HOUSTON, March 4, 2021 /PRNewswire/ -- Summit Midstream
Partners, LP (NYSE: SMLP) ("Summit", "SMLP" or the "Partnership")
announced today its financial and operating results for the three
months ended December 31, 2020,
including net income of $103.0
million, adjusted EBITDA of $61.8
million and DCF of $44.8
million. Net income for the quarter included a
$124.1 million gain from early
extinguishment of debt related to the open market repurchase of
senior unsecured notes and the consensual debt discharge and
restructuring of a subsidiary's $155.2
million term loan ("GP Term Loan Restructuring"), partially
offset by non-cash charges for a $17.0
million loss contingency and a $5.1
million asset impairment related to an $8.0 million sale of compressor equipment, which
closed in January 2021.
Fourth quarter 2020 operated natural gas volume throughput
averaged 1,436 million cubic feet per day ("MMcf/d") and liquids
volume throughput averaged 71 thousand barrels per day
("Mbbl/d"). Operated natural gas volumes increased by 3.2%
relative to the third quarter of 2020, largely due to a volume
increase of 91 MMcf/d in the Utica Shale segment from a combination
of a customer returning 22 MMcf/d of temporarily shut-in production
at the end of the third quarter, and seven new well connections in
September, partially offset by modest volume throughput declines in
other reportable segments. Throughput volumes for the Ohio
Gathering segment increased by 42 MMcf/d, net to Summit, or 21.3%
over the third quarter of 2020, due to the return of substantially
all temporarily shut-in production and higher volumes from 15 new
wells that were connected late in the third quarter.
Quarterly liquids volume throughput increased by 2.9% over the
third quarter of 2020, primarily due to eight new wells that were
turned in line during the quarter.
Heath Deneke, President, Chief
Executive Officer and Chairman, commented, "Summit's fourth quarter
financial results were in line with expectations, and adjusted
EBITDA was $2 million ahead of third
quarter results. Our full year results fell within our guidance
range of $250 million to $260 million that we established in July 2020, to reflect the implications of the
global COVID-19 pandemic, lower commodity prices and a slowdown of
upstream activity behind our systems. The strong performance
of our Utica Shale and Ohio Gathering segments drove overall
quarter-over-quarter increases in adjusted EBITDA and volume
throughput. On an aggregate basis, these two segments
contributed an incremental $2.6
million of quarterly adjusted EBITDA relative to the third
quarter of 2020, and each segment had quarterly volume throughput
growth of more than 20%. Additionally, with the return of
substantially all shut-in production behind the Ohio Gathering
system in November, we no longer have any material amount of
production that is temporarily shut-in for economic purposes behind
any of our assets."
"We executed a number of liability management transactions in
the fourth quarter, including the repurchase of $95.6 million face value of our 2025 notes, a
cash tender for $75.1 million of our
Series A Preferred Units, and the closing of the transformational
GP Term Loan Restructuring. In total, since closing the GP
Buy-In in May 2020, we have
eliminated more than $625 million of
recourse fixed capital obligations at SMLP, including the
$180.8 million DPPO, and we
extinguished our GP's $155.2 million
term loan, all at substantial discounts to par. As a result
of these actions, our organizational structure and capital
structure have been significantly simplified. In December 2020, we completed an amendment to our
revolving credit facility that provides additional flexibility to
support the next phase of our liability management
initiatives. The newly added $400
million junior lien debt basket can be utilized to address
our 2022 bond maturities and the increased total leverage covenant
of 5.75x provides SMLP with additional cushion to mitigate future
uncertainty."
"We continue to make great progress on the Double E project,
having received all necessary approvals to proceed with
construction, and securing bank financing commitments. Now
that we have received the Notice to Proceed from the FERC, we have
initiated construction activities and we expect to bring the
project online during the fourth quarter of 2021. We continue
to expect that Double E will be completed at or below the current
$425 million capital budget, of
which, approximately $35 million
currently remains in unidentified project contingency. In the
fourth quarter of 2020, SMLP contributed approximately $6.6 million of cash for its 70% share of Double
E capital contributions, resulting in SMLP funding approximately
$20 million during the calendar year
2020, and approximately $131 million
of total funding from the project's inception through the end of
2020. In 2021, we expect to finance SMLP's estimated
$150 million share of Double E
capital expenditures with funds from the $175 million of new, non-recourse senior secured
credit facilities which have been committed by leading commercial
banks."
"In 2020, we successfully executed a robust set of liability
management transactions that strengthened the balance sheet and
created financial flexibility to offset the potential for a
prolonged challenging macro environment, while generating long term
value for our unitholders. We expect that 2021 will be a
trough year for Summit, as many of our customers have significantly
reduced drilling and completion activities behind our systems,
particularly during the first half of the year. As a result,
we expect approximately 45 to 75 new well connections in 2021,
which is materially less than the 104 and 262 wells connected in
2020 and 2019, respectively. We also anticipate MVC shortfall
payment step-downs of approximately $10
million in 2021, relative to 2020, primarily from customers
in the Piceance and Williston
segments. Accordingly, we issued our 2021 adjusted EBITDA
guidance range of $210 million to
$230 million, which includes a
moderate amount of risking to our customer-provided development
plans and volume forecasts at the midpoint of the range,
Further risking of these plans reflect the low end of the range and
if our customers achieve their stated plans, we would expect our
financial results to be at the high end of the range."
"Although we are expecting softened customer activity in 2021,
we expect to generate sufficient cash, after interest expense and
capital expenditures, to reduce outstanding indebtedness by
approximately $130 million to
$150 million due to the resiliency of
our business model. While it is too early to provide guidance
for 2022, we foresee several tailwinds that we believe will support
increased customer activity behind our systems, including an
improving outlook on oil and gas prices, more constructive capital
markets and the potential for additional consolidation activity in
the upstream sector, all of which should further strengthen
customer balance sheets. In the meantime, we will remain
focused on maximizing free cash flow, further de-levering the
balance sheet and implementing plans to address our upcoming 2022
debt maturities."
2021 Financial Guidance
SMLP is reiterating its financial guidance for full year 2021
that was released on February 16,
2021, and included the following guidance ranges:
- 2021 adjusted EBITDA of $210
million to $230 million
- Total capital expenditures of $20
million to $35 million,
including approximately $10 million
of maintenance capital expenditures, but excluding SMLP's estimated
$150 million of capital investment in
Double E which is expected to be financed with new non-recourse
credit facilities at Summit Permian Transmission, LLC, an indirect,
unrestricted subsidiary
- Expect to generate sufficient cash in 2021, after interest
expense and capital expenditures, to reduce outstanding
indebtedness by approximately $130
million to $150 million
The Partnership believes these guidance ranges reflect a
conservative, yet appropriate level of risking to the most recent
drill schedules and volume forecasts provided by customers.
These projections are subject to risks and uncertainties described
in the "Forward-Looking Statements" section at the end of this
press release.
Please refer to SMLP's press release issued on February 16, 2021, for additional details
regarding Summit's full year 2021 financial guidance.
Fourth Quarter 2020 Business Highlights
In the fourth quarter of 2020, SMLP's average daily natural gas
throughput for its operated systems increased 3.2% relative to the
third quarter of 2020, to 1,436 MMcf/d, and liquids volumes
increased 2.9% relative to the third quarter of 2020, to 71
Mbbl/d. SMLP's customers had approximately 37 DUCs in
inventory upstream of its systems with line of sight to near-term
completions as of December 31,
2020.
Core Focus Areas:
- Core Focus Areas generated combined quarterly segment adjusted
EBITDA of $33.2 million and had
combined capital expenditures of $7.0
million in the fourth quarter of 2020.
- Utica Shale segment adjusted EBITDA totaled $8.7 million, a $1.3
million increase from the third quarter of 2020, which was
driven by a 25.9% increase in volume throughput. Volume throughput
growth was primarily due to seven new wells that were turned in
line in September and continue to outperform expectations, together
with a customer returning 22 MMcf/d of previously shut-in
production. There were no wells connected in the segment during the
quarter; however, a new four-well pad site, which is subject to our
previously announced gathering agreement to incentivize accelerated
upstream activity, was connected to the SMU system in the fourth quarter and these new
wells are expected to be turned in line during the first quarter of
2021. There were 10 DUCs in the Utica Shale segment at year-end
2020.
- Ohio Gathering segment adjusted EBITDA totaled $8.5 million, a 18.9% increase from the third
quarter of 2020. Higher segment adjusted EBITDA was driven by a
21.3% increase in volume throughput, largely due to return of all
temporarily curtailed production and volumes from 10 new wells that
were connected late in the third quarter. As of the end of the
fourth quarter, there were seven DUCs in the Ohio Gathering
segment, all of which are expected to be turned in line in 2021,
based on current customer development plans.
- Williston Basin segment
adjusted EBITDA totaled $11.4 million
in the fourth quarter of 2020, a 2.4% decrease from the third
quarter of 2020, primarily due to a change in customer volume mix
and impacts to margins from recent contract amendments. Liquids
volume throughput increased by 2.9% from the third quarter, to 71
Mbbl/d, primarily due to eight new wells that were turned in line
in October and November, partially offset by natural production
declines. There are 8 DUCs in inventory behind our Williston Basin systems, which we expect to be
turned in line in 2021.
- DJ Basin segment adjusted EBITDA totaled $4.4 million in the fourth quarter of 2020, a
7.0% decrease from the third quarter of 2020, due to a 7.4%
quarter-over-quarter decrease in volume throughput to 25 MMcf/d.
The volume throughput decrease was primarily driven by natural
production declines and offset partially by volumes from 2 new pads
that were connected during the quarter. As of December 31, 2020, our customers had
approximately 20 DUCs on our DJ Basin system; however, we do not
expect them to be turned-in-line in the near-term.
- Permian Basin segment adjusted EBITDA totaled $0.1 million in the fourth quarter of 2020, a
decrease of approximately $0.8
million relative to the prior quarter, primarily due to
decreased margins on natural gas and NGL sales, a true-up payment
due to our customers related to gas purchases, and increased
expenses during the fourth quarter. The 2.9% decrease in volume
throughput was largely attributable to natural production declines
and partially offset by volumes associated with a contract that was
extended in May of 2020. Our customers have two DUCs in inventory
behind the Permian Basin system that we expect to be turned-in-line
during the first quarter of 2021.
Legacy Areas:
- Legacy Areas generated $35.4
million of combined segment adjusted EBITDA in the fourth
quarter of 2020 and had combined capital expenditures of
$0.9 million.
- Piceance Basin segment adjusted EBITDA of $22.0 million increased by $0.5 million from the third quarter of 2020,
primarily due to lower spend on operations and maintenance
activities. Lower volume throughput of 14 MMcf/d, or 3.9%, compared
to the third quarter of 2020, was primarily a result of natural
production declines.
- Barnett Shale segment adjusted EBITDA increased by 5.7% from
the third quarter of 2020, to $7.6
million, primarily due to customer margin mix and impacts
from recent contract amendments that reduced net expenses.
Throughput volumes decreased by 1.9% primarily due natural
production declines and were partially offset by increased volumes
from workovers and recompletions of existing wells. Our customers
have 7 new wells that are being drilled behind our system and 1 DUC
in inventory.
- Marcellus Shale segment adjusted
EBITDA decreased to $5.8 million for
the fourth quarter of 2020, a 3.9% quarterly decrease relative to
the third quarter of 2020, driven primarily by a 6.6% decrease in
volume throughput to 370 MMcf/d as a result of natural production
declines. Our anchor customer had nine DUCs in inventory behind our
Marcellus Shale infrastructure at
the end of the fourth quarter, which we expect to all be
turned-in-line in the first half of 2021.
The following table presents average daily throughput by
reportable segment for the periods indicated:
|
|
Three months ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Average daily
throughput (MMcf/d):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utica
Shale
|
|
|
443
|
|
|
|
273
|
|
|
|
358
|
|
|
|
273
|
|
Williston Basin
(1)
|
|
|
14
|
|
|
|
12
|
|
|
|
14
|
|
|
|
12
|
|
DJ Basin
|
|
|
25
|
|
|
|
27
|
|
|
|
26
|
|
|
|
27
|
|
Permian
Basin
|
|
|
33
|
|
|
|
19
|
|
|
|
33
|
|
|
|
19
|
|
Piceance Basin
(2)
|
|
|
347
|
|
|
|
452
|
|
|
|
364
|
|
|
|
452
|
|
Barnett
Shale
|
|
|
204
|
|
|
|
251
|
|
|
|
212
|
|
|
|
251
|
|
Marcellus
Shale
|
|
|
370
|
|
|
|
363
|
|
|
|
368
|
|
|
|
363
|
|
Aggregate average
daily throughput
|
|
|
1,436
|
|
|
|
1,397
|
|
|
|
1,375
|
|
|
|
1,397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily
throughput (Mbbl/d):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Williston
Basin
|
|
|
71
|
|
|
|
105
|
|
|
|
79
|
|
|
|
105
|
|
Aggregate average
daily throughput
|
|
|
71
|
|
|
|
105
|
|
|
|
79
|
|
|
|
105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ohio Gathering
average daily throughput
(MMcf/d) (3)
|
|
|
621
|
|
|
|
732
|
|
|
|
571
|
|
|
|
732
|
|
__________
|
(1) The
Williston Basin segment includes the Tioga Midstream system, which
was sold in March 2019.
|
(2) The
Piceance Basin segment includes the RRG West system, which was sold
in December 2019.
|
(3) Gross
basis, represents 100% of volume throughput for Ohio Gathering,
subject to a one-month lag.
|
The following table presents adjusted EBITDA by reportable
segment for the periods indicated:
|
|
Three months ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
(In
thousands)
|
|
Reportable segment
adjusted EBITDA (1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utica
Shale
|
|
$
|
8,709
|
|
|
$
|
8,595
|
|
|
$
|
32,783
|
|
|
$
|
29,292
|
|
Ohio Gathering
(2)
|
|
|
8,474
|
|
|
|
9,542
|
|
|
|
31,056
|
|
|
|
39,126
|
|
Williston Basin
(3)
|
|
|
11,428
|
|
|
|
20,213
|
|
|
|
52,060
|
|
|
|
69,437
|
|
DJ Basin
|
|
|
4,433
|
|
|
|
6,625
|
|
|
|
19,449
|
|
|
|
18,668
|
|
Permian
Basin
|
|
|
124
|
|
|
|
117
|
|
|
|
4,426
|
|
|
|
(879)
|
|
Piceance Basin
(4)
|
|
|
22,026
|
|
|
|
24,138
|
|
|
|
88,820
|
|
|
|
98,765
|
|
Barnett
Shale
|
|
|
7,617
|
|
|
|
9,560
|
|
|
|
32,093
|
|
|
|
43,043
|
|
Marcellus
Shale
|
|
|
5,786
|
|
|
|
5,316
|
|
|
|
22,015
|
|
|
|
20,051
|
|
Total
|
|
$
|
68,597
|
|
|
$
|
84,106
|
|
|
$
|
282,702
|
|
|
$
|
317,503
|
|
Less: Corporate
and Other (5)
|
|
|
6,806
|
|
|
|
7,122
|
|
|
|
30,587
|
|
|
|
34,151
|
|
Adjusted
EBITDA
|
|
$
|
61,791
|
|
|
$
|
76,984
|
|
|
$
|
252,115
|
|
|
$
|
283,352
|
|
__________
|
(1)
|
We define segment
adjusted EBITDA as total revenues less total costs and expenses,
plus (i) other income excluding interest 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)
|
Represents 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 in
Ohio Gathering during the respective period.
|
(3)
|
The Williston Basin
segment includes the Tioga Midstream system, which was sold in
March 2019.
|
(4)
|
The Piceance Basin
segment includes the RRG West system, which was sold in December
2019.
|
(5)
|
Corporate and Other
represents those results that are not specifically attributable to
a reportable segment (such as Double E) or that have not been
allocated to our reportable segments, including certain general and
administrative expense items and natural gas and crude oil
marketing services.
|
Capital Expenditures
Capital expenditures totaled $7.8
million in the fourth quarter of 2020, inclusive of
maintenance capital expenditures of $3.1
million. Capital expenditures in the fourth quarter of
2020 were primarily related to growth projects in our Utica Shale
and DJ Basin segments.
|
|
Year ended
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
(In
thousands)
|
|
Cash paid for
capital expenditures (1):
|
|
|
|
|
|
|
|
|
Utica
Shale
|
|
$
|
6,957
|
|
|
$
|
3,902
|
|
Williston
Basin
|
|
|
8,767
|
|
|
|
30,861
|
|
DJ Basin
|
|
|
12,829
|
|
|
|
80,487
|
|
Permian
Basin
|
|
|
7,014
|
|
|
|
44,955
|
|
Piceance
Basin
|
|
|
1,370
|
|
|
|
1,946
|
|
Barnett Shale
(2)
|
|
|
1,878
|
|
|
|
184
|
|
Marcellus
Shale
|
|
|
700
|
|
|
|
693
|
|
Total reportable
segment capital expenditures
|
|
|
39,515
|
|
|
|
163,028
|
|
Corporate and Other
(3)
|
|
|
3,613
|
|
|
|
19,263
|
|
Total cash paid for
capital expenditures
|
|
$
|
43,128
|
|
|
$
|
182,291
|
|
__________
|
(1)
|
Excludes cash paid
for capital expenditures by Ohio Gathering and Double E (after June
2019) due to equity method accounting.
|
(2)
|
For the year ended
December 31, 2019, the amount includes sales tax reimbursements of
$1.1 million.
|
(3)
|
For the year ended
December 31, 2019, and through the formation date of the Double E
joint venture in June 2019, reflects 100% of the capital
expenditures associated with Double E and excludes capital
contributions made by our JV partner.
|
Capital & Liquidity
As of December 31, 2020, SMLP had
$238.9 million of undrawn commitments
under its $1.1 billion revolving
credit facility, after accounting for a $4.1
million issued but undrawn letter of credit. Subject
to covenant limits, our available borrowing capacity at
December 31, 2020 totaled
approximately $105 million.
SMLP also had $15.4 million of cash
on hand as of December 31, 2020.
Based upon the terms of SMLP's revolving credit facility and
total outstanding debt, net of cash, of $1.34 billion (inclusive of $493.5 million of senior unsecured notes), SMLP's
total leverage ratio and first lien leverage ratio (as defined in
the credit agreement) as of December 31,
2020, were 5.1 to 1.0 and 3.2 to 1.0, respectively, relative
to maximum threshold limits of 5.75 to 1.0 and 3.50 to 1.0.
Fourth Quarter 2020 Loss Contingency
In accordance with certain GAAP requirements, in the fourth
quarter of 2020, the Partnership recognized a $17.0 million, non-cash loss contingency accrual
related to a previously disclosed incident dating back to a 2015
release of produced water from a pipeline owned by Meadowlark
Midstream. Since discovering the pipeline rupture in
January 2015, the Partnership and its
affiliates have spent nearly $75
million on environmental remediation costs and preventative
system improvements associated with this incident. Since
then, we have also engaged in discussions with federal and state
agencies and the U.S. Department of Justice regarding resolution of
potential criminal and civil violations under statutes such as the
Clean Water Act. It remains unclear if a resolution to these
potential violations could be achieved through a negotiated
settlement or through litigation, and the timing of any resolution
is unknown. We will continue to provide updates if any material
developments occur.
Double E Update
During the fourth quarter of 2020, SMLP made cash investments
totaling $6.6 million with respect to
its 70% equity investment in Double E. SMLP's 70% share of
the total expected Double E capital costs is approximately
$300 million, of which approximately
$131 million has been funded as of
December 31, 2020. In January
of 2021, Double E received its Notice to Proceed with construction
from the Federal Energy Regulatory Commission and was granted the
necessary rights-of-way on federal lands from the Bureau of Land
Management. In February 2021,
SMLP's wholly-owned, indirect subsidiary, Summit Permian
Transmission, LLC, received $175
million of commercial bank commitments to finance
development of the Double E pipeline project, which it expects to
fully fund SMLP's approximately $150
million of capital contributions for Double E in 2021.
The estimated in-service date for Double E continues to be the
fourth quarter of 2021.
MVC Shortfall Payments
SMLP billed its customers $22.3
million in the fourth quarter of 2020 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 fourth quarter
of 2020, SMLP recognized $14.0
million of gathering revenue associated with MVC shortfall
payments. SMLP also recognized $0.9
million of adjustments to MVC shortfall payments in the
fourth quarter of 2020 related to shortfall payment adjustments
from customers in the Williston
Basin segment and the Piceance Basin segment. SMLP's MVC
shortfall payment mechanisms contributed $14.9 million of total adjusted EBITDA in the
fourth quarter of 2020.
|
Three months ended
December 31, 2020
|
|
|
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
|
$
|
3,469
|
|
|
|
$
|
3,469
|
|
|
$
|
—
|
|
|
$
|
3,469
|
|
Total net
change
|
$
|
3,469
|
|
|
|
$
|
3,469
|
|
|
$
|
—
|
|
|
$
|
3,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MVC shortfall
payment adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Williston
Basin
|
$
|
9,144
|
|
|
|
$
|
1,354
|
|
|
$
|
1,416
|
|
|
$
|
2,770
|
|
Piceance
Basin
|
|
8,136
|
|
|
|
|
7,619
|
|
|
|
(557
|
)
|
|
|
7,062
|
|
Marcellus
Shale
|
|
1,569
|
|
|
|
|
1,569
|
|
|
|
—
|
|
|
|
1,569
|
|
Total MVC shortfall
payment adjustments
|
$
|
18,849
|
|
|
|
$
|
10,542
|
|
|
$
|
859
|
|
|
$
|
11,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
(1)
|
$
|
22,318
|
|
|
|
$
|
14,011
|
|
|
$
|
859
|
|
|
$
|
14,870
|
|
__________
|
(1) Exclusive of Ohio
Gathering due to equity method accounting.
|
|
Year ended
December 31, 2020
|
|
|
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
|
$
|
14,000
|
|
|
|
$
|
14,000
|
|
|
$
|
—
|
|
|
$
|
14,000
|
|
Total net
change
|
$
|
14,000
|
|
|
|
$
|
14,000
|
|
|
$
|
—
|
|
|
$
|
14,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MVC shortfall
payment adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Williston
Basin
|
$
|
12,191
|
|
|
|
$
|
12,191
|
|
|
$
|
—
|
|
|
$
|
12,191
|
|
Piceance
Basin
|
|
29,182
|
|
|
|
|
28,560
|
|
|
|
—
|
|
|
|
28,560
|
|
Marcellus
Shale
|
|
5,467
|
|
|
|
|
5,467
|
|
|
|
—
|
|
|
|
5,467
|
|
Total MVC shortfall
payment adjustments
|
$
|
46,840
|
|
|
|
$
|
46,218
|
|
|
$
|
—
|
|
|
$
|
46,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
(1)
|
$
|
60,840
|
|
|
|
$
|
60,218
|
|
|
$
|
—
|
|
|
$
|
60,218
|
|
__________
|
(1) Exclusive of Ohio
Gathering due to equity method accounting.
|
Quarterly Distribution
The board of directors of SMLP's general partner continues to
suspend cash distributions payable on its common units and on its
9.50% Series A fixed-to-floating rate cumulative redeemable
perpetual preferred units for the period ended December 31, 2020. Unpaid distributions on
the Series A preferred units will continue to accrue.
Fourth Quarter 2020 Earnings Call Information
SMLP will host a conference call at 10:00
a.m. Eastern on Thursday, March 4,
2021, to discuss its quarterly operating and financial
results. Interested parties may participate in the call by
dialing 847-585-4405 or toll-free 888-771-4371 and entering the
passcode 50087230. 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.
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, a non-GAAP financial measure. 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, less interest income, 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 by
external users of our financial statements such as investors,
commercial banks, research analysts and others.
Adjusted EBITDA is used 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 minimum volume commitments 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.
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 six 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 Permian Basin, which
includes the Bone Spring and Wolfcamp formations in New Mexico; (v) the Fort Worth Basin, which includes the Barnett
Shale formation in Texas; and (vi)
the Piceance Basin, which includes the Mesaverde formation as well
as the Mancos and Niobrara shale formations in Colorado.
SMLP has an equity investment in Double E Pipeline, LLC, which is
developing natural gas transmission infrastructure that will
provide 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 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." 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 2019 Annual Report on Form 10-K filed with
the Securities and Exchange Commission (the
"SEC") on March 9, 2020, Quarterly Report on Form 10-Q
for the three months ended March 31,
2020 filed with the SEC on May 8,
2020, Quarterly Report on Form 10-Q for the three months
ended June 30, 2020 filed with the
SEC on August 10, 2020 and Quarterly
Report on Form 10-Q for the three months ended September 30, 2020 filed with the SEC on
November 6, 2020, each 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
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
(In
thousands)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
15,544
|
|
|
$
|
9,530
|
|
Restricted
cash
|
|
|
-
|
|
|
|
27,392
|
|
Accounts
receivable
|
|
|
61,932
|
|
|
|
97,418
|
|
Other current
assets
|
|
|
4,623
|
|
|
|
5,521
|
|
Total current
assets
|
|
|
82,099
|
|
|
|
139,861
|
|
Property, plant and
equipment, net
|
|
|
1,817,546
|
|
|
|
1,882,489
|
|
Intangible assets,
net
|
|
|
199,566
|
|
|
|
232,278
|
|
Investment in equity
method investees
|
|
|
392,740
|
|
|
|
309,728
|
|
Other noncurrent
assets
|
|
|
7,866
|
|
|
|
9,742
|
|
TOTAL
ASSETS
|
|
$
|
2,499,817
|
|
|
$
|
2,574,098
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
CAPITAL
|
|
|
|
|
|
|
|
|
Trade accounts
payable
|
|
$
|
11,878
|
|
|
$
|
24,415
|
|
Accrued
expenses
|
|
|
13,036
|
|
|
|
11,339
|
|
Deferred
revenue
|
|
|
9,988
|
|
|
|
13,493
|
|
Ad valorem taxes
payable
|
|
|
9,086
|
|
|
|
8,477
|
|
Accrued compensation
and employee benefits
|
|
|
9,658
|
|
|
|
8,719
|
|
Accrued
interest
|
|
|
8,007
|
|
|
|
12,346
|
|
Accrued environmental
remediation
|
|
|
1,392
|
|
|
|
1,725
|
|
Other current
liabilities
|
|
|
5,363
|
|
|
|
3,487
|
|
Term loan
|
|
|
-
|
|
|
|
5,546
|
|
Total current
liabilities
|
|
|
68,408
|
|
|
|
89,547
|
|
Long-term
debt
|
|
|
1,347,326
|
|
|
|
1,622,279
|
|
Noncurrent deferred
revenue
|
|
|
48,250
|
|
|
|
38,709
|
|
Noncurrent accrued
environmental remediation
|
|
|
1,537
|
|
|
|
2,926
|
|
Other noncurrent
liabilities
|
|
|
21,747
|
|
|
|
7,951
|
|
Total
liabilities
|
|
|
1,487,268
|
|
|
|
1,761,412
|
|
|
|
|
|
|
|
|
|
|
Mezzanine
Capital
|
|
|
|
|
|
|
|
|
Subsidiary Series A
Preferred Units
|
|
|
89,658
|
|
|
|
27,450
|
|
|
|
|
|
|
|
|
|
|
Partners'
Capital
|
|
|
|
|
|
|
|
|
Series A Preferred
Units
|
|
|
174,425
|
|
|
|
293,616
|
|
Common limited
partner capital
|
|
|
748,466
|
|
|
|
305,550
|
|
Noncontrolling
interest
|
|
|
—
|
|
|
|
186,070
|
|
Total partners'
capital
|
|
|
922,891
|
|
|
|
785,236
|
|
TOTAL LIABILITIES AND
CAPITAL
|
|
$
|
2,499,817
|
|
|
$
|
2,574,098
|
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
|
|
Three months ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
(In thousands,
except per-unit amounts)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gathering services
and related fees
|
|
$
|
73,125
|
|
|
$
|
83,708
|
|
|
$
|
302,792
|
|
|
$
|
326,747
|
|
Natural gas, NGLs and
condensate sales
|
|
|
14,073
|
|
|
|
18,556
|
|
|
|
49,319
|
|
|
|
86,994
|
|
Other
revenues
|
|
|
9,212
|
|
|
|
9,983
|
|
|
|
31,362
|
|
|
|
29,787
|
|
Total
revenues
|
|
|
96,410
|
|
|
|
112,247
|
|
|
|
383,473
|
|
|
|
443,528
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of natural gas
and NGLs
|
|
|
13,708
|
|
|
|
12,636
|
|
|
|
36,653
|
|
|
|
63,438
|
|
Operation and
maintenance
|
|
|
20,899
|
|
|
|
23,948
|
|
|
|
86,030
|
|
|
|
98,719
|
|
General and
administrative (1)
|
|
|
33,530
|
|
|
|
16,968
|
|
|
|
73,438
|
|
|
|
55,947
|
|
Depreciation and
amortization
|
|
|
29,331
|
|
|
|
28,310
|
|
|
|
118,132
|
|
|
|
110,354
|
|
Transaction
costs
|
|
|
1,049
|
|
|
|
455
|
|
|
|
2,993
|
|
|
|
3,017
|
|
Gain on asset sales,
net
|
|
|
(37)
|
|
|
|
59
|
|
|
|
(307)
|
|
|
|
(1,536)
|
|
Long-lived asset
impairment (2)
|
|
|
8,614
|
|
|
|
15,486
|
|
|
|
13,089
|
|
|
|
60,507
|
|
Goodwill Impairment
(3)
|
|
|
—
|
|
|
|
-
|
|
|
|
—
|
|
|
|
16,211
|
|
Total costs and
expenses
|
|
|
107,094
|
|
|
|
97,862
|
|
|
|
330,028
|
|
|
|
406,657
|
|
Other
income
|
|
|
(596)
|
|
|
|
147
|
|
|
|
48
|
|
|
|
451
|
|
Interest
expense
|
|
|
(14,058)
|
|
|
|
(23,419)
|
|
|
|
(78,894)
|
|
|
|
(91,966)
|
|
Gain on early
extinguishment of debt (4)
|
|
|
124,137
|
|
|
|
—
|
|
|
|
203,062
|
|
|
|
—
|
|
Income (loss) before
income taxes and equity method investment income
(loss)
|
|
|
98,799
|
|
|
|
(8,887)
|
|
|
|
177,661
|
|
|
|
(54,644)
|
|
Income tax benefit
(expense)
|
|
|
42
|
|
|
|
196
|
|
|
|
146
|
|
|
|
(1,231)
|
|
Income (loss) from
equity method investees (5)
|
|
|
4,125
|
|
|
|
(336,654)
|
|
|
|
11,271
|
|
|
|
(337,851)
|
|
Net income
(loss)
|
|
$
|
102,966
|
|
|
$
|
(345,345)
|
|
|
$
|
189,078
|
|
|
$
|
(393,726)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per limited partner unit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common unit
– basic
|
|
$
|
30.45
|
|
|
$
|
(59.74)
|
|
|
$
|
73.22
|
|
|
$
|
(70.50)
|
|
Common unit
– diluted
|
|
$
|
29.73
|
|
|
$
|
(59.74)
|
|
|
$
|
55.84
|
|
|
$
|
(70.50)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
limited partner units
outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common units
– basic
|
|
|
4,894
|
|
|
|
3,021
|
|
|
|
3,592
|
|
|
|
3,021
|
|
Common units
– diluted
|
|
|
5,013
|
|
|
|
3,021
|
|
|
|
4,710
|
|
|
|
3,021
|
|
__________
|
(1)
|
For the three months
ended December 31, 2020, the amount includes a $17.0 million
non-cash loss contingency expense and $5.6 million of restructuring
expenses. For the year ended December 31, 2020, the amount includes
a $17.0 million non-cash loss contingency expense and $9.0 million
of restructuring expenses. For the three months and the year ended
December 31, 2019, the amount includes $5.0 million of
restructuring expenses. For the year ended December 31, 2019,
includes $3.8 million of severance expenses.
|
(2)
|
For the year ended
December 31, 2020, the amount is associated with (i) a $5.1 million
impairment related to the 2021 sale of compressor equipment and
(ii) a $3.6 million impairment related to the cancellation of a DJ
Basin compressor station. For the year ended December 31,
2019, the amount is associated with (i) our decision in March 2019
to idle our existing 20 MMcf/d DJ Basin processing plant in
conjunction with the commissioning of our new 60 MMcf/d DJ Basin
processing plant resulting in an impairment charge of $34.7
million; (ii) a $14.2 million impairment charge associated with the
sale of certain Red Rock Gathering system assets in the fourth
quarter of 2019; and (iii) our decommissioning in March 2019 of an
underutilized Barnett Shale compressor station resulting in an
impairment charge of $10.2 million.
|
(3)
|
For the year ended
December 31, 2019, the amount represents an impairment charge
associated with our annual goodwill testing of the Marcellus Shale
reporting unit.
|
(4)
|
Subsequent to the GP
Buy-In Transaction, the Partnership commenced a debt buyback
program to repurchase our Senior Notes, which is ongoing. We
repurchased $66.0 million of the outstanding $300 million aggregate
principal amount of our 5.50% Senior Notes through December 31,
2020. The gain on early extinguishment of debt for the 5.50% Senior
Notes for the year ended December 31, 2020 totaled $20.5 million
and is inclusive of a $0.3 million write off of debt issuance
costs. We also repurchased $240.5 million of the outstanding $500
million aggregate principal amount of our 5.75% Senior Notes
through December 31, 2020. The gain on early extinguishment of debt
for the 5.75% Senior Notes during the three months and the year
ended December 31, 2020 totaled $30.2 million and $90.5 million,
respectively, and is inclusive of a $1.8 million write off of debt
issuance costs.
|
(5)
|
For the year ended
December 31, 2019, the amount includes a $336.7 million impairment
charge associated with our equity method investment in Ohio
Gathering and Ohio Condensate.
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
UNAUDITED OTHER FINANCIAL AND OPERATING DATA
|
|
|
Three months ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
(Dollars in
thousands)
|
|
Other financial
data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
102,966
|
|
|
$
|
(345,345)
|
|
|
$
|
189,078
|
|
|
$
|
(393,726)
|
|
Net cash provided by
operating activities
|
$
|
51,782
|
|
|
$
|
34,124
|
|
|
$
|
198,589
|
|
|
$
|
161,741
|
|
Capital
expenditures
|
$
|
7,816
|
|
|
$
|
30,628
|
|
|
$
|
43,128
|
|
|
$
|
182,291
|
|
Contributions to
equity method investees
|
$
|
7,855
|
|
|
$
|
6,986
|
|
|
$
|
99,927
|
|
|
$
|
18,316
|
|
Adjusted
EBITDA
|
$
|
61,791
|
|
|
$
|
76,984
|
|
|
$
|
252,115
|
|
|
$
|
283,352
|
|
Cash flow available
for distributions (1)
|
$
|
44,755
|
|
|
$
|
50,348
|
|
|
$
|
162,835
|
|
|
$
|
176,491
|
|
Distributions
(2)
|
$
|
—
|
|
|
$
|
18,812
|
|
|
$
|
—
|
|
|
$
|
111,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate average
daily throughput – natural
gas (MMcf/d)
|
|
1,436
|
|
|
|
1,397
|
|
|
|
1,375
|
|
|
|
1,397
|
|
Aggregate average
daily throughput – liquids (Mbbl/d)
|
|
71
|
|
|
|
105
|
|
|
|
79
|
|
|
|
105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ohio Gathering
average daily throughput (MMcf/d) (3)
|
|
621
|
|
|
|
732
|
|
|
|
571
|
|
|
|
732
|
|
__________
|
(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.
|
(3)
|
Gross basis,
represents 100% of volume throughput for Ohio Gathering, subject to
a one-month lag.
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
UNAUDITED RECONCILIATIONS TO NON-GAAP FINANCIAL
MEASURES
|
|
|
|
Three months ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
(In
thousands)
|
|
Reconciliations of
net income or loss to
adjusted EBITDA and distributable
cash flow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
102,966
|
|
|
$
|
(345,345)
|
|
|
$
|
189,078
|
|
|
$
|
(393,726)
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
14,058
|
|
|
|
23,419
|
|
|
|
78,894
|
|
|
|
91,966
|
|
Income tax (benefit)
expense
|
|
|
(42)
|
|
|
|
(196)
|
|
|
|
(146)
|
|
|
|
1,231
|
|
Depreciation and
amortization (1)
|
|
|
29,565
|
|
|
|
28,544
|
|
|
|
119,070
|
|
|
|
111,574
|
|
Proportional adjusted
EBITDA for equity method investees (2)
|
|
|
8,474
|
|
|
|
9,542
|
|
|
|
31,056
|
|
|
|
39,126
|
|
Adjustments related to
MVC shortfall payments (3)
|
|
|
859
|
|
|
|
608
|
|
|
|
—
|
|
|
|
3,476
|
|
Adjustments related to
capital reimbursement activity (4)
|
|
|
(619)
|
|
|
|
(250)
|
|
|
|
(1,395)
|
|
|
|
(2,156)
|
|
Unit-based and noncash
compensation
|
|
|
1,920
|
|
|
|
2,801
|
|
|
|
8,111
|
|
|
|
8,171
|
|
Gain on early
extinguishment of debt (5)
|
|
|
(124,137)
|
|
|
|
—
|
|
|
|
(203,062)
|
|
|
|
—
|
|
Gain on asset sales,
net
|
|
|
(37)
|
|
|
|
59
|
|
|
|
(307)
|
|
|
|
(1,536)
|
|
Long-lived asset
impairment (6)
|
|
|
8,614
|
|
|
|
15,486
|
|
|
|
13,089
|
|
|
|
60,507
|
|
Goodwill
Impairment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16,211
|
|
Other, net
(7)
|
|
|
24,295
|
|
|
|
5,662
|
|
|
|
28,998
|
|
|
|
10,657
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
equity method investees
|
|
|
4,125
|
|
|
|
(336,654)
|
|
|
|
11,271
|
|
|
|
(337,851)
|
|
Adjusted
EBITDA
|
|
$
|
61,791
|
|
|
$
|
76,984
|
|
|
$
|
252,115
|
|
|
$
|
283,352
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash interest
paid
|
|
|
17,009
|
|
|
|
26,101
|
|
|
|
79,450
|
|
|
|
92,536
|
|
Cash paid for
taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
190
|
|
|
|
150
|
|
Senior notes interest
adjustment (8)
|
|
|
(3,091)
|
|
|
|
(3,063)
|
|
|
|
(4,487)
|
|
|
|
—
|
|
Maintenance capital
expenditures
|
|
|
3,118
|
|
|
|
3,598
|
|
|
|
14,127
|
|
|
|
14,175
|
|
Cash flow available
for distributions (9)
|
|
$
|
44,755
|
|
|
$
|
50,348
|
|
|
$
|
162,835
|
|
|
$
|
176,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions
(10)
|
|
$
|
—
|
|
|
$
|
18,812
|
|
|
$
|
—
|
|
|
$
|
111,530
|
|
__________
|
(1)
|
Includes the
amortization expense associated with our favorable gas gathering
contracts as reported in other revenues.
|
(2)
|
Reflects our
proportionate share of Ohio Gathering adjusted EBITDA, subject to a
one-month lag.
|
(3)
|
Adjustments related
to MVC shortfall payments are recognized ratably over the term of
the associated MVC.
|
(4)
|
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").
|
(5)
|
Subsequent to the GP
Buy-In Transaction, the Partnership commenced a debt buyback
program to repurchase our Senior Notes, which is ongoing. We
repurchased $66.0 million of the outstanding $300 million aggregate
principal amount of our 5.50% Senior Notes through December 31,
2020. The gain on early extinguishment of debt for the 5.50% Senior
Notes for the year ended December 31, 2020 totaled $20.5 million
and is inclusive of a $0.3 million write off of debt issuance
costs. We also repurchased $240.5 million of the outstanding $500
million aggregate principal amount of our 5.75% Senior Notes
through December 31, 2020. The gain on early extinguishment of debt
for the 5.75% Senior Notes during the three months and the year
ended December 31, 2020 totaled $30.2 million and $90.5 million,
respectively, and is inclusive of a $1.8 million write off of debt
issuance costs.
|
(6)
|
For the year ended
December 31, 2020, the amount is associated with (i) a $5.1 million
impairment related to the 2021 sale of compressor equipment and
(ii) a $3.6 million impairment related to the cancellation of a DJ
Basin compressor station. For the year ended December 31,
2019, the amount is associated with (i) our decision in March 2019
to idle our existing 20 MMcf/d DJ Basin processing plant in
conjunction with the commissioning of our new 60 MMcf/d DJ Basin
processing plant resulting in an impairment charge of $34.7
million; (ii) a $14.2 million impairment charge associated with the
sale of certain Red Rock Gathering system assets in the fourth
quarter of 2019; and (iii) our decommissioning in March 2019 of an
underutilized Barnett Shale compressor station resulting in an
impairment charge of $10.2 million.
|
(7)
|
Represents items of
income or loss that we characterize as unrepresentative of our
ongoing operations. For the three months ended December 31, 2020,
the amount includes $17.0 million of non-cash loss contingency
expense, $5.6 million of restructuring expenses and $1.0 million of
transaction costs associated with the GP Buy-In Transaction. For
the year ended December 31, 2020, the amount includes $17.0 million
of non-cash loss contingency expense, $9.0 million of restructuring
expenses and $3.2 million of transaction costs associated with the
GP Buy-In Transaction. For the three months ended December 31,
2019, the amount includes $5.0 million related to restructuring
expenses and $0.7 million of transaction costs associated with the
November 2019 DPPO amendment. For the year ended December 31, 2019,
the amount includes $5.0 million related to restructuring expenses,
$3.8 million of severance expense associated with our former Chief
Executive Officer, $0.9 million of transaction costs associated
with the Equity Restructuring, and $0.9 million of transaction
costs primarily associated with the November 2019 DPPO
amendment.
|
(8)
|
Senior notes interest
adjustment represents the net of interest expense accrued and paid
during the period. Interest on the $300.0 million 5.5% senior notes
is paid in cash semi-annually in arrears on February 15 and August
15 until maturity in August 2022. Interest on the $500.0
million 5.75% senior notes is paid in cash semi-annually in arrears
on April 15 and October 15 until maturity in April 2025.
|
(9)
|
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.
|
(10)
|
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.
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
UNAUDITED RECONCILIATIONS TO NON-GAAP FINANCIAL
MEASURES
|
|
|
|
Year ended
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
(In
thousands)
|
|
Reconciliation of
net cash provided by operating activities to
adjusted
EBITDA and distributable cash flow:
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
|
198,589
|
|
|
$
|
161,741
|
|
Add:
|
|
|
|
|
|
|
|
|
Interest expense,
excluding amortization of debt issuance costs
|
|
|
72,286
|
|
|
|
85,653
|
|
Income tax (benefit)
expense
|
|
|
(146)
|
|
|
|
1,231
|
|
Gain on fair value of
warrants
|
|
|
393
|
|
|
|
—
|
|
Settlement of interest
rate derivative
|
|
|
(134)
|
|
|
|
—
|
|
Transaction
costs
|
|
|
3,913
|
|
|
|
—
|
|
Changes in operating
assets and liabilities
|
|
|
(50,018)
|
|
|
|
24,010
|
|
Proportional adjusted
EBITDA for equity method investees (1)
|
|
|
31,056
|
|
|
|
39,126
|
|
Adjustments related to
MVC shortfall payments (2)
|
|
|
—
|
|
|
|
3,476
|
|
Adjustments related to
capital reimbursement activity (3)
|
|
|
(1,395)
|
|
|
|
(2,156)
|
|
Other, net
(4)
|
|
|
28,998
|
|
|
|
10,657
|
|
Less:
|
|
|
|
|
|
|
|
|
Distributions from
equity method investees
|
|
|
28,185
|
|
|
|
37,300
|
|
Noncash lease
expense
|
|
|
3,242
|
|
|
|
3,086
|
|
Adjusted
EBITDA
|
|
$
|
252,115
|
|
|
$
|
283,352
|
|
Less:
|
|
|
|
|
|
|
|
|
Cash interest
paid
|
|
|
79,450
|
|
|
|
92,536
|
|
Cash paid for
taxes
|
|
|
190
|
|
|
|
150
|
|
Senior notes interest
adjustment (5)
|
|
|
(4,487)
|
|
|
|
—
|
|
Maintenance capital
expenditures
|
|
|
14,127
|
|
|
|
14,175
|
|
Cash flow available
for distributions (6)
|
|
$
|
162,835
|
|
|
$
|
176,491
|
|
__________
|
(1)
|
Reflects our
proportionate share of Ohio Gathering adjusted EBITDA, subject to a
one-month lag.
|
(2)
|
Adjustments related
to MVC shortfall payments are recognized ratably over the term of
the associated MVC.
|
(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 year ended December 31, 2020, the
amount includes $17.0 million of non-cash loss contingency expense,
$9.0 million of restructuring expenses and $3.2 million of
transaction costs associated with the GP Buy-In Transaction. For
the year ended December 31, 2019, the amount includes $5.0 million
related to restructuring expenses, $3.8 million of severance
expense associated with our former Chief Executive Officer, $0.9
million of transaction costs associated with the Equity
Restructuring, and $0.9 million of transaction costs primarily
associated with the November 2019 DPPO amendment.
|
(5)
|
Senior notes interest
adjustment represents the net of interest expense accrued and paid
during the period. Interest on the $300.0 million 5.5% senior notes
is paid in cash semi-annually in arrears on February 15 and August
15 until maturity in August 2022. Interest on the $500.0 million
5.75% senior notes is paid in cash semi-annually in arrears on
April 15 and October 15 until maturity in April 2025.
|
(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.
|
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SOURCE Summit Midstream Partners, LP