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 two 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 Oleksiak, Senior Vice President and CFO. 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 28th. That's our third-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. Now I'll begin on slide four. 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 at DTE. We are purchasing these assets from Momentum Midstream and Indigo Natural Resources for $2.25 billion, plus a $400 million milestone payment. The U.S. is undergoing a fundamental shift towards cleaner 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-inch, 150-mile gathering pipeline that will be in service in the second half of 2020. As you know from our track record over the years, we apply a 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 the 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 we've built over the last 20 years in our GSP 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 GSP business over the next five years. We have described a plan that saw us investing $4 billion-$5 billion in this business during that timeframe. This investment accelerates most of that planned growth and solidifies our long-term earnings profile for this business. At the same time, we are staying consistent with our commitment to a long-term business mix of 70%-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. It is an attractive asset with a strong underlying resource that is connected to a growing market.
It provides solid contracted cash flows and growth opportunities, and it is consistent with our longer-term investment strategy. Let's talk more about the transaction on slide five. Let me walk you through the financial overview 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% 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 efficiencies to remain within the previously guided range of $1 billion-$1.5 billion 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 five-year period. These accretion numbers are at the project level. We'll convey the impact of DTE's overall 2020 operating EPS on the Q3 earnings call and give a new five-year earnings number for GSP at EEI. There is substantial contracted growth that takes place over the first three 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 case is obviously take us 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 to 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 were then able to capitalize on that experience by moving into the Barnett Shale in Texas, and then more recently into the Appalachian. 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 to continue our success in a basin that has all of the fundamentals that we look for. I'll turn it over to David Slater, who'll tell you more about these assets and discuss some of the key features that underpin the investment.
Thanks, Jerry. Good morning, everyone. As Jerry mentioned, we are very excited about these assets and the value it will provide to our shareholders. There are two 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 2020. 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. The system has the ability to double its capacity, expanding to 2.5 Bcf per day, enabling growth.
The LEAP gathering pipeline is currently under construction and will be a one Bcf per day, 150-mile length, 36-inch high-pressure line. As I mentioned, it is fully contracted for the one Bcf per day, there is minimal construction risks. The gathering pipeline can economically be expanded to two Bcf per day through compression, which also makes this a good growth opportunity for us, particularly since the pipe's so well-positioned. It interconnects to a major gas hub, the Gillis 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 seven, 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 two 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 at 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 seven 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 has 65% of their production hedged in 2020 and 40% hedged in 2021. Let's turn to slide eight 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 with 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 one times, 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 nine. As Jerry mentioned, one of the reasons we purchased this asset is because we are confident that the 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 bi-directional 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 third-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. 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 bi-directional 1.3 Bcf per day pipe. Millennium started off as a 0.5 Bcf per day pipe moving gas east to 1.7 Bcf per day bi-directional pipe. Bluestone was a 0.3 Bcf per day pipe, and now is at 1.2 Bcf per day. 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 if the right asset came around that fit our criteria.
This new platform, plus our other existing platforms, set us up nicely going forward for deploying organic development capital to continue to add value to our shareholders. 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 billion to $5 billion into this business from 2019 to 2023. This is part of DTE's total investment plan of $20 billion over this period. This acquisition solidifies $3.25 billion of the GSP five-year investment plan. This includes an initial purchase price of $2.25 billion, with a milestone payment of $400 million upon the completion of the pipeline under construction. An additional $600 million is contracted for future growth of this asset.
We'll be updating the five-year earnings and capital numbers for GSP at EEI, but I can say that this acquisition, plus ongoing development capital on the existing platforms, will more than deliver our 2023 income target for this segment. This will be done with total capital below the $5 billion upper end range we previously disclosed. Our mindset for the five-year plan is to optimize the remaining investment across existing platforms and to continue to grow organically. We will keep GSP within the $4 billion to $5 billion 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%-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 has very strong cash flows that will allow DTE's equity issuance to remain at the previously guided range of $1 billion-$1.5 billion for the three-year period from 2019 to 2021. For 2019, our total equity issuance, including this acquisition, will be $500 million, with $300 million related to this transaction. As stated earlier, this acquisition delivers $0.15 accretion next year and $0.45 in the five-year timeframe. The remaining equity for this acquisition will come from approximately $1 billion of three-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 for this acquisition and the value creation it'll provide for our shareholders. This investment really fits all of the strategic and financial criteria that gives us confidence it will increase 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. Additionally, these assets complement our existing GSP portfolio nicely and provide the growth that is consistent that we have been communicating with you while establishing a platform to continue to economically expand and grow.
With this investment, we also maintain our strong balance sheet and credit profile while remaining committed to our 70%-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, sir. Ladies and gentlemen, if you would like to ask a question, please signal by pressing star one on your telephone keypad now. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. Our first question comes from Shar Pourreza with Guggenheim Partners.
Hey, good morning, guys.
Morning, Shar.
Congrats on the transaction. Just a couple of questions here that we can start. First is there any other producers in the system? Jerry, is there an original cost to build this system?
Indigo is the dominant producer for the delivery on this system. We have some small producers, but they're 2% or less of the EBITDA at this point in time. The original cost, we're not disclosing at this point in time.
Okay. Is that something you'll disclose in the near future or no?
It's not something that we typically disclose, Shar.
Okay. Just maybe elaborate, I know the transaction's 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.
We feel really good about the credit provisions in the agreement. The fact that they are contractually committed to delever their 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. We feel they'll have a very strong balance sheet. Then, of course, going forward, we've got credit provisions that provide them with a strong incentive to maintain high-quality balance sheet. We feel 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. Maybe I'll ask David to comment a little bit on it.
Just one thing that I would add to that is that we 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. Not only will they delever the balance sheet, they're expecting to be cash flow positive going forward. The combination of those two items, we really feel they're going to be a top-decile dry gas producer in the country.
Got it. Thanks for that. Just lastly, Jerry, you'll probably elaborate a little bit on this in time, but the $600 million that you have allocated for future growth capital, can you just elaborate on exactly what is embedded in that? Is that partial upsizing of the systems through compression? As you guys think about the upsizing through compression, how does that fit in with your $4 billion-$5 billion capital budget, right? You're obviously accelerating it, you're reiterating your growth targets, your business mix. As we think about upsizing, you're essentially potentially doubling the capacity of this system. 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 million. The $600 million is growth capital that's contracted with Indigo. That's to expand the gathering system so that they can meet their contractual ramp in their contract. That's where that capital will go. Beyond that, we are looking forward to expanding this pipeline that is going to be constructed, the 150-mile pipeline. It'll start at one BCF a day. 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. None of that is in the economics that we're advertising right now. We view that as all upside. Does that fit within our $4 billion-$5 billion target? The answer is yes. It also fits within our 70%-75% utility, non-utility mix.
Terrific. Thank you, guys. That answered it.
Thank you. Our next question comes from Praful Mehta with Citigroup.
Thanks so much. Hi, guys.
Morning.
Morning.
Morning. Congrats on the deal.
Thank you.
just clarify on the growth capital then. The $600 million 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?
Yeah, the $600 million is primarily, we talked about this LEAP pipeline and the construction, the 36-inch, 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. Actually, the EBITDA continues to grow beyond that. That's just merely because your first full year, probably end of 2021 and 2022 timeframe, you're at the 10 run rate from the 10:8 initial purchase price.
Got you. 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, it's tough to get to the core numbers. If you could just 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.
The $10.8 is essentially year one, it really is the initial purchase price here of the $2.25. That's one way to think about that. We have, over the next 18 months, construction of this gathering pipeline, which essentially is the milestone payment will come with that, as well as the $600 million of growth capital. When that's all in service, I'd call the run rate 2021 to 2022, we have a 10x EBITDA multiple rate as well. 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 up to $0.45 in 2024 at the project level.
Got you. From a P/E multiple perspective, is there an effective P/E multiple of the acquisition as well you can share?
We really didn't look at it that way, to be honest. That's maybe something we can get back. Essentially, we looked at it from an EBITDA multiple.
Sure. No, that's fine.
Yeah.
Got you. All right. From a pro forma credit perspective, you've talked about it helping maintain your credit profile. Is that credit basically after the $1 billion-$1.5 billion that was already in the plan, right? There's no incremental equity that's been planned. You're saying the 1.1-1.5 will be maintained 2019 to 2021.
That is correct. Within this timeframe, we have the $300 million of straight equity that we're going to be issuing for this project, and the milestone payment in growth capital, which is approximately $1 billion altogether, will be financed at the holding company level, a 50/50 mix there. That $300 million plus the 50/50 equity related to the growth milestone payment will be within the $1 billion-$1.5 billion equity disclosure that we put out there. For this year, it's approximately $500 million, which includes the $300 million for this transaction.
Got you. 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 is it controlled from your perspective?
Yeah, the credit provisions allow us to call on collateral if certain degradations 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. That's helpful. Then finally, I'm assuming the process was pretty competitive. Is there any breakthrough or anything else 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. I'll leave it at that.
All right. Okay, really appreciate it, guys. Thank you.
Thank you.
Thank you.
Thank you. Our next question comes from Andrew Weisel with Scotiabank 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 excited to get that out there for you guys.
Thank you.
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?
We've got-
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. We feel really confident in their revenue ramp or their volume ramp, as well as the fact that they'll be cash flow positive with their balance sheet de-leveraging activity. We feel that they'll be well-positioned to furnish on those contractual commitments.
Okay, great. Next, you mentioned that it's $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%-7% figure?
Yeah, Andrew. We definitely will provide an update on the third quarter call. As you know, it's a little more than a week. I can say that the acquisition does set up nicely for this business segment as well as the company to be within that five to 7% growth, not only for 2020, but long-term as well. Definitely brings a lot of clarity for this segment. You'll hear more about that here on the 28th.
Okay. We'll try to be patient best we can. Last question. You mentioned the 70%-75% of earnings coming from utilities in the long term. Given that you're accelerating the midstream spending here relative to the five-year outlook?
Should we expect that 70% coming from utilities to be a floor in all years? Might that have some creep in the shorter term?
It really is from a long-term commitment. Post this acquisition and this growth capital, the majority of the capital will be spent on utilities. You will see the utility growth growing within the five-year timeframe. Our goal would be within that five-year timeframe to be within that 70%-75% mix. Obviously, this kind of pulls ahead a little with the midstream segment, but it'll normalize itself out within a few years.
Great. Okay. Thank you very much.
Thank you. Our next question comes from Steve Fleishman with Wolfe Research.
Yeah, hi. Good morning.
Morning, Steve.
Morning.
Hi, Steve.
Just a clarification on your equity comments. Is the mandatory convertible that you plan to do in the $1 billion-$1.5 billion of equity?
No, the mandatory.
Is it separate? it.
It'll be beyond. It'll be the 2022 timeframe, and we'll be giving updated guidance at the EEI, for the end of 2020 to 2022. I can say this project, first of all, it delivers that $0.45 accretion. That equity is well-supported by the earnings for this project, and it really helps us reduce equity issuance at the DTE level overall.
Okay
out at this point.
Okay. Just to clarify, when you say 50% equity, $300 million of that, whatever that 50% equity is straight equity in 2019 or 2020, and then the rest would be a mandatory convert that would then convert in 2022. Is that the way to look at it?
That is correct.
Okay.
For the initial transaction. We talked about the growth capital, $600 million in the milestone payment. That'll be funded 50/50 as it is.
Yeah
at level.
Okay. 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. 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. Does it go down a little bit just because you've got more growth?
Correct
for this growth investment?
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 the gathering system that the MVCs, as the volume grows on the MVC, they become less than the 90%.
Okay. 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 gas basis in the region's going to meaningfully change for the benefit of you? Is that part of the thought on this transaction?
Steve, that's a good observation. The Gillis Point, which is a southern delivery point on the LEAP system, is just around the corner from Henry Hub. 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. Those are big demand draws. In addition to these two areas in the country are the two areas that are significantly growing long-term on the demand side. Both industrial power gen and LNG. 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.
Okay.
Thank you. Our next question comes from David Fishman with Goldman Sachs.
Hi. Good morning, and congratulations again.
Thank you.
Thank you.
Good morning.
Just wondering strategically, a little bit longer term. If we think back in 2016, I think we saw a pretty substantial gathering asset acquisition. Now in 2019, 2020, we're seeing another kind of substantial gathering asset acquisition. Do you guys view this as essentially becoming a reoccurring theme that you need as your new assets? You go through compression, and then they become more mature? Every three to five years, are we going to need to see more acquisitions? How do we get comfortable 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 of that drives future growth on the GSP side?
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. 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 five-year plan of $4 billion-$5 billion. That's how we look at things. We look at one, does it fit inside our plan? Does it drive high returns and high accretion? Which makes it a very attractive investment for us. I would say it will also drive a significant amount of organic expansion in the future that we look forward to originating on this asset.
Maybe to add onto what Jerry said is, we don't see another asset acquisition of this size in this five-year timeframe. We've allocated so much capital and essentially even earnings within the mix perspective, it sets us up nicely, really, just to do organic development capital. We did mention the expansions on the system. That's not in our base economics. That's going to provide future growth as well, even beyond this five-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'll be worth this amount? I just want to make sure that's clear.
It is the latter. It is a pure project accretion based on the financing, based on the equity and the earnings related to the project.
Okay. Did I hear earlier on in the prepared remarks that you said more than deliver the five-year plan?
Yes, 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 disclosure here in 2023, and this sets us up really nicely to achieve that 2023. We'll definitely give you more updates and more insights here at EEI next month.
Awesome. Thank you. Congrats again.
Thanks.
Thank you.
Thanks.
Thank you. Our next question comes from Shar Pourreza with Guggenheim Partners.
Hey, guys. Thanks for the follow-up. Just one question on your $0.45 of accretion that steps up to $0.45. What share count are you assuming on that?
That's a five-year number, Shar, as you know. We don't give the five-year of equity. It is a pure project related. If you think about the total capital spend on this project of over $3 billion, and it's a 50/50 equity on that's one way to think about the share count just related to this project. It's incremental to our share count at DTE.
Okay, got it. All right, thanks.
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 third quarter earnings call. I'll see many of you at EEI in November. Have a great day. Thank you.
Ladies and gentlemen, that concludes the DTE acquisition announcement conference call. You may now disconnect, and thank you for joining us this morning.