Ladies and gentlemen, good day, and welcome to the DTE Acquisition Announcement Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Barbara Tuckfield. Please go ahead, ma'am.
Thank you, and good morning, everyone. Before we get started, I would like to remind you to read the Safe Harbor statement on Page 2 of the presentation, including the reference to forward looking statements. Our presentation also includes references to operating earnings, which is a non GAAP financial measure. Please refer to the reconciliation of GAAP to operating earnings provided in the appendix of today's presentation. Our speakers this morning include Jerry Norcia, President and CEO David Slater, GSP President and COO and Peter Alexiak, Senior Vice President and CFO.
And now, I'll turn it over to Jerry to start the call this morning.
Well, thanks Barb, and good morning, everyone. Before I talk about the acquisition, I just wanted to mention that our earnings call is on October 28. That's our 3rd quarter earnings call. On that call, we'll discuss Q3 results, the current guidance and provide the early outlook for 2020. I also look forward to seeing many of you at EEI in a few weeks.
So now I'll begin on Slide 4. Today, I'm pleased to announce the acquisition of a set of gathering and pipeline assets in the Haynesville Basin in Louisiana. This acquisition will continue our track record of disciplined, focused growth and DTE. We are purchasing these assets from Momentum Midstream and Indigo Natural Resources for 2,250,000,000 plus a $400,000,000 milestone payment.
The U.
S. Is undergoing a fundamental shift towards clear energy and natural gas will play a large role in that shift. Our large investments in renewable resources and natural gas infrastructure enable this shift to a cleaner energy future. The assets include a fully contracted gathering system that is currently operating as well as a fully contracted 36 inches 150 mile gathering pipeline that will be in service in the second half of twenty twenty. As you know from our track record over the years, we applied strict and disciplined approach to all of our investments.
This acquisition is very consistent with that approach and exhibits all of the key features that make us confident that this will be a valuable asset. As you'll see, this is a highly accretive transaction that will deliver substantial value to our shareholders. Beyond that, one of the most important criteria in these investments is the underlying resource. The asset is underpinned by an extremely strong resource in the Haynesville Basin, which gives us high confidence that this resource will continue to produce
in a
wide range of gas price environments. These assets are fully contracted, including significant minimum volume commitments and demand charges on the pipeline. We'll have an experienced and well capitalized producer with strong credit provisions. The assets are located in a great demand area in a quickly growing Gulf Coast natural gas market with excellent access to other pipeline systems. This provides the opportunity for access to multiple markets and future growth.
This investment is right in the sweet spot of our proven operating abilities that have built over the last 20 years in our GSV business. We can ensure that we maximize the potential of these assets, including the expansion and growth opportunities of the pipes. Additionally, it is consistent with our stated company growth plan that we've been sharing with you in the past. As we've discussed with you in the past, we have planned for strong growth in the GSD business over the next 5 years. We didn't describe the plan that saw us investing $4,000,000,000 to $5,000,000,000 into this business during that timeframe.
This investment accelerates most of that planned growth and slow drives our long term earnings profile for this business. Same time, we are staying consistent with our commitment to a long term business mix of 70% to 75% utility, as well as maintaining our solid investment grade rating. These are important elements for our company and for our stakeholders. Therefore, this investment hits on all the key strategic characteristics for us. Is an attractive asset with a strong underlying resource that is connected to a growing market and provides solid contracted cash flows and growth opportunities and it is consistent with our longer term investment strategy.
Now let's talk more about the transaction on Slide 5. Let me walk you through the financial review of the transaction. As always, we'll finance the transaction in order to maintain our overall strong credit quality and we have developed a prudent and balanced financing plan for the acquisition that is consistent with the economics of the investment. We will finance this at the parent company with 50 percent equity, which will be predominantly mandatory convertible equity units and 50% senior unsecured debt. This financing structure allows us to maintain a strong balance sheet and solid investment grade profile.
The project has very strong cash flows that allow DTE's equity issuances remain within the previously guided range of $1,000,000,000 to $1,500,000,000 from 2019 to 2021. Investment has really good project earnings accretion as it will immediately generate $0.15 in operating EPS in 2020 with EPS accretion growing to approximately $0.45 per share over a 5 year period. These accretion numbers are at the project level. We will convey the impact of ETE's overall 2020 operating EPS on a Q3 earnings call and give a new 5 year earnings number for GSV at EEI. There is substantial contracted growth that place over the 1st 3 years to support this accretion as construction is completed.
Our financing will structure to fit the revenue and EBITDA growth. The growth also moves the EBITDA multiple for the transaction from 10.8 times in 2020 to 10 times after the completion of the gathering pipeline. And that's our base case upside cases obviously that is below that. Before I turn it over to David Slater to review the acquisition in more detail, let me describe what brought us to Haynesville. Moving into the Haynesville area is an exciting opportunity for us that is directly analogous with our history in this business.
As you know, we've operated in multiple resource basins throughout our history and successfully expanded the new areas when the timing and the challenges characteristic of the basin were right. We began our midstream operations in Michigan over 30 years ago, where we developed valuable experience in midstream operations, gathering, processing and transportation. We're then able to capitalize on that experience by moving into the Barnett Shale in Texas and then more recently into the Appalachia. Each of these moves into new areas had similar strategic dynamics associated with them. Very strong resources connected to large growing demand centers that we could service with our pipeline assets and strong operations to create value for our customers and our shareholders.
These assets in the Haynesville Basin offer a great opportunity continue our success in a basin that has all
of the fundamentals that we look for.
I'll turn it over to David Slater to tell you more about these assets and discuss some of the key features that underpin the investment.
Well, thanks, Jerry, and good morning, everyone. As Jerry mentioned, we're very excited about these assets and that I will provide to our shareholders. There are 2 main assets: the fully contracted gathering system, known as the Blue Union Gathering System and the Louisiana Energy Access Project, known as LEAP, a fully contracted large diameter gathering pipeline that will be in service in the second half of twenty twenty. Both these assets are fully contracted with minimum volume commitments and demand charges for the pipe. The gathering system has a current capacity of 1.2 Bcf per day.
Current utilization is around 95%. It is primarily a dry gas gathering system with about 10% wet gas gathering. This system has the ability to double its capacity, expanding to 2.5 Bcf per day, enabling growth. The leak gathering pipeline is currently under construction and will be a 1 Bcf per day, 150 mile length, 36 inches high pressure line. As I mentioned, it is fully contracted for the 1 Bcf per day, and there is minimal construction risks.
The gathering pipeline can economically be expanded to 2 Bcf per day through compression, which also makes this a good growth opportunity for us, particularly since the pipe is so well positioned. It interconnects to a major gas hub, the Gilles Hub, that provides access to several Gulf Coast interstate pipelines, growing Gulf Coast and Southeast markets as well as major LNG facilities along the coast. Moving on to Slide 7, I'll discuss more about the major producer and the resource underlying these assets. As Jerry has mentioned, this investment is underpinned by a very strong resource in the Haynesville Basin. As you can see on the slide, how favorably the resource underlying this gathering system fits into the overall U.
S. Gas supply stack. We have deeply analyzed this resource with the support of 2 leading independent oil and gas consulting services and concluded that our main customer, Indigo, has a deep inventory of economic drillable reserves to fill our pipeline assets during their economic life. In fact, there are over 10 years of these reserves that are economic and natural gas prices below $2 This gives us high confidence that we will continue to see strong growth in volumes even in a low gas price environment. This is one of the key characteristics that helps ensure the long term value of our investment.
Further benefiting this investment is that Indigo is an experienced and well capitalized producer that is positioned to continue their strong production growth. They have grown to become the largest gas producer in Louisiana and produced 1.5% of U. S. Domestic natural gas supply in 2018. They currently have 7 drilling rigs operating in basin and are known for their best in class operations and safety record.
They have been
a disciplined producer that has expanded effectively and have 65% of their production hedged in 202040% hedged in 2021. Now let's turn to Slide 8 and talk about the highly contracted assets with favorable credit provisions. As I mentioned, these assets are fully contracted, which further solidifies our cash flows from this investment. Both the gathering system and the gathering pipeline are fully contracted for long term commitments. The gathering system comes with substantial acreage dedication, minimum volume commitments and demand charges on the gathering pipeline.
As you can see from the chart on the bottom of this page, the firm revenue commitments in the contracts represent about 90% of our total revenue. Our agreements with Indigo also include significant credit provisions. These provisions include Indigo using the proceeds from the sale to pay down debt, allowing their post transaction debt to EBITDA ratio to be 1x, which is close to the lowest in the industry. There are also contractual credit provisions that provide incentives to the producer to maintain a strong balance sheet into the future. Now that we have discussed the asset, resource, counterparty and contracts, let's talk about the market on Slide 9.
As Jerry mentioned, one of the reasons we purchased this asset is because we are confident that Haynesville Basin will experience significant growth. With projections to increase over 8% annually from 2018 through 2023. This pipeline has access to multiple complementary downstream pipelines with bidirectional capabilities.
As you can see from the map on
the right side of this slide, our assets are well positioned to serve multiple markets, including Louisiana, which is the 3rd largest demand center in the nation, as well as growing Gulf Coast and Southeast markets, including LNG facilities along the coast. Importantly, the geographic proximity to Henry Hub and other highly liquid hubs provides transportation cost advantages over other basins.
Now let me turn it
over to Peter, who will discuss how this transaction fits into our capital and financial plans.
Thanks, David. Before I get into the details of this acquisition, I just want to provide some context. We have a great track record of creating value in this segment. This acquisition capitalizes on GSP's operating expertise and complements our existing business with a new growth platform. For the past 10 years, our GSP portfolio has achieved annual operating earnings increases of 20%, and we've done this with highly accretive organic growth from our storage, Vector, Millennium, Bluestone, Link and Nexus assets.
Vector increased from 1 Bcf
per day pipe to a bidirectional 1.3 Bcf per day pipe. Millennium start up is a 0.5 Bcf per day pipe moving east gas east to 1.7 Bcf per day bidirectional pipe. Keystone was at 0.3 Bcf per day pipe and now is at 1.2 Bcf per day and Link has undergone multiple organic expansions. Much of this organic growth came from highly accretive compression and looping. This just illustrates our focused work on unlocking value from high quality assets with significant growth potential.
We also have a solid track record of disciplined acquisitions that have growth potential and connections to power and industrial markets such as our Link and Generation Pipeline assets. Both are highly accretive on their own but can also provide additional value to our Nexus pipeline with access to new power and industrial markets. Bringing this new set of assets into our portfolio gives us the capability to continue the distinctive growth of the GSP business that you have come to expect. Let's talk more about the future growth in this business on Slide 11. We have indicated that strategic acquisitions were part of our plan for the segment as the right asset came around that fit our criteria.
This new platform plus our other existing platform set us up nicely going forward for deploying organic development capital to continue to add value to our shareholders. And we did have development capital in our plan to enable this acquisition. As you can see on the right side of the slide, we discussed investing $4,000,000,000 to $5,000,000,000 into this business from 2019 to 2023. This is part of DTE's total investment plan of $20,000,000,000 over this period. This acquisition solidifies $3,250,000,000 of the GSP 5 year investment plan.
This includes an initial purchase price of $2,250,000,000 with a milestone payment of $400,000,000 upon the completion of the pipeline under construction. An additional $600,000,000 is contracted for future growth of this asset. We'll be updating the 5 year earnings and capital numbers for GSV and EEI, but I can say that this acquisition, plus ongoing development capital on existing platforms will more than deliver our 2023 income target for this segment. This will be done with total capital below the $5,000,000,000 upper end range we previously disclosed. Our mindset for the 5 year plan is to optimize the remaining investment across existing platforms and to continue to grow organically.
We will keep GSP within
the $4,000,000,000 to $5,000,000,000 capital allocation as we are not considering another acquisition of this size. When considering capital investment in the non utility areas, we always keep in mind our commitment to maintain our 70% to 75% utility mix long term. This investment supports our high quality earnings, EPS growth and maintains our utility mix. Underpinning this growth is our equity plan, which I'll summarize for you before handing it over to Jerry for a wrap up. This project had very strong cash flows that will allow DTE's equity issuance to remain at the previously guided range of $1,000,000,000 to $1,500,000,000 for the 3 year period from 2019 to 2021.
As for 2019, our total equity issuance including this acquisition will be $500,000,000 or $300,000,000 related to this transaction. As stated earlier, this acquisition delivers $0.15 of accretion next year and $0.45 in the 5 year timeframe. The remaining equity for this acquisition will come from approximately $1,000,000,000 of 3 year mandatory convertible securities, which will convert in 2022. Now I'll turn it back over to Jerry to wrap things up.
Well, thanks, Peter. I would just like to wrap up and reiterate that we are excited with this acquisition and the value creation that will provide for our shareholders. This investment really fits all of the strategic and financial criteria that gives us confidence that will produce long term value. It has strong and immediate earnings accretion. These are high quality assets that are underpinned by a great resource.
The pipes serve a growing demand market with multiple access paths and we have a proven operating capability to make this a great success. The mission of these assets complement our existing GSV portfolio nicely and provide the growth that is consistent and we have been communicating with you while establishing a platform to continue to economically expand and grow. With this investment, we also maintained our strong balance sheet and credit profile while maintaining what remaining committed to our 70% to 75% utility business mix. Thank you for your time this morning and we look forward to answering your questions. David, you can open up the line for questions.
Thank you, Our first question comes from Shahriar Pourreza with Guggenheim Partners.
Hey, good morning guys.
Good morning, Chuck.
Congrats on the transaction. Just a couple of questions here, if I can start. First is, is there any other producers in the system? And Jerry, is there like sort of an original cost to build this system?
The Indigo is the dominant producer for the delivery on this system. We have some small producers that they're like 2% or less of the EBITDA at this point in time. And the original costs were not disclosing Just one time. Okay. Is that
something you'll disclose in the near future or not?
It's not something that we typically disclose, sure.
Okay.
And then just maybe elaborate, I know the transaction has gone some distance to provide financial support for Indigo. But maybe you could just elaborate a little bit around Indigo's financial stability and how we should think about this?
Well, we feel really good about the credit provisions in the agreement. The fact that they are contractually committed to delever the balance sheet with these proceeds and get to a one times EBITDA to debt ratio that is one of the lowest in the industry from a producer perspective. So we feel they'll have a very strong balance sheet. And then of course, going forward, we've got credit provisions that provide them with a strong incentive to maintain high quality balance sheet. So we feel really, really good about contractually what we've developed with Indigo.
In addition to that, obviously, the resource underpins the quality of the cash flows and it's a very high quality resource. And maybe I'll ask David to comment
a little bit on that.
Yes. Just one thing that
I would add to that is that we've spent
a lot of time looking closely at Indigo, that's a fundamental item for this investment. They're expected to be cash flow positive next year as well. So not only will they delever the balance sheet, they're expecting to be cash flow positive going forward. So the combination of those two items, we really feel they're going to be a top dry gas producer in the country.
Got it. And then thanks for that. And then just lastly, Jerry, you'll probably elaborate a
little bit on this in
time, but the $600,000,000 that you have allocated for future growth capital, Is that can you just elaborate on exactly what is embedded in that? Is that sort of partial upsizing of the systems through compression? And then as you guys sort of think about the upsizing through compression, how does that sort of fit in with your $4,000,000,000 to $5,000,000,000 capital budget, right? Because you're obviously accelerating it, you're reiterating your growth targets, your business mix. But as we think about upsizing, you're essentially potentially doubling the capacity of your systems.
So is that so as you think about the mix and maintaining that optimal utility mix, does that include an assumption that you could essentially double the system's capacity?
Yes. First of all, let me start with the $600,000,000 The $600,000,000 is growth capital that's contracted with Indigo and that's to expand the gathering system so that they can meet their ramp contractual ramp in their contract. So that's what that's where that capital will go. Beyond that, we are looking forward to expanding this pipeline that is going to be constructed in our 50 mile pipeline. It will start at 1 Bcf a day, but there are other shippers that are potential shippers on this pipeline that we'll be looking to originate.
None of that is in our base case and none of that in the economics that we're advertising right now. So we view that as all upside. Does that fit within our $4,000,000,000 to $5,000,000,000 target? The answer is yes. And it also fits within our 70% to 75% utility, non utility mix.
Terrific. Thank you guys. That answered it.
Thank you. Our next question comes from Praful Mehta with Citigroup.
Congrats on the deal. Just maybe
just to
clarify on the growth capital then, The $600,000,000 that you will be putting into Indigo, is that going to help boost the EBITDA and earnings from your platform? Or is it really helping stabilize their business?
Yes. The 600,000,000 is primarily, we talked about this LEAP pipeline and the construction, the 36 inches 150 mile pipe, that's really primarily for that. When we quoted the EBITDA numbers, the run rate of 10% is post that LEAP construction. And actually, the EBITDA continues to grow beyond that. That's just purely because your 1st full year by the end of 2021, 2022 time frame, you're at the 10% run rate from the 10.8% initial purchase price.
Got you. So maybe just clarify a little bit more on that EBITDA multiple or earnings multiple because while the accretion is helpful, you also have a mix of cash and stock. And so there's a it's tough to kind of get to the core numbers. So if you could give us some color on the EBITDA multiple, the earnings multiple, not just for 2020, but maybe 2021 as well in terms of what you're seeing for this acquisition?
Yes. The $10,800,000 is essentially year 1 and it really is the initial purchase price here, the $2,250,000,000 is one way to think about that. We have over the next 18 month construction of this gathering pipeline, which essentially is the milestone payment will come with that as well as the $600,000,000 of growth capital. And so when that's all in service, I'd call it, it's an easy run rate 2021 to 2022. We have a 10 time EBITDA multiple rate as well.
So that very first year in 2020, this is before that gathering pipeline is in service. We're at $0.15 Once that gathering pipeline is in service and with some EBITDA growth that happens beyond that, we'll be at the $0.45 in 2024 at the project level.
Got you. And from a PE multiple perspective, is there an effective PE multiple of the acquisition as well you can share?
We really didn't look at it that way. Yes, it's not something we can get back. We essentially look at it from an EBITDA multiple.
Sure. That's fine.
Yes.
Got you. All right. And then from a pro form a credit perspective, you've talked about it helping maintain your credit profile. Is that credit basically after the $1,000,000,000 to 1.5 $1,000,000,000 that was already in the plan, right? There's no incremental equity that's been planned.
You're saying the $1,100,000,000 to $1,500,000,000 will be maintained 2019 to 2021?
That is correct. Within this time frame, we have the $300,000,000 of straight equity that we're going to be issuing for this project And the milestone payment in growth capital, which is approximately $1,000,000,000 altogether will be financed at the holding company level, a fifty-fifty mix there. So that $300,000,000 plus the fifty-fifty equity related to the growth milestone payment will be within the $1,000,000 to $1,500,000,000 equity disclosure that we put out there. So for this year, it's approximately $500,000,000 which includes $300,000,000 for this transaction.
Got you. And then for Indigo, you mentioned that there was some credit provision to ensure that they maintain their credit. What is the penalty if they don't? Is there some form of collateral they need to post if the metrics weaken? How does that how is it controlled from your perspective?
Yes. The credit provisions allow us to call on collateral if certain, take rotations occur. And that's part of our contractual arrangements that we have with Indigo.
Got you. Is there a size of collateral that you can talk about? Or is it quite broad at this point?
We typically don't get into those details with individual counterparties. But suffice it to say that it's a sizable amount that gives us the protection that we desire.
Got you. And that's helpful. And then finally, I'm assuming the process was pretty competitive. Is there any breakthrough or anything else that or we can read it obviously in the filings, but is there any risk you think of anybody else coming in here?
We don't expect that to happen. And I'll say I'll leave it at that.
All right. Okay, really appreciate it guys. Thank you.
Thank you. Thank you. Our next question comes from Andrew Weiser with Scotia Howard Weil.
Hey, good morning, everyone. Congrats. I know you've been looking
for an acquisition for a while and I
think this has been on the market for a bit, so exciting to get that out there for you guys. First question, just to clarify, because I don't think I heard it expressly said, does this have any commodity exposure whatsoever?
It does not.
Okay, great. Next thing I wanted to ask about, so Indigo is obviously backed by private equity. You talked about their credit commitments. What about production growth? Is there any sort of risk that they might slow down given their lack of midstream exposure?
And you mentioned free cash flow positive. What does that assume for production growth out of them?
We've got contracted growth for 90% of the revenues on this asset at this point in time. And so we feel really confident in their revenue ramp or their volume ramp as well as the fact that they'll be cash flow positive on their with their balance sheet. Deleveraging activity, we feel that they'll be well positioned to furnish those contractual commitments.
Okay, great. Next, you mentioned that this $0.15 accreted to 2020, but obviously, we don't know what the guidance is for 2020. I know the timing is tough around announcing things like this. My question was, can you give us a little sneak peek? Should this mean that the 2020 EPS growth rate might be above the 5% to 7% CAGR?
Yes, Drew. We definitely will provide an update on the Q3 call. As you know, it's a little more than a week. I can say that the acquisition just set up so nicely for this segment as well as the company to be within that 5% to 7% growth and not only for 2020, but long term as well. It definitely brings a lot of clarity for this segment.
So you'll hear more about that here on the 28th.
Okay. We'll try to be patient as best we can. Last question. You mentioned the 70% to 75% of earnings coming from utilities in the long term, given that you're accelerating the midstream spending here relative to the 5 year outlook, should we expect that 70% coming from utilities to be a floor in all years? Or might that kind of have some creep in the shorter term?
Yes. It really is from a long term commitments. But post this acquisition and this growth capital, the majority of the capital will be spent at utilities. So you will see the utility growth growing within the 5 year time frame. So our goal would be within that 5 year time frame to be within that 70% to 75% mix.
Obviously, this kind of pulls ahead a little bit in the midstream segment, but it will normalize itself out within
a few years.
You. Our next question comes from Steve Fleishman with Wolfe Research.
Yes. Hi. Good morning.
Good morning, Steve. Good morning, Steve.
Just a clarification on the your equity comments. Is the mandatory convertible that you plan to do in
the $1,000,000,000 to $1,500,000,000 of equity?
Well, the main story It will be beyond it will be the 2022 timeframe and we'll be giving updated guidance in EEI for mid-twenty to 2020 2. But I can say this project, first of all, delivers that $0.45 accretion, so that equity is well supported by the earnings for this project and it really helps us reduce equity issuance at the DTD level overall. But it is not at this point.
Okay. But just to clarify, so when you say 50 percent equity, dollars 300,000,000 of that, whatever that 50 percent equity is, is straight equity in 2019 or 2020. And then the rest would be a mandatory convert that will then convert in 2022. Is that do we look at it?
That's correct. With the eventual transaction, we do have we talked about growth capital, dollars 600,000,000 in the milestone payment. That will be funded fifty-fifty as it is at that level.
Okay. And then just maybe in terms of just trying to understand how much is really locked up of the $0.45 of earnings. If you wanted to look at MVCs and demand charges and say how much of that $0.45 is essentially from MVCs and demand charges? Is there a way to give a sense of how much of that is kind of covered by things that are directly locked up like that?
Based on the MVCs, the demand charges and the growth and the drilling activity that we're seeing from this group, we feel really confident in the $0.45 And we also have potential for upside on that.
Okay.
It's a large portion of it, Steve, I would say.
Okay.
Well over 90% in the early years and well over 80% in the later years.
Okay. And does it go down a little bit just because you've got more growth for this growth investment?
Correct. That's exactly what's happening, Steve. As the volumes and revenues grow, the MVCs and the demand charges, obviously, the demand charges cover 100% of the pipe. It's on a gathering system that the MVCs as the volume grows on the MVC, they become less than the 90%.
Okay.
And then last question is, do you have
kind of in your view with this deal kind of a high level point of view given all the demand for LNG export and industrial in that region that basis gas basis in the region is going to meaningfully change to the benefit of you. Is that part of the thought on this transaction?
Yes, Steve, that's a good observation. The Gilles Point, which is a southern delivery point on the LEAP system is just around the corner from Henry Hub. So there's a basis advantage that this basin realizes. And that system also directly interconnects with numerous LNG facilities that are operational right now along the coast. And those are big demand draws in addition to these two areas in the country or the two areas that are significantly growing long term on the demand side, so both industrial, power gen and LNG.
So there's this robust demand down there in this region. And we believe this asset, this suite of assets is really well positioned to serve those growing demand centers.
Thank you.
Thank you. Our next question comes from David Fishman with Goldman Sachs.
Hi, good morning and congratulations again.
Thank you. Thank you.
Just wondering strategically a little bit longer term. So if we think back in 2016, I think we saw a pretty substantial gathering asset acquisition now in 2019, 2020. We're seeing another fairly substantial gathering asset acquisition. So do you guys view this as potentially becoming a reoccurring theme that you need as your new assets, you go through compression and then they become more mature? Kind of every 3 to 5 years, are we going to need to see more acquisitions?
Or how do we get comfortable that, that isn't going to be kind of the long term view? Or why should we be comfortable with that if that is kind of what we're thinking that drives future growth on the GS and P side?
So what I'll say about that is that in 2016, we did acquire Link and then post that we built the Nexus pipeline and now we're obviously taking advantage of this great opportunity. So we try to take a balanced approach in terms of the type of assets that we pursue. And certainly, the driving factor on this one was the high accretion and value accretion for our shareholders fit nicely within our 5 year plan of $4,000,000,000 to $5,000,000,000 So that's how we look at things. We look at 1, does it fit inside our plan? Does it drive high returns and high accretion and which makes it a very attractive investment for us.
So I would say it will also drive significant amount of organic expansion in the future that we look forward to originating on this asset. And maybe just to add on
to what Jerry said is, we don't see another asset acquisition of this size in this 5 year timeframe. We've allocated so much capital and essentially even earnings within a mix perspective, but it sets us up nicely related to organic development capital. And we did mention the expansions on the system, that's not in our base economics. So that's going to provide future growth as well even beyond this 5 year period.
Okay. Thank you. That makes a lot of sense.
I just wanted to clarify, when
you guys use the term accretion, when you talk about the $0.15 and the $0.45 Are you referring to that accretive relative to a baseline plan? Or are you just simply saying based on the CapEx you deploy, it will be worth this to come out? I just want to make sure that's clear.
Yes, it is the latter. It's a project pure project accretion based on the financing, based on the equity and the earnings related to the project.
Okay. And did I hear earlier on in the prepared remarks that you said more than deliver the 5 year plan?
Yes. For the we'll give an update here at EEI for GSP, and we'll be rolling forward to 2024. I mentioned on the prepared remarks that we did have a current exposure during 2023, and this sets us up really nicely to achieve that 2023. Okay. I'll give you more updates and more insights here at EEI next month.
Awesome. Thank you. And congrats again.
Thanks. Thank you. Thanks.
Thank you. Our next question comes from Shahriar Pourreza with Guggenheim Partners.
Hey guys, thanks for the follow-up. Just one question on your $0.45 of accretion that starts up to $0.45 What share count are you assuming on that?
Well, we that's a 5 year number, sir, as you know. So we don't give the 5 year of equity. But it is a pure project related. So if you think about the total capital spend in this project, it's over $3,000,000,000 and it's a fifty-fifty equity on that. That's one way to think about the share count as it relates to this project.
It's incremental to our share count of DTE.
Okay, got it.
All right, thanks.
Thank you. At this time, we have no further questions. So I will turn it back to Mr. Jerry Norcia for closing comments today.
Thank you, David. Well, we thank you for joining us and appreciate all your questions. We look forward to seeing you on the Q3 earnings call. And I'll see many of you at EEI in November. Have a great day.
Thank you.
Ladies and gentlemen, concludes the DTE acquisition announcement conference call. You may now disconnect, and thank you for joining us this morning.