DT Midstream – An Attractive Carbon Capture Stock?

DT Midstream - An Attractive Carbon Capture Stock? - Carbon Herald

DT Midstream is a premier natural gas pipeline, storage, and gathering provider, one of the first midstream companies to start implementing plans to achieve net zero emissions by 2050 with a 30% cut target by 2030. The company is committed to finding the best decarbonization technologies and sees carbon capture as the one with the greatest potential. It could be seen as one of the attractive carbon capture stocks based on the fundamentals analysis.

Carbon sequestration is “the most interesting and the one that will emerge the earliest…That’s a really attractive way to reduce the carbon footprint and it’s supported by federal tax credits…I think that’s going to be one of the first areas on this journey,” said CEO of DT Midstream David Slater.

The company made its debut as an independent, publicly-traded company on July 1st on the New York Stock Exchange (NYSE:DTM). It completed its spinoff from DTE Energy (NYSE: DTE) – a power and gas utility based in Detroit.

Its main operations are the transportation of clean natural gas for electric and gas utilities, power plants, marketers, large industrial customers, and energy producers across the US and Canada. 

DT Midstream operates 1,200 miles of pipelines and over 1,000 miles of gathering lines in the gas-rich Marcellus, Utica and Haynesville basins. It plans to expand the capacity of its existing pipelines to take advantage of rising natural gas use. 

The company is also planning to find a way to make this vast network of natural gas  infrastructure still relevant in a net zero world as it stays determined to reduce its carbon footprint. 

Why The Carbon Capture Stock Could Be A Buy?

DT Midstream plans to meet its net zero targets by investing into existing technology solutions and new low carbon initiatives that are currently in development. Other fossil-fuel companies like Occidental, Exxon and Shell are also investing heavily into decarbonization technologies like carbon capture and storage to stay relevant in the changing economic climate focused on addressing climate change. 

The company expects 2021 to bring in continued successful organic development and acquisitions aimed at bringing premium financial returns. Its strength lies in a stable leadership team and commitment to sustainable operations that have resulted in a strong and healthy balance sheet.

It’s one of the top carbon capture stocks with no significant debt maturities in the last seven years and a stable cash flow generation on the financial statements which can give it financial flexibility in the medium-term.

The firm’s expectations for an adjusted EBITDA are for $710 million to $750 million in 2021, and a 7% growth for the year compared to 2020. Some analysts from Credit Suisse are giving the stock a buy rating with a set price target of $52.

It is currently trading around $38.66 which based on fundamentals and financials could be seen as one of the publicly traded carbon capture companies at a discount level. 

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