David said, we are again, when we provide you our view on our guidance for the year, I take that we're providing you that guidance with the ranges and it's different than that one. We'll adjust accordingly. So that's probably the first thing. You're right. First quarter was very strong and then we do have that seasonality across the interstate pipelines and the JVs that's always going to be there. PC, you've got a little bit of that. There's a step down on the Guardian, you know, that was baked in from the last rate case. So that happens here in the second quarter. And then also then you know you're going to have planned maintenance and those types of things that you wouldn't have had in the first quarter. So combination of those things and David's comments again, we're feeling very good about the guidance range we provided you guys for the full year.
Jeremy Tunit (Equity Analyst)
Got it. Still see some conservatism there, but understand the gives and takes. Thanks so much.
David Slater (Executive Chairman and CEO)
God bless you, Jeremy. Yeah, thanks.
OPERATOR
Your next question comes from the line of Keith Stanley with Wolff Research. Your line is open.
Keith Stanley (Equity Analyst)
Hi, good morning. Want to follow up on mist? Just on the disclosure you provided this morning of customer interest above the 1.5 BCF a day. Is that on a cumulative basis? So adding the north and south legs or was the statement meant to express that there's above a B and a half of demand kind of across each segment?
David Slater (Executive Chairman and CEO)
The B and a half was the cumulative amount of capacity we offered Keith. So we're not unpacking it between north and south, we're just Telling you the total and the total interest was north of the total capacity we offered.
Keith Stanley (Equity Analyst)
Okay, great. The, you know, given the high level of demand, could mist be upsized even above 1.5 BCF a day given it was oversubscribed? Or does that make it less competitive from a cost perspective and so less likely
David Slater (Executive Chairman and CEO)
we, we would love it to be above 1/2 BCF. And Keith, that's the work that Chris was describing and his team is working on is we're engineering out, you know, based on the customer specifics. And yes, typically more volume is more economic. So we will aim high.
Keith Stanley (Equity Analyst)
Thank you.
OPERATOR
Your next question comes through the line of Jean Ann Salisbury with Bank of America. Your line is open.
Jean Ann Salisbury
Hi, good morning. I just wanted to follow up on the discussion about the leap potential expansion to 4 bcfd and make sure I understood the comments on an answer to another question. Is going from the 2.1 bcfd to 4 bcfd basically laying a second parallel pipe? And can you kind of, can you talk about, I guess whether that is indeed like a bite sized offering as I think I heard earlier, or is that more like a large add that, that you would have to fill out kind of altogether?
Chris Zona (President and COO)
Chris, you want to take that? I can take that. Yeah. So it's. So our expansion up from where we are today to 4bcf would be a combination of pipe and compression. It's not necessarily entire lines not required. I mean this was built as a high pressure gathering pipeline here, gathering lateral when we first built this. So it's got a very economic and I'll say ratable expansion path ahead of it to the 4, to the 4 BCF.
Jean Ann Salisbury
Okay, thank you. I didn't hear the second part of your question. Yeah, I think that answers that answers that. So I appreciate it. And then I believe that Nexus, you know, the expansion, the long awaited expansion had been waiting on some incremental demand. I guess it kind of depends on where in Ohio the data center connection is and whether it's in Appalachia or kind of far enough into the market. But is it, is this new data center connection enough to potentially help drive that expansion forward?
David Slater (Executive Chairman and CEO)
Well, I'd say it's helpful, right? It's adding another quarter BCF a day of demand onto the main line and locationally it's on the, it's in the northwest section of Ohio. So it's going to be constructive and helpful. We'll, you know, step number one is to connect it. Step number two is to provide contract capacity on the main line. So stay tuned as it evolves. But yeah, I mean, we're, you know, I think as we've talked there, Nexus is one of the few pipelines in the region that has available capacity where we've, we've got a couple hundred million a day that we didn't term out long term when we built the asset. So, you know, clearly that capacity is in play right now to be termed out. So that would be step one, and then step two would be then an expansion on the main line. So that's kind of how we think about it. Jean Ann, hopefully that helps.
Jean Ann Salisbury
Yeah, that does. Thank you for taking my questions.
OPERATOR
Your next question comes through the line of Julian Dumoulin Smith with Jefferies. Your line is open.
Rob Mosca (Equity Analyst)
Hi, good morning, everyone. This is Rob Mosca on for Julian. So you touched on affordability in your prepared remarks and capacity constraints in certain regions. Could you perhaps give us some updated thoughts on Millennium Pro and whether you need to see a downstream expansion into New England or whether that project can make sense on a standalone basis, acknowledging that the regulatory backdrop is kind of a key constraint here?
David Slater (Executive Chairman and CEO)
Yeah, Rob, great question. So maybe we'll start off with R2R. Getting R2R commercialized and over the goal line is demonstrating that there is a market need, an incremental market need. You know, that project percolated for a number of years, as you know, and you know, we just stayed at it and the market is evolving and there's that recognition of need. I think you're seeing something similar with Algonquin where they're, they're looking at potential expansion opportunities as well. So we're beginning to see the market untaw, for lack of a better word, which I think is encouraging. But we're going to have to be patient. For us, for Pro, there's a few critical ingredients that are really important for that project. Number one is New York specific support. So that would be number one from customers in New York. Number two is regional governmental support or lack of opposition of a project like that. So those are pretty critical to us before we consider deploying capital into that region. I think it's very clear at this stage in the game that the demand need is real. And there, I mean, you can just look at the prices that people are paying in that region, and they're paying that price because the infrastructure is constrained. So we're optimistic that we're going to be able to move forward, but we're going to be very careful and patient with that particular project.
Rob Mosca (Equity Analyst)
Got it. That's helpful. David. And then maybe switching gears to the recent PJM backstop auction. Seems like we could see some more gas demand around your gathering footprint in the Northeast and some of that may be reflected in the opportunities you're pursuing in the way of laterals. But can you frame how much of an incremental benefit this could provide and how risk adjusted those opportunities are in the current five year backlog?
David Slater (Executive Chairman and CEO)
Yeah, I think, you know, the historical conundrum in PJM has constrained and limited what I'll call utility scale generation in that region. I think there's been a number of ways that they're trying to address that and fix that. You just mentioned the most recent. It feels like that's going to unlock some of these projects and allow capital to come in. I still think we need to see, you know, we need to see some projects fid to get more comfortable with that. But it's definitely a positive step. It furthers and strengthens the fundamentals in that region that we've talked a lot about to, to the investor group. So yes, it's, it's a positive, it's, it. Again, I goes back to my year end conversation that this is a very fluid dynamic market right now that we're observing. And you know, I, I put an up arrow on, on, on the fundamentals of, the fundamentals continue to strengthen, but it is very fluid. And there's, as you pointed out, we need some of this regulatory modifications and adjustments to enable capital to pour in and it feels like we're pointed in the right direction. So I'm encouraged by it.
Rob Mosca (Equity Analyst)
Really helpful color. Thanks for the time everyone.
OPERATOR
Your next question comes from the line of Spiro Dunas with Citi. Your line is open.
Spiro Dunas (Equity Analyst)
Thanks, operator. Good morning, gentlemen. Want to start with the capital plan? David, last call. You suggested that the gross backlog of projects was multiples of that 3.4 billion. And today from what I'm hearing, it sounds like things are accelerating. So I guess I'm just curious to the extent you're successful in commercializing a lot of these additional projects, how are you thinking about the upper bound of growth capital in any given year that the balance sheet can handle? You know, if you just convert that 3.4 at 2x, you know, that's over a billion dollars a year. I don't think we're there yet, to be clear, but just curious how you think about funding that growth and pacing it for the balance sheet.
David Slater (Executive Chairman and CEO)
Yeah, a great question, Spiro. I'd say let's start with the 3.4. We're just de risking the 3.4, you know, as we announce projects and deploy capital and as the year unfolds, I fully expect we're going to continue to announce more and continue to DE risk that 3.4 in a market backdrop where, you know, there is probably more opportunity today than there was four months ago. And if, if the fundamentals continue to play out, that probably continues to evolve over the course of the year. So that's a very encouraging market backdrop to operate a company in. So we'll start there in terms of our capability to address that market reality. The good news, Jeff. Jeff's smiling right now. We've got a really strong balance sheet, you know, investment grade. We have a lot of dry powder on the balance sheet that is, you know, could be deployed above and beyond that 3.4 billion. So I think, you know, we're in a good position with the asset and the footprint that we have to compete in this, in this evolving market. We have the balance sheet that can allow us to grow that investment agenda. So I don't see the balance sheet or funding capability today as a constraint. And then I would maybe add one more detail that when you look at what we've fid recently, they would be characterized by investment grade customers, 20 year demand based contracts. So if we ever did get to the edge of the balance sheet, those projects will, will be able to attract additional capital without a lot of anxiety or concern. I'll say it that way, just the nature of those investments are very solid, strong investments that, that could attract capital. So I just do not see right now a capital constraint in our investment agenda. And Jeff, I don't know if you have anything to add to that.
Jeff Jewell (Executive Vice President and CFO)
Yeah, that, that also spreads again. Remember, you know, we're deleveraging as we continue to grow, so that obviously adds more open capacity. Also, just as a reminder, our on balance sheet top threshold is at ceiling yield at four times and Moody's just moved us up for the off balance sheet up to four and a quarter. So that just added even more headroom to what David's talking about. So again I'm, we're feeling very confident we can handle all the projects and all the things we've got coming at us and more. So we're feeling very good about that.
Spiro Dunas (Equity Analyst)
Great. It's great to hear. Second question, maybe just going to Guardian, curious how you think about the total expansion potential of that pipeline. Seems like there's already some downstream utility interest pursue, maybe even a phase four. And if you look beyond 2030, there's some nuclear contracts that are expiring that maybe result in new gas fire generation which may be underwrites of phase five. So apologies for getting ahead of it, but you know, at what point does Guardian needs may be twinned? Do you feel like there's a long Runway here before you'd have to do something more Greenfield?
David Slater (Executive Chairman and CEO)
Yeah, great question, Sparrow. We actually are looping guardian. So G3 is beginning a loop. So I think you know, G4 and G5 and you're really getting ahead of us on G5. But I think it's from an engineering perspective, it's pretty simple, is we will just continue to extend the loops deeper into Wisconsin. The beauty of Guardian is that it's a modern high pressure system which gives it a tremendous advantage in a market like this. An expanding market like this where we can run modern high pressure system that makes it very efficient and cost effective to expand.
Spiro Dunas (Equity Analyst)
Great help of color as always. Thank you guys.
OPERATOR
Your next question comes through the line of John McKee with Goldman Sachs. Your line is open.
John McKee (Equity Analyst)
Hey, good morning guys. Thank you for the time. Maybe just one on the macro. We have seen kind of hub a lot lower recently. I'd love just to hear kind of your view on maybe the kind of gas price backdrop overall, but kind of more specifically just what you're hearing from your Haynesville gathering customers. Thanks.
David Slater (Executive Chairman and CEO)
Yeah, good morning, John. Good question. We watch that very closely, as you would expect. You know, I think the Haynesville liners were pretty robust in Q1. I expect they're going to be similar in Q2. But typically where you see producer recalibrating their Production is in Q3. If we, if we roll into the summer here and perhaps don't get, you know, the short term weather that they want. Typically Q3 is where you get some price dislocations. So we're, we're very mindful of that both in Haynesville and in Appalachia. And watch that closely. We're not seeing or hearing anything imminent from any of the producers. But I think that's always a reality or a situation that can play out in the short term, John. And that's something that we have seen historically and we factor into our guidance as we lay out our guidance.
John McKee (Equity Analyst)
All right, that's clear. Appreciate that. Maybe just staying kind of down in the Haynesville. But going back to some of your LNG comments earlier, I guess I'd just like to put a finer point on it. Are you guys starting to have kind of explicit conversations with new potential LNG customers that are thinking about, you know, Adding incremental capacity on the back of what's happened in the last two months or so. And, and maybe just speaking broadly, if someone is talking about fiding a new facility next year, year from now for early 30s in service, when would you be having the kind of pipeline supply agreement conversations with them? Would it be too early for them to come in and underwrite something on leap or could that happen now ahead of again, an early 30s in service?
David Slater (Executive Chairman and CEO)
Yeah, there's a couple, couple questions in there, John. I'll try to tackle them. I'd say the first question is are we seeing active conversations in the Haynesville? I'm gonna, Chris is smiling so I'm gonna let him answer that question.
Chris Zona (President and COO)
Yeah, yeah. So John, absolutely. I mean there's a lot of activity going on around that right now. A lot of conversation, especially, you know, given the geopolitical, you know, issues that we've had here. And I'll say, you know, the reliance and the recognition of, you know, the importance of North American LNG supply on a global basis, that that's certainly, I'll say, a tailwind. You know, I think that's probably going to drive additional LNG development fid sooner than later. So I think that's kind of the trend I'd say that we're seeing in the market.
John McKee (Equity Analyst)
Alright, that's interesting. Appreciate the time, guys. Thank you.
OPERATOR
Your next question comes to the line of Samya Jain with ubs. Your line is open.
Samya Jain (Equity Analyst)
Hi, good morning. Thanks for taking my questions. Can you provide more color on the Blue Union gathering? Well, pad expansions and build out. So with a greater number of pipelines going from Waha eastward, how would you consider future expansion opportunities at Blue Union given its location in the Carthage hub? And if you could speak to any data center discussions you were seeing in that area that are new.
David Slater (Executive Chairman and CEO)
Yeah, maybe I'll start at a higher level. I'd say, you know, the Blue Union system is really the wellhead gathering and treating system that we operate in the Haynesville. And you know, Chris kind of alluded to it in the last question. We are seeing renewed interest on the, what I'll call the producer side, incremental drilling, where they're looking for incremental gathering and treating. So that's been very positive. You know, the volumes as we disclosed are strong on that network right now. So we're encouraged by that. I think the fundamentals, the high level fundamentals of the attention that the US LNG complex is getting is causing, I think some international players to be more attentive or attuned to vertical integration into the basin to serve those facilities. So I think those are all strong fundamentals that are driving additional activity in the region which we, we will benefit from over time. So, you know, we're positive, that's a positive fundamental driver for our, our existing asset, the utilization of the existing asset, but also incremental expansion opportunities. And then I'd say Carthage, Carthage is becoming a landing zone for a lot of Permian. And we're connected to Carthage. We can pull gas from Carthage. So the network is very well connected there and will benefit from incremental Permian supply working its way over to the Carthage hub.
Samya Jain (Equity Analyst)
Okay, great. Thank you. And then in regards to the Vector open season, could you elaborate on the supply you're seeing coming out of dawn and how the Washington storage complex is especially set to benefit from that? And given the open season, how would you consider any new opportunities and potentially even expanding that storage complex?
David Slater (Executive Chairman and CEO)
Yeah, so I think I'm going to go back to my dominoes illustration that we've used over the quarters here with how we're seeing, you know, the expansion is kind of domino across our footprint. So, you know, as the Guardian expansion or as the Vector expansion is moving forward, it's feeding the Guardian expansion. It'll create opportunity for more supply to come into Vector on Nexus, also on Rover, also out of the dawn hub. It also will create. And those shippers are very interested in the, what I'll call the Broad storage complex in Michigan and at Dawn. So, you know, both us and our partner are large storage operators in that region. So that that domino effect or that synergy that the other assets will realize over time is real and I think will play out over time. Like I said, the dominoes fall one at a time typically. So more to come on that. Stay tuned on that. But I would fully expect that the storage business will be a beneficiary of the existing vector expansion and potentially additional expansions down the road. Like, like our Nexus asset. We fully expect that that'll be also a beneficiary of these expansions over time. And, and like I said, it's just, it's a domino effect. It comes in stages and in waves. So.
Samya Jain (Equity Analyst)
Okay, great. Thank you so much. Appreciate the caller.
David Slater (Executive Chairman and CEO)
You're welcome.
OPERATOR
Your final question comes from the line of Zach Van Everen with kph. Your line is.
Zach Van Everen (Equity Analyst)
Thanks for taking my question. Maybe another one on Midwestern. Understand that you guys don't want to get into the specifics on capacity, but that pipeline does connect to various Other pipes that head all the way down to the Gulf was curious. On the demand you're seeing, is it mostly around the pipeline or you're also seeing interest from whether it's LNG or utilities all the way in the, in the Gulf?
David Slater (Executive Chairman and CEO)
Zach, that's a great question. And yes, you are correct that we on the southern pathway, we connect to other pipelines that traverse all the way down to the Gulf and connect to other markets. So, you know, we, we just had a really diverse group of shippers respond to the open season. So that's very positive. And you know, we're not going to get into the details on the call here because it's just too early to talk about that. But yeah, it was more than just everybody in the neighborhood, I'll say it that way. Which again is just a strong indication of the macro fundamentals that are unfolding right now across our footprint.
Zach Van Everen (Equity Analyst)
That's super helpful. And then maybe one just broad based contracting. It seems the capacity exist, existing capacity on these pipes is becoming more and more valuable. And I know you have a lot of long term contracts across the pipelines, but as these existing contracts roll, do you see operating leverage to, you know, charge higher rates or most your pipes close to that max tariff rate?
David Slater (Executive Chairman and CEO)
Yeah. Great observation, Zach. I mean, we're really pleased with how that wave of renewals on Midwestern unfolded and which is why we shared it with the, the investor base. I mean it just creates durability to the existing asset. And it also demonstrates, and it's another proof point to the fundamentals that we talk about is that not only are we seeing these fundamentals play out, but the existing shippers are seeing the same fundamentals play out and want to make sure that they maintain control of that valuable capacity in a, in a market area where the demand continues to grow. So, so the question is how do we take, how do we maximize that opportunity? Number one is by terming it out, right? That would be step number one is you term it out and we don't have to sell anything unless we're selling it at the maximum tariff rate. So terming it out and turning it out at the maximum allowable tariff rate would be the playbook in a market environment like we're in right now, which is exactly what the team did on Midwestern and you should expect us to do that on all of our assets across the region over time.
Zach Van Everen (Equity Analyst)
That makes sense. Appreciate the time today.
David Slater (Executive Chairman and CEO)
I will now turn the call back over to David Sledger for closing remarks. Well, thank you everybody for joining us today. We certainly appreciate your interest in dtm. Thank you for the great questions today and look forward to seeing everybody in person at the next event. Have a great day.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
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