Executive Summary / Key Takeaways

• DT Midstream is a pure-play natural gas midstream company strategically positioned in premium supply basins (Appalachia, Haynesville) and key demand centers (Midwest, Northeast, Gulf Coast), benefiting from durable, demand-based contracts with an over 80% investment-grade customer base.
• The recent $1.2 billion Midwest Pipeline Acquisition significantly expanded DTM's FERC-regulated pipeline network, enhancing its scale, market reach, and contributing substantially to revenue and EBITDA growth, with integration progressing on schedule.
• The company boasts a robust $2.3 billion organic growth project backlog through 2029, primarily focused on pipeline expansions and new laterals to serve growing demand from LNG exports, utility-scale power generation, and data centers, supporting a targeted 5-7% long-term Adjusted EBITDA growth rate.
• DTM achieved a key strategic goal by securing investment-grade credit ratings from two agencies as of May 20, 2025, strengthening its balance sheet, improving liquidity, and potentially reducing interest expense, while maintaining strong leverage and interest coverage ratios.
• Beyond traditional midstream, DTM is advancing energy transition initiatives, including a Carbon Capture and Sequestration (CCS) project in Louisiana (FID expected H1 2025) and a Clean Fuels Gathering project for fugitive coal mine methane, diversifying its growth avenues and aligning with environmental goals.

Setting the Scene: A Pure-Play Midstream Powerhouse

DT Midstream, Inc., established as a standalone public company in 2021, operates as a focused owner, operator, and developer of integrated natural gas midstream assets across the United States. The company's strategic footprint connects prolific supply regions like the Appalachian Basin (Marcellus/Utica) and the Haynesville formation to critical demand centers in the Midwest, Northeast, and the burgeoning Gulf Coast LNG export market. This positioning is foundational to its business model, which is built on providing essential natural gas transportation, storage, and gathering services underpinned by long-term, demand-based contracts.

From its inception, DTM set a clear strategic course centered on disciplined capital deployment, strengthening its balance sheet, and achieving an investment-grade credit rating. This strategy has guided its growth trajectory, which has seen the company consistently deliver a 10% compounded annual growth rate in Adjusted EBITDA since its spin-off. The company's portfolio is structured into two primary segments: Pipeline and Gathering, designed to offer integrated solutions from the wellhead to end-user markets.

DTM's operational capabilities are enhanced by its technological applications within its infrastructure. While specific quantitative performance metrics for proprietary technologies are not detailed, the company leverages standard midstream technologies such as advanced compression, dehydration, and gas treatment facilities to ensure the quality and efficient flow of natural gas. These technologies are critical for meeting pipeline specifications and customer requirements. The strategic intent behind these operational technologies is to enhance resource utilization, improve system reliability, and provide flexible service offerings tailored to diverse customer needs, including producers, local distribution companies, power generators, and industrial users.

Beyond traditional operations, DTM is actively pursuing new technological frontiers within its energy transition platform. A key initiative is the Carbon Capture and Sequestration (CCS) project in Louisiana, where the company has validated the geological suitability of a storage formation. This project aims to capture CO2 emissions for permanent underground storage, aligning with the company's goal of achieving net zero carbon emissions by 2050. While awaiting final regulatory permits (Class VI) from the Louisiana DENR, detailed engineering design is underway, with Final Investment Decision (FID) expected in the first half of 2025. Another emerging area is the Clean Fuels Gathering project, which involves capturing fugitive coal mine methane. This initiative leverages DTM's gathering and treating expertise and is expected to provide significant tax credit and environmental benefits, representing an entry into a growing clean fuel market. These R&D and new technology initiatives are strategically aimed at diversifying DTM's asset base, accessing new revenue streams, and supporting environmental stewardship goals.

In the competitive landscape, DT Midstream operates alongside major players like Williams Companies (WMB), EQT Corporation (EQT), Kinder Morgan (KMI), and Energy Transfer (ET). While precise, directly comparable market share figures for all niche competitors are not publicly detailed, DTM holds an estimated 5-7% aggregate market share in the U.S. natural gas midstream sector. DTM differentiates itself through its highly integrated asset footprint, particularly the wellhead-to-water connectivity in the Haynesville, which management highlights as the most interconnected system in the basin. Its focus on specific gathering and treating expertise provides niche efficiency advantages, potentially leading to lower operating costs in these segments compared to broader players. The company's tax credit monetization expertise, particularly relevant for new energy transition projects, offers a distinct financial advantage. Furthermore, DTM's contract structure, with over 80% investment-grade customers and average seven-year terms, provides a level of revenue durability that compares favorably to competitors with higher exposure to volatile commodity prices or less secure contracts. However, DTM's smaller scale relative to giants like KMI and ET can result in higher unit costs in certain areas and potentially slower overall growth rates compared to more aggressively expanding rivals. The company strategically positions itself by leveraging its asset locations and integrated service offerings to capture demand growth in key regions, focusing on disciplined organic expansions rather than large-scale M&A to compete effectively.

Industry trends strongly favor natural gas infrastructure. Total U.S. natural gas supply and demand are projected to grow by approximately 19 Bcf per day through 2030, driven by robust demand from LNG exports, increasing power generation needs (including data centers and utility scale plants), and industrial onshoring. DTM's assets are strategically located to serve these growth vectors, particularly its Louisiana assets for LNG and its Midwest/Northeast pipelines for power demand in regions like PJM and MISO, where 25% growth is anticipated by 2030. Growing political and regulatory support for energy infrastructure also provides a favorable backdrop for DTM's expansion plans.

Recent Performance and Strategic Execution

DT Midstream has demonstrated solid financial performance, reflecting the durability of its business model and the impact of strategic growth initiatives. For the three months ended March 31, 2025, the company reported Operating Revenues of $303 million, a significant increase from $240 million in the same period of 2024. This growth was primarily fueled by the activity from the interstate pipelines acquired in the Midwest Pipeline Acquisition, which closed on December 31, 2024, and new LEAP long-term firm service revenue contracts. Net Income Attributable to DT Midstream also saw an increase, rising to $108 million in Q1 2025 compared to $97 million in Q1 2024.

Adjusted EBITDA for the first quarter of 2025 reached $280 million, a notable $45 million increase from the fourth quarter of 2024. This sequential improvement was driven by a $39 million increase in the Pipeline segment results, reflecting a full quarter's contribution from the acquired interstate pipelines, and a $6 million increase in the Gathering segment, benefiting from lower expenses and growing Haynesville volumes. The Pipeline segment contributed $169 million in operating revenues in Q1 2025, up sharply from $107 million in Q1 2024, while the Gathering segment's operating revenues were relatively stable at $134 million compared to $133 million.

Operational expenses, including Operation and Maintenance ($78 million vs. $54 million), Depreciation and Amortization ($63 million vs. $50 million), and Taxes other than income ($14 million vs. $12 million), increased year-over-year in Q1 2025, primarily due to the inclusion of the acquired Midwest Pipeline assets. Interest expense remained unchanged at $40 million, as the impact of the 2034 Notes was offset by the repayment of the Term Loan Facility in 2024. Earnings from equity method investees decreased to $37 million from $46 million, mainly due to higher interest expense at Millennium Pipeline.

The company's liquidity position remains robust. As of March 31, 2025, DTM had approximately $1 billion of available liquidity, comprising cash and cash equivalents ($83 million) and available borrowings under its Revolving Credit Facility ($919 million net of outstanding borrowings and letters of credit). The balance sheet reflects disciplined financial management, with a consolidated net leverage ratio of 2.30 to 1.00 and an interest coverage ratio of 9.00 to 1.00 as of March 31, 2025, well within covenant requirements.

A significant financial milestone was achieved on May 20, 2025, when DTM attained investment-grade credit ratings from two agencies, fulfilling a key strategic objective since its spin-off. This achievement is expected to enhance financial flexibility and potentially reduce financing costs. The company has also optimized its debt profile, with no debt maturities until 2029.

DTM's commitment to shareholder returns is evident in its dividend policy. The company declared a quarterly dividend of $0.82 per share for Q1 2025, unchanged from the prior quarter but representing a 12% increase announced in late 2024, supported by the higher Adjusted EBITDA base following the Midwest acquisition. Management intends to grow the dividend annually by 5% to 7% in line with long-term Adjusted EBITDA growth, maintaining a coverage ratio above its two times floor.

Strategic execution continues to drive growth. The $1.2 billion Midwest Pipeline Acquisition, completed in December 2024, significantly expanded DTM's FERC-regulated footprint and increased its organic growth project backlog by approximately $1 billion, bringing the total backlog to $2.3 billion over the 2025-2029 period. This backlog represents high-probability organic growth opportunities, with approximately 70% focused on the Pipeline segment. Integration of the acquired assets is proceeding on schedule, with full financial cutover completed in Q1 2025. Construction is already underway on the first growth project stemming from this acquisition: the Midwestern Gas Transmission Power Plant Lateral to serve AES Indiana (AES)'s Petersburg Generating Station, expected in service in Q1 2026.

Other key organic projects are also advancing. The LEAP Phase 3 expansion in the Haynesville was placed in service early and on budget in Q2 2024, increasing capacity to 1.9 Bcf/d. FID was reached on the LEAP Phase 4 expansion (200 MMcf/d increase) in Q3 2024, underpinned by new long-term contracts and expected in service in H1 2026. The Stonewall Mountain Valley Pipeline interconnect project in Appalachia is being upsized, adding 100 MMcf/d of outlet capacity by H1 2026. The Ohio Utica system, placed in service in 2024, continues to perform well, with potential for downstream transmission opportunities as volumes grow. The Clean Fuels Gathering project, initiated in Q2 2024, is progressing, representing an entry into the emerging clean fuels market.

Outlook, Guidance, and Future Potential

DT Midstream is confident in its ability to deliver on its financial commitments and execute its growth strategy. The company has reaffirmed its 2025 Adjusted EBITDA guidance range of $1.95 billion to $2.155 billion, representing 18% growth from its 2024 original guidance. The early outlook for 2026 Adjusted EBITDA is set at $2.155 billion to $2.225 billion, with the midpoint indicating a 6% increase over the 2025 midpoint. This guidance is supported by the incremental contributions from recent acquisitions and organic growth projects, as well as expected activity from major customers.

Management anticipates total capital expenditures for 2025, including contributions to equity method investees, to be approximately $470 million to $550 million. Committed capital for 2025 stands at approximately $365 million, with about $100 million committed for 2026, reflecting new projects underway.

The company expects to fund its growth investments within its free cash flow in both 2024 and 2025 and projects being a minimal cash taxpayer until 2028.

The $2.3 billion organic growth backlog is central to the long-term outlook, underpinning the targeted 5% to 7% annual Adjusted EBITDA growth rate. This backlog includes opportunities across both segments, such as expansions on the DTM Interstate Transportation assets, further growth at LEAP and other Haynesville/Appalachia gathering systems, new contracts at the Washington 10 Storage Complex, and continued development of energy transition projects like CCS and Clean Fuels. Management sees significant potential in serving the growing power generation market, including data centers, with numerous commercial discussions underway for lateral and potential mainline expansion opportunities across its footprint.

The long-term fundamentals for natural gas infrastructure remain bullish, with DTM's strategically located and integrated assets well-positioned to capitalize on increasing demand from LNG, power generation, and industrial sectors. The company's pure-play focus and disciplined execution are expected to drive continued value creation and support a growing dividend.

Risks and Challenges

While the outlook is positive, DT Midstream faces several risks inherent to the midstream sector. Dependence on the continued availability of natural gas production and reserves in its operating areas is a key factor; low commodity prices could adversely affect producer development and future volumes, particularly impacting the Gathering segment. The company manages this through long-term, demand-based contracts, but minimal volume exposure still exists in the Gathering segment.

Credit risk from nonpayment or nonperformance by customers is present, although mitigated by a largely investment-grade customer base and credit monitoring procedures. A significant portion of revenues depends on a key customer, Expand Energy, in the Haynesville and Marcellus, making the business sensitive to changes in their production plans.

Regulatory risks, including those from FERC regarding pipeline rates and environmental regulations (such as permitting for the CCS project), could impact operations and project timelines. The CCS project's FID, for instance, is contingent on receiving the necessary Class VI permit from the Louisiana DENR.

Interest rate risk exists due to floating rate debt under the Revolving Credit Facility and its impact on goodwill impairment assessments. While the company has no debt maturities until 2029, changes in interest rates could affect future financing costs.

Competition from other midstream companies and alternative energy sources poses a long-term challenge, potentially impacting market share and profitability. However, DTM's integrated assets, contractual structure, and focus on niche efficiencies and energy transition opportunities are designed to mitigate these competitive pressures.

Conclusion

DT Midstream is executing a clear and effective strategy as a pure-play natural gas midstream company. Its integrated asset base, strategically located in key supply and demand markets, provides a durable foundation supported by long-term, demand-based contracts. The successful integration of the Midwest Pipeline Acquisition has significantly enhanced its scale and market reach, contributing to strong recent financial performance and increasing the potential for future growth.

The company's robust $2.3 billion organic growth backlog, focused on serving the accelerating demand from LNG, power generation, and industrial sectors, underpins its confidence in achieving a 5% to 7% long-term Adjusted EBITDA growth rate. The recent attainment of investment-grade credit ratings from two agencies validates its disciplined financial management and strengthens its position for future capital deployment. While challenges such as commodity price volatility, regulatory hurdles, and competition persist, DTM's contractual structure, operational expertise, and strategic pursuit of energy transition opportunities like CCS and Clean Fuels position it to capitalize on the bullish long-term outlook for natural gas infrastructure. For investors, DTM offers exposure to a high-quality, growing midstream portfolio with a commitment to returning capital through a growing dividend, supported by a strong balance sheet and a clear path for future expansion.