Gabe Moreen

Gabe Moreen asked about the timing and implications of the new non-GAAP adjustments, specifically their impact on equity issuance, capital structure, and dividend payout ratio. He also inquired about growth opportunities, the competitive landscape with midstream providers, and the regulatory construct for new projects.

Answer

Chris Sighinolfi, Chief Financial Officer, explained the timing of the non-GAAP adjustments, noting the legislation passed in June and the Railroad Commission's 270-day window for procedural rules, with final rules pending approval. He stated that the adjustments do not materially affect capital market plans initially. Curtis Dinan, President and Chief Operating Officer, discussed the competitive advantages for growth projects, highlighting the use of existing assets and the transparency of ONE Gas's regulatory structure and tariffs as key differentiators against midstream providers.

Gabe Moreen inquired about the timing and implications of the new non-GAAP adjustments, specifically how they might influence ONE Gas's equity issuance, capital structure, and dividend payout ratio. He also asked about the competitive landscape for growth opportunities, such as the Western Farmers project, and how ONE Gas's regulatory construct provides a competitive advantage.

Answer

Chris Sighinolfi, Chief Financial Officer, explained that the timing of the non-GAAP adjustments was due to the finalization of procedural rules for Texas House Bill 4384 and the increased magnitude of the delta between regulatory and GAAP books. He noted that the adjustments primarily impact earnings more than cash flow and are not expected to materially change capital market plans. Curtis Dinan, President and Chief Operating Officer, added that ONE Gas prioritizes opportunities where it has a competitive advantage due to existing assets, and its transparent regulatory structure often serves as a tiebreaker against midstream providers.

Gabe Moreen inquired about Western Midstream's efforts to mitigate negative Waha pricing impacts, potential participation in egress solutions, and an update on Pathfinder Pipeline's commercialization and third-party interest.

Answer

Oscar Brown, CEO of Western Midstream Partners, stated that new egress in the second half of 2026 is expected to alleviate Waha volatility. WES is actively working with customers to diversify pricing exposure and secure long-term solutions. He reported significant pickup in third-party interest for Pathfinder, including integrated solutions and direct pipe commitments, noting that the project's cost is decreasing, which enhances returns.

Gabe Moreen with Mizuho Securities asked about Western Midstream's M&A and inorganic growth strategy, particularly in light of recent cost of service restructurings, the Aris water acquisition, and the current balance sheet. He also inquired about efforts to mitigate negative Waha pricing impacts, potential WES participation in egress solutions, and an update on Pathfinder Pipeline commercialization and third-party interest.

Answer

Oscar Brown, CEO, stated that the M&A strategy remains unchanged, focusing on disciplined capital deployment for distribution growth and synergistic opportunities, citing the Aris acquisition as an example of disciplined execution and flexibility gained from equity issuance and contract renegotiations. He also noted that WES is working with customers to mitigate Waha pricing impacts by aggregating commitments for downstream capacity and expects new egress to help. Regarding Pathfinder, Oscar Brown highlighted increased interest in integrated water solutions and direct pipe commitments, noting that the project's cost is decreasing, which improves returns.

Gabe Moreen asked for an update on the Pathfinder project, specifically how the acquisition of additional pore space impacts its efficiency and the original cost estimates. He also sought an update on the progress of third-party contracting for the project. Additionally, he inquired about Western Midstream Partners' (WES) strategy for expanding gas and oil infrastructure into New Mexico within the newly acquired Aris footprint, and whether this expansion would be organic, inorganic, or both.

Answer

CEO Oscar Brown stated that third-party contracting for Pathfinder is progressing well, especially after the Aris acquisition enabled commercial team coordination. He noted that the pore space deal added capacity, flexibility, and allowed for pipeline rerouting, which improved Pathfinder's returns. Brown highlighted a favorable shift in the regulatory environment, increasing pressure on smaller players. Regarding New Mexico expansion, Oscar Brown confirmed WES would pursue both organic and inorganic opportunities, leveraging Aris's extensive footprint and WES's existing gas lines. He emphasized their success with multi-stream contracts in Texas-Delaware and sees water solutions as a critical leverage point in the New Mexico market.

Gabe Moreen inquired about the impact of additional pore space on the Pathfinder project's efficiency and original cost estimates, and sought an update on third-party contracting progress.

Answer

CEO Oscar Brown stated that the pore space deal added capacity, improved flexibility, and allowed for rerouting a pipeline portion, enhancing Pathfinder's returns. He noted that third-party contracting is progressing well, with the Aris acquisition accelerating discussions and the regulatory environment shifting favorably for produced water solutions.

Gabe Moreen of Mizuho Securities questioned USA Compression Partners' current evaluation of the distributed power space, especially in light of a competitor's recent expansion into that area, to understand if it's a business segment they are actively considering. He also asked about the expectations for contracting the remaining 50% of new horsepower planned for 2026 that is not yet under contract, and customer demand for it.

Answer

Clint Green, President and CEO, confirmed that USA Compression Partners has actively evaluated the distributed power business over the past 12-18 months, recognizing synergies with their compression operations but noting that previous opportunities did not meet their model requirements. Chris Wauson, SVP and COO, expressed confidence that the remaining new horsepower for 2026, primarily focused on tier one customers, would be contracted in the near future, aligning with their goal of consistent margins.

Gabe Moreen asked about USA Compression's current evaluation of the distributed power space, particularly in light of a competitor's recent entry into that market.

Answer

Clint Green, President and CEO, confirmed that USA Compression has actively evaluated the distributed power business over the past 12-18 months, recognizing its similarities to the compression business in terms of mechanical equipment and guaranteed runtime. He noted that while they see potential for similar margins, the opportunities reviewed so far have not met their specific model requirements, but they continue to evaluate the space. Moreen's follow-up question focused on the remaining 50% of new horsepower for 2026 that is not yet contracted, asking about expectations for its placement and customer demand. Chris Wauson, SVP and COO, expressed confidence that the remaining balance would be contracted in the near future, as their new unit growth primarily targets tier one customers and they strive for consistent margins.

Gabe Moreen asked for an update on the potential conversion of an NGL pipeline to natural gas service, as discussed in the previous quarter. He also inquired about the performance of Energy Transfer's assets during recent winter weather and gas market volatility, and any financial benefits derived.

Answer

Co-CEO Mackie McCrea stated that due to significant NGL growth, they cannot afford to convert the NGL pipeline and would instead pursue a new natural gas pipeline project if needed. Regarding winter weather, he noted that while the company was well-prepared and kept customers whole, the financial benefits were less significant than during previous events like Uri due to broader industry preparedness.

Gabe Moreen inquired about the status of Energy Transfer's previously discussed plan to convert a pipeline from NGL to gas service. He also asked how the company's assets performed during recent winter weather and gas market volatility, and to what extent this benefited Energy Transfer financially in the first quarter.

Answer

Co-CEO Mackie McCrea explained that Energy Transfer continuously evaluates asset repurposing. However, due to significant NGL growth, the company cannot afford to take the NGL pipeline out of service, and a new project would be required for natural gas. Regarding winter weather, McCrea stated that the company was well-prepared, keeping customers whole through pipeline systems and storage, though industry-wide preparedness meant profits were not at the level seen during the Uri event.

Gabe Moreen inquired about the performance of Spire's marketing segment during January's volatile gas markets and its ability to capitalize on price swings. He also asked about the effectiveness of the utility's hedging strategy in protecting customers.

Answer

President and CEO Scott Doyle stated it was too early for quantitative details but confirmed strong operational performance across all systems, meeting customer obligations, and fluid market conditions. He affirmed satisfaction with the utility's hedging strategy, noting that the Asset Management Agreement (AMA) effectively protected customers.

Gabe Moreen inquired about the necessity of the next potential LEAP expansion, asking if recently completed egress projects, including LEAP Phase 4, are sufficient for the current round of LNG projects, or if more gas capacity is needed. He also questioned if inorganic growth, such as consolidating gathering systems, might be required to drive sufficient volumes for another LEAP expansion. Additionally, he asked about the implications of the upsized Mountain Valley Pipeline (MVP) expansion for the Stonewall expansion project.

Answer

President and CEO David Slater confirmed that more egress capacity is required to the Gulf Coast beyond existing projects, expecting current systems to fill quickly, and stated DT Midstream is proactively expanding connectivity to future load centers. He did not directly address inorganic growth for LEAP but emphasized winning their fair share of the large growth area. For Stonewall, Slater viewed the upsized MVP expansion as a very positive fundamental event, positioning Stonewall as a strategic independent supply source for Mountain Valley shippers.

Gabe Moreen asked about the need for further LEAP expansions given recent egress project completions, if inorganic growth (consolidation of gathering systems) is needed to drive volumes for another expansion, and the implications of the MVP (Mountain Valley Pipeline) expansion for the Stonewall expansion.

Answer

David Slater (President and CEO, DT Midstream) asserted that more egress capacity is needed to the Gulf Coast beyond current projects, as existing systems will fill quickly, and DTM is pre-positioning for future load. He viewed the MVP expansion as a very positive fundamental event for the Stonewall expansion, positioning Stonewall as a strategic, independent supply source and valuable outlet for Mountain Valley shippers.