DT Midstream, Inc.DTM
DT Midstream, Inc. Leases Disclosure
LEASES
Lessee
Our leases are primarily comprised of equipment and buildings with terms ranging from approximately 3 to 11 years.
A lease exists when we have the right to control the use of identified property, plant or equipment, as conveyed through a contract, for a certain time period and consideration paid. The right to control is deemed to occur when we have the right to obtain substantially all of the economic benefits of the identified assets and the right to direct the use of such assets.
Significant Accounting Policy – Lessee Accounting
Lease liabilities are calculated utilizing a discount rate to determine the present values of lease payments. GAAP requires the use of the rate implicit in the lease if it is readily determinable. When the rate implicit in the lease is not readily determinable, the incremental borrowing rate is used. The incremental borrowing rate is based upon the rate of interest that would have been paid on a collateralized basis over similar contract terms to that of the leases. The incremental borrowing rates have been determined utilizing an implied secured borrowing rate based upon an unsecured rate for a similar time period of remaining lease terms, which is then adjusted for the estimated impact of collateral. We have leases with non-index-based escalation clauses for fixed dollar or percentage increases over the contract term.
We have certain leases which contain purchase options. Based upon the nature of the leased property and terms of the purchase options, we have determined it is not reasonably certain that such purchase options will be exercised. Thus, the impact of the purchase options has not been included in the determination of right-of-use assets and lease liabilities for the subject leases.
We have certain leases which contain renewal options. Where the renewal options were deemed reasonably certain to occur, the impacts of such options were included in the determination of the right-of-use assets and lease liabilities for the subject leases.
We have agreements with lease and non-lease components, which are generally accounted for separately. Consideration in a lease is allocated between lease and non-lease components based upon the estimated relative standalone prices.
The components of lease cost for the following years includes:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (millions) | |||||||||||||||||
| Operating lease cost | $ | 20 | $ | 21 | $ | 20 | |||||||||||
| Short-term lease cost | 3 | 3 | 3 | ||||||||||||||
| $ | 23 | $ | 24 | $ | 23 | ||||||||||||
Operating lease cost includes amortization of operating lease right-of-use assets and other related costs. We have elected not to apply the lease balance sheet recognition requirements to short-term leases with a term of 12 months or less. Operating and short-term lease costs are recorded to operation and maintenance in our Consolidated Statements of Operations.
Other relevant information related to leases for the following years includes:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Supplemental Cash Flows Information | (millions, except years and percentages) | ||||||||||||||||
| Cash paid for amounts included in the measurement of these liabilities: | |||||||||||||||||
| Operating cash flows for operating leases | $ | 20 | $ | 21 | $ | 21 | |||||||||||
| Right-of-use assets obtained in exchange for lease obligations: | |||||||||||||||||
| Operating leases | $ | 19 | $ | 29 | $ | 25 | |||||||||||
| Weighted Average Remaining Lease Term | |||||||||||||||||
| Operating leases | 3.8 years | 3.9 years | 4.4 years | ||||||||||||||
| Weighted Average Discount Rate | |||||||||||||||||
| Operating leases | 5.1 | % | 5.3 | % | 4.8 | % | |||||||||||
Future minimum lease payments under leases for remaining periods as of December 31, 2025 are as follows:
Operating Leases | |||||
| (millions) | |||||
| 2026 | $ | 18 | |||
| 2027 | 17 | ||||
| 2028 | 7 | ||||
| 2029 | 3 | ||||
| 2030 | 3 | ||||
| 2031 and thereafter | 5 | ||||
| Total future minimum lease payments | 53 | ||||
| Imputed interest | (5) | ||||
| Lease liabilities | $ | 48 | |||
Lessor
A lease exists when we have provided other parties with the right to control the use of identified property, plant or equipment, as conveyed through a contract, for a certain time period and consideration received. The right to control is deemed to occur when we have provided other parties with the right to obtain substantially all of the economic benefits of the identified assets and the right to direct the use of such assets.
We lease certain assets under an operating lease for a pipeline which commenced in December 2018. The lease is comprised of fixed payments with a remaining term of 13 years. The operating lease does not have renewal provisions or options to purchase the assets at the end of the lease and does not have termination for convenience provisions. The lease term extends to the end of the estimated economic life of the leased assets, thereby resulting in no residual value.
Guardian has agreements with various subsidiaries of a single parent company that results in the use of substantially all the pipeline's capacity through 2029 and represents an operating lease.
Fixed lease income associated with the operating leases was $78 million, $9 million, and $7 million for the years ended December 31, 2025, 2024 and 2023, respectively. Fixed lease income is reported in in our Consolidated Statements of Operations. Depreciation expense associated with the property under the operating leases was $17 million, $3 million, and $3 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Future minimum rental revenues for remaining periods as of December 31, 2025 are as follows:
Operating Lease | |||||
| (millions) | |||||
| 2026 | $ | 73 | |||
| 2027 | 72 | ||||
| 2028 | 72 | ||||
| 2029 | 61 | ||||
| 2030 | 9 | ||||
| 2031 and thereafter | 70 | ||||
| Total future minimum rental revenues | $ | 357 | |||
Property under the operating leases is as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (millions) | |||||||||||
| Gross property under operating leases | $ | 512 | $ | 484 | |||||||
| Accumulated amortization of property under operating leases | $ | 34 | $ | 17 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 16, 2024 | |
| 2022 | Feb 16, 2023 | |
| 2021 | Feb 25, 2022 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.