HOUSTON, Nov. 3, 2023
/PRNewswire/ -- Summit Midstream Partners, LP (NYSE: SMLP)
("Summit", "SMLP" or the "Partnership") announced today its
financial and operating results for the three months ended
September 30, 2023.
Highlights
- Third quarter 2023 net income of $3.9
million, adjusted EBITDA of $72.8
million, cash flow available for distributions
("Distributable Cash Flow" or "DCF") of $38.5 million and free cash flow ("FCF") of
$21.9 million
- Adjusted EBITDA of $72.8 million
represents ~24% quarter-over-quarter growth and ~$290 million run-rate
- Connected 77 wells during the third quarter, resulting in 227
wells connected year-to-date and remain on pace to connect a total
of ~300 wells by the end 2023
- Reiterating fourth quarter Adjusted EBITDA guidance of
$75 million to $85 million
- Active customer base with six drilling rigs and more than 165
DUCs behind our systems
- Executed 15-year contract extension dedicating more than 30,000
leased acres with a key customer in the Williston
- Constructing initial phase of compression project to provide
low-pressure service on the Summit Midstream Utica ("SMU") system
- Launched strategic alternatives review with the goal of
maximizing unitholder value
Management Commentary
Heath Deneke, President, Chief
Executive Officer, and Chairman, commented, "Summit delivered solid
third quarter 2023 financial and operating results that include a
significant quarter-over-quarter increase in Adjusted EBITDA and
operational progress that supports our projection of achieving
approximately $300 million of LTM
Adjusted EBITDA by mid-2024. As we look ahead, activity levels
behind our systems remain strong with more than 220 new wells
scheduled to be turned in line from the fourth quarter of 2023
through the first half of 2024.
We had some solid commercial wins during the quarter, including
a long-term contract extension in the Williston Basin of more than 30,000 contiguous
and largely undeveloped acreage in Williams County. With this contract extension,
we expect our customer to begin a one-rig development program in
mid-2024. In addition, we announced that we are constructing the
initial phase of a broader centralized compression project to add
low-pressure service to our SMU system.
We expect this first phase to be in-service by year-end, which will
result in an incremental compression fee on approximately 20 MMcf/d
beginning in the first quarter of 2024. We continue to work with
our customer on the timing of adding compression to the rest of the
system.
As previously announced, our Board of Directors launched a
strategic alternatives review with the goal of maximizing
unitholder value. These alternatives may include, but are not
limited to, continued execution of the Partnership's business plan,
sale of assets, refinancing parts or the entirety of its capital
structure, sale of the Partnership by merger or cash, or any
combination of these and other alternatives. We are very pleased
with the continued level of interest from third parties for
potential transactions, ranging from the sale of specific assets
to consideration for the entire Partnership.
While the Board conducts its review, the Partnership remains
focused on its operational performance and execution of its
business strategy to increase unitholder value."
Business Highlights
SMLP's average daily natural gas throughput for its wholly owned
operated systems increased 12% to 1,352 MMcf/d, and liquids volumes
increased 20% to 85 Mbbl/d, relative to the second quarter of 2023.
OGC natural gas throughput increased from 781 MMcf/d to 870 MMcf/d,
an 11% increase quarter-over-quarter, and generated $11.9 million of adjusted EBITDA, net to SMLP,
for the third quarter of 2023. Double E Pipeline gross volumes
transported increased from 243 MMcf/d to 327 MMcf/d, a 34% increase
quarter-over-quarter, and generated $5.9
million of adjusted EBITDA, net to SMLP, for the third
quarter of 2023.
Natural gas price-driven segments:
- Natural gas price-driven segments had combined quarterly
segment adjusted EBITDA of $49.1
million, representing 17.4% sequential growth, and combined
capital expenditures of $3.1 million
in the third quarter of 2023.
- Northeast segment adjusted EBITDA totaled $27.8 million, an increase of $7.6 million from the second quarter 2023,
primarily due to a 19.6% increase in volume on our wholly owned
systems and an 11% increase in volume from our OGC joint venture.
During the third quarter, 14 new wells were brought online behind
our wholly owned Summit Midstream Utica ("SMU") system and eight new wells were connected
behind our OGC joint venture. The 14 new wells behind our
SMU system were brought online
throughout the third quarter. As such, current operated volumes are
trending approximately 60 MMcf/d higher than third quarter volumes.
We began constructing the initial phase of a centralized
compression project behind the SMU
system with an expected year-end in-service date. This project adds
compression to approximately 20 MMcf/d of volume, resulting in an
incremental compression fee beginning in the first quarter of 2024.
We continue to evaluate the timing of adding compression on the
rest of the system with our key customer. We expect 11 new wells to
be connected during the fourth quarter, all of which have already
been connected. There is currently two rigs running and 14 DUCs
behind our systems.
- Piceance segment adjusted EBITDA totaled $15.3 million, an increase of $0.9 million from the second quarter of 2023,
primarily due to a 5.4% increase in volume throughput driven by 12
wells brought online during the quarter, partially offset by
natural production declines. We expect approximately 20 new wells
to be connected during the fourth quarter, of which eight have
already been connected. There are currently 13 DUCs behind the
system.
- Barnett segment adjusted EBITDA totaled $6.1 million, a decrease of $1.2 million relative to the second quarter of
2023, primarily due to approximately $1.8
million in other revenue recognized during the second
quarter. Volumes decreased 6.6%, primarily due to the continuation
of production being temporarily shut-in by one of our customers. We
estimate these curtailments impacted segment volumes by
approximately 20 MMcf/d during the quarter. Our anchor customer
completed six new wells in September that have increased segment
volumes to approximately 190 MMcf/d currently. While we do not
expect any new wells during the fourth quarter, our anchor customer
is expected to bring online 15 to 20 new wells during the first
half of 2024. There is currently one rig running and 21 DUCs behind
the system.
Oil price-driven segments
- Oil price-driven segments generated $30.8 million of combined segment adjusted
EBITDA, representing 38.8% sequential growth, and had combined
capital expenditures of $13.7
million.
- Permian segment adjusted EBITDA totaled $5.8 million, an increase of $0.5 million from the second quarter of 2023,
primarily due to an increase in proportionate EBITDA from our
Double E joint venture.
- Rockies segment adjusted EBITDA totaled $25.0 million, an increase of $8.2 million relative to the second quarter of
2023, primarily due to a 19.7% increase in liquids volume
throughput, an 18.2% increase in natural gas volume throughput and
higher realized commodity prices. There were 37 new wells connected
during the quarter, including six in the DJ Basin and 31 in the
Williston Basin. We expect more
than 50 new wells to be connected during the fourth quarter,
including more than 40 new wells in the DJ Basin that are expected
to reach peak production in the second quarter of 2024. We executed
a 15-year contract extension with a key customer in the
Williston Basin, which includes
more than 30,000 dedicated leased acres in southern Williams County. We expect this customer to
begin a one-rig development program in mid-2024. In addition, one
of our anchor customers in the Williston announced the acquisition of our
other anchor customer during the quarter. While integration has
historically delayed development for a few months, we are excited
about the highly contiguous pro forma dedicated acreage position.
We expect this will enable our anchor customer to develop more
three-mile laterals to its historic two-mile laterals. There are
currently three rigs running and approximately 117 DUCs behind the
systems.
The following table presents average daily throughput by
reportable segment for the periods indicated:
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Average daily
throughput (MMcf/d):
|
|
|
|
|
|
|
|
Northeast
(1)
|
752
|
|
637
|
|
658
|
|
670
|
Rockies
|
117
|
|
31
|
|
108
|
|
30
|
Permian
(1)
|
—
|
|
—
|
|
—
|
|
18
|
Piceance
|
313
|
|
305
|
|
299
|
|
310
|
Barnett
|
170
|
|
204
|
|
184
|
|
200
|
Aggregate average
daily throughput
|
1,352
|
|
1,177
|
|
1,249
|
|
1,228
|
|
|
|
|
|
|
|
|
Average daily
throughput (Mbbl/d):
|
|
|
|
|
|
|
|
Rockies
|
85
|
|
66
|
|
76
|
|
62
|
Aggregate average
daily throughput
|
85
|
|
66
|
|
76
|
|
62
|
|
|
|
|
|
|
|
|
Ohio Gathering
average daily throughput (MMcf/d)
(2)
|
870
|
|
783
|
|
763
|
|
648
|
|
|
|
|
|
|
|
|
Double E average
daily throughput (MMcf/d) (3)
|
327
|
|
314
|
|
278
|
|
272
|
_________
|
(1)
|
Exclusive of Ohio
Gathering and Double E due to equity method accounting.
|
(2)
|
Gross basis, represents
100% of volume throughput for Ohio Gathering, subject to a
one-month lag.
|
(3)
|
Gross basis, represents
100% of volume throughput for Double E.
|
The following table presents adjusted EBITDA by reportable
segment for the periods indicated:
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(In
thousands)
|
|
(In
thousands)
|
Reportable segment
adjusted EBITDA (1):
|
|
|
|
|
|
|
|
Northeast
(2)
|
$
27,751
|
|
$
19,353
|
|
$
65,806
|
|
$
57,989
|
Rockies
|
24,998
|
|
14,262
|
|
64,986
|
|
43,991
|
Permian
(3)
|
5,840
|
|
4,882
|
|
16,283
|
|
13,848
|
Piceance
|
15,292
|
|
14,249
|
|
43,640
|
|
45,367
|
Barnett
|
6,084
|
|
7,864
|
|
20,380
|
|
24,397
|
Total
|
$
79,965
|
|
$
60,610
|
|
$
211,095
|
|
$
185,592
|
Less: Corporate
and Other (4)
|
7,175
|
|
5,868
|
|
19,267
|
|
23,630
|
Adjusted
EBITDA
|
$
72,790
|
|
$
54,742
|
|
$
191,828
|
|
$
161,962
|
__________
|
(1)
|
We define segment
adjusted EBITDA as total revenues less total costs and expenses,
plus (i) other income, (ii) our proportional adjusted EBITDA for
equity method investees, (iii) depreciation and amortization, (iv)
adjustments related to MVC shortfall payments, (v) adjustments
related to capital reimbursement activity, (vi) unit-based and
noncash compensation, (vii) impairments and (viii) other noncash
expenses or losses, less other noncash income or gains.
|
(2)
|
Includes our
proportional share of adjusted EBITDA for Ohio Gathering, subject
to a one-month lag. We define proportional adjusted EBITDA for our
equity method investees as the product of (i) total revenues less
total expenses, excluding impairments and other noncash income
or expense items and (ii) amortization for deferred contract costs;
multiplied by our ownership interest during the respective
period.
|
(3)
|
Includes our
proportional share of adjusted EBITDA for Double E. We define
proportional adjusted EBITDA for our equity method investees as the
product of total revenues less total expenses, excluding
impairments and other noncash income or expense items;
multiplied by our ownership interest during the respective
period.
|
(4)
|
Corporate and Other
represents those results that are not specifically attributable to
a reportable segment or that have not been allocated to our
reportable segments, including certain general and administrative
expense items and transaction costs.
|
Capital Expenditures
Capital expenditures totaled $17.7
million in the third quarter of 2023, inclusive of
maintenance capital expenditures of $2.8
million. Capital expenditures in the third quarter of 2023
were primarily related to pad connections and DJ Basin integration
projects in the Rockies segment.
|
|
Nine Months Ended
September 30,
|
|
|
2023
|
|
2022
|
|
|
(In
thousands)
|
Cash paid for
capital expenditures (1):
|
|
|
|
|
Northeast
|
|
$
2,502
|
|
$
7,520
|
Rockies
|
|
40,089
|
|
6,204
|
Permian
|
|
—
|
|
1,406
|
Piceance
|
|
3,910
|
|
4,350
|
Barnett
|
|
109
|
|
248
|
Total reportable
segment capital expenditures
|
|
$
46,610
|
|
$
19,728
|
Corporate and
Other
|
|
3,253
|
|
1,227
|
Total cash paid for
capital expenditures
|
|
$
49,863
|
|
$
20,955
|
__________
|
(1)
|
Excludes cash paid for
capital expenditures by Ohio Gathering and Double E due to equity
method accounting.
|
Capital & Liquidity
As of September 30, 2023, SMLP had
$17.1 million in unrestricted cash on
hand and $295 million drawn under its
$400 million ABL Revolver and
$100.7 million of borrowing
availability, after accounting for $4.3
million of issued, but undrawn, letters of credit. As of
September 30, 2023, SMLP's gross
availability based on the borrowing base calculation in the credit
agreement was $715 million, which is
$315 million greater than the
$400 million of lender commitments to
the ABL Revolver. As of September 30,
2023, SMLP was in compliance with all financial covenants,
including interest coverage of 2.2x relative to a minimum interest
coverage covenant of 2.0x and first lien leverage ratio of 1.2x
relative to a maximum first lien leverage ratio of 2.5x. As of
September 30, 2023, SMLP reported a
total leverage ratio of approximately 5.5x.
As of September 30, 2023, the
Permian Transmission Credit Facility balance was $147.5 million, a reduction of $2.7 million relative to the June 30, 2023 balance of $150.2 million due to scheduled mandatory
amortization. The Permian Transmission Term Loan remains
non-recourse to SMLP.
MVC Shortfall Payments
SMLP billed its customers $7.2
million in the third quarter of 2023 related to MVC
shortfalls. For those customers that do not have MVC shortfall
credit banking mechanisms in their gathering agreements, the MVC
shortfall payments are accounted for as gathering revenue in the
period in which they are earned. In the third quarter of 2023, SMLP
recognized $7.2 million of gathering
revenue associated with MVC shortfall payments. SMLP had no
adjustments to MVC shortfall payments in the third quarter of 2023.
SMLP's MVC shortfall payment mechanisms contributed $7.2 million of total adjusted EBITDA in the
third quarter of 2023.
|
Three Months Ended
September 30, 2023
|
|
MVC
Billings
|
|
Gathering
revenue
|
|
Adjustments
to MVC
shortfall
payments
|
|
Net impact to
adjusted
EBITDA
|
|
(In
thousands)
|
Net change in
deferred revenue related to MVC
shortfall payments:
|
|
|
|
|
|
|
|
Piceance
Basin
|
$
—
|
|
$
—
|
|
$
—
|
|
$
—
|
Total net
change
|
$
—
|
|
$
—
|
|
$
—
|
|
$
—
|
|
|
|
|
|
|
|
|
MVC shortfall
payment adjustments:
|
|
|
|
|
|
|
|
Rockies
|
$
84
|
|
$
84
|
|
$
—
|
|
$
84
|
Piceance
|
5,499
|
|
5,499
|
|
—
|
|
5,499
|
Northeast
|
1,637
|
|
1,637
|
|
—
|
|
1,637
|
Total MVC shortfall
payment adjustments
|
$
7,220
|
|
$
7,220
|
|
$
—
|
|
$
7,220
|
|
|
|
|
|
|
|
|
Total
(1)
|
$
7,220
|
|
$
7,220
|
|
$
—
|
|
$
7,220
|
__________
|
(1)
|
Exclusive of Ohio
Gathering and Double E due to equity method accounting.
|
|
Nine Months Ended
September 30, 2023
|
|
MVC
Billings
|
|
Gathering
revenue
|
|
Adjustments
to MVC
shortfall
payments
|
|
Net impact to
adjusted
EBITDA
|
|
(In
thousands)
|
Net change in
deferred revenue related to MVC
shortfall payments:
|
|
|
|
|
|
|
|
Piceance
Basin
|
$
—
|
|
$
—
|
|
$
—
|
|
$
—
|
Total net
change
|
$
—
|
|
$
—
|
|
$
—
|
|
$
—
|
|
|
|
|
|
|
|
|
MVC shortfall
payment adjustments:
|
|
|
|
|
|
|
|
Rockies
|
$
138
|
|
$
138
|
|
$
—
|
|
$
138
|
Piceance
|
16,435
|
|
16,435
|
|
—
|
|
16,435
|
Northeast
|
4,925
|
|
4,925
|
|
—
|
|
4,925
|
Total MVC shortfall
payment adjustments
|
$
21,498
|
|
$
21,498
|
|
$
—
|
|
$ 21,498
|
|
|
|
|
|
|
|
|
Total
(1)
|
$
21,498
|
|
$
21,498
|
|
$
—
|
|
$ 21,498
|
__________
|
(1)
|
Exclusive of Ohio
Gathering and Double E due to equity method accounting.
|
Quarterly Distribution
The Board of Directors of SMLP's general partner continued to
suspend cash distributions payable on its common units and on its
Series A fixed-to-floating rate cumulative redeemable perpetual
preferred units (the "Series A Preferred Units") for the period
ended September 30, 2023. Unpaid
distributions on the Series A Preferred Units will continue to
accumulate.
Third Quarter 2023 Earnings Call Information
SMLP will host a conference call at 10:00
a.m. Eastern on November 3,
2023, to discuss its quarterly operating and financial
results. The call can be accessed via teleconference at: Q3 2023
Summit Midstream Partners LP Earnings Conference Call
(https://register.vevent.com/register/BIc42a8b051b4d40e8902304edf61e8ef7).
Once registration is completed, participants will receive a dial-in
number along with a personalized PIN to access the call. While not
required, it is recommended that participants join 10 minutes prior
to the event start. The conference call, live webcast and archive
of the call can be accessed through the Investors section
of SMLP's website at www.summitmidstream.com.
Upcoming Investor Conference
Members of SMLP's senior management team will attend the 2023
Bank of America Leverage Finance Conference taking place on
November 28–29, 2023 and the 2023 Wells Fargo Midstream and
Utilities Symposium taking place on December 6–7, 2023. The
presentation materials associated with these events will be
accessible through the Investors section of SMLP's website at
www.summitmidstream.com prior to the beginning of the
conference.
Use of Non-GAAP Financial Measures
We report financial results in accordance with U.S. generally
accepted accounting principles ("GAAP"). We also present adjusted
EBITDA, Distributable Cash Flow, and Free Cash Flow, non-GAAP
financial measures.
Adjusted EBITDA
We define adjusted EBITDA as net income or loss, plus interest
expense, income tax expense, depreciation and amortization, our
proportional adjusted EBITDA for equity method investees,
adjustments related to MVC shortfall payments, adjustments related
to capital reimbursement activity, unit-based and noncash
compensation, impairments, items of income or loss that we
characterize as unrepresentative of our ongoing operations and
other noncash expenses or losses, income tax benefit, income (loss)
from equity method investees and other noncash income or
gains. Because adjusted EBITDA may be defined differently by
other entities in our industry, our definition of this non-GAAP
financial measure may not be comparable to similarly titled
measures of other entities, thereby diminishing its utility.
Management uses adjusted EBITDA in making financial, operating
and planning decisions and in evaluating our financial performance.
Furthermore, management believes that adjusted EBITDA may provide
external users of our financial statements, such as investors,
commercial banks, research analysts and others, with additional
meaningful comparisons between current results and results of prior
periods as they are expected to be reflective of our core ongoing
business.
Adjusted EBITDA is used as a supplemental financial measure to
assess:
- the ability of our assets to generate cash sufficient to make
future potential cash distributions and support our
indebtedness;
- the financial performance of our assets without regard to
financing methods, capital structure or historical cost basis;
- our operating performance and return on capital as compared to
those of other entities in the midstream energy sector, without
regard to financing or capital structure;
- the attractiveness of capital projects and acquisitions and the
overall rates of return on alternative investment opportunities;
and
- the financial performance of our assets without regard to (i)
income or loss from equity method investees, (ii) the impact of the
timing of MVC shortfall payments under our gathering agreements or
(iii) the timing of impairments or other income or expense items
that we characterize as unrepresentative of our ongoing
operations.
Adjusted EBITDA has limitations as an analytical tool and
investors should not consider it in isolation or as a substitute
for analysis of our results as reported under GAAP. For
example:
- certain items excluded from adjusted EBITDA are significant
components in understanding and assessing an entity's financial
performance, such as an entity's cost of capital and tax
structure;
- adjusted EBITDA does not reflect our cash expenditures or
future requirements for capital expenditures or contractual
commitments;
- adjusted EBITDA does not reflect changes in, or cash
requirements for, our working capital needs; and
- although depreciation and amortization are noncash charges, the
assets being depreciated and amortized will often have to be
replaced in the future, and adjusted EBITDA does not reflect any
cash requirements for such replacements.
We compensate for the limitations of adjusted EBITDA as an
analytical tool by reviewing the comparable GAAP financial
measures, understanding the differences between the financial
measures and incorporating these data points into our
decision-making process.
Distributable Cash Flow
We define Distributable Cash Flow as adjusted EBITDA, as defined
above, less cash interest paid, cash paid for taxes, net interest
expense accrued and paid on the senior notes, and maintenance
capital expenditures.
Free Cash Flow
We define free cash flow as distributable cash flow attributable
to common and preferred unitholders less growth capital
expenditures, less investments in equity method investees, less
distributions to common and preferred unitholders. Free cash flow
excludes proceeds from asset sales and cash consideration paid for
acquisitions.
We do not provide the GAAP financial measures of net income or
loss or net cash provided by operating activities on a
forward-looking basis because we are unable to predict, without
unreasonable effort, certain components thereof including, but not
limited to, (i) income or loss from equity method investees and
(ii) asset impairments. These items are inherently uncertain and
depend on various factors, many of which are beyond our control. As
such, any associated estimate and its impact on our GAAP
performance and cash flow measures could vary materially based on a
variety of acceptable management assumptions.
About Summit Midstream Partners, LP
SMLP is a value-driven limited partnership focused on
developing, owning and operating midstream energy infrastructure
assets that are strategically located in the core producing areas
of unconventional resource basins, primarily shale formations, in
the continental United States.
SMLP provides natural gas, crude oil and produced water gathering,
processing and transportation services pursuant to primarily
long-term, fee-based agreements with customers and counterparties
in five unconventional resource basins: (i) the Appalachian Basin,
which includes the Utica and
Marcellus shale formations in Ohio
and West Virginia; (ii) the
Williston Basin, which includes
the Bakken and Three Forks shale formations in North Dakota; (iii) the Denver-Julesburg
Basin, which includes the Niobrara
and Codell shale formations in Colorado and Wyoming; (iv) the Fort Worth Basin, which includes the Barnett
Shale formation in Texas; and (v)
the Piceance Basin, which includes the Mesaverde formation as well
as the Mancos and Niobrara shale formations in Colorado. SMLP has an equity method investment
in Double E Pipeline, LLC, which provides interstate natural gas
transportation service from multiple receipt points in the
Delaware Basin to various delivery
points in and around the Waha Hub in Texas. SMLP also has an equity method
investment in Ohio Gathering, which operates extensive natural gas
gathering and condensate stabilization infrastructure in the Utica
Shale in Ohio. SMLP is
headquartered in Houston,
Texas.
Forward-Looking Statements
This press release includes certain statements concerning
expectations for the future that are forward-looking within the
meaning of the federal securities laws. Forward-looking statements
include, without limitation, any statement that may project,
indicate or imply future results, events, performance or
achievements and may contain the words "expect," "intend," "plan,"
"anticipate," "estimate," "believe," "will be," "will continue,"
"will likely result," and similar expressions, or future
conditional verbs such as "may," "will," "should," "would," and
"could", including the estimated closing date of the acquisitions,
sources and uses of funding, the benefits of the acquisitions to us
and any related opportunities. In addition, any statement
concerning future financial performance (including future revenues,
earnings or growth rates), ongoing business strategies and possible
actions taken by us or our subsidiaries are also forward-looking
statements. Forward-looking statements also contain known and
unknown risks and uncertainties (many of which are difficult to
predict and beyond management's control) that may cause SMLP's
actual results in future periods to differ materially from
anticipated or projected results. An extensive list of specific
material risks and uncertainties affecting SMLP is contained in its
2022 Annual Report on Form 10-K filed with the Securities and
Exchange Commission (the "SEC") on March 1,
2023, as amended and updated from time to time. Any
forward-looking statements in this press release are made as of the
date of this press release and SMLP undertakes no obligation to
update or revise any forward-looking statements to reflect new
information or events.
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
September
30,
2023
|
|
December 31,
2022
|
|
(In
thousands)
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
17,097
|
|
$
11,808
|
Restricted
cash
|
1,798
|
|
1,723
|
Accounts
receivable
|
78,915
|
|
75,287
|
Other current
assets
|
3,159
|
|
8,724
|
Total current
assets
|
100,969
|
|
97,542
|
Property, plant and
equipment, net
|
1,695,459
|
|
1,718,754
|
Intangible assets,
net
|
182,195
|
|
198,718
|
Investment in equity
method investees
|
491,747
|
|
506,677
|
Other noncurrent
assets
|
39,144
|
|
38,273
|
TOTAL
ASSETS
|
$
2,509,514
|
|
$
2,559,964
|
|
|
|
|
LIABILITIES AND
CAPITAL
|
|
|
|
Trade accounts
payable
|
$
15,496
|
|
$
14,052
|
Accrued
expenses
|
31,542
|
|
20,601
|
Deferred
revenue
|
11,262
|
|
9,054
|
Ad valorem taxes
payable
|
7,969
|
|
10,245
|
Accrued compensation
and employee benefits
|
5,269
|
|
16,319
|
Accrued
interest
|
39,468
|
|
17,355
|
Accrued environmental
remediation
|
1,365
|
|
1,365
|
Accrued settlement
payable
|
6,659
|
|
6,667
|
Current portion of
long-term debt
|
14,258
|
|
10,507
|
Other current
liabilities
|
9,313
|
|
11,724
|
Total current
liabilities
|
142,601
|
|
117,889
|
Long-term debt, net of
issuance costs
|
1,440,832
|
|
1,479,855
|
Noncurrent deferred
revenue
|
31,280
|
|
37,694
|
Noncurrent accrued
environmental remediation
|
1,701
|
|
2,340
|
Other noncurrent
liabilities
|
34,546
|
|
38,784
|
TOTAL
LIABILITIES
|
1,650,960
|
|
1,676,562
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Mezzanine
Capital
|
|
|
|
Subsidiary Series A
Preferred Units
|
122,564
|
|
118,584
|
|
|
|
|
Partners'
Capital
|
|
|
|
Series A Preferred
Units
|
93,769
|
|
85,327
|
Common limited partner
capital
|
642,221
|
|
679,491
|
Total partners'
capital
|
735,990
|
|
764,818
|
TOTAL LIABILITIES AND
CAPITAL
|
$
2,509,514
|
|
$
2,559,964
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
Three Months
Ended September
30,
|
|
Nine Months
Ended September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(In thousands,
except per-unit amounts)
|
Revenues:
|
|
|
|
|
|
|
|
Gathering services and
related fees
|
$ 66,035
|
|
$ 61,814
|
|
$
180,492
|
|
$
187,465
|
Natural gas, NGLs and
condensate sales
|
45,120
|
|
16,628
|
|
130,365
|
|
67,364
|
Other
revenues
|
10,038
|
|
10,240
|
|
20,728
|
|
29,042
|
Total
revenues
|
121,193
|
|
88,682
|
|
331,585
|
|
283,871
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Cost of natural gas and
NGLs
|
27,110
|
|
15,080
|
|
77,967
|
|
64,162
|
Operation and
maintenance
|
26,161
|
|
21,877
|
|
75,291
|
|
61,216
|
General and
administrative
|
11,098
|
|
8,550
|
|
31,897
|
|
31,983
|
Depreciation and
amortization
|
30,778
|
|
28,841
|
|
90,734
|
|
89,397
|
Transaction
costs
|
144
|
|
1,517
|
|
926
|
|
1,750
|
Acquisition integration
costs
|
171
|
|
—
|
|
2,396
|
|
—
|
Gain on asset sales,
net
|
(40)
|
|
(99)
|
|
(183)
|
|
(409)
|
Long-lived asset
impairments
|
—
|
|
7,016
|
|
455
|
|
91,644
|
Total costs and
expenses
|
95,422
|
|
82,782
|
|
279,483
|
|
339,743
|
Other income (expense),
net
|
(315)
|
|
—
|
|
747
|
|
(4)
|
Gain on interest rate
swaps
|
2,856
|
|
5,527
|
|
4,851
|
|
16,491
|
Loss on sale of
business
|
(9)
|
|
(85)
|
|
(45)
|
|
(85)
|
Interest
expense
|
(34,568)
|
|
(24,932)
|
|
(103,966)
|
|
(73,982)
|
Loss before income
taxes and equity method
investment income
|
(6,265)
|
|
(13,590)
|
|
(46,311)
|
|
(113,452)
|
Income tax benefit
(expense)
|
(72)
|
|
68
|
|
180
|
|
(307)
|
Income from equity
method investees
|
10,211
|
|
5,734
|
|
22,302
|
|
14,162
|
Net income
(loss)
|
$
3,874
|
|
$ (7,788)
|
|
$
(23,829)
|
|
$
(99,597)
|
|
|
|
|
|
|
|
|
Net loss per limited
partner unit:
|
|
|
|
|
|
|
|
Common unit –
basic
|
$
(0.27)
|
|
$
(1.28)
|
|
$
(3.99)
|
|
$
(9.68)
|
Common unit –
diluted
|
$
(0.27)
|
|
$
(1.28)
|
|
$
(3.99)
|
|
$
(9.68)
|
|
|
|
|
|
|
|
|
Weighted-average
limited partner units outstanding:
|
|
|
|
|
|
|
|
Common units –
basic
|
10,376
|
|
10,168
|
|
10,320
|
|
10,003
|
Common units –
diluted
|
10,376
|
|
10,168
|
|
10,320
|
|
10,003
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES UNAUDITED OTHER FINANCIAL
AND OPERATING DATA
|
|
|
Three Months
Ended September
30,
|
|
Nine Months
Ended September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(In
thousands)
|
Other financial
data:
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
3,874
|
|
$ (7,788)
|
|
$
(23,829)
|
|
$
(99,597)
|
Net cash provided by
operating activities
|
59,119
|
|
36,646
|
|
110,759
|
|
96,805
|
Capital
expenditures
|
17,685
|
|
6,161
|
|
49,863
|
|
20,955
|
Contributions to equity
method investees
|
—
|
|
—
|
|
3,500
|
|
8,444
|
Adjusted
EBITDA
|
72,790
|
|
54,742
|
|
191,828
|
|
161,962
|
Cash flow available for
distributions (1)
|
38,478
|
|
29,766
|
|
87,786
|
|
87,145
|
Free Cash
Flow
|
21,922
|
|
24,295
|
|
38,606
|
|
63,279
|
Distributions
(2)
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
|
|
|
|
|
|
|
Operating
data:
|
|
|
|
|
|
|
|
Aggregate average daily
throughput – natural gas (MMcf/d)
|
1,352
|
|
1,177
|
|
1,249
|
|
1,228
|
Aggregate average daily
throughput – liquids (Mbbl/d)
|
85
|
|
66
|
|
76
|
|
62
|
|
|
|
|
|
|
|
|
Ohio Gathering average
daily throughput (MMcf/d) (3)
|
870
|
|
783
|
|
763
|
|
648
|
Double E average daily
throughput (MMcf/d) (4)
|
327
|
|
314
|
|
278
|
|
251
|
__________
|
(1)
|
Cash flow available for
distributions is also referred to as Distributable Cash Flow, or
DCF.
|
(2)
|
Represents
distributions declared and ultimately paid or expected to be paid
to preferred and common unitholders in respect of a given period.
On May 3, 2020, the board of directors of SMLP's general partner
announced an immediate suspension of the cash distributions payable
on its preferred and common units. Excludes distributions paid on
the Subsidiary Series A Preferred Units issued at Summit Permian
Transmission Holdco, LLC.
|
(3)
|
Gross basis, represents
100% of volume throughput for Ohio Gathering, subject to a
one-month lag.
|
(4)
|
Gross basis, represents
100% of volume throughput for Double E.
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES UNAUDITED RECONCILIATIONS
TO NON-GAAP FINANCIAL MEASURES
|
|
|
Three Months
Ended September
30,
|
|
Nine Months
Ended September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(In
thousands)
|
Reconciliations of
net income to adjusted EBITDA and
Distributable
Cash Flow:
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
3,874
|
|
$ (7,788)
|
|
$
(23,829)
|
|
$
(99,597)
|
Add:
|
|
|
|
|
|
|
|
Interest
expense
|
34,568
|
|
24,932
|
|
103,966
|
|
73,982
|
Income tax expense
(benefit)
|
72
|
|
(68)
|
|
(180)
|
|
307
|
Depreciation and
amortization (1)
|
31,013
|
|
29,076
|
|
91,438
|
|
90,101
|
Proportional adjusted
EBITDA for equity method
investees (2)
|
16,917
|
|
11,949
|
|
42,655
|
|
33,807
|
Adjustments related to
capital reimbursement activity (3)
|
(3,111)
|
|
(1,517)
|
|
(6,778)
|
|
(4,823)
|
Unit-based and noncash
compensation
|
1,396
|
|
692
|
|
5,158
|
|
2,964
|
Gain on asset sales,
net
|
(40)
|
|
(99)
|
|
(183)
|
|
(409)
|
Long-lived asset
impairment
|
—
|
|
7,016
|
|
455
|
|
91,644
|
Gain on interest rate
swaps
|
(2,856)
|
|
(5,527)
|
|
(4,851)
|
|
(16,491)
|
Other, net
(4)
|
1,168
|
|
1,810
|
|
6,279
|
|
4,639
|
Less:
|
|
|
|
|
|
|
|
Income from equity
method investees
|
10,211
|
|
5,734
|
|
22,302
|
|
14,162
|
Adjusted
EBITDA
|
$ 72,790
|
|
$ 54,742
|
|
$
191,828
|
|
$
161,962
|
Less:
|
|
|
|
|
|
|
|
Cash interest
paid
|
10,162
|
|
4,054
|
|
72,749
|
|
46,093
|
Cash paid for
taxes
|
—
|
|
—
|
|
15
|
|
149
|
Senior notes interest
adjustment (5)
|
21,392
|
|
18,604
|
|
22,210
|
|
21,414
|
Maintenance capital
expenditures
|
2,758
|
|
2,318
|
|
9,068
|
|
7,161
|
Cash flow available
for distributions (6)
|
$ 38,478
|
|
$ 29,766
|
|
$ 87,786
|
|
$ 87,145
|
Less:
|
|
|
|
|
|
|
|
Growth capital
expenditures
|
14,927
|
|
3,843
|
|
40,795
|
|
13,794
|
Investment in equity
method investee
|
—
|
|
—
|
|
3,500
|
|
8,444
|
Distributions on
Subsidiary Series A Preferred Units
|
1,629
|
|
1,628
|
|
4,885
|
|
1,628
|
Free Cash
Flow
|
$ 21,922
|
|
$ 24,295
|
|
$ 38,606
|
|
$ 63,279
|
__________
|
(1)
|
Includes the
amortization expense associated with our favorable gas gathering
contracts as reported in other revenues.
|
(2)
|
Reflects our
proportionate share of Double E and Ohio Gathering (subject to a
one-month lag) adjusted EBITDA.
|
(3)
|
Adjustments related to
capital reimbursement activity represent contributions in aid of
construction revenue recognized in accordance with Accounting
Standards Update No. 2014-09 Revenue from Contracts with Customers
("Topic 606").
|
(4)
|
Represents items of
income or loss that we characterize as unrepresentative of our
ongoing operations. For the nine months ended September 30,
2023, the amount includes $2.4 million of integration costs, $2.7
million of transaction and other costs and $1.6 million of
severance expense. For the nine months ended September 30,
2022, the amount includes $2.5 million of severance
expenses.
|
(5)
|
Senior notes interest
adjustment represents the net of interest expense accrued and paid
during the period. Interest on the 2025 senior notes is paid in
cash semi-annually in arrears on April 15 and October 15 until
maturity in April 2025. Interest on the 2026 senior notes is paid
in cash semi-annually in arrears on April 15 and October 15 until
maturity in October 2026.
|
(6)
|
Represents cash flow
available for distribution to preferred and common unitholders.
Common distributions cannot be paid unless all accrued preferred
distributions are paid. Cash flow available for distributions is
also referred to as Distributable Cash Flow, or DCF.
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES UNAUDITED RECONCILIATIONS
TO NON-GAAP FINANCIAL MEASURES
|
|
|
Nine Months
Ended September
30,
|
|
2023
|
|
2022
|
|
(In
thousands)
|
Reconciliation of
net cash provided by operating activities to
adjusted
EBITDA and distributable cash flow:
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$ 110,759
|
|
$
96,805
|
Add:
|
|
|
|
Interest expense,
excluding amortization of debt issuance costs
|
94,473
|
|
67,340
|
Income tax expense
(benefit)
|
(180)
|
|
307
|
Changes in operating
assets and liabilities
|
(6,685)
|
|
(3,968)
|
Proportional adjusted
EBITDA for equity method investees (1)
|
42,655
|
|
33,807
|
Adjustments related to
capital reimbursement activity (2)
|
(6,778)
|
|
(4,823)
|
Realized (gain) loss
on swaps
|
(3,777)
|
|
379
|
Other, net
(3)
|
5,897
|
|
4,554
|
Less:
|
|
|
|
Distributions from
equity method investees
|
40,732
|
|
31,764
|
Noncash lease
expense
|
3,804
|
|
675
|
Adjusted
EBITDA
|
$ 191,828
|
|
$ 161,962
|
Less:
|
|
|
|
Cash interest
paid
|
72,749
|
|
46,093
|
Cash paid for
taxes
|
15
|
|
149
|
Senior notes interest
adjustment (4)
|
22,210
|
|
21,414
|
Maintenance capital
expenditures
|
9,068
|
|
7,161
|
Cash flow available
for distributions (5)
|
$
87,786
|
|
$
87,145
|
Less:
|
|
|
|
Growth capital
expenditures
|
40,795
|
|
13,794
|
Investment in equity
method investee
|
3,500
|
|
8,444
|
Distributions on
Subsidiary Series A Preferred Units
|
4,885
|
|
1,628
|
Free Cash
Flow
|
$
38,606
|
|
$
63,279
|
__________
|
(1)
|
Reflects our
proportionate share of Double E and Ohio Gathering adjusted EBITDA,
subject to a one-month lag.
|
(2)
|
Adjustments related to
capital reimbursement activity represent contributions in aid of
construction revenue recognized in accordance with Accounting
Standards Update No. 2014-09 Revenue from Contracts with Customers
("Topic 606").
|
(3)
|
Represents items of
income or loss that we characterize as unrepresentative of our
ongoing operations. For the nine months ended September 30,
2023, the amount includes $2.4 million of integration costs, $2.7
million of transaction and other costs and $1.6 million of
severance expenses. For the nine months ended September 30,
2022, the amount includes $2.5 million of severance expenses and
$1.8 million of transaction costs.
|
(4)
|
Senior notes interest
adjustment represents the net of interest expense accrued and paid
during the period. Interest on the 2025 senior notes is paid in
cash semi-annually in arrears on April 15 and October 15 until
maturity in April 2025. Interest on the 2026 senior notes is paid
in cash semi-annually in arrears on April 15 and October 15 until
maturity in October 2026.
|
(5)
|
Represents cash flow
available for distribution to preferred and common unitholders.
Common distributions cannot be paid unless all accrued preferred
distributions are paid. Cash flow available for distributions is
also referred to as Distributable Cash Flow, or DCF.
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/summit-midstream-partners-lp-reports-third-quarter-2023-financial-and-operating-results-301976600.html
SOURCE Summit Midstream Partners, LP