DT Midstream, Inc. (DTM) Q1 2026 Earnings Report, Transcript and Summary

Welcome to the DT Midstream First Quarter 2026 Earnings Call. My name is Rebecca, and I will be your conference operator today. [Operator Instructions] I will now turn it over to our speaker, Todd Lohrmann, Director of Investor Relations. 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 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 DTM 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 a customer reaching FID in the power plant, which we expect to occur in 2026. Our expected lateral pipeline in-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 our 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 nonbinding 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 nonbinding open season for the 2030 expansion project to increase westbound capacity into Chicago by 300 million 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 U.S. LNG as a stable and dependable supply source. We believe this dynamic will favor increased LNG exports from the U.S. Gulf Coast and create additional expansion opportunities for U.S.-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 1 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.

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 million to $100 million for the project. DTM has also approved investment in the 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.

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 U.S. 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 Instructions] Your first question comes from the line of Michael Blum with Wells Fargo.

I wanted to start with the MIST project. I 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 do you think it's going to be one big expansion?

Good 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. 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. We can talk about what we announced today on the power generation side on Midwestern. I think a big takeaway is that we've attached 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.

Yes, sure. Thanks, David. Yes. And so it's early. I'll start with that, Michael. Right now, we are in the process of, okay, we've got the fantastic response here to the open season. Again, electric and gas utility, data center development, generation, power generation, all of the above. And recall, really this MIST expansion is really trying to put a box around the needs in the early cycle here, the '29, '30 time frame and how do we help kind of quantify what that really looks like for those customers and then go through the detailed engineering, get through kind of the solution and then progressing those conversations to FID or binding PAs that can lead to FID. And that's a process that we'll be in here in the next few months here with the shippers. We've already started those conversations. We've already had our customership, our meeting started this week, and I expect 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.

Great. Appreciate it. And then an interesting comment on this interconnect on NEXUS to serve behind-the-meter project. We're starting to see some pushback from the data center development from both politicians and some local communities. So curious to 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 it is picking back up.

Yes. I think our view on the, what I'll call, the aggregate power demand load 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 mainline of NEXUS, it adds 250 million a day of demand onto the mainline of NEXUS, which obviously fundamentally strengthens that asset over time. So we're very excited to have that demand on the mainline. And the whole dialogue around these data centers has really been around the affordability as it relates to what I'll call the retail power customers 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 forums. It's a very positive development from our perspective because it's helping to frame these investments in 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 all the stakeholders, including the local retail stakeholders. I think that's the proper way to approach these growth stories here.

Your next question comes from the line of Theresa Chen with Barclays.

Going back to Midwestern following the strong demand post the nonbinding open season, are you seeing enough demand for up to 1.5 Bcf 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 MIST?

Yes, Theresa. Great question. So we're not going to get into the granular details of 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 Bcf a day addressable growth opportunity in this region. So yes, there is room for multiple pipeline expansions. I think the competitive dynamics is 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 going to have an advantage. Expanding an asset in your existing footprint where you have -- 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 -- 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 the lateral to the demand center, but 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 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.

That's great color. And turning to your Haynesville footprint. Clearly, there is a pull for U.S. 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 the strategic positioning here, visibility you have on additional expansions at this point, but also keeping in mind that the area is fiercely competitive.

Yes. I mean 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 is running like absolutely full, so at its designed conditions. So that also is a strong indication that the asset is valued and highly utilized. I'm going to hand over to Chris for some commentary on what I'll call sort of the to and fros of the competitive nature in the basin and maybe he can provide some comments on that.

Sure. Sure, David. Yes. So I think one of the things, Theresa, that I'll say is 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, I'll call it, bite-sized expansions, a couple of hundred million a day, we can do that. And I would say we have extremely competitive pricing in the basin and in a timely manner as we have done here for the last few LEAP expansions. And again, I think that is an advantage that we will also hold here in the region, and there's a lot of activity around that as well.

And maybe I'd add to that, that 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.

Your next question comes from the line of Jeremy Tonet with JPMorgan Chase.

Wanted to come back to MIST, if I could, and kind of come at a slightly different maybe simpler angle. I'm just wondering, there's still items to be settled, as you said, 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 if Guardian is around half a B and this is 1.5 B, this is 3x the scale? Can we make a high-level thought around that? Or just any color there would be great.

Yes, Jeremy, I mean, I'd say it was a 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. 1.5 Bcf a day effectively is the capacity of the existing system. So 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 FID-ing a project. 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 is on the system. So there's work to do here. But it's certainly -- we're 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 let's just make it up. If we're 50% successful, yes, it would be north of what Guardian -- 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 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.

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 granted there was some help maybe in the quarter, but it 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?

Yes. 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 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. Well, and good morning, Jeremy. Yes. 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 what the range is. And if it's different than that, 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. You've got a little bit of that. There's a step-down on the Guardian, that was baked in from the last rate case. So that happens here in the second quarter. And then also then 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.

Got it. Still see some conservatism there, but I understand the gives and takes.

Your next question comes from the line of Keith Stanley with Wolfe Research.

I want to follow up on this 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 1.5 Bcf of demand kind of across each segment?

The 1.5 Bcf 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.

Okay. Great. 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?

We would love it to be above 1.5 Bcf. And Keith, that's the work that Chris was describing and his team is working on as we're engineering out based on the customer specifics. And yes, typically, more volume is more economic. So we will aim high.

Your next question comes from the line of Jean Ann Salisbury with Bank of America.

I just wanted to follow up on the discussion about the LEAP potential expansion to 4 Bcfd and make sure I understood the comments in 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 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 you would have to fill out kind of altogether?

Chris, do you want to take that?

Yes. No, I can take that. Yes. So it's -- so our expansion up from where we are today to 4 Bcf would be a combination of pipe and compression. It's not necessarily that entire line is 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 Bcf. And I'm sorry, I didn't hear the second part of your question.

I think that answers that. So I appreciate it. And then I believe that NEXUS, 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 kind of far enough into the market. But is this new data center connection enough to potentially help drive that expansion forward?

Well, I'd say it's helpful, right? It's adding another 0.25 Bcf a day of demand onto the mainline. And locationally, it's in the Northwest section of Ohio. So it's going to be constructive and helpful. Step #1 is to connect it. Step #2 is to provide contract capacity on the mainline. So stay tuned as it evolves. But yes, I mean, we're -- I think as we've talked, NEXUS is one of the few pipelines in the region that has available capacity where we've got a couple of hundred million a day that we didn't term out long term when we built the asset. So clearly, that capacity is in play right now to be termed out. So that would be step 1. And then step 2 would be then an expansion on the mainline. So that's kind of how we think about it, Jean Ann. Hopefully, that helps.

Yes that helps.

Your next question comes from the line of Julien Dumoulin-Smith with Jefferies.

This is Rob Mosca on for Julien. 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 stand-alone basis, acknowledging that the regulatory backdrop is kind of a key constraint here?

Yes, Rob, great question. So maybe we'll start off with R2R, right? Getting R2R commercialized and over the goal line is demonstrating that there is a market need, an incremental market need. That project percolated for a number of years, as you know, and 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 looking at potential expansion opportunities as well. So we're beginning to see the market unthaw, 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 to a project like that. So those are pretty critical to us before we would 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.

Got it. That's helpful, David. And then maybe switching gears to the recent PJM backstop auction. It 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?

Yes. I think 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 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 the investor group. So yes, it's a positive -- again, it goes back to my year-end conversation that this is a very fluid dynamic market right now that we're observing. And I put an up arrow on the fundamentals and 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.

Your next question comes from the line of Spiro Dounis with Citi.

I 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? If you just convert that $3.4 billion at 2x, that's over $1 billion a year. I don't think we're there yet to be clear, but just curious how you're thinking about funding that growth and pacing it for the balance sheet.

Yes. Great question, Spiro. I'd say let's start with the $3.4 billion. We're just derisking the $3.4 billion. 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 derisk that $3.4 billion. In a market backdrop where there is probably more opportunity today than there was four months ago. And 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 is smiling right now. We've got a really strong balance sheet, investment grade. We have a lot of dry powder on the balance sheet that could be deployed above and beyond that $3.4 billion. So I think we're in a good position with the asset and the footprint that we have to compete 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 our funding capability today as a constraint. And then I would maybe add one more detail that when you look at what we've FID-ed 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 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 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.

Yes. That also spreads. Again, 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, it was at 4x, and Moody's just moved us up for the off-balance sheet up to 4.25. So that just added even more headroom to what David is 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.

Great. That's great to hear. Second question, maybe just regarding Guardian. Just curious how you think about the total expansion potential of that pipeline. It seems like there's already some downstream utility interest to pursue maybe even a Phase 4. And if you look beyond 2030, there's some nuclear contracts that are expiring that maybe result in new gas-fired generation, which may underwrite to Phase 5. So apologies for getting ahead of it. But at what point does Guardian need to maybe be twinned? Do you feel like there's a long runway here before you have to do something more greenfield?

Yes. Great question, Spiro. We actually are looping Guardian. So G3 is beginning a loop. So I think G4 and G5, you're really getting ahead of us on G5. But I think it's -- from an engineering perspective, it's pretty simple is that 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.

Your next question comes from the line of John Mackay with Goldman Sachs.

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.

John, good question. We watched that very closely, as you would expect. I think the Haynesville lines 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 roll into the summer here and perhaps don't get the short-term weather that they want. Typically, Q3 is where you get some price dislocations. So 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.

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 that. Are you guys starting to have kind of explicit conversations with new potential LNG customers that are thinking about adding incremental capacity on the back of what's happened in the last two months or so? And maybe just speaking broadly, if someone is talking about FID-ing a new facility next year, a 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?

Yes. And there's a couple of 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 going to -- Chris is smiling, so I'm going to let him answer that question.

Yes. Yes. So, John, absolutely. I mean there's a lot of activity going on around that right now, a lot of conversations, especially given the geopolitical issues that we've had here, and I'll say the reliance and the recognition of the importance of North American LNG supply on a global basis, that's certainly, I'll say, a tailwind. 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.

Your next question comes from the line of Samya Jain with UBS.

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're seeing in that area that are new?

Yes. Maybe I'll start at a higher level. I'd say the Blue Union system is really the wellhead gathering and treating system that we operate in the Haynesville. And 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. 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 U.S. 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 will benefit from over time. So that's a positive fundamental driver for 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 we will benefit from incremental Permian supply working its way over to the Carthage Hub.

Okay. Great. And then in regard 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?

Yes. So I think I'm going to go back to my dominos illustration that we've used over the quarters here with how we're seeing the expansions kind of domino across our footprint -- so as the Guardian expansion -- as the Vector expansion is moving forward, it's feeding the Guardian expansion. It will 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 both us and our partner are large storage operators in that region. So 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 dominos 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 our NEXUS asset, we fully expect that, that will be also a beneficiary of these expansions over time. And like I said, it's just -- it's a domino effect that comes in stages and in waves.

Your final question comes from the line of Van Everen with TPH.

Maybe another one on Midwestern. I 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. I was curious on the demand you're seeing. Is it mostly around the pipeline? Or are you also seeing interest from whether it's LNG or utilities all the way in the Gulf?

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 we just had a really diverse group of shippers respond to the open season. So that's very positive. And we're not going to get into the details on the call here because it's just too early to talk about that. But yes, 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.

Got you. That's super helpful. And then maybe one just broad-based contracting. It seems the capacity -- 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 charge higher rates? Or are most of your pipes close to that max tariff rate?

Yes. Great observation, Zach. I mean we're really pleased with how that wave of renewals on Midwestern unfolded, which is why we shared it with 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 market area where the demand continues to grow. So the question is how do we do we maximize that opportunity? Number one is by terming it out, right? That would be step #1 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 terming 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.

I will now turn the call back over to David Slater 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.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.