DT Midstream (DTM) is expected to report lower sequential Q2 EBITDA due to seasonal weakness across its interstate pipelines, a rate step-down at Guardian and planned maintenance, UBS Securities said in an earnings preview.

The declines are expected to be partly offset by modest growth in the Haynesville and a full-quarter contribution from the Appalachia expansion project, according to the note Monday.

UBS said investors will likely focus on updates to the Guardian 3 Expansion, progress on the MIST and Vector 2030 expansion projects, the pace of converting uncommitted projects into the company's $3.4 billion project backlog, LNG demand for pipelines and storage, and sentiment among Haynesville producers.

Following a late-June investor dinner with DT Midstream's management, UBS said the company outlined about 30 Bcf/d of incremental natural gas demand growth, including 5 Bcf/d to 8 Bcf/d from the Midwest, adding that roughly half of the projects supporting that demand have already reached final investment decision.

The investment firm said utility customers are converting potential expansion opportunities into signed demand faster than previously expected, supporting its positive long-term outlook.

UBS has a buy rating and a $170 price target on the stock.

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