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DATE
Tuesday, Nov. 3, 2026
CALL PARTICIPANTS
- Director of Investor Relations - Caroline Sardella
- President and Chief Executive Officer - Chad J. Zamarin
- Chief Financial Officer - John D. Porter
- Chief Operating Officer - Larry C. Larsen
- Executive Vice President of Corporate Strategic Development - Robert R. Wingo
- Judge - Terence Lane Wilson
TAKEAWAYS
- Adjusted EBITDA -- $2.04 billion, representing 6% growth from the third quarter of 2025 driven by expansion projects and storage growth.
- Non-GAAP EPS -- $0.54, an increase of 10% from $0.49 in the third quarter of 2025.
- Transmission, Power & Gulf Adjusted EBITDA -- $1.03 billion, growing 9% year over year reflecting initial contributions from the Socrates project and natural gas storage expansions.
- Northeast G&P Adjusted EBITDA -- $542 million, an increase of 7% from the third quarter of 2025 due to higher volumes at Ohio Valley Midstream.
- West Adjusted EBITDA -- $401 million, representing 9% growth from the prior year period following the Momentum Midstream acquisition and a full quarter of results from the Louisiana Energy Gateway pipeline.
- Available Funds from Operations (AFFO) -- $1.59 billion, a 10% increase year over year driven by higher operating results and distributions from equity-method investments.
- Dividend Coverage Ratio -- 2.42x on an AFFO basis, compared to 2.37x in the third quarter of 2025.
- Momentum Midstream Acquisition -- $2.82 billion, representing the cash purchase price for the Haynesville assets closed on Sept. 3, 2026.
- Full Year Adjusted EBITDA Guidance -- $8.3 billion to $8.5 billion, with management reporting that performance is tracking toward the upper half of the range.
- Growth Capital Expenditures Guidance -- $7.3 billion to $7.9 billion for the full year 2026, which remained unchanged during the quarter.
- Debt-to-Adjusted EBITDA -- 3.80x at the end of the quarter, with a year-end target of approximately 3.75x reflecting the Momentum acquisition.
- Clay Basin Storage Expansion -- 9.4 billion cubic feet, representing a newly commercialized expansion project at the Mountain West facility.
- Southeast Supply Enhancement II (SESI II) -- 150 million cubic feet per day, representing a follow-on expansion project on the Transco system.
- Garden Connector Project Upsize -- 144 million cubic feet per day, representing an increase from previous plans following new customer agreements.
- Long Lead Power Equipment Commitments -- $5.9 billion, representing aggregate commitments for equipment to support the power innovation project backlog.
- West Gathering Volumes -- 7.18 billion cubic feet per day, an increase from 6.14 billion cubic feet per day in the third quarter of 2025.
- Northeast G&P Consolidated Gathering Volumes -- 4.14 billion cubic feet per day, rising from 4.10 billion cubic feet per day in the prior year period.
- NGL Production (Northeast G&P) -- 170,000 barrels per day, an increase from 150,000 barrels per day in the third quarter of 2025.
- Transco Average Daily Transportation Volumes -- 15.4 million dekatherms per day, growing from 14.9 million dekatherms per day in the third quarter of 2025.
- MountainWest Average Daily Transportation Volumes -- 4.2 million dekatherms per day, rising from 3.3 million dekatherms per day in the prior year quarter.
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RISKS
- Zamarin warned that the court remand of the NESE project permit could delay the project's online date beyond the next winter season, potentially impacting energy affordability in the New York region.
SUMMARY
The Williams Companies, Inc. (NYSE:WMB) reported record third-quarter results driven by the early closure of the Momentum Midstream acquisition and the initial contributions from the Socrates power innovation project. Management updated its financial outlook to reflect performance tracking toward the upper half of its 2026 Adjusted EBITDA guidance range while maintaining long-term compound annual growth targets of 11% or more through 2030. The company completed four pipeline expansions during the period and reached an agreement for a storage expansion in the Rockies to address increasing demand from utility and data center customers. Williams is currently focusing on scaling its power innovation backlog and pursuing permitting reform to support infrastructure development.
- Management reported that the second and final phase of the Socrates project is expected to be placed into service later this week, ahead of schedule and within budget.
- The company indicated that 75% of the natural gas inventory behind the newly acquired Momentum Midstream system is economic at prices of $3.00 per million British thermal units.
- CEO Zamarin stated, "Socrates serves as a blueprint for commercializing and scaling the next wave of power projects," as the company targets additional agreements with hyperscale customers.
- Management noted that the Bipartisan Affordable, Affordability, and Jobs Act (BAAA) would bring more certainty to project permitting if passed by the Senate.
- The company reported it has secured enough long-lead equipment to support its entire power innovation backlog and potentially additional projects through the early 2030s.
- CFO Porter stated that year-end leverage is expected to be around 3.75x, providing approximately $2 billion of capacity below the company's internal ceiling for additional power projects.
INDUSTRY GLOSSARY
- AFFO: Available Funds from Operations, a non-GAAP measure of cash generated by the business after preferred dividends and distributions to noncontrolling interests.
- Bcf: Billion cubic feet, a standard unit of measure for natural gas volume.
- Dekatherm: A unit of energy equal to 1 million British thermal units (Btu), used for natural gas pricing and transportation.
- G&P: Gathering and Processing, referring to midstream services that collect natural gas from wells and process it for transportation.
- Hyperscaler: Large-scale cloud and data center providers, such as those operated by major technology firms, that require massive power infrastructure.
- Modified EBITDA: A segment performance measure that includes proportional earnings from equity-method investments.
- Take-or-pay: A contract provision that requires a customer to pay for a minimum volume of service even if it is not used.
Full Conference Call Transcript
Operator: Hello, and welcome to William's Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message advising that your hand has been raised. To withdraw your question, please press *11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Caroline Sardella, Director of Investor Relations. Please go ahead.
Caroline Sardella: Thank you, and good morning, everyone. Thank you for joining us and for your interest in Williams. Yesterday afternoon, we released our earnings press release and the presentation that our President and CEO, Chad J. Zamarin, and our chief financial officer, John D. Porter, will speak to you this morning. Also joining us on the call today are Larry C. Larsen, our chief operating officer and Robert R. Wingo, our executive vice president of corporate strategic development. In our presentation materials, you will find a disclaimer related to forward-looking statements. This disclaimer is important and integral to our remarks. So please review it. Also included in the presentation materials are non-GAAP measures that we reconciled with generally accepted accounting principles.
These reconciliation schedules appear at the back of today's presentation materials. So with that, I will turn it over to Chad.
Chad J. Zamarin: Thanks, Caroline. Thank you all for joining us today. This was another strong quarter for Williams. We delivered record third quarter results, closed the Momentum acquisition to enhance our premier position in the Haynesville, and placed 4 more expansion projects into service. And we are excited to announce that later this week, we will bring the second phase of Socrates online. that is the story of this quarter, a team that delivers on commitments made, while advancing the next set of opportunities. I and the management team are incredibly proud of how our teams are executing and building long term value for shareholders.
So starting with the numbers, third quarter adjusted EBITDA grew 6% over the third quarter of 2025 and 9% year to date. And achieving over $2 billion in EBITDA in Q3 sets an all time record for third quarter earnings. Based on our performance through the first 9 months of the year, we continue to track toward the upper half of our 2026 adjusted EBITDA guidance and we are well positioned to deliver on the long term growth target we raised last quarter to an 11%+ compound annual EBITDA growth through 2030. On September 3, we closed our acquisition of Momentum Midstream, 1 month ahead of schedule.
And the Momentum assets integrate seamlessly into our existing Haynesville position and tie into our Transco footprint along the Gulf Coast. Integration is well underway, our teams are already moving on the growth this combination unlocks. Starting with the Shelby Trough Connector and Delta Access Pipeline Projects. Both of which will Expand The Delivery Of Haynesville gas into Transco for transport to power and LNG customers along the Gulf Coast. Also during the quarter, we successfully placed 4 projects into service. Gillis West, Wharton West, the Huntington Connector, and the Rickman Creek lateral. Together adding over 400 million cubic feet per day of fully contracted take or pay pipeline capacity.
Projects like these may not make major headlines on their own, but the growth compounds. Each project strengthens the reach and reliability of our system, and together, they drive base business growth quarter after quarter. In our power business, you recall that last quarter, we brought the first phase of Socrates into full service in under 18 months from commercialization. Later this week and, again, ahead of schedule and within budget, our teams will place the second and final phase of Socrates into service. Socrates shows that when customers need comprehensive energy solutions, combined with speed to power, Williams is a partner that will deliver. And the Williams team continues to do things the right way.
Delivering pipeline and power projects in a way that benefits communities and customers. Our teams prove every day that we can do both. And Socrates serves as a blueprint for commercializing and scaling the next wave of power projects. On that note, we expect to announce 1 to 2 more power projects by year's end, so stay tuned. And we expect those projects to expand our customer base with additional high quality counterparties along with significantly longer contract tenures. Across our pipeline system, we continued to expand our growth runway during the quarter. On Transco, we announced a follow on project to SESI, the Southeast Supply Enhancement Project.
And recall, SESI will be the largest project in the company's history by earnings contribution. The follow on project creatively referred to as SESI II, a 150+ million cubic feet per day expansion project. We also upsized our Garden Connector project to a 144 million cubic feet per day. Just 1 quarter after signing initial customer agreements. that is the power of the Transco footprint Every expansion lays the foundation for the next. And now shifting to natural gas storage, As we have discussed, gas storage becomes increasingly valuable as natural gas demand continues to grow. Especially as demand increases from LNG and power customers who need gas the moment they call for it.
During the third quarter, we commercialized another gas storage expansion project, a 9.4 Bcf expansion of our Mountain West Clay Basin facility. Continue to benefit from our advantaged storage footprint and we expect storage values to continue to increase and expansion opportunities to continue to commercialize. So to sum it up, the team delivered record third quarter results, while executing on projects that will drive growth through the end of the decade and beyond with a growing backlog that now extends well into the 20 thirties. And with that, I will turn it over to John for a deeper dive into the financials.
John D. Porter: Thanks, Chad. Our third quarter 2026 EBITDA was up 6% over 2025, and we also delivered 10% growth in both adjusted EPS and AFFO for the quarter. For EBITDA, we are now up 9% over 2025 for the first 9 months of the year. Bridging from last year's $1.92 billion to this year's $2.04 billion, our overall financial performance continues to be led by our transmission, power, and golf businesses, which improved $83 million or about 9% growth in this segment was led by the initial contributions from our Socrates project, and continued growth from our natural gas storage businesses and pipeline expansions.
Our Northeast G&P business grew $37 million or 7% primarily due to higher volumes across our major liquids rich and dry gas system. The West grew $34 million or about 9% including initial contributions from the Momentum acquisition, which closed in early September, as well as other higher Haynesville results including a full quarter from our Louisiana Energy Gateway pipeline and other Haynesville volume growth. Our Sequent Marketing business was a bit lower than last year with continued seasonally lower opportunities for this business. Finally, our other segment, which includes our upstream businesses, was down about $28 million primarily due to our divestiture of the upstream Haynesville assets which closed in January 2026.
So, again, third quarter EBITDA is up 6% with 10% growth in adjusted EPS. and AFFO, and EBITDA now up 9% year to date. So now I will offer a few thoughts on how we expect to finish for 2026. Turning to the full year outlook. Our strong financial performance and execution on the Socrates project gives us confidence in updating the full year outlook. For full year 2026 adjusted EBITDA, our existing businesses continue tracking toward the upper half of our $8.3 billion to $8.5 billion range.
On leverage, excluding the impacts of any additional power innovation projects that we announce prior to year end, we would expect year end leverage to be around 3.75x, reflecting the Momentum acquisition on a full year run rate basis. And as we previously discussed, 3.75x provides another $2 billion of incremental capacity versus our internal 4x leverage ceiling to cover the initial spend on any additional power projects we announced before year end. Most importantly, though, as we previously discussed, the balance sheet leverage tightness is primarily an issue for 2026-2027, before the historic earnings growth we expect in 2028 and beyond. But before we get to 2028, we also expect to see sector leading growth in 2027.
So, ultimately, our financing plan for 2027 will be guided by the scale and speed of our next power projects. In advance of those future announcements, our growth CapEx guidance remains unchanged. We are encouraged by the performance of our base business, our Momentum acquisition, the ongoing strong execution across our project portfolio, and the continued commercialization of new business. And we feel well positioned with our flexibility to fund additional innovation opportunities which will fuel an expansion of our targeted 11%+ EBITDA CAGR Through 2030. And with that, I will turn it back over to Chad.
Chad J. Zamarin: Thanks, John. Before we open the line for questions, I wanna come back to the message on slide 4. The Williams story is 1 of making commitments and delivering results. And while we focus on delivering a strong finish to 2026, we also remain laser focused on driving our growth through the end of the decade and beyond. As discussed, we expect to finish 2026 in the top half of our guidance range, and we are entering the next chapter of growth from a position of strength. Natural gas remains our country's most important, most abundant, and most affordable domestic energy resource. And as a result, demand for natural gas continues to accelerate.
LNG exports are growing along the Gulf Coast, Industrial reshoring is happening, and power demand is surging for the first time in decades. Our country's growth will continue to be fueled by our ability to produce low cost, low emissions, and highly reliable energy. Natural gas checks those boxes better than any other energy resource in America. And with the Momentum acquisition, our expanding pipeline network, our growing storage portfolio, and our unique backlog of power projects, we have more ways to capture demand for energy and translate it into value for our shareholders. None of this happens without the dedication of our people. To the Williams team, thank you for working safely.
For serving our customers reliably, and for building infrastructure our country will depend upon for generations to come. And thank you to our customers, partners, and investors for your continued trust in Williams. And finally, since today is election day, I wanna encourage everyone on the call including our Williams employees. If you have not voted yet, I encourage you to make time to head to the polls. Decisions made at every level of government shape whether America can build the infrastructure it needs, and whether energy will be reliable and affordable for the homes and businesses that depend on it.
Our industry serves every community in this country all of us have a stake and should make our voices heard. And with that, we will now open the line for questions. Thank you.
Operator: At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press *11 on your telephone and wait for your name to be announced. To address your question, please press *11 again. Please standby while we compile the Q and A roster. Our first question comes from the line of Jeremy Tonet from JPMorgan Securities. Please go ahead.
Jeremy Tonet: Good morning. Hi, Jeremy. Good morning. Just wanted to start off, I guess, talking about the behind the meter commercialization, as you discussed. And 1 to 2 more, you know, deals expected by year end, Is how should we think about, I guess, customer conversations here? Is this broadening out your counterparties? I mean, would these customers be similar to who you have signed, you know, so far? Just wondering, I guess, about the opportunity set if it is another large customer and if that leads to, you know, the potential for, you know, subsequent deals post these.
Chad J. Zamarin: Yeah. Thanks, Jeremy. Yes. The answer to your question is we have been advancing opportunities with additional customers. We are only focused on, you know, really the highest quality hyperscalers and projects that we think fit really well within our strategic capabilities. And so, you know, I mentioned in the prepared remarks that, you know, we expect to expand and diversify the customer base. We will continue to be, you know, large high quality customers. And we also expect contracts to significantly extend in term length. And importantly, I know we have been asked about timing of announcements. I think that, you know, we.
I think the market, I think our customers have seen the success of the team on Socrates. So I think we have got a very credible capability and solution. And we are also working on projects now that in addition to the speed to power, also provide our ability to scale over time. And so part of what I would expect, you know, us to deliver are projects that not only look a lot like what we have announced so far, but provide more clarity into the length of the backlog and the scaling of projects over time.
Jeremy Tonet: Got it. that is, helpful there. Maybe just continuing these are kind of some first of the kind type of projects for Williams, and you have had Socrates running for a little bit here. Just wondering, I guess, any learnings so far, your comfort here, and if you think about kind of expanding your, you know, solution offerings here, how do you think about that?
Chad J. Zamarin: Yeah. Thanks, Jeremy. How. I will start, and I am going to let Larry fill in. I would tell you we are just so proud of the team. You know, Williams has a long history. I mean, company for 1 hundred and 20 years has been building complex critical infrastructure solving, frankly, some of the world's most challenging energy problems. And the team did a great job building this business. The nice thing is it is a pretty clean extension of our existing capabilities. But, yes, the team is learning every day. I mean, I have said this before. We are somewhat solving a new challenge, a new problem with existing technology. So every project will get more efficient.
Every project will become more optimized. And we are we are taking those lessons learned from every know, element of every project and deploying those to the next. But I will let Larry speak to some of, you know, what he is seen.
Larry C. Larsen: Yeah. Thanks, Jeremy. This is Larry. Yeah. I mean, as Chad said, really proud of the team. They have done some amazing work to be able to deliver projects. I mean, they are complex. Some of the first of its kind, be able to work with our customers on be able to manage the load following, and it is been great to see these projects deliver exactly the way that we anticipated. We have now had some runtime with Plato South, and we have seen that, ramp up in utilization, and it is performed exactly the way we want to.
And, really excited for the team to get through the final commissioning this week on Plato North and have the facility fully up and operational. As Chad mentioned, there is always lessons learned as we go through these both on how we commission and execute the projects and we are taking those efficiencies into the next phase of projects, even the ones that we have commercialized to continue to further provide a better solution for our customers. And so I think you will see that continue to play into the solutions we provide for the next wave of projects we are commercializing. And, I think the great thing is counterparties are out there looking for people to work with.
I think our ability to continue to deliver on projects is scale, the speed, the complexity, and navigate through all of the different things that come up on these types of projects. it is just continuing to demonstrate William's ability, and I think that is helping on the commercial front.
Jeremy Tonet: Got it. that is helpful. I will leave it there. Thanks.
Operator: Thank you. Our next question comes from the line of Praneeth Satish from Wells Fargo,
Praneeth Satish: Thanks. Good morning. So I guess with Election Day, here upon us, you know, when you when you look across your power backlog, particularly the projects that are closer to commercialization, I guess, how sensitive is the timing of those projects to the to the elections and specifically the governor races? I guess, And I am really curious about Texas given the size of the opportunity there and whether that has any bearing on your time lines and backlog.
Chad J. Zamarin: Yeah. I would not say that is a gating issue for any of the discussions that we have been having. I think everybody's keeping an eye on the election and you know, looking forward, I would say, to getting through. An election cycle. But, you know, I do believe at the end of the day, you know, places like Texas are going to be important for our country. You know, we have got a very large energy resource We have got a place where there is a lot of land available. And so we do think Texas will be an important, part of the infrastructure story for data centers.
But just in general, I mean, you know, the Permian Basin, West Texas is, you know, obviously 1 of our most important energy resources in the country. But we also, you know, spend a lot of time making sure we are focused on places where we can build with supportive communities. We can build projects that fit right, you know, within our existing kind of capability set. And so we feel really good about the projects that we are advancing, and we do not see the election being a gating item Again, we have just been focused on making sure we can properly scope and design and optimize the projects that we are going to bring to market. Got it.
Praneeth Satish: And maybe switching gears on SESI 2. Can you talk about maybe the potential to upsize this project over time and how large it could ultimately become? And then I guess from a capital efficiency standpoint, should we think about the economics of SESI 2? Similar to SESI 1, which I think was something like a 3 to 4x build multiple, if I remember correctly. Could this to that level as well? Thanks.
Larry C. Larsen: Yeah. Praneeth, this is Larry. Thanks for the question. Yeah. As we have announced right now, we have got, a 150 a day contracted on that with is with a high credit, utility counterparty. We did have a non. Binding open season on that, which articulated the scope up to 390. We do have an additional customer for the remaining capacity on that. We have got some things to work through with that customer to firm up. So, ideally, we think there is a project that makes a lot of sense in that $3.90 range. Could it be expanded down the road? Definitely.
But I think that would be done in a future phase of the project from a maybe a SESI phase 3 if we stay creative with our naming. convention. But as far as returns, I mean, these are pretty capital-efficient projects. I would assume you would see this in a similar type of range that we have talked about in the 4 to 6x build multiple. But a lot of that is going to be dependent on once we finalize the scope and, capital for this next phase of the project as we work through that final, commercial contract.
Praneeth Satish: Got it. Thank you.
Operator: Thank you. Our next question comes from the line of from Spiro Dounis from Citi, Please go ahead.
Spiro Dounis: Thanks, operator. Good morning, everybody. I want to start with the compensation framework, this new disclosure. in the 10-Q seem to point to a 10% to 16% EBITDA CAGR through 2030. So first, great to see alignment there on some of these targets you set. That low end is congruent with the 11%+ target, but I wanted to dig in a little bit more on that high end of 16% I suspect that is a deliberate and achievable target by 2030. Wanted to understand, I guess, what it would take to achieve that how much M&A is contemplated versus organic? And then, John, on the leverage side, this competition target also requires leverage to be at or below 4 times.
Just maybe talk through the rank order of tools available to fund growth while keeping leverage in check?
Chad J. Zamarin: Yeah. Thanks, Spiro. This is Chad. I will start, I will let John then fill in the rest. First thing, yeah, I mean, you picked up on, you know, we, as a management team and the board, are very focused on aligning the. Or the entire organization with the goals that we have articulated and you know, what we think will be the sector leading growth and delivery of shareholder value. And so, you know, the compensation structures are set to do that. And we have talked about you know, that does not change our existing compensation structures as well, which, return on invested capital is the single most important metric that we measure for executive compensation.
And so when you think about our growth, you know, those numbers, I think, reflect what we do believe is achievable. If you look at the business and you look at how we have grown over the last 5 years, we have had, you know, 9% compound annual growth in earnings over the last 5 years, and we have done that with high return projects, that creates a tremendous amount of capacity to invest capital over the next 5 years and beyond. And so I think if you run the model on Williams, we have built a platform that can invest capital at attractive returns and can, you know, generate the type of growth that we are guiding towards.
And so we feel really good about that range. And, you know, I would just say that we and the board have made sure that the entire organization you know, that is obviously. We disclosed what was required for the officers, but the entire organization you know, we are making sure is highly focused on delivering know, the commitments that we are making, to our shareholders. And, John, you wanna fill in?
John D. Porter: Yeah. Thanks for the question, Spiro. Really excited about the financial flexibility we have got this pathway to 2030 and all of this growth that we are chasing. For 1, we have talked about it. Our targeted leverage 3.5 to 4x. So you see in the new goal that there is no payout if our balance sheet is over 4x. So we have to land sub 4x in our range that we are trying to navigate to is 3.5 to 4x. And we have talked about this before that we do have some tightness up against that 4x leverage, primarily in 2026 and 2027.
But, you know, importantly, I think as you get beyond 2027, we see enormous capacity that opens up. Chad just mentioned it as a result of all of the projects that are coming online and the earnings growth we are going to see. I mean, we are gonna start seeing pretty great earnings growth even in 2027, but it picks up even from there. So I think, you know, when you think about capacity and flexibility, we are going to have a lot of internally generated cash flow, and we are going to have a lot of balance sheet capacity to continue to fuel additional growth as we chase that 16% high end.
I will tell you, everybody on our management team is super focused on winning at a 16% level. And, you know, that could include some bolt ons along the way. But I think, you know, as we focus in on our plan, we are most focused in on our backlog. And winning, you know, more than our fair share of the backlog, primarily in the pipes and power parts of the business. Think we have got really good line of sight into enough of it, opportunity set to win, you know, again, more than our fair share in those spaces and achieve that 16%.
We do have things in terms of financial flexibility You know, the Blackstone deal proved out that there is tremendous appetite to partner with us. So if along the way we need to bring in partners, we can certainly do that. As well. So we have got a lot of financial flexibility. We have got, you know, I think, big backlog. As Chad mentioned, you know, we are gonna stay super focused, though, on the cash returns on invested capital. We do not want to get to the end of this and find that we have lost any ground in terms of the great track record we have had on cash returns on invested capital.
So we are gonna have the growth. We are gonna have the balance sheet strength. And that is gonna be because we have generated really strong cash returns on the capital we are investing.
Spiro Dounis: Got it. it is, it is great to hear. I appreciate the color on that front. Second question, just going back to power innovation and maybe sticking with the theme of some data points in the 10-Q. Looks like it pointed out almost $6 billion of long lead equipment purchases for projects not sanctioned yet. And so I am trying to reconcile what that means with respect to your 6-gigawatt-plus opportunity set. To think about delivery time frames for this equipment, and maybe the conversion rate so far on what is gone from an order turning into a sanctioned project Yeah.
John D. Porter: Thanks, Spiro. Yeah. Those 10 Q disclosures can be sometimes a little murky. In this case, I think you are talking about the $5.9 billion that is referred to in terms of commitments. And that does sort of pick up the aggregate. Yeah. The aggregate sort of overall commitments that have been made around equipment that we would use to commercialize additional projects, I would say there is, again, murkiness around those kinds of disclosures because some of those have cancellation fees and things like that. And so we are not absolutely committed, and that kind of that kind of plays into the way we have described how we have been able to build this really strong inventory of equipment.
We have done it with back stop agreements. We have done it without really exposing the company to the risk of loss associated with that equipment. As far as the direct sort of relationship between the 5.9 billion and the 6 gigawatts, I would not think that there is. Or 6 gigawatts plus. I do not think there is a real strong connection between those 2.
Chad J. Zamarin: Yeah. And I would just add that those layer in, you know, our equipment that is on order, and John, you know, did I think a good job describing how we have done that. We have worked collaboratively with customers to secure equipment and frankly, you know, I think we have said that we have got enough equipment secured on order in partnership with customers that would support the entire backlog that we have guided to and even a bit more. And those deliveries would layer in you know, within the.
You know, from now, frankly, until, call it, the early 20 thirties, when we have talked about our backlog, we have kinda guided towards that being the targeted you know, timeline for projects. Layering in projects in a in a disciplined way, so that we have got predictable growth through the end of the decade. And now we are even seeing those opportunities crystallize into well into the 20 thirties and doing it in a way where we can be efficient in moving talent and capabilities from project to project. And so that is how you know, we think about the equipment that is on order in the backlog that we have. Guided towards.
Spiro Dounis: Great. I will leave it there. Thank you, everyone.
Operator: Thank you. Our next question comes from the line of Elvira Scotto from RBC Capital Markets. Your line is now open.
Elvira Scotto: Hey. Good morning. I wanna pivot to the Momentum acquisition. That closed ahead of schedule in September. Can you share some early integration learnings Any unexpected synergies or challenges you have encountered? And just how the integration is progressing to your original plan?
Robert R. Wingo: Yeah. Sure. Thanks for the question, Elvira. No, I mean, look. Integration's off to a really strong start. Really no surprises after the first 2 months of ownership.
Analyst: The performance of the business has been tracking with expectations. You know, it is still early, but we are starting to capture synergies ahead of our of what we modeled. And commercial and business development engagement is off to a strong start. Both with existing and potential customers. Look. We have got lots of experience with acquisitions and integrating, and we have worked out the bugs over the years. And so far, I would say everything is going as planned.
Elvira Scotto: Okay. Great. And then my next question, I am gonna pivot here again. So it looks like there is a bigger call on U. S. LNG, especially given sort of security of supply. Obviously, you benefit on the pipeline side through Haynesville assets. But this should also increase the value of that 1.5 million ton per annum SPA you entered into with wood side, the Louisiana LNG facility. How are you thinking about that capacity now as we kind of move closer to that start date.
Robert R. Wingo: Yeah. Look, I mean, when we took that capacity as part of the Woodside investment, you know, we did it for a couple reasons. 1, because we like the pairing of that with the pipeline and the marketing piece of the deal. We felt like the capacity was really going to be something that we could help bring additional volumes through our midstream system. that is how we have been approaching it. And, you know, with the Momentum acquisition, it really puts us in a even stronger position to be able to interface with customers and offer international pricing as a service offering.
And so, you know, we have already heard and seen interest from producers in the basin that want international exposure. And so 1 of the things we are doing is talking about pairing that with gathering and compression and those types of services.
Chad J. Zamarin: Yeah. And I will just add. I think Robert said it well. We have got time. We can be patient. I think the project is on track. I know some of the team here actually went out to the Woodside project and got to go to site and, Woodside's doing a great job on the LNG side. Our team is well underway on the pipeline side of the project, but we are gonna be patient and disciplined. But I would expect, again, yes, that capacity has certainly increased in value, but our strategy will likely be to term out that capacity, make sure we capture fixed margin. We are not-- I think we have made it clear.
You know, that is not an attempt to create a large international price exposure position, but I think Robert said it well. it is really a tool that allows us to offer more opportunity, a window into international markets for some of our producer customers that might not otherwise be able to access it. I do not know. Larry. Anything you wanna add on line 200 and how the project's going?
Larry C. Larsen: Yeah. I mean, right now, everything's moving as planned. As the project's moving forward, we have gotten through all the permitting, Construction is online to be targeted for end of 2028 time frame. So that front, everything's going well, and I think now you will see further opportunities for us to, as you think about our Haynesville position, continue to do further expansions as we see additional LNG demand grow within that corridor. We do see additional interest. We announced the Shelby Trough Connector Project last quarter. And, obviously, we are Seeing A Lot Of Additional Interest On That.
So I think you will See Not Only With Line 200 and the Woodside LNG facility, but as we see additional LNG demand grow in that corridor, we are seeing definitely a lot more interest to get molecules from the Haynesville down into that corridor, which we are excited is gonna really, I think, play into the advantage of the premier Haynesville position that we built up.
Elvira Scotto: Great. Thank you for that.
Analyst: Alright.
Operator: Thank you. Our next question comes from the line of John Mackay from Goldman Sachs. Please go ahead.
John Mackay: Hey, team. Thank you for the time. Appreciated the comments on SESI Phase 2 earlier, but just wondering if you could talk broadly on Transco as a whole. You kind of talked about potential later phases. Just anything you can frame up for timing or maybe ultimate sizing would be helpful. Thank you.
Larry C. Larsen: Yeah. I think that we have highlighted before, I mean, the expansion opportunity on Transco, it is almost limitless. I mean, there is so many different opportunities that you are seeing us continue to commercialize projects, across the footprint on Transco. And not even just on Transco, across all of our pipeline assets as we have obviously just announced the storage expansion on Mountain West earlier this year. We did the Silver Spur expansion on Northwest Pipeline.
So I think on Transco, the SESI phase 2 is just another example of ways that we can continue to optimize as our customers demand grows in those regions, and we have very strategic bolt on brownfield that can continue to serve those markets. So, we have definitely got more projects in the backlog that we are working on, optimistic that we will see additional projects commercialized as we go into 2027. And there will be probably a myriad of some of them smaller scale like we have seen, like, with Leidy Access. That we commercialized earlier this year, to potentially some larger scale, larger capital expansions that the team is working on as well.
Chad J. Zamarin: Yeah. 1 of the nice things I have been mentioning to folks and Larry mentioned it, we will continue to see some of the, you know, nearer term smaller projects that can be delivered between now and the end of the decade, but we are already having really encouraging discussions regarding the next wave of large expansion projects that will help fuel growth frankly, well beyond 2030 as we have seen, you know, a next wave of power projects that we expect our utility customers to need to supply with natural gas.
You know, Transco is the nation's most important artery for supplying utilities along know, along that corridor, both Gulf Coast, Southeast, Mid Atlantic, up into the Northeast, And then LNG demand, you know, we. We have been watching to see kind of the next wave of capacity in again, we are seeing, you know, really strong signs that a round of projects will commercialize. And so not only do we feel really good about the growth through the end of the decade, but we are starting to see projects and focus a lot of energy with the team on projects into the 20 thirties.
John Mackay: that is great. Thanks for that. Second 1 for me. Can you just catch us up on where NESE stands right now, kind of next steps to watch? You are feeling about the timeline? Thank you.
Judge Terence Lane Wilson: Yes. Thanks for the questions. this is Lane Wilson. Yeah. I am sure you guys are aware, the Third Circuit remanded our New Jersey certificate, but there is nothing in that remand that is really jeopardized the project. We are reevaluating right now The direction we are gonna take, but there is as I said, there is nothing in that.
Analyst: Opinion that we think it jeopardized that project. it is probably gonna depend more on the level of cooperation we get from New Jersey, and we are working with them right now to figure out the next steps.
Chad J. Zamarin: Yeah. I would just say I think this reinforces the importance of permitting reform. I think had we seen the bill that is hopefully going to make it to the floor of the senate And, you know, Lane can give an update on that if we wanna provide additional color. But that would have addressed what happened with, you know, this third circuit decision. And, frankly, what this does is it is not gonna have an impact on us from a financial forecasting perspective. We feel really good about the need for the project.
But, you know, it could put at risk our ability to get it online in time for next winter and, you know, again, will not have a material impact on us, but will have an impact on affordability in New York and in that region.
Analyst: And so you know, we are hopeful that the senate, is successful in voting on the bill, the bipartisan affordable, Affordability, and Jobs Act, the BAAA bill, And I do not know if you wanna give a quick update on that, but it had some really strong provisions that would address, I think, a lot of the challenges that we have seen. And would bring a lot more certainty and predictability to permitting projects.
Judge Terence Lane Wilson: I just do not think there is any doubt that if the BAAA had been in been in effect at the time the Third Circuit considered our permit, we would still have that permit. So this is really critical for the country, from all avenues in terms of energy, no matter where you look at it. there is a vote scheduled for November 9th for a cloture vote in the senate. I think it is gonna get more than 60 votes. How many more than 60 votes it gets probably determines how quickly it makes it through the house. So we are optimistic.
This is as good a chance as we have ever had to get meaningful permitting reform kind of across the full scale of infrastructure in this country, There are Democrats and Republicans that have come out in favor of this, and we think it is gonna happen.
John Mackay: Appreciate all that, guys. Thank you.
Operator: Thank you. Our next question comes from the line of Julien Dumoulin-Smith from Jefferies. Please go ahead.
Julien Dumoulin-Smith: Hey, good morning, team. Thank you guys for the time and the opportunity. Look, maybe to take a couple different directions here. First, going back to where we started at top of the call, as it pertains to the projects coming, just the size of the projects contemplated, are we seeing an increase, or it is just more about the cadence here and getting 1 to 2 before the end of the year? And then related within that, some discussion out there about just obtaining the adequate gas lateral easements, etc.? Just where are you in just executing against that side of the equation, across the portfolio projects underway today? If you can just, update us briefly.
Chad J. Zamarin: Yeah. Thanks, Julien. First, on the size of projects, I think I alluded to the fact that, you know, we are taking some time with the next round of projects to not just scope and commercialize the front end speed to power components similar to the size and scale, and scope of what you have seen so far out of the 5 projects that we have announced. But we are taking some time on several of our projects to plan the further phasing and scaling of those projects.
Look, I think, you know, Chad even mentioned that on the first 5 projects we have announced, Larry was speaking to kind of the optimization lessons learned There is also significant upside opportunity at each of those projects to unlock more capacity and scale those projects You know, we sanctioned those projects based on very conservative assumptions to make sure that we can deliver the front end speed to power. But there is a lot that we can unlock and scale over time.
Now as we look at projects where we have the time to plan, additional phases, I think you can expect that some of the projects in the backlog, you know, will have larger scale and will have phasing of capacity over time. Your question about easements, maybe just expand on that a little bit. Was that on pipeline projects that you were referring to?
Julien Dumoulin-Smith: Or just the lateral for the power side of the equation. Right? And as much as you have a litany of these underway. Just if there is any issues, if you could be able to secure everything thus far?
Chad J. Zamarin: Yeah. I would just say that our team does a great job of when we are citing, we are working very collaboratively. I think 1 of the capabilities that is really important that we bring, you know, and Robert has showed a slide before that shows the extent of the SQN footprint. Obviously, we have got an incredible you know, core business footprint. I think 1 of the unique capabilities we bring is helping hyperscaler site projects in locations where we have high confidence that we can deliver gas supplies. And so, you know, we feel really good about the projects we have been developing, and Teams had a lot of success.
That has not been an issue that know, has prevented us from advancing projects. And, you know, when I think about the projects that are in the backlog, all of them know, are sited into locations where we have high degree of confidence. Either we have we have got, you know, a location that is rightly situated, or we have we have got what we need or would expect to need from a pipeline capacity perspective.
Julien Dumoulin-Smith: Excellent. And just to say it even more directly, you would contemplate the extent to which these are announced. That the larger. The future scope and phases would be announced simultaneously such that we could see overall a larger project announcement to the extent to which these have been a bit longer in the wait. They should indeed at least initially be announced. As a longer duration, but also larger scope and project at the outset.
Chad J. Zamarin: Yeah. Not every project, but I think that, you know, I would expect that you will see projects from us that make. That crystallize, commercialize, a larger portion of the backlog and show larger scale phases with, you know, within a single project. So, yes. Got it. And, just to clarify, even amidst the backdrop, you feel confident on return staying the course here on these larger scope projects? As defined earlier. We do. Team's done a great job. I-- yeah, I do think we expect the return framework to hold. I will say that 1 of the nice things about scaling projects is you can layer in larger equipment and more efficient power.
And over time, the speed to power units can become more of your peaking units. And so you can also drive down the cost for the customer, preserve return, become more efficient. You know, as Larry discussed bring the lessons learned from every project we are delivering. So, you know, the goal is to keep driving down the cost for the customer while, you know, preserving returns, expanding the customer base, and extending contract duration.
Julien Dumoulin-Smith: Excellent. Glad to hear it, Chad and team. Good luck. We will see you soon.
Analyst: Alright. Thanks.
Operator: Thank you. Our next question comes from the line of Robert Catellier from CIBC Capital Markets, Please go ahead.
Robert Catellier: Hey, good morning. Maybe a question here for John. I just wondered if what the ability and appetite is to use the joint venture structure for future power projects. I asked the question because maybe the market has moved a tiny bit since the first agreement. So I am curious about the level and the depth in the market given prices may have moved a little bit?
John D. Porter: Yeah. Thanks, Robert. Definitely, prices have moved a bit from the, you know, the 6.35% that we got on the deal with Blackstone back in July and, you know, just the underlying movement in the 10-year treasuries has caused there to be a shift in the cost of capital for that. For that kind of arrangement. So we will keep an eye on it. It certainly remains an option. We definitely hear all the time that there is very strong demand. We ran a very competitive process. I think we could reboot something like that fairly quickly as well and, again, drive toward the lowest available cost of capital for that kind of financing.
But whether we decide to do that or not, I think just depends on, again, on the size and scale and speed of the next power projects that we are commercializing. And definitely could be something that we do again but it is just 1 of several options, including just, you know, perhaps running the balance sheet a little bit harder for a short period of time before all the earnings kicks in. But we have a lot of options. The insurance capital will continue to be something we will be definitely looking at.
Robert Catellier: Okay. And maybe just a quick follow-up here on Momentum Midstream. It looks like it is off to a pretty good start from a small sample size. But what do you see the most upside, the most strategic upside when you look at how it interfaces with LEG or Transco and some of your other US Gulf Coast footprint?
Robert R. Wingo: Yeah. I mean, look, I think the inventory and the breakeven prices and the price at which producers are going to act I mean, 75% of the inventory behind that system is economic at $3 and virtually all of it is economic at $3.75. So we do not need $4 gas prices. To support growth there. So, you know, as you see LNG and you see power demand continue to come online over the long term, we think that demand is gonna provide a signal to bring that economic inventory into production. So it is really the strength of the inventory behind the system combined with the demand from LNG and power that we see over the long term.
Analyst: Yeah.
Larry C. Larsen: And this is Larry. I will add to it. I mean, obviously, we have only got a couple of months under our belt, but I mean, we do a very good job of integrating those operations teams. The commercial team is really under the hood now and really looking at the broader opportunity set in front of it.
And I would say with this combined footprint and asset mix we have across the Haynesville, both in Eastern Texas and West Louisiana, I mean, it is creating a lot of opportunities, not only on just winning new dedications and opportunities to expand, whether that is LEG or NG 3 to be able to serve that growing demand, but it is also creating some great opportunities to optimize across the footprint we have. We have got several projects right now, both on our legacy system and Momentum that are ramping up for growth. Going into next year. And so right now, everything is really positive. it is still early.
Only a couple months in, but the integration with the team's operations organization is going extremely well. And opportunity set that the commercial team is seeing is really robust. So I think there is some great upside that will then, I think, layer into some, hopefully, downstream expansions as well as you think about Transco and the Delta Access project that hopefully will continue to upsize.
Chad J. Zamarin: Yeah. And I will just add credit to the team. There is a large team working the integration. Robert mentioned earlier we are pretty conservative when we plan bolt on transactions. We had assumed that synergies would start to materialize in 2028, but I can tell you the team is focused on capturing you know, every ounce of that now and as early as possible. Synergy capture. But you know, we have got a very large cross functional team working every day on that integration and then also on unlocking those additional commercial opportunities. And I think we have been really excited to see you know, see the possibilities start to emerge.
Robert Catellier: Okay. that is helpful. Thank you.
Operator: Thank you. Our next question comes from the line of Manav Gupta from UBS, Please go ahead.
Manav Gupta: Good morning. Can you talk more about Clay Basin and your outlook for fuel further storage expansions, please?
Larry C. Larsen: Yeah. Hey, Manav. This is Larry. Thanks for the question. question. Yeah. Clay Basin, I mean, this is. it is been a nice expansion opportunity the team has been working on through the course of this year. Obviously, we have highlighted that we feel like storage capacity has lagged development over the last decade, and we are really starting to see additional interest in storage. This is a nice project out on the Mountain West system. We do have some additional projects that we are working on in the Gulf Region, and I think we will see, some additional announcements on that in the upcoming quarters as the team's working through commercializing additional expansions in that space.
Analyst: But I think we have seen a really strong response since we have done the acquisition of the Gulf Storage business and Nortex. Contracted rates continue to go up as demand for storage is increasing, and that is helping us facilitate some of these expansion projects.
Chad J. Zamarin: And just so that everyone kind of knows, you know, Clay Basin is the largest storage asset in the Rockies, and Larry mentioned it is part of our Mountain West system. Mountain West really serves as a gateway between the Rockies and Western markets. You know, there is really just no new production when you go West of the Rockies, but there is tremendous demand. And that storage asset provides an incredibly important function as really a gateway between production and market And so, you know, we think we will continue to see the Mountain West asset's been a great asset. That team's done a great job. We have integrated that.
Those operations with our Northwest pipeline, so we gain a lot of synergies there. I mean, we can we can add additional services for customers and so as and then as Larry mentioned, you know, we still see strong value and growth across the Gulf Coast and our remainder of our storage assets. So we would expect to continue to see these projects commercialize over time.
Manav Gupta: And how are you thinking about your remaining gathering portfolio post the divestiture of the Cogentrix gathering assets?
Chad J. Zamarin: Yeah. I will let Robert speak to it. But I think we really like so I think you mentioned we had a couple of small divestitures that show up, I think, in the in the reports throughout the course of the year. I think we recorded a gain or 2 as a result of those sales. But those were really small, I would say almost off system, nonstrategic divestitures. You know, Robert and the team are always looking at portfolio optimization, but I think we feel really good about where we sit today from a gathering footprint perspective.
You know, we are talking about 40 percent-- 35% to 40% demand growth for natural gas over the next 10 years, that is gonna drive a tremendous amount of supply response that is gonna be required. And so, you know, I think the team's done a really good job of making sure we are we have got the right assets in the right locations.
Manav Gupta: Thank you so much.
Analyst: Thank you.
Operator: Alright. Our next question comes from the line of Jason Gabelman from TD Cowen. Your line is now open.
Jason: Yes. Hey, good morning. Thanks for taking my questions, 2 on the Power Innovation side, if I could. The 1 to 2 projects by the end of the year does that indicate that you have a much higher degree of confidence in 1 project than another, or is that more, you know, just timing and 1 can slip into the beginning of 2027.
Chad J. Zamarin: Yeah. I think importantly. Thank you. that is a good question because, you know, we do not time announcements based on earnings call dates or even, you know, New Year's Eve and New Year's Day. But you know, we feel pretty good about our ability to commercialize projects you know, over the course of the next few months. And you know, I think at the end of the day, that does not mean the project's are not still moving.
We kind of know, we do not like to get public with our announcements until we have a fully signed and commercial agreement and also with our customer partners until we are permit ready, and we have made sure we have got sites secured, and we have got a lot of the derisking of the project already complete. I think we have continued to say we expect 1 or 2 of those to hit the finish line by the end of the year. But I think that also means that you will see additional projects. You know, we would expect commercialized into 2027 and beyond.
And so, you know, we are not just specifically targeting a date Those projects continue to advance, but we do feel pretty good that you know, 1 or 2 of those will likely be signed by the end of the year.
Jason: Great. Thanks for clarifying that. My other is just on the financing of these projects. And, you know, I. it sounds like you are evaluating different options and the right balance sheet size. But to the extent that you do think that financing or additional capital inflows are. That necessary to move projects forward, Should we expect that to be announced concurrent with positive FID on new power innovation projects or it something that we should expect after projects are sanctioned similar to what happened with the earlier. With the financing earlier this year. Thanks.
John D. Porter: Yeah. This is John. Thanks for the question. And I think a little bit of it depends on, you know, the specific size, again, and scale and speed associated with the particular projects. But in a case where we are talking about a large scale project that may scale over time, we will definitely be trying to give some color about how that project scales over time. We will also be trying to give some real clarity about, generally speaking, how we plan to finance the project. You know, cannot say how specific that would be.
At the time, but we will definitely try to give you a good sense of how we are thinking about financing, especially around the bigger projects.
Jason: Great. Thanks for the answers.
Operator: Thank you. Our last question comes from Craig Shere from Tudor, Pickering, Holt & Co. Your line is now open.
Craig Shere: Just wanted to briefly dig into a little further the sustained 5 times EBITDA economics for new power innovation projects. So the legacy projects were overengineered, and the PPAs themselves have 5 times EBITDA economics outside of synergies with other assets and the ability to monetize the excess generation capacity. Is it fair to think about the potential new project announcements, with much longer-term tenors as significantly derisking the assets because of longer tenors. But also to some small degree, at least, minimizing some of the upside beyond 5x because the excess capacity is called for.
Chad J. Zamarin: Thanks, Craig, for the question. No, I think that, you know, we are gonna target maintaining economics through efficiency. But at the end of the day, our business is making sure we have got predictable fee based take or pay cash flows that are the foundation for the returns that we are sanctioning. And then we look to create upside beyond that. So we are not embedding kind of, you know, extrinsic, you know, speculative upside into the base economics of a project, but we are working hard to drive efficiency, drive down the cost for the customer, make the project a much more optimized design and scope and scale.
But I would still expect that with each of these projects, we are creating a platform upon which we are gonna find you know, additional upside and opportunity.
Craig Shere: Maybe I could just quickly ask it slightly differently. On these longer term scaling projects, prospective opportunities. Would they be as proportionately overengineered as the legacy projects?
Chad J. Zamarin: Okay. No, I think that is a good question. I do think we will learn over time how to be more efficient with excess capacity. So I do think that is an opportunity for us to. As we operate and learn load profiles, you know, we may be able to have less of a redundancy from an efficiency perspective. So I do think that is a fair you know, observation.
Analyst: Thank you.
Operator: Thank you. This concludes our question-and-answer session. I would now like to turn the call over to Chad for closing remarks.
Chad J. Zamarin: Great. Thanks, Haley. And thank you, everyone, for your participation in today's call. Have a great day, and we look forward to seeing you soon.
Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
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