HOUSTON, Nov. 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 September 30, 2021,
including net income of $7.0 million,
adjusted EBITDA of $61.1 million and
DCF of $45.7 million. Operated
natural gas throughput averaged 1,333 million cubic feet per day
("MMcf/d") and liquids throughput averaged 63 thousand barrels per
day ("Mbbl/d"). Operated natural gas volumes decreased 7.5%
relative to the second quarter of 2021, largely due to natural
production declines, which was partially offset by volumes from 20
new wells that were turned-in-line during the quarter, including
seven new Barnett wells that came online in September. Third
quarter 2021 liquids volume was flat relative to the second quarter
of 2021, primarily as a result of six new wells that were
turned-in-line in July that provided both crude oil and water
volumes to Summit's Williston liquids system.
Heath Deneke, President, Chief
Executive Officer and Chairman, commented, "Summit's third quarter financial and
operational results exceeded our revised expectations established
in late June 2021, with quarterly
adjusted EBITDA of $61.1
million. A total of 20 new wells were connected across
our diversified operating footprint during the quarter and we
expect approximately 45 new wells to be turned-in-line during the
fourth quarter. After posting our third consecutive quarter
of strong results, and factoring in expected fourth quarter
activity, we now expect full year 2021 adjusted EBITDA to be near
the high end of our previously announced guidance of $225 million to $240
million."
"The recent closing of the previously announced $400 million ABL Revolver and $700 million of secured bonds provides a new
multi-year runway to continue harvesting substantial free cash flow
from the business, reducing debt and further unlocking value across
Summit's capital structure.
These new financings provide ample liquidity and financial
flexibility over the next several years to continue our focus on
strengthening the balance sheet, optimizing the base business, and
pursuing value enhancing growth opportunities."
"The Double E Pipeline achieved mechanical completion in October
of 2021 and we are now entering the commissioning phase to place
the project in-service by the end of the year. As the Double
E Pipeline nears completion, we are also pleased to announce
further reductions to the project budget, which is now expected to
be approximately $400 million in
total, or $280 million net to
Summit. This significant reduction versus the original
$500 million budget in June 2019 is a real testament to the hard work,
planning and efficiency of the entire project team that has worked
diligently on this effort over the past 3 years, while maintaining
a best-in-class safety and compliance record. We are very
excited to commence operations of the Double E Pipeline later this
year and introduce a new strategic outlet for incremental gas
takeaway in the northern Delaware
Basin."
Third Quarter 2021 Business Highlights
In the third
quarter of 2021, SMLP's average daily natural gas throughput for
its operated systems decreased by 7.5% to 1,333 MMcf/d, and liquids
volumes remained unchanged at 63 Mbbl/d, relative to the second
quarter of 2021. SMLP's customers are currently operating
five drilling rigs on acreage behind SMLP's gathering
systems, and there were approximately 30 DUCs in inventory
and 12 wells under development as of September 30, 2021.
Core Focus Areas:
- Core Focus Areas generated combined quarterly segment adjusted
EBITDA of $34.3 million and had
combined capital expenditures of $4.3
million in the third quarter of 2021.
- Utica Shale segment adjusted EBITDA totaled $8.3 million, a $2.3
million decrease relative to the second quarter of 2021,
which was driven primarily by a 20.2% decline in volume throughput
as a result of natural production declines, partially offset by two
new wells connected behind the TPL-7 interconnect. Volumes from the
four well pad that was connected in March of 2021 averaged 104
MMcf/d during the third quarter of 2021, and were responsible for
the majority of the volume decline relative to the second quarter
of 2021. As of September 30, 2021,
our Utica Shale customers had 10 DUCs, including another four well
pad that is expected to be turned-in-line in the fourth quarter of
2021.
- Ohio Gathering segment adjusted EBITDA totaled $6.7 million, a 2.2% decrease from the second
quarter of 2021, primarily driven by a 2.1% decrease in volume
throughput. Four new dry gas wells were connected during the third
quarter of 2021 and there are currently nine DUCs behind the
system, of which three, when commissioned in the fourth quarter of
2021, will provide volumes to both the Ohio Gathering system and
the TPL-7 interconnect included in the Utica Shale segment.
- Williston Basin segment
adjusted EBITDA totaled $11.3 million
in the third quarter of 2021, a 17.1% increase from the second
quarter of 2021, primarily as a result of favorable changes in
customer volume mix, increased margins on certain contracts,
reflecting higher commodity prices, and lower operating expenses.
Six wells were connected behind our liquids gathering system in the
third quarter of 2021, providing incremental crude oil and water
volumes, which helped offset natural production declines. There are
12 wells currently in development behind our Polar Divide system,
all which are expected to be turned-in-line later this year.
- DJ Basin segment adjusted EBITDA totaled $7.4 million in the third quarter of 2021, a
$2.3 million increase from the second
quarter of 2021, and included a $1.8
million benefit from the settlement of a legal matter. One
new well was turned-in-line during the quarter and volume
throughput averaged 23 MMcf/d, which was in-line with the second
quarter of 2021. As of September 30,
2021, there were no DUCs behind our DJ Basin infrastructure
expected to be turned-in-line in the near-term; however,
Summit is engaged with third
parties regarding new agreements that could further utilize spare
processing capacity and improve cash flows.
- Permian Basin segment adjusted EBITDA totaled $0.6 million in the third quarter of 2021, a
slight increase relative to the second quarter of 2021, primarily
due to improved product sales margins and a change in customer
volume mix. No new wells were connected during the quarter, but
Summit recently signed a new
commercial agreement with a new customer who is commissioning four
new wells in the fourth quarter of 2021. Summit also executed a new offload agreement
with a third party, which is expected to drive additional volumes
behind the system heading into 2022.
Legacy Areas:
- Legacy Areas generated $34.2
million of combined segment adjusted EBITDA in the third
quarter of 2021 and had combined capital expenditures of
$1.2 million.
- Piceance Basin segment adjusted EBITDA of $18.9 million decreased by 7.0% from the second
quarter of 2021, primarily due to a gathering rate reduction for a
customer that became effective in July, lower quarterly volume
throughput and increased operating expenses. No new wells were
connected during the third quarter; however, one of our larger
customers is expected to turn-in-line nine new wells during the
fourth quarter of 2021, which would be the first new wells in the
Piceance Basin segment since 2018.
- Barnett Shale segment adjusted EBITDA of $9.6 million increased by 8.4% from the second
quarter of 2021, primarily due to increased volumes and a change in
customer volume mix as a result of seven new wells that were
turned-in-line in September 2021,
which represent the first new wells on the DFW system since 2019.
In aggregate, these seven wells produced in excess of 55 MMcf/d in
the first 30 days and represent some of the largest natural gas
wells ever drilled in the Barnett.
- Marcellus Shale segment adjusted
EBITDA of $5.7 million decreased 2.8%
from the second quarter of 2021, driven primarily by natural
production declines, as no new wells were connected in the third
quarter of 2021. There were four DUCs behind the Mountaineer system
at the end of September 2021 that are
expected to be connected during the fourth quarter of 2021.
The following table presents average daily throughput by
reportable segment for the periods indicated:
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Average daily
throughput (MMcf/d):
|
|
|
|
|
|
|
|
Utica
Shale
|
396
|
|
352
|
|
434
|
|
330
|
Williston
Basin
|
13
|
|
14
|
|
13
|
|
14
|
DJ Basin
|
23
|
|
27
|
|
23
|
|
26
|
Permian
Basin
|
24
|
|
34
|
|
28
|
|
33
|
Piceance
Basin
|
321
|
|
361
|
|
329
|
|
370
|
Barnett
Shale
|
201
|
|
208
|
|
197
|
|
215
|
Marcellus
Shale
|
355
|
|
396
|
|
350
|
|
366
|
Aggregate average
daily throughput
|
1,333
|
|
1,392
|
|
1,374
|
|
1,354
|
|
|
|
|
|
|
|
|
Average daily
throughput (Mbbl/d):
|
|
|
|
|
|
|
|
Williston
Basin
|
63
|
|
69
|
|
64
|
|
81
|
Aggregate average
daily throughput
|
63
|
|
69
|
|
64
|
|
81
|
|
|
|
|
|
|
|
|
Ohio Gathering
average daily throughput
(MMcf/d) (1)
|
503
|
|
512
|
|
525
|
|
554
|
__________
|
|
(1) 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
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
(In
thousands)
|
|
(In
thousands)
|
Reportable segment
adjusted EBITDA (1):
|
|
|
|
|
|
|
|
Utica
Shale
|
$
|
8,328
|
|
|
$
|
7,453
|
|
|
$
|
26,700
|
|
|
$
|
24,074
|
|
Ohio Gathering
(2)
|
6,690
|
|
|
7,129
|
|
|
20,403
|
|
|
22,582
|
|
Williston
Basin
|
11,276
|
|
|
11,713
|
|
|
31,707
|
|
|
40,632
|
|
DJ Basin
|
7,446
|
|
|
4,766
|
|
|
17,899
|
|
|
15,016
|
|
Permian
Basin
|
559
|
|
|
893
|
|
|
1,729
|
|
|
4,302
|
|
Piceance
Basin
|
18,908
|
|
|
21,503
|
|
|
60,266
|
|
|
66,794
|
|
Barnett
Shale
|
9,637
|
|
|
7,205
|
|
|
26,542
|
|
|
24,475
|
|
Marcellus
Shale
|
5,702
|
|
|
6,022
|
|
|
17,171
|
|
|
16,230
|
|
Total
|
$
|
68,546
|
|
|
$
|
66,684
|
|
|
$
|
202,417
|
|
|
$
|
214,105
|
|
Less: Corporate
and Other (3)
|
7,402
|
|
|
6,854
|
|
|
18,700
|
|
|
23,781
|
|
Adjusted
EBITDA
|
$
|
61,144
|
|
|
$
|
59,830
|
|
|
$
|
183,717
|
|
|
$
|
190,324
|
|
__________
|
|
|
(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)
|
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
during the respective period.
|
|
|
(3)
|
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
$5.8 million in the third quarter of
2021, inclusive of maintenance capital expenditures of $2.2 million. Capital expenditures in the
third quarter of 2021 were primarily related to growth projects to
connect new pad sites in our Utica Shale and Williston Basin segments.
|
Nine Months
Ended
September
30,
|
|
2021
|
|
2020
|
|
(In
thousands)
|
Cash paid for
capital expenditures (1):
|
|
|
|
Utica
Shale
|
$
|
6,247
|
|
|
$
|
2,461
|
|
Williston
Basin
|
3,031
|
|
|
8,435
|
|
DJ Basin
|
481
|
|
|
11,349
|
|
Permian
Basin
|
349
|
|
|
6,342
|
|
Piceance
Basin
|
(32)
|
|
|
971
|
|
Barnett
Shale
|
731
|
|
|
1,627
|
|
Marcellus
Shale
|
525
|
|
|
430
|
|
Total reportable
segment capital expenditures
|
$
|
11,332
|
|
|
$
|
31,615
|
|
Corporate and
Other
|
448
|
|
|
3,697
|
|
Total cash paid for
capital expenditures
|
$
|
11,780
|
|
|
$
|
35,312
|
|
__________
|
|
|
(1)
|
Excludes cash paid
for capital expenditures by Ohio Gathering and Double E (after June
2019) due to equity method accounting.
|
Capital & Liquidity
As of September 30, 2021, SMLP had $725 million drawn under its $1.1 billion Revolver and $351.1 million of undrawn commitments, after
accounting for $23.9 million of
issued, but undrawn letters of credit. Year-to-date through
September 30, 2021, SMLP has reduced
the drawn balance on the Revolver by $132
million, including $37 million
in the third quarter of 2021. Subject to covenant limits, our
available borrowing capacity at September
30, 2021 totaled approximately $170.5
million. SMLP also had $5.5
million of unrestricted cash on hand as of September 30, 2021.
Based upon the terms of SMLP's Revolver, and $1.21 billion of total outstanding debt, net of
cash (inclusive of $493.5 million of
senior unsecured notes), SMLP's total leverage ratio and first lien
secured leverage ratio (as defined in the credit agreement) as of
September 30, 2021, were 4.88 to 1.0
and 2.90 to 1.0, respectively, relative to maximum threshold limits
of 5.75 to 1.0 and 3.50 to 1.0.
As of November 2, 2021, pro forma
for the completion of the 2022 debt maturities refinancing
transaction, SMLP had approximately $300
million outstanding on its new $400
million ABL Revolving Credit Facility and borrowing
availability of $76.1 million, after
accounting for $23.9 million of
issued, but undrawn letters of credit, and Summit was in compliance with all financial
covenants.
Double E Update
The Double E Pipeline is mechanically
complete and currently interconnected with all five natural gas
processing plant receipt points in the northern Delaware Basin, which represent the
origination points for future natural gas flowing to Double
E. Double E is also now interconnected with two of the
largest and newest downstream pipelines originating in the Waha Hub
region, which will provide Double E's customers with access to the
Texas Gulf Coast markets. Additionally, Double E is nearing
completion for a third downstream pipeline interconnection.
Summit is currently in the
process of commissioning the Double E Pipeline and expects to place
it in service during the fourth quarter of 2021, at an all-in,
gross (8/8th's) cost of approximately $400
million, which is approximately $280
million net to Summit, for
its 70% interest in the project. Summit funded all of its Double E capital
calls in the third quarter of 2021 with borrowings under the
non-recourse credit facilities at its wholly-owned, unrestricted
subsidiary, Summit Permian Transmission, LLC ("Permian
Transmission"). As of September 30,
2021, there was $107.0 million
outstanding under the $160.0 million
Permian Transmission construction facility.
Double E has 1.0 Bcf/d, or approximately 75% of its initial 1.35
Bcf/d of total throughput capacity, committed under long-term,
take-or-pay firm transportation service agreements from some of the
largest and most active producers in the Delaware Basin.
These volume commitments are structured to step-up over a three
year period, with the first year of commitments totaling 585
MMcf/d. Commitments step up each year such that, by year 4,
Double E will earn take-or-pay revenue on the full 1.0 Bcf/d of
existing contracted commitments.
Summit is engaged in various
stages of discussions with multiple prospective shippers to
subscribe the remaining uncontracted capacity and will provide
additional details regarding these discussions at the appropriate
time.
MVC Shortfall Payments
SMLP billed its customers
$11.5 million in the third quarter of
2021 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 2021, SMLP recognized $13.6 million of gathering revenue associated
with MVC shortfall payments. SMLP had no adjustments to MVC
shortfall payments in the third quarter of 2021. SMLP's MVC
shortfall payment mechanisms contributed $13.6 million of total adjusted EBITDA in the
third quarter of 2021.
|
Three Months Ended
September 30, 2021
|
|
MVC
Billings
|
|
|
Gathering
revenue
|
|
Adjustments to MVC
shortfall payments
|
|
Net impact to
adjusted EBITDA
|
|
|
Net change in
deferred revenue related to MVC
shortfall payments:
|
|
|
|
|
|
|
|
|
Piceance
Basin
|
$
|
3,705
|
|
|
|
$
|
3,705
|
|
|
$
|
—
|
|
|
$
|
3,705
|
|
Total net
change
|
$
|
3,705
|
|
|
|
$
|
3,705
|
|
|
$
|
—
|
|
|
$
|
3,705
|
|
|
|
|
|
|
|
|
|
|
MVC shortfall
payment adjustments:
|
|
|
|
|
|
|
|
|
Williston
Basin
|
$
|
—
|
|
|
|
$
|
2,145
|
|
|
$
|
—
|
|
|
$
|
2,145
|
|
Piceance
Basin
|
6,226
|
|
|
|
6,226
|
|
|
—
|
|
|
6,226
|
|
Marcellus
Shale
|
1,571
|
|
|
|
1,571
|
|
|
—
|
|
|
1,571
|
|
Total MVC shortfall
payment adjustments
|
$
|
7,797
|
|
|
|
$
|
9,942
|
|
|
$
|
—
|
|
|
$
|
9,942
|
|
|
|
|
|
|
|
|
|
|
Total
(1)
|
$
|
11,502
|
|
|
|
$
|
13,647
|
|
|
$
|
—
|
|
|
$
|
13,647
|
|
__________
|
|
|
(1)
|
Exclusive of Ohio
Gathering due to equity method accounting.
|
|
Nine Months Ended
September 30, 2021
|
|
MVC
Billings
|
|
|
Gathering
revenue
|
|
Adjustments to MVC
shortfall payments
|
|
Net impact to
adjusted EBITDA
|
|
|
Net change in
deferred revenue related to MVC
shortfall payments:
|
|
|
|
|
|
|
|
|
Piceance
Basin
|
$
|
11,007
|
|
|
|
$
|
11,007
|
|
|
$
|
—
|
|
|
$
|
11,007
|
|
Total net
change
|
$
|
11,007
|
|
|
|
$
|
11,007
|
|
|
$
|
—
|
|
|
$
|
11,007
|
|
|
|
|
|
|
|
|
|
|
MVC shortfall
payment adjustments:
|
|
|
|
|
|
|
|
|
Williston
Basin
|
$
|
—
|
|
|
|
$
|
6,435
|
|
|
$
|
—
|
|
|
$
|
6,435
|
|
Piceance
Basin
|
18,588
|
|
|
|
18,588
|
|
|
—
|
|
|
18,588
|
|
Marcellus
Shale
|
4,778
|
|
|
|
4,778
|
|
|
—
|
|
|
4,778
|
|
Total MVC shortfall
payment adjustments
|
$
|
23,366
|
|
|
|
$
|
29,801
|
|
|
$
|
—
|
|
|
$
|
29,801
|
|
|
|
|
|
|
|
|
|
|
Total
(1)
|
$
|
34,373
|
|
|
|
$
|
40,808
|
|
|
$
|
—
|
|
|
$
|
40,808
|
|
__________
|
|
|
(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 (the "Series A Pref Units") for the period ended September 30, 2021. Unpaid distributions on
the Series A Pref Units will continue to accrue.
Third Quarter 2021 Earnings Call Information
SMLP will
host a conference call at 10:00 a.m.
Eastern on Thursday, November 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 50239464. 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 Conferences
Members of SMLP's senior
management team will be attending the RBC Capital Markets Midstream
and Energy Infrastructure Conference on November 16, 2021, the Bank of America General
Leveraged Finance Conference on December 1,
2021, and the Wells Fargo 2021 Virtual Midstream, Utility
& Renewables Symposium on December
8, 2021. Presentation materials associated with these
events will be accessible through the Investors section of SMLP's
website at www.summitmidstream.com in advance of each respective
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, 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, 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 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 2020 Annual Report on Form 10-K filed with
the Securities and Exchange Commission (the
"SEC") on March 4, 2021, 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,
2021
|
|
December
31,
2020
|
|
(In
thousands)
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
5,505
|
|
|
$
|
15,544
|
|
Restricted
cash
|
756
|
|
|
—
|
|
Accounts receivable,
net
|
68,473
|
|
|
61,932
|
|
Other current
assets
|
11,388
|
|
|
4,623
|
|
Total current
assets
|
86,122
|
|
|
82,099
|
|
Property, plant and
equipment, net
|
1,748,174
|
|
|
1,817,546
|
|
Intangible assets,
net
|
180,017
|
|
|
199,566
|
|
Investment in equity
method investees
|
481,985
|
|
|
392,740
|
|
Other noncurrent
assets
|
4,379
|
|
|
7,866
|
|
TOTAL
ASSETS
|
$
|
2,500,677
|
|
|
$
|
2,499,817
|
|
|
|
|
|
LIABILITIES AND
CAPITAL
|
|
|
|
Trade accounts
payable
|
$
|
10,706
|
|
|
$
|
11,878
|
|
Accrued
expenses
|
15,369
|
|
|
13,036
|
|
Deferred
revenue
|
10,576
|
|
|
9,988
|
|
Ad valorem taxes
payable
|
6,531
|
|
|
9,086
|
|
Accrued compensation
and employee benefits
|
7,981
|
|
|
9,658
|
|
Accrued
interest
|
8,592
|
|
|
8,007
|
|
Accrued environmental
remediation
|
2,684
|
|
|
1,392
|
|
Other current
liabilities
|
10,098
|
|
|
5,363
|
|
Total current
liabilities
|
72,537
|
|
|
68,408
|
|
Long-term
debt
|
1,318,078
|
|
|
1,347,326
|
|
Noncurrent deferred
revenue
|
43,248
|
|
|
48,250
|
|
Noncurrent accrued
environmental remediation
|
2,924
|
|
|
1,537
|
|
Other noncurrent
liabilities
|
37,860
|
|
|
21,747
|
|
Total
liabilities
|
1,474,647
|
|
|
1,487,268
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Mezzanine
Capital
|
|
|
|
Subsidiary Series A
Preferred Units
|
101,932
|
|
|
89,658
|
|
|
|
|
|
Partners'
Capital
|
|
|
|
Series A Preferred
Units
|
165,823
|
|
|
174,425
|
|
Common limited
partner capital
|
758,275
|
|
|
748,466
|
|
Total partners'
capital
|
924,098
|
|
|
922,891
|
|
TOTAL LIABILITIES AND
CAPITAL
|
$
|
2,500,677
|
|
|
$
|
2,499,817
|
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
(In thousands,
except per-unit amounts)
|
Revenues:
|
|
|
|
|
|
|
|
Gathering services
and related fees
|
$
|
70,924
|
|
|
$
|
71,964
|
|
|
$
|
215,504
|
|
|
$
|
229,667
|
|
Natural gas, NGLs and
condensate sales
|
22,121
|
|
|
10,783
|
|
|
59,301
|
|
|
35,246
|
|
Other
revenues
|
9,000
|
|
|
7,406
|
|
|
26,599
|
|
|
22,150
|
|
Total
revenues
|
102,045
|
|
|
90,153
|
|
|
301,404
|
|
|
287,063
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Cost of natural gas
and NGLs
|
21,072
|
|
|
8,632
|
|
|
58,174
|
|
|
22,945
|
|
Operation and
maintenance
|
20,781
|
|
|
22,168
|
|
|
54,881
|
|
|
65,131
|
|
General and
administrative (1)
|
8,477
|
|
|
10,561
|
|
|
48,414
|
|
|
39,908
|
|
Depreciation and
amortization
|
30,992
|
|
|
29,505
|
|
|
87,866
|
|
|
88,801
|
|
Transaction
costs
|
1,060
|
|
|
726
|
|
|
1,276
|
|
|
1,944
|
|
Gain on asset sales,
net
|
(212)
|
|
|
(104)
|
|
|
(352)
|
|
|
(270)
|
|
Long-lived asset
impairment
|
248
|
|
|
—
|
|
|
1,773
|
|
|
4,475
|
|
Total costs and
expenses
|
82,418
|
|
|
71,488
|
|
|
252,032
|
|
|
222,934
|
|
Other income
(expense), net
|
753
|
|
|
795
|
|
|
(1,532)
|
|
|
644
|
|
Loss on ECP
Warrants
|
—
|
|
|
—
|
|
|
(13,634)
|
|
|
—
|
|
Interest
expense
|
(15,530)
|
|
|
(19,018)
|
|
|
(44,985)
|
|
|
(64,836)
|
|
Gain on early
extinguishment of debt
|
—
|
|
|
24,690
|
|
|
—
|
|
|
78,925
|
|
Income (loss) before
income taxes and equity method investment income
|
4,850
|
|
|
25,132
|
|
|
(10,779)
|
|
|
78,862
|
|
Income tax benefit
(expense)
|
79
|
|
|
(298)
|
|
|
341
|
|
|
104
|
|
Income from equity
method investees
|
2,075
|
|
|
795
|
|
|
6,694
|
|
|
7,146
|
|
Net income
(loss)
|
$
|
7,004
|
|
|
$
|
25,629
|
|
|
$
|
(3,744)
|
|
|
$
|
86,112
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per limited partner unit:
|
|
|
|
|
|
|
|
Common unit –
basic
|
$
|
(0.17)
|
|
|
$
|
19.28
|
|
|
$
|
(2.99)
|
|
|
$
|
36.12
|
|
Common unit –
diluted
|
$
|
(0.17)
|
|
|
$
|
18.67
|
|
|
$
|
(2.99)
|
|
|
$
|
35.04
|
|
|
|
|
|
|
|
|
|
Weighted-average
limited partner units outstanding:
|
|
|
|
|
|
|
|
Common units –
basic
|
6,999
|
|
|
3,465
|
|
|
6,596
|
|
|
3,155
|
|
Common units –
diluted
|
6,999
|
|
|
3,577
|
|
|
6,596
|
|
|
3,252
|
|
__________
|
|
|
(1)
|
For the three and
nine months ended September 30, 2021, the amount includes $2.9
million and $22.2 million losses related to the Blacktail Release.
For the three and nine months ended September 30, 2020, the
amount includes $0.1 million and $3.4 million of restructuring
expenses, respectively.
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
UNAUDITED OTHER
FINANCIAL AND OPERATING DATA
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
(In
thousands)
|
Other financial
data:
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
7,004
|
|
|
$
|
25,629
|
|
|
$
|
(3,744)
|
|
|
$
|
86,112
|
|
Net cash provided by
operating activities
|
41,514
|
|
|
41,436
|
|
|
127,731
|
|
|
146,807
|
|
Capital
expenditures
|
5,818
|
|
|
7,886
|
|
|
11,780
|
|
|
35,312
|
|
Contributions to
equity method investees
|
53,166
|
|
|
12,344
|
|
|
102,109
|
|
|
92,072
|
|
Adjusted
EBITDA
|
61,144
|
|
|
59,830
|
|
|
183,717
|
|
|
190,324
|
|
Cash flow available
for distributions (1)
|
$
|
45,736
|
|
|
$
|
37,551
|
|
|
$
|
138,364
|
|
|
$
|
118,270
|
|
Distributions
(2)
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
Operating
data:
|
|
|
|
|
|
|
|
Aggregate average
daily throughput – natural
gas (MMcf/d)
|
1,333
|
|
|
1,392
|
|
|
1,374
|
|
|
1,354
|
|
Aggregate average
daily throughput – liquids (Mbbl/d)
|
63
|
|
|
69
|
|
|
64
|
|
|
81
|
|
|
|
|
|
|
|
|
|
Ohio Gathering
average daily throughput (MMcf/d) (3)
|
503
|
|
|
512
|
|
|
525
|
|
|
554
|
|
__________
|
|
|
(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
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
(In
thousands)
|
Reconciliations of
net income or loss to
adjusted EBITDA and distributable
cash flow:
|
|
|
|
|
|
|
|
Net income
|
$
|
7,004
|
|
|
$
|
25,629
|
|
|
$
|
(3,744)
|
|
|
$
|
86,112
|
|
Add:
|
|
|
|
|
|
|
|
Interest
expense
|
15,530
|
|
|
19,018
|
|
|
44,985
|
|
|
64,836
|
|
Income tax (benefit)
expense
|
(79)
|
|
|
298
|
|
|
(341)
|
|
|
(104)
|
|
Depreciation and
amortization (1)
|
31,226
|
|
|
29,739
|
|
|
88,570
|
|
|
89,505
|
|
Proportional adjusted
EBITDA for equity method investees (2)
|
6,690
|
|
|
7,129
|
|
|
20,403
|
|
|
22,582
|
|
Adjustments related to
MVC shortfall payments (3)
|
—
|
|
|
2,292
|
|
|
—
|
|
|
(859)
|
|
Adjustments related to
capital reimbursement activity (4)
|
(1,549)
|
|
|
(328)
|
|
|
(5,019)
|
|
|
(776)
|
|
Unit-based and noncash
compensation
|
868
|
|
|
1,622
|
|
|
3,883
|
|
|
6,191
|
|
Gain on early
extinguishment of debt
|
—
|
|
|
(24,690)
|
|
|
—
|
|
|
(78,925)
|
|
Gain on asset sales,
net
|
(212)
|
|
|
(104)
|
|
|
(352)
|
|
|
(270)
|
|
Long-lived asset
impairment
|
248
|
|
|
—
|
|
|
1,773
|
|
|
4,475
|
|
Other, net
(5)
|
3,493
|
|
|
20
|
|
|
40,253
|
|
|
4,703
|
|
Less:
|
|
|
|
|
|
|
|
Income from equity
method investees
|
2,075
|
|
|
795
|
|
|
6,694
|
|
|
7,146
|
|
Adjusted
EBITDA
|
$
|
61,144
|
|
|
$
|
59,830
|
|
|
$
|
183,717
|
|
|
$
|
190,324
|
|
Less:
|
|
|
|
|
|
|
|
Cash interest
paid
|
12,485
|
|
|
18,368
|
|
|
40,353
|
|
|
62,441
|
|
Cash paid for
taxes
|
176
|
|
|
—
|
|
|
191
|
|
|
—
|
|
Senior notes interest
adjustment (6)
|
512
|
|
|
410
|
|
|
512
|
|
|
(1,396)
|
|
Maintenance capital
expenditures
|
2,235
|
|
|
3,501
|
|
|
4,297
|
|
|
11,009
|
|
Cash flow
available for distributions (7)
|
$
|
45,736
|
|
|
$
|
37,551
|
|
|
$
|
138,364
|
|
|
$
|
118,270
|
|
__________
|
|
|
(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)
|
Represents items of
income or loss that we characterize as unrepresentative of our
ongoing operations. For the three and nine months ended September
30, 2021, the amount includes $2.9 million and $22.2 million of
losses related to the Blacktail Release. Additionally, for
the nine months ended September 30, 2021, the amount includes a
$13.6 million loss related to the change in the fair value of the
ECP Warrants. For the nine months ended September 30, 2020, the
amount represents $3.4 million of restructuring expenses and $2.1
million of transaction costs associated with the GP Buy-In
Transaction.
|
|
|
(6)
|
Senior notes interest
adjustment represents the net of interest expense accrued and paid
during the period. Interest on the 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 5.75% senior notes
is paid in cash semi-annually in arrears on April 15 and October 15
until maturity in April 2025.
|
|
|
(7)
|
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,
|
|
2021
|
|
2020
|
|
(In
thousands)
|
Reconciliation of
net cash provided by operating activities to
adjusted
EBITDA and distributable cash flow:
|
|
|
|
Net cash provided by
operating activities
|
$
|
127,731
|
|
|
$
|
146,807
|
|
Add:
|
|
|
|
Interest expense,
excluding amortization of debt issuance costs
|
39,809
|
|
|
59,966
|
|
Income tax (benefit)
expense
|
(341)
|
|
|
(104)
|
|
Gain (loss) on ECP
warrants and unsettled interest rate swaps
|
(11,696)
|
|
|
838
|
|
Changes in operating
assets and liabilities
|
(6,626)
|
|
|
(21,049)
|
|
Proportional adjusted
EBITDA for equity method investees (1)
|
20,403
|
|
|
22,582
|
|
Adjustments related to
MVC shortfall payments (2)
|
—
|
|
(859)
|
|
Adjustments related to
capital reimbursement activity (3)
|
(5,019)
|
|
|
(776)
|
|
Other, net
(4)
|
40,253
|
|
|
4,703
|
|
Less:
|
|
|
|
Distributions from
equity method investees
|
20,004
|
|
|
19,859
|
|
Noncash lease
expense
|
793
|
|
|
1,925
|
|
Adjusted
EBITDA
|
$
|
183,717
|
|
|
$
|
190,324
|
|
Less:
|
|
|
|
Cash interest
paid
|
40,353
|
|
|
62,441
|
|
Cash paid for
taxes
|
191
|
|
|
—
|
|
Senior notes interest
adjustment (5)
|
512
|
|
|
(1,396)
|
|
Maintenance capital
expenditures
|
4,297
|
|
|
11,009
|
|
Cash flow
available for distributions (6)
|
$
|
138,364
|
|
|
$
|
118,270
|
|
__________
|
|
|
(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 nine months ended September 30, 2021,
the amount includes $22.2 million of losses related to the
Blacktail Release and a $13.6 million loss related to the change in
the fair value of the ECP Warrants. For the nine months ended
September 30, 2020, the amount includes $3.4 million of
restructuring expenses and $2.1 million of transaction costs
associated with the GP Buy-In Transaction.
|
|
|
(5)
|
Senior notes interest
adjustment represents the net of interest expense accrued and paid
during the period. Interest on the 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 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