The Williams Companies, Inc. (WMB) Earnings Call Transcript & Summary

Good day, everyone, and welcome to The Williams Second Quarter 2026 Earnings Conference Call. Today's conference is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Ms. Caroline Sardella, Director of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Thank you for joining us and for your interest in Williams. Yesterday afternoon, we released our earnings press release and the presentation that our President and CEO, Chad Zamarin, and our Chief Financial Officer, John Porter will speak to you this morning. Also joining us on the call today are Larry Larsen, our Chief Operating Officer; and Rob Wingo, our Executive Vice President of Corporate Strategic Development. In our presentation materials, you'll find a disclaimer related to forward-looking statements. This disclaimer is important and integral to our remarks, so please review it. Also included in the presentation materials are non-GAAP measures that we reconciled with generally accepted accounting principles. These reconciliation schedules appear at the back of today's presentation materials. So with that, I'll turn it over to Chad.

Thanks, Caroline. This is another quarter of accomplishment for Williams with strong execution and meaningful growth across our business. I want to start by recognizing an awesome milestone for our Power Innovation business. Last week, we achieved in-service for Phase 1 of Socrates, delivering a utility scale 200 megawatts of power to our customer in under 18 months since commercialization. This is how America wins the race for the next generation of technology. a huge shout out to the Williams team and the incredible group of engineering, equipment and construction partners that have worked to make this possible. We remain on track to deliver the next phase of soccer tees before year-end with many more projects to come thereafter. With the first phase of Socrates completed on time and within budget, we have proven our ability to deliver and we are well positioned to advance the commercialization and scaling of future power innovation projects. On Transco, we signed customer agreements for the Leidy Access and Garden Connector projects two pipeline expansions that serve residential, commercial and power demand in Pennsylvania and New Jersey. We also further upsized our Transco Power Express project, which now represents an 800 million cubic feet per day expansion of Transco to serve load growth, power demand and data center growth in Virginia. Additionally, the team commercialized an extension of Line 200, which you'll recall is the 3.1 Bcf per day transmission pipeline that Williams is building from Gillis to serve the Woodside LNG terminal. The extension of Line 200 includes a new lateral to serve growing power demand in the Lake Charles, Louisiana area and is a nice upside to the Woodside partnership. In the second quarter, we also executed on 2 strategic transactions, including a power innovation financing joint venture with Blackstone and the strategic acquisition of Momentum Midstream. I'll let John provide more color in a minute, but I want to highlight that our financing JV creates a flexible source of low-cost equity that will enable us to continue the rapid growth and ongoing commercialization of near-term power innovation projects. I want to congratulate the Williams and Blackstone teams as well as key partners, Apollo and KR for achieving a great outcome and for supporting this exciting business. And as noted in our earnings release, we announced the highly strategic acquisition of Momentum Midstream. This bolt-on acquisition complements our Haynesville gathering and Transco Gulf Coast pipeline footprint, and strengthens our position in the most important natural gas growth basin tied to the fastest-growing and largest natural gas demand corridor. As a result of 1 financial quarter of assumed ownership of momentum and improved performance across our base business, we are raising full year 2026 EBITDA guidance by $200 million at the midpoint and we are increasing our long-term EBITDA growth rate target to 11-plus percent compound annual growth through 2030 versus our previously announced 10-plus percent compound annual growth target. Just as important, we are preserving near-term investment capacity with forecasted leverage of 3.75x debt-to-EBITDA, which preserves our ability to execute on additional near-term power and pipeline projects. So Williams really is firing on all cylinders. I'll now turn the call over to John to talk about our power innovation financing JV and to provide an overview of our quarterly financial results. After John is done, I'll come back to provide additional color on the Momentum acquisition, and I'll highlight 2 exciting pipeline expansion projects that we are announcing alongside the acquisition. John?

Thanks, Chad. I'm happy to spend a moment on the power innovation joint venture. It's an important example of how we are enhancing shareholder value with our unique growth opportunities. I also think it's important to emphasize that as attractive as this joint venture is we would not have done it at all, if it's not for the expectations we have in driving substantial additional growth in our power innovation business. So let's talk about the value this joint venture creates. First, our high-quality power innovation business attracted a highly efficient source of equity capital while preserving Williams operatorship, key decision-making authority and upside participation. The joint venture provides $5.34 billion of committed capital, including $4.4 billion for 49% of the expected total growth capital expenditures plus $900 million of additional consideration to Williams. Importantly, that capital comes at an attractive capped 6.35% cost of equity, which is a very efficient way to fund these near-term power innovation projects without diluting the value of the platform we are building. Second, that $900 million of additional consideration significantly enhances our compelling project returns across the 5 power innovation projects currently underway. Lots of different ways to illustrate how this joint venture enhances our project returns but the effect on the multiple on invested capital over the primary term of the underlying contracts is pretty striking. Specifically, if you look at the ratio of the total cash flow Williams will see from these 5 projects, to the total invested capital, that ratio improves about 56% with the joint venture. And again, that is only over the primary term of the contracts and doesn't include any of the upside we expect to develop both within the primary term and well beyond. Additionally, the joint venture includes an attractive buyout option at the remaining partner investment balance beginning in 2033, and then back to where I started, the full equity treatment creates immediate balance sheet capacity for the expected continued growth in our power innovation business. I'll walk you through that capacity when I cover our updated '26 guidance later in the presentation. So with that, let's move now to a quick look at our second quarter financial performance. We've continued our strong start to '26, with second quarter '26 EBITDA, up 6% over 25% and now up 10% year-to-date, bridging from last year's $1.8 billion to this year's $1.92 billion, our overall financial performance continues to be led by our transmission and golf businesses, which improved $56 million or about 6%. Growth in this segment was led by our golf businesses, which grew 23%, reflecting the combined effects of our recent golf expansion projects. And we also saw a 23% increase from our natural gas storage businesses and we had growth from expansion projects at Transco and Mountain West Pipeline. Our Northeast G&P business grew $39 million or 8%, primarily due to growth in the rich gas areas. The West grew $18 million or about 5%, led by our Haynesville investments, including our Louisiana Energy Gateway Pipeline. Our secret marketing business did a bit better than last year, although second quarters present seasonally lower opportunities for this business. And finally, our other segment, which includes our upstream businesses was down about $14 million, primarily due to our divestiture of the upstream Haynesville assets, which closed in January of '26. So again, continuing our strong start to '26 with second quarter EBITDA up 6% over 25% and now up 10% year-to-date. Now I'll turn it back over to Chad to discuss our strategic acquisition of Momentum Midstream.

Thanks, John. Looking at Slide 6, I want to start by highlighting the importance of the Haynesville basin as it will be the single most important U.S. supply basin in answering the near-term call for natural gas especially in order to supply the growth of LNG exports along our Gulf Coast Transco footprint. Over the next decade, the Haynesville is expected to grow by over 10 Bcf per day, and LNG exports are expected to double from where they are today. The combined Williams and Momentum assets will form the backbone that connects our country's fastest-growing supply basin with our fastest-growing demand corridor. With this combination, we solidify our position as the largest gatherer of Haynesville gas connected to Transco, the largest gas transmission pipeline system along the Gulf Coast corridor coupled with our leading Gulf Coast natural gas storage system and our relationship with every LNG export facility along the Louisiana Gulf Coast, including our partnership with Woodside LNG, Williams provides the most integrated set of capabilities to connect U.S. natural gas supply to premium, domestic and international markets. You can see on Slide 7 that the Momentum acquisition significantly expands our East Texas and Louisiana footprint into areas that are rapidly emerging as the next horizon of U.S. natural gas supply growth. The momentum footprint extends our reach into the rapidly growing Shelby Trough in Western Haynesville, where we see incredibly deep upstream inventory, a strong foundation of high-quality dedicated customers and a large opportunity for new customer growth. We add to our Haynesville footprint roughly 6 Bcf per day of gathering capacity and over 4 Bcf per day of take-or-pay pipeline capacity. With a balanced mix of gathering and take-or-pay earnings that fits squarely within the fairway of our existing core business mix, the $5.5 billion acquisition is being funded by $3.5 billion in cash and debt and $2 billion of equity. We are forecasting an accretive transaction at an attractive acquisition multiple of approximately 8.5x, which we expect will quickly compress over time as both growth and synergies are realized. The combination of Williams and Momentum is exciting for the existing assets we bring together and even more exciting for the new opportunities that we unlock to even better serve customers along the Gulf Coast. So alongside the acquisition, we are announcing 2 strategic expansion projects. The first project Shelby Connector is a large diameter pipeline expansion from the footprint of the Momentum gathering system connecting into the Williams Louisiana Energy Gateway or leg system. And the second project Delta Access is a large-scale transmission project from the combined momentum and William systems to LNG and power customers along the Transco corridor. On Slide 8, we highlight the strategic expansion projects. The Shelby Connector represents an expansion of our LEG system to reach into the footprint of the Momentum system with initial customer committed capacity of up to 750 million cubic feet per day, with an expected in-service date in the first half of 2028. We have the potential to further expand the Shelby Connector by doubling the pipeline capacity to up to 1.5 billion cubic feet per day. This project connects the Shelby Trough, which is expected to be one of the most rapid growth areas for natural gas supply over the next decade through our LEG system and into Transco at Gillis, Louisiana. And from Gillis, we are adding the Delta Access Pipeline project, a fully contracted transmission pipeline along the Transco corridor with initial capacity of 2.25 Bcf per day. And an in-service date of early 2029. Delta Access is expandable to up to 3.5 Bcf per day and is underpinned by capacity commitments from customers representing both LNG and power demand along the Louisiana Gulf Coast. So to recap, the Momentum acquisition is an accretive bolt-on transaction at an attractive multiple that will compress over time due to attractive growth and highly strategic synergies. We the combined Williams and Momentum platform will serve as a springboard for high-return expansion projects in the most important Gulf Coast supply basin as well as along the Transco pipeline and Gulf Coast natural gas storage corridor. Before we close, I'll pass it back to John to discuss our enhanced growth outlook.

Thanks, Chad. Our strong first half financial performance and execution on the Socrates project gives us confidence in updating the full year outlook. For full year '26 adjusted EBITDA, our existing businesses continue tracking toward the upper half of the guidance framework we discussed earlier in the year. On top of that, the accretive Momentum acquisition adds incremental EBITDA, taking the full year outlook to $8.3 billion to $8.5 billion. We've also provided revised guidance for EPS and AFFO, reflecting the effects of the power innovation JV and accretion from the Momentum transacted. On leverage, we expect year-end leverage to be around 3.9x, but importantly, that only includes an assumed 3 months of contributions from Momentum. On a full year run rate basis, leverage would be around 3.75x. So that's really the right way to think about the amount of additional capacity we now have to add additional power innovation projects through the remainder of the year. 3.75x leverage opens up in excess of another $2 billion of incremental capacity versus our internal 4x leveraged ceiling. And that's without considering bringing in any partners on future power innovation opportunities, which will remain an attractive and relatively easy thing to do. Most importantly, though, as we previously discussed, the balance sheet leverage tightness is primarily an issue for '26 and '27 before the historic earnings growth we expect in '28 and beyond. Finally, we've also updated our growth CapEx guidance primarily to reflect initial spending on the projects that we announced today. Overall, we're encouraged by the performance of our base business and excited about the momentum acquisition, the ongoing strong execution across our project portfolio, and the continued commercialization of new business, and we feel well positioned with our flexibility to fund additional power innovation opportunities in the near term. Turning now to our latest thoughts on progress toward our long-term growth targets that we presented back in February. As you'll recall, our initial announcement in February was a 10%-plus CAGR for EBITDA and EPS for 2025 through 2030. At that time, we set our current book of contracted business supported around an 8% CAGR estimate. And then in May, we announced additional projects that moved the 8% up to about 9%. And now after layering in the Momentum transaction as well as the other projects we've announced today, we feel confident in moving our target up to 11% plus. Additionally, our long-range plan assumes continued strong project execution on our current backlog of projects, plus winning new opportunities and driving more value out of the legacy business, which leaves us well positioned to exceed this new target. So stay tuned. And with that, I'll turn it back over to Chad. .

Thanks, John. I want to again congratulate and thank The Williams team for another outstanding quarter of execution, and I want to warmly welcome the Momentum Midstream team to The Williams family. This is actually the second time we have partnered with the team at Momentum. As we work together more than a decade ago to build and grow key assets that became the bedrock of what is now a major portion of our Northeast Marcellus and Utica system. I want to personally thank Frank Tsuru, Brant Baird, Bill Pritchard and the entire Momentum team for building things the right way and for developing critical infrastructure that will endure and serve our country for generations to come. Bringing together great talent and strategic infrastructure is how we serve the world's growing energy needs. Fueling LNG exports to friends and allies around the world, enabling the resurgence of American industrial expansion, empowering homes, businesses and the AI revolution across our great nation. Of course, none of our progress happens without the dedication of our people and the strength of our partnerships. Thank you to our employees, our customers, our partners and our investors for your continued trust in Williams. And with that, we'll now open the line for questions.

[Operator Instructions] Our first question comes from the line of Praneeth Satish of Wells Fargo.

Maybe John, going back to your comments. So the EBITDA CAGR here was increased to 11% from 10% 5-year EBITDA CAGR. I guess if we just simply layer in EBITDA from momentum and Delta Express, I mean, it seems like on our math, those projects alone would add 200 basis points to the CAGR, take it up to 12%. So I'm just -- is that 11% target incorporating a degree of conservatism? Or are there other kind of headwinds, puts and takes to consider in the forecast?

Thanks, Praneeth. Thanks for the question. Yes, I mean, like I said in my comments, we do feel well positioned to exceed 11%. And so like I said in February, plus is plus. But just to give a little more color to that, I mean, Again, this 11% plus -- the 11% that we're discussing really serves as an update to the 8% we gave back in February and the 9% we gave in May. And specifically, we're really talking about a number here that continues to be centered on our existing contracted book of business. And so we're excluding the commercialization of any additional power or pipes projects, which you're aware of the extensive backlog we've got in both the power side and the pipes projects, -- and I would say we also do continue to have a degree of conservatism across a pretty broad swath of all of the other parts of the business that we're working on as well, including the Northeast, which is over $2 billion of EBITDA today. And we're continuing to be pretty conservative in terms of how we're modeling the growth in some of those areas.

Got it. And then maybe switching gears to the momentum. So I guess beyond the organic projects that you've identified, Delta access, are there specific operating or cost synergies that you expect to get for momentum? And if so, can you help quantify those? And then just as a point of clarification on the deal, the 8.5x acquisition multiple -- is that multiple calculated based on momentum's consolidated EBITDA? Or is it based on Williams' net share after reflecting expense 35% interest.

Yes. Thanks, Praneeth. This is Chad. First off, I'd say we're not going to quantify yet what those synergies will be. But I think if you look at the footprint and the overlap between the 2 companies, there will absolutely be operational synergies. But I think even more importantly, I mean we're talking about what is expected to be the most important growth area for our country in serving the more than doubling of LNG demand that we're going to see. I mean we're at about 18 Bcf a day of LNG export capacity today. I mean forecast models are showing that going above 40 BCf [Audio Gap] 10 years. And so the Haynesville is going to have to respond. And the other thing that I think is important to know about the Haynesville is that it's been producing a lot of gas on what has been the traditional core area. So we see the inventory moving West. And so we expect this integrated footprint to be really in the heart of what's going to be called upon for growth. So you will see operational synergies, but we also expect to see significant growth, both from existing dedicated customers, but also from new projects that we will launch -- and that, I think, helps support the acquisition multiple. You're right. The multiple is based on consolidated EBITDA. There are some noncontrolling interest. You mentioned there is the primary noncontrolling interest, which is the joint venture structure of NGI. But even with the net effect of that, it's still approximately a 9x multiple, the way we're looking at next year's expected performance. And again, we expect that to compress over time as this asset continues to grow within the business.

Our next question comes from the line of Jeremy Tonet of JP Morgan Securities LLC.

I was just wondering if you could talk, I guess, a bit more on the behind-the-meter backlog as far as how you see the opportunity set at this point in how deals might materialize? And curious, I guess, if you're dealing with one hyperscaler, is it possible to do deals with a different hyperscale? Or are you in conversations with others of similar size or each hyperscaler picking the room solution provider there.

Yes. Thanks, Jeremy. I would say we've continued to see strengthening of the commercial interest in our projects and what we can provide, I think, further supported by separates coming online on time, within budget. Again, a huge shout out to that team. And the large number of partners that are supporting us in these projects. I think as we've continued to see the challenge of delivering grid capacity, the concerns about how we develop this really important infrastructure. I think our our solution of bringing very tailored infrastructure to data center projects is just gaining additional momentum. So we do have conversations ongoing with multiple different counterparties. We expect to commercialize additional projects between now and the end of the year. I will say, I know everyone is excited about and looking forward to the next announcement, but the team is also doing a really good job of pacing the commercialization of projects so that we can maintain this steady growth throughout the end of the decade and beyond. And so Socrates is a great example. Those crews that just delivered that project are moving on to the next site and we'll be ramping up even further the work. And so a lot of, I'd say, responding to the commercial momentum, but also being deliberate about making sure we can phase in projects the right way. And so I'd say, again, stay tuned, but our backlog continues to be strong, and it is supported by multiple customers beyond just our first primary customer.

Got it. And just to confirm, I guess, with the business with 1 major hyperscaler, you don't think precludes your commercial negotiations with signing up another major hyperscaler.

No. Look, we're a big company. I mean, we want to provide energy infrastructure solutions for every business in America. And I think that we know how to do that. We want to support the utility and the growth of our grid. We want to support data centers and technology companies getting access to energy, so that we, as a country, can win the race for the next generation of technology. And so no, we do not see the discussions that we're having with customers as something that needs to be exclusive to any one or the other. .

Got it. That's very helpful. And if I could just as far as the [ Transco ] I just wondering if you give us a flavor, I guess, what you're seeing as far as more kind of laterals still being potential here? Or do you think that that's kind of play out more more smaller parts. Just trying to think of the larger projects that like the ones you announced today, how much in...

Sorry, Jeremy, you were breaking up on us there. Can you repeat that?

Yes, just the potential for large Transco projects coming to fruition like what we saw for that.

Yes. Thanks, Jeremy. This is Larry Larsen. Just -- yes, I mean, we continue to have great discussions with our customers across the Transco footprint. We obviously are doing a great job executing on the projects we have right now with Southeast supply enhancement progressing forward. You saw the upsizing of Power Express. And so yes, there's tremendous opportunity. If you think about the backlog that we talked about at Analyst Day, highlighted previously that a lot of those projects that we've been working on in the backlog are Transco-related. I think the Delta Access is a great first step on a large-scale project in the Gulf region, but we're continuing to look at additional demand response across the Mid-Atlantic and Southeast. And so we're continuing to work those. It's just a matter of pacing with our utility customers as they look at kind of firming up their demand and timing of projects. So Hopefully, we'll continue to see things in the backlog commercialize at a pace that seems reasonable.

Our next question comes from the line of Spiro Dounis of Citi.

I want to sort of power innovation. I guess as we think about this next wave of projects that you guys see coming, just curious a high level -- if you can walk us through maybe what those -- what might look the same or different from the first wave, specifically, just thinking about new geographic locations, maybe longer contract tenors. It sounds like we'd see some new customers show up. And Chad, you mentioned pacing these projects -- so trying to get a sense of your plan to recycle the capital to the next project. You've announced $9.6 billion or so in the last 18 months. So is it crazy to think you could allocate most of that $5 billion or so over the next 12 months.

Yes. Thanks. A great question. And I think you're thinking about it the right way. I mean -- and again, credit to John and the entire team, Blackstone and our partners there in the JV is, I think, a great tool that allows us to preserve our capacity, but also to recycle that capital into the next round of projects. We do see those continuing to evolve. I think that our first 5 projects are a great example of achieving speed. And they have scale. I mean these are big projects, certainly relative to what we used to think about a large power project but they're primarily focused on scale and flexibility, and we are seeing projects evolve to having both that element of speed looking like our first 5 projects on the front end, but also layering in over time, scale and even hybrid projects that would include how we better optimize and frankly, support grid expansion as well. And so I think you will continue to see projects and we've demonstrated our ability to get projects up and running fast, but also I think we've got the ability to then further scale projects over time. And so you will see, I think some of our projects have that phased approach to scaling over time. geography, we continue to focus on areas where you have, I think, supportive places to get things built. And so we continue to guide to our footprint, but also -- you think about we're building in Ohio, Utah, but certainly, Oklahoma, Texas, Louisiana, our entire footprint, I think, but also think about the states where things are getting built more easily than in other parts of the country will continue to be our focus. And so I'd say that's been our primary model there. As far as pacing, you kind of mentioned it, I mean, I would say, again, stay tuned. We do expect additional commercialization of projects between now and the end of the year. And I think we'll demonstrate pretty quickly that we will with our partnership with Blackstone, we will put those resources to work on very attractive projects. And I do think the term for those projects as we continue to validate the model of both bringing your own power, having islanded behind the meter, but also evolving over time to be a more optimized and tailored power solution, you will continue to see contract terms extend in duration as I think we recognize these are going to become integral infrastructure solutions for our entire ecosystem.

Got it. It's good to hear, Chad. Second one, maybe sticking on this theme but focusing more on Socrates. Can you just maybe give us a sense of how that start-up process went and how it's going so far? And I ask in the context of all this being somewhat novel to us and the investor base and really trying to see the proof of concept here. So curious is that operating revenue is expected? And is there an ability to maybe apply the learnings on Socrates forward on these remaining start-ups and maybe you can accelerate those time lines?

Yes. Thanks for the question. This is Larry. I'll hit on it. And again, as Chad said, major kudos to our team and the way they worked closely with our customer through commissioning as well as all of our equipment manufacturers and contractors. And the commissioning has gone extremely well. We did a lot of load testing prior to actual start-up to facilitate to make sure that we actually could see the AI load following actually the work the way it was intended to. So -- those tests went really smoothly. We've made adjustments as we needed to, as you always do through commissioning and start-up. And as of this week, we're delivering first power to the facility and expect to see that ramp up over the course of the month. and so far, so good. So excited to see that ramp up the full capacity in the near term. But yes, the team is not constantly taking learnings from these first projects, both on design and efficiencies on how we commission and approach that. I'm not sure it's going to translate directly into kind of earlier in services at this point on the project. Right now, all of our other projects, Aqualand Apollo and others they're all trending on schedule and on budget right now, similar to Socrates. So yes, I think we'll always take those lessons learned into the next project and hopefully make it even that much more efficient.

Our next question comes from the line of Ameet Thakkar of BMO Capital Markets.

Congrats on all the progress and the updates today. I appreciate it. I was just going to maybe turn back to kind of the Woodside LNG kind of transaction and Line 200 now kind of with momentum. I was just kind of thinking like how much of that of Line 200 class do you think you'll be able to source from Transco LEG and now momentum?

Yes. So Line 200 obviously originates from Gillis. And you're hearing a lot about Gillis, I mean, it is an important supply point both the NG3 pipeline that momentum had built and is operating and our leg system deliver into the Gillis area. There are several other pipelines that deliver and the largest, most important trunk line system running across from west to east in that corridor is the Transco system. And so those pipes connect into Transco at Gillis and that is the supply source for a lot of different customers, including -- you mentioned the Delta Access project is going to take off and move east across Louisiana serve power plants along the way, even serve LNG further east across Louisiana and even power demand in the Mississippi River corridor. And so it truly is an expansion of that entire artery and thoroughfare across Louisiana. And then Line 200 as it takes off. I mean, obviously, the Haynesville is going to be the primary supply point for that area, which is again why we think the growth both in our traditional footprint, but in the momentum footprint is going to be really important for serving all of that Gillis supply pull that's going to happen from those demand customers, but also we'll be sourcing the lowest cost of most abundant supply for Line 200 and Woodside. The project from a take-or-pay perspective is fully subscribed. So now it's just a matter of making sure we can find the lowest cost supply to support the LNG customers and our partner there. And so that will be the focus. The lateral and Larry can give a little more color. That's an expansion off of Line 200, where the team was able to basically free up additional capacity and build a lateral to a power load along the way. I don't know Larry, if there's any else you want to share about that.

Yes, I can add. I mean it's basically a 7-mile extension going right into Lake Charles to serve incremental power demand in the corridor. So I mean it's a really great success story to think about Line 200 its really anchored around the Louisiana LNG. And it's just the importance of having this infrastructure as we're seeing growth across Louisiana, both from power and industrial loads, it's going to create more opportunities for us. And so great job by the commercial teams identifying this opportunity and continue to upsize and find ways to invest further in these facilities going forward.

And if I could just ask one quick housekeeping question on the power innovation JV. I know like you announced this on Slide 35, you kind of indicated that $5.34 billion towards 59% of the expected JV project capital. How do I -- I think that implies something closer to $9 billion. How do I reconcile that with the $9.6 billion, I think, on on Slide 30. I know certain items like capitalized interest rate excluded, but that seemed like a pretty big delta for just capitalized interest. If you could just help us bridge that.

Yes. I think capitalized interest is the biggest component of that. So a noncash from the standpoint of the partnership.

Our next question comes from the line of John MacKay of Goldman Sachs.

You touched a little bit on this, but I just wanted to run through again. So in terms of funding the next set of BTM projects, John, wondering if you could kind of walk us to the $2 billion you framed up. And then more broadly for incremental funding options, -- can we think about the existing JV with Blackstone being expanded, so more kind of assets being brought into it? Could the next ones to be a different structure? Maybe just walk us through some of the options.

Yes. Thanks for the question, John. Yes, so the -- I said in my comments that we feel like we've got in excess of $2 billion available now to fund near-term power innovation projects between now and the end of the year. And that's really working off the 3.75x leverage number that we cited in the presentation, which does normalize the Momentum contribution across a full year versus just, call it, roughly 3 months of Momentum that we would expect in sort of our base case forecast getting through HSR and and closing and having basically about 3 months of contribution in '26 gets you to the 3.9x roughly at year-end. But again, we're focused more on a normalized full year momentum leverage number of 3.75x. And so really, it's just the math between 3.75x and the 4x, which is sort of our -- as we've discussed before, is sort of our internal ceiling around leverage 4x -- 3.5x to 4x is the range that we're working within. 4x is not a hard and fast number. We've -- at times, we've talked about ticking over it, maybe a little bit for a short period of time. So that's always an option. We could always look at the potential to run things a little bit hotter. But in general, and as we've said before, this leverage issue is really just a '26 and '27 issue. I think relative to the JV, Chad mentioned it, it's a fantastic platform. We spent a lot of time really investing this year in a very competitive process where we really canvassed all of the potential parties and worked very hard to stand up the diligence around the business. And I think we invested a lot in that process that will be transferable and make things much more efficient if we do want to bring in partners in the future. And so I think we'll be able to run a process in a much, much faster time frame and get to the similar kind of attractive results. I think in general, though, it's probable in my mind that each one of these deals could perhaps be a unique separate partnership just because I think each partnership sort of has to price the opportunity in a somewhat unique manner. That being said, we're -- as Chad mentioned, we love the partnership we formed now with Blackstone, with KR, with Apollo there were others at the table too who are very close. And so we feel like we've got real depth in this market, tremendous depth in this market. And if that is something we want to do, I think we will be able to do it quickly. And I think we'll be able to continue to achieve very, very positive results. And as I mentioned in my comments, I mean, this structure is really enhancing the returns on these projects. So I think it will continue to be a pretty attractive option if that's the way we want to go.