THE WOODLANDS, Texas,
Nov. 3, 2016 /PRNewswire/
-- Summit Midstream Partners, LP (NYSE: SMLP) announced today
its financial and operating results for the three and nine months
ended September 30, 2016. SMLP
reported net income of $2.0 million
for the third quarter of 2016 compared to net income of
$3.5 million for the prior-year
period. Net cash provided by operations totaled $37.2 million in the third quarter of 2016
compared to $33.1 million in the
prior-year period. Adjusted EBITDA totaled $76.5 million and distributable cash flow totaled
$55.6 million for the third quarter
of 2016 compared to $43.5 million and
$26.6 million, respectively, for the
prior-year period.
![MM82470LOGO MM82470LOGO](http://photos.prnewswire.com/prnvar/20120927/MM82470LOGO)
Natural gas volume throughput averaged 1,572 million cubic feet
per day ("MMcf/d") in the third quarter of 2016, an increase of
8.7% compared to 1,446 MMcf/d in the prior-year period, and an
increase of 4.0% compared to 1,512 MMcf/d in the second quarter of
2016. Crude oil and produced water volume throughput in the
third quarter of 2016 averaged 92.2 Mbbl/d, an increase of 35.2%
compared to 68.2 Mbbl/d in the prior-year period, and an increase
of 7.2% compared to 86.0 Mbbl/d in the second quarter of
2016. All volume throughput metrics exclude SMLP's
proportionate share of volume throughput from our 40% ownership
interest in Ohio Gathering.
Steve Newby, President and Chief
Executive Officer, commented, "SMLP generated strong financial
results in the third quarter of 2016 due to increasing volumes, and
corresponding segment adjusted EBITDA, primarily driven by our
Summit Utica and Williston
operations. We also experienced strong sequential quarterly volume
growth in our Piceance/DJ Basins segment as the recent increase in
activity levels from our customer base is starting to show up in
our results. The third quarter financial results also
benefitted from a continued company-wide focus to control costs and
optimize operations. The 2016 Drop Down assets continue to
perform in-line with our original 2016 adjusted EBITDA expectations
of approximately $80 million.
We are also encouraged by the recent trend of upstream M&A
that is occurring across several of our operating assets.
During the third quarter, TOTAL S.A. announced its intention to
acquire Chesapeake Energy's Barnett acreage. We are excited
to have a new, well-capitalized customer anchor this system.
We expect that this trend will lead to an increased level of
drilling and completion activity.
Our strong financial performance in the third quarter of 2016
resulted in a quarterly distribution coverage ratio of 1.25x, which
includes the impact of our September
2016 primary offering of 5.5 million common SMLP
units. This offering, which generated net proceeds of
$126.1 million, allowed us to reduce
debt and further strengthen our balance sheet. Given our
strong third quarter and year-to-date performance, we expect our
2016 adjusted EBITDA to be at or above the top end of our 2016
adjusted EBITDA guidance range of $270.0
million to $290.0 million."
SMLP reported a net loss of $52.2
million for the first nine months of 2016 compared to a net
loss of $1.3 million for the
prior-year period. Net cash provided by operations totaled
$168.7 million in the first nine
months of 2016, compared to $138.1
million in the prior-year period. SMLP reported
adjusted EBITDA of $218.9 million and
distributable cash flow of $158.1
million for the first nine months of 2016, compared to
$167.0 million and $114.2 million, respectively, for the prior-year
period. Natural gas volume throughput averaged 1,536 MMcf/d
for the first nine months of 2016 compared to 1,533 MMcf/d in the
prior-year period. Crude oil and produced water volume
throughput averaged 91.0 Mbbl/d in the first nine months of 2016
compared to 61.5 Mbbl/d in the prior-year period.
SMLP's financial results for the nine months ended September 30, 2016 and 2015 and the three months
ended September 30, 2015 include the
historical financial results from (i) its May 2015 acquisition from Summit Investments of
the Polar and Divide system (the
"Polar and Divide Drop Down"), and (ii) its March 2016 acquisition from Summit Investments of
substantially all of (a) Summit Utica, Meadowlark Midstream and
Tioga Midstream, and (b) Summit Investments' 40.0% ownership
interest in each of Ohio Gathering and Ohio Condensate
(collectively, "Ohio Gathering") (the "2016 Drop Down").
Because of the common control aspects of the acquired assets, the
Polar and Divide Drop Down and the 2016 Drop Down were each deemed
a transaction between entities under common control and, as such,
have been accounted for on an "as-if pooled" basis for all periods
in which common control existed.
Third Quarter 2016 Segment Results
Utica Shale
The Utica Shale reportable segment includes our ownership
interest in Ohio Gathering, a natural gas gathering system in
service and under development spanning the condensate, liquids-rich
and dry gas windows of the Utica Shale in Harrison, Guernsey, Noble, Belmont and Monroe counties in southeastern Ohio.
Segment adjusted EBITDA for the Utica Shale includes our
proportional share of adjusted EBITDA from Ohio Gathering, based on
a one-month lag.
The Utica Shale reportable segment also includes Summit Utica,
our wholly owned natural gas gathering system currently in service
and under development in Belmont
and Monroe counties in
southeastern Ohio. Summit
Utica gathers and delivers dry natural gas to interconnections with
a third-party intrastate pipeline.
Segment adjusted EBITDA for the third quarter of 2016 totaled
$17.0 million, up 54.5% from
$11.0 million in the prior-year
period, primarily due to higher volume throughput across the Ohio
Gathering and Summit Utica systems, partially offset by declining
stabilization revenue at Ohio Condensate. Volume throughput on the
Ohio Gathering system, which is based on a one-month lag, averaged
800 MMcf/d in the third quarter of 2016 compared to 718 MMcf/d in
the prior-year period and 937 MMcf/d in the second quarter of
2016. We anticipate recent well completions from certain of
our Ohio Gathering customers in August
2016 to partially offset the sequential quarterly volume
decline experienced in the third quarter of 2016. Volume
throughput on the Summit Utica system averaged 234 MMcf/d in the
third quarter of 2016 compared to 42 MMcf/d in the prior-year
period and 167 MMcf/d in the second quarter of 2016. Volume
throughput for the third quarter of 2016 increased due to our
continued buildout of the Summit Utica gathering system and our
connection of 10 wells during the first half of 2016 and 8 wells
during the third quarter of 2016. SMLP completed the third
dehydration station on the Summit Utica system in the third quarter
of 2016, which increased total system capacity to 450 MMcf/d, and
enabled an increase in volumes across the system. We expect
to add compression capacity to these dehydration stations, as
needed, over the next two years, offering our customers an
incremental service, with associated incremental fees.
Williston Basin
The Bison Midstream, Polar and Divide, and Tioga Midstream systems provide
our midstream services for the Williston Basin reportable segment.
Bison Midstream gathers associated natural gas from pad sites
located in Mountrail and
Burke counties in North Dakota and delivers to third-party
pipelines serving a third-party processing plant in Channahon, Illinois. The Polar and
Divide system gathers crude oil
from pad sites located in Williams
and Divide counties in
North Dakota and delivers to the
COLT and Basin Transload rail terminals, as well as third-party
pipeline infrastructure. SMLP executed an interconnect
agreement in the third quarter of 2016 to connect into the Dakota
Access Pipeline, which will provide our Polar and Divide customers access to new markets.
The Polar and Divide system also
gathers and delivers produced water to various third-party disposal
wells in the region. Tioga Midstream is a crude oil, produced
water, and associated natural gas gathering system in Williams County, North Dakota. All crude
oil and natural gas gathered on the Tioga Midstream system is
delivered to third-party pipelines, and all produced water is
delivered to third-party disposal wells.
Segment adjusted EBITDA for the Williston Basin segment totaled $21.8 million for the third quarter of 2016
compared to ($5.8) million the
prior-year period, primarily due to a $20.0
million environmental remediation expense that we recognized
in the prior-year period associated with a produced water pipeline
that became part of the Polar and Divide system in conjunction with the 2016
Drop Down transaction. Higher liquids and natural gas
volumes, together with fees associated with the commencement of the
Stampede Lateral, which was placed into service in the first
quarter of 2016, also contributed to the Williston Basin's segment results in the third
quarter of 2016.
Liquids volumes averaged 92.2 Mbbl/d in the third quarter of
2016, an increase of 35.2% over the prior-year period and an
increase of 7.2% compared to the second quarter of 2016.
Liquids volumes were positively impacted by producers completing 28
drilled but uncompleted ("DUC") wells across our gathering
footprint during the third quarter of 2016. We expect that
our customers will continue to turn their inventory of DUCs to
sales over the next several quarters.
Compared to the third quarter of 2015, associated natural gas
volumes increased 4.3% to 24 MMcf/d in the third quarter of 2016,
driven by increased volumes associated with the development of the
Tioga Midstream system throughout 2015 and into 2016.
Piceance/DJ Basins
The Grand River and the Niobrara Gathering & Processing
systems provide our midstream services for the Piceance/DJ Basins
reportable segment. These systems provide natural gas
gathering and processing services for producers operating in the
Piceance Basin located in western Colorado and eastern Utah and in the Denver-Julesburg ("DJ") Basin located in northeastern
Colorado.
Segment adjusted EBITDA totaled $28.1
million for the third quarter of 2016, an increase of 7.3%
from $26.2 million in the prior-year
period. Third quarter 2016 volume throughput averaged 591
MMcf/d, a decrease of 1.3% from 599 MMcf/d in the prior-year period
and an increase of 4.8% from 564 MMcf/d in the second quarter of
2016. Volume declines, primarily from our anchor customer's
continued suspension of drilling activities in the basin and the
resulting natural declines from existing production, were offset by
the commissioning of 46 new wells during the quarter, primarily
from three of our privately held single-basin focused
customers. These customers are actively drilling and
completing wells across our footprint, and the third quarter of
2016 represents the first quarter sequential quarterly increase in
volume throughput on this segment since the fourth quarter of
2015.
The impact of our anchor customer's volume declines was
partially offset by higher minimum volume commitment ("MVC")
shortfall payment adjustments associated with certain of our
customers' gas gathering agreements. Lower commodity prices
in the third quarter of 2016, compared to the prior-year period,
also negatively impacted the margins we earned from our
Grand River percent-of-proceeds
contracts and condensate revenue.
Barnett Shale
The DFW Midstream system provides our midstream services for the
Barnett Shale reportable segment. This system gathers and
delivers low-pressure natural gas received from pad sites,
primarily located in southeastern Tarrant
County, Texas, to downstream intrastate pipelines serving
various natural gas hubs in the region.
Segment adjusted EBITDA for the Barnett Shale segment totaled
$13.1 million for the third quarter
of 2016, flat with the prior-year period primarily due to lower
gathering revenue, offset by lower operating expenses and higher
natural gas sales associated with our fuel retainage gas which
offsets the power costs related to our electric drive compression.
Volume throughput of 305 MMcf/d in the third quarter of 2016
was down 6.2% compared to the prior-year average of 325 MMcf/d and
down 10.6% from 341 MMcf/d in the second quarter of 2016.
Volumes in the second quarter of 2016 benefitted from the initial
production related to a customer's commissioning of an 11-well pad
site. Third quarter 2016 volumes were negatively impacted by
the annual shutdown of the DFW Midstream system, which occurred in
September 2016 vs. October in 2015,
as well as the temporary shutting-in of wells on existing pad sites
to allow our customers to drill and complete new wells. These
activities impacted average daily volumes by an estimated 7 MMcf/d
during the quarter. A customer on the DFW Midstream system
has six DUCs on an existing pad site in our service area that are
in the process of being completed; we expect to see production from
these DUCs in the fourth quarter of 2016.
Marcellus Shale
The Mountaineer Midstream system provides our midstream services
for the Marcellus Shale reportable segment. This system gathers
high-pressure natural gas received from upstream pipeline
interconnections with Antero Midstream Partners, LP and Crestwood
Equity Partners LP. Natural gas on the Mountaineer Midstream
system is delivered to the Sherwood Processing Complex located in
Doddridge County, West Virginia.
Segment adjusted EBITDA for the Marcellus Shale segment totaled
$5.1 million for the third quarter of
2016, down 11.2% from $5.8 million in
the prior-year period. Volume throughput for this segment
averaged 418 MMcf/d in the third quarter of 2016, an 8.5% decrease
from 457 MMcf/d in the prior-year period, and an increase of 0.5%
from the 416 MMcf/d in the second quarter of 2016. Lower
volumes in the third quarter of 2016 continue to result from our
customer's decision to defer the completion of an estimated 29 DUCs
identified behind the Mountaineer Midstream system. We expect
that the completion of these wells will continue to be deferred
until 2017.
The following table presents average daily throughput by
reportable segment:
|
Three months
ended
September
30,
|
|
Nine months
ended
September
30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
Average daily
throughput (MMcf/d) (1):
|
|
|
|
|
|
|
|
|
Utica Shale
(2)
|
|
234
|
|
|
|
42
|
|
|
|
178
|
|
|
|
24
|
|
|
Williston
Basin
|
24
|
|
|
23
|
|
|
24
|
|
|
22
|
|
|
Piceance/DJ
Basins
|
591
|
|
|
599
|
|
|
576
|
|
|
611
|
|
|
Barnett
Shale
|
305
|
|
|
325
|
|
|
329
|
|
|
361
|
|
|
Marcellus
Shale
|
418
|
|
|
457
|
|
|
429
|
|
|
515
|
|
|
Aggregate average
daily throughput
|
1,572
|
|
|
1,446
|
|
|
1,536
|
|
|
1,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily
throughput (Mbbl/d) (1):
|
|
|
|
|
|
|
|
|
|
|
|
|
Williston
Basin
|
92.2
|
|
|
68.2
|
|
|
91.0
|
|
|
61.5
|
|
|
Aggregate average
daily throughput
|
92.2
|
|
|
68.2
|
|
|
91.0
|
|
|
61.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Prior periods have
been recast to include the incremental historical volumes from the
2016 Drop Down.
|
(2)
|
Exclusive of volume
throughput for Ohio Gathering.
|
MVC Shortfall Payments
SMLP billed its customers $5.7
million in the third quarter of 2016 related to MVCs.
For those customers that do not have credit banking
mechanisms in their gathering agreements, or have no ability to use
MVC shortfall payments as credits, the MVC shortfall payments are
accounted for as gathering revenue in the period that they are
earned. For the third quarter of 2016, SMLP recognized
$4.8 million of gathering revenue
associated with MVC shortfall payments from certain customers in
the Marcellus Shale, Piceance/DJ Basins, and Barnett Shale
reportable segments.
MVC shortfall payment adjustments in the third quarter of 2016
totaled $11.5 million and included
$0.8 million of deferred revenue
related to MVC shortfall payments and $10.7
million related to MVC shortfall payment adjustments from
certain customers in the Piceance/DJ Basins, Williston Basin, and Barnett Shale reportable
segments.
SMLP's MVC shortfall payment mechanisms contributed $16.4 million of adjusted EBITDA in the third
quarter of 2016.
|
Three months ended
September 30, 2016
|
|
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:
|
|
|
|
|
|
|
|
|
Utica
Shale
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Williston
Basin
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Piceance/DJ
Basins
|
4,071
|
|
|
|
3,224
|
|
|
847
|
|
|
4,071
|
|
Barnett
Shale
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Marcellus
Shale
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total net
change
|
$
|
4,071
|
|
|
|
$
|
3,224
|
|
|
$
|
847
|
|
|
$
|
4,071
|
|
|
|
|
|
|
|
|
|
|
MVC shortfall
payment adjustments:
|
|
|
|
|
|
|
|
|
Utica
Shale
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Williston
Basin
|
—
|
|
|
|
—
|
|
|
4,195
|
|
|
4,195
|
|
Piceance/DJ
Basins
|
290
|
|
|
|
290
|
|
|
6,412
|
|
|
6,702
|
|
Barnett
Shale
|
245
|
|
|
|
245
|
|
|
87
|
|
|
332
|
|
Marcellus
Shale
|
1,081
|
|
|
|
1,081
|
|
|
—
|
|
|
1,081
|
|
Total MVC shortfall
payment adjustments
|
$
|
1,616
|
|
|
|
$
|
1,616
|
|
|
$
|
10,694
|
|
|
$
|
12,310
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
5,687
|
|
|
|
$
|
4,840
|
|
|
$
|
11,541
|
|
|
$
|
16,381
|
|
|
Nine months ended
September 30, 2016
|
|
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:
|
|
|
|
|
|
|
|
|
Utica
Shale
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Williston
Basin
|
235
|
|
|
|
—
|
|
|
235
|
|
|
235
|
|
Piceance/DJ
Basins
|
12,028
|
|
|
|
8,707
|
|
|
3,321
|
|
|
12,028
|
|
Barnett
Shale
|
—
|
|
|
|
677
|
|
|
(677)
|
|
|
—
|
|
Marcellus
Shale
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total net
change
|
$
|
12,263
|
|
|
|
$
|
9,384
|
|
|
$
|
2,879
|
|
|
$
|
12,263
|
|
|
|
|
|
|
|
|
|
|
MVC shortfall
payment adjustments:
|
|
|
|
|
|
|
|
|
Utica
Shale
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Williston
Basin
|
—
|
|
|
|
—
|
|
|
11,757
|
|
|
11,757
|
|
Piceance/DJ
Basins
|
854
|
|
|
|
854
|
|
|
18,911
|
|
|
19,765
|
|
Barnett
Shale
|
753
|
|
|
|
753
|
|
|
271
|
|
|
1,024
|
|
Marcellus
Shale
|
2,800
|
|
|
|
2,800
|
|
|
—
|
|
|
2,800
|
|
Total MVC shortfall
payment adjustments
|
$
|
4,407
|
|
|
|
$
|
4,407
|
|
|
$
|
30,939
|
|
|
$
|
35,346
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
16,670
|
|
|
|
$
|
13,791
|
|
|
$
|
33,818
|
|
|
$
|
47,609
|
|
Capital Expenditures
SMLP recorded total capital expenditures of $35.9 million in the third quarter of 2016,
including $4.5 million of
contributions to equity method investees. Maintenance capital
expenditures for the quarter totaled approximately $4.9 million. Development activities during
the third quarter of 2016 were primarily related to the ongoing
expansion of our wholly owned Summit Utica natural gas gathering
system as well as the continued development of certain pipeline and
compression expansion projects in the Williston and Piceance/DJ segments.
Capital & Liquidity
As of September 30, 2016, SMLP had
$617.0 million of available borrowing
capacity under its $1.25 billion
revolving credit facility, subject to covenant limits. Based
upon the terms of SMLP's revolving credit facility and total
outstanding debt of $1.23 billion,
SMLP's leverage ratio (as defined in the credit agreement) as of
September 30, 2016 was 4.11 to
1.0.
Through December 31, 2016, the
upper limit of SMLP's leverage ratio is 5.50 to 1.0. The
leverage ratio upper limit can be permanently increased from 5.00
to 1.0 to 5.50 to 1.0 any time, at SMLP's option, subject to the
inclusion of a senior secured leverage ratio (as defined in the
credit agreement) upper limit of 3.75 to 1.00.
Deferred Purchase Price Obligation
The consideration for the 2016 Drop Down consisted of (i) an
initial $360.0 million cash payment
(the "Initial Payment") which was funded on March 3, 2016 with borrowings under SMLP's
revolving credit facility and (ii) a deferred payment which will be
paid no later than December 31, 2020
(the "Deferred Purchase Price Obligation" or the "Deferred
Payment," as defined below). At the discretion of the board
of directors of SMLP's general partner, the Deferred Payment can be
made in either cash or SMLP common units, or a combination
thereof.
The Deferred Payment will be equal to: (a) six-and-one-half
(6.5) multiplied by the average Business Adjusted EBITDA
of the 2016 Drop Down Assets for 2018 and 2019; less (b) the
Initial Payment; less (c) all capital expenditures incurred for the
2016 Drop Down Assets between March 3, 2016 and December 31, 2019;
plus (d) all Business Adjusted EBITDA from the 2016 Drop
Down Assets between March 3, 2016 and December 31, 2019. SMLP
currently estimates that the Deferred Payment will be approximately
$800.0 million to $900.0 million.
2016 SMLP Financial Guidance
SMLP expects its 2016 adjusted EBITDA to be at or above the top
end of its $270.0 million to $290.0
million guidance range. SMLP is reaffirming its capex
guidance of $150.0 million to $200.0
million, including maintenance capex of approximately
$15.0 million to $20.0 million.
SMLP's 2016 capex guidance reflects the inclusion of our
contributions to equity method investees. SMLP expects to
report an average full year 2016 distribution coverage ratio of
1.20x to 1.25x.
Quarterly Distribution
On October 27, 2016, the board of
directors of SMLP's general partner declared a quarterly cash
distribution of $0.575 per unit on
all of its outstanding common units, or $2.30 per unit on an annualized basis, for the
quarter ended September 30,
2016. This quarterly distribution remains unchanged from the
previous quarter and from the quarter ended September 30, 2015. This distribution will
be paid on November 14, 2016, to
unitholders of record as of the close of business on November 7, 2016.
Third Quarter 2016 Earnings Call Information
SMLP will host a conference call at 10:00
a.m. Eastern on Friday, November 4,
2016, 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 43651663. The conference call will also be webcast
live and can be accessed through the Investors section of SMLP's
website at www.summitmidstream.com.
A replay of the conference call will be available until
November 18, 2016, at 11:59 p.m. Eastern and can be accessed by dialing
888-843-7419 and entering the replay passcode 43651663#. An
archive of the conference call will also be available on SMLP's
website.
Upcoming Investor Conferences
Members of SMLP's senior management team will participate in
Baird's 2016 Global Industrial
Conference in Chicago, Illinois,
on November 9, 2016 and in RBC
Capital Markets' MLP Conference in Dallas, Texas, on November 16, 2016 and November 17, 2016. The presentation
materials associated with these events will be accessible through
the Investors section of SMLP's website at www.summitmidstream.com
prior to the beginning of each 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 and distributable cash flow, each 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, Deferred
Purchase Price Obligation expense, impairments and other noncash
expenses or losses, less interest income, income tax benefit,
income (loss) from equity method investees and other noncash income
or gains. We define distributable cash flow as adjusted
EBITDA plus cash interest received and cash taxes received, less
cash interest paid, senior notes interest adjustment, cash taxes
paid and maintenance capital expenditures. Because adjusted
EBITDA and distributable cash flow may be defined differently by
other entities in our industry, our definitions of these non-GAAP
financial measures may not be comparable to similarly titled
measures of other entities, thereby diminishing their utility.
Management uses these non-GAAP financial measures in making
financial, operating and planning decisions and in evaluating our
financial performance. Furthermore, management believes that these
non-GAAP financial measures 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 and distributable cash flow are used as
supplemental financial measures 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
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
noncash income or expense items.
Distributable cash flow is used to assess:
- the ability of our assets to generate cash sufficient to make
future cash distributions and
- the attractiveness of capital projects and acquisitions and the
overall rates of return on alternative investment
opportunities.
Both of these measures have limitations as analytical tools and
investors should not consider them in isolation or as a substitute
for analysis of our results as reported under GAAP. For
example:
- certain items excluded from adjusted EBITDA and distributable
cash flow 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 and distributable cash flow do not reflect our
cash expenditures or future requirements for capital expenditures
or contractual commitments;
- adjusted EBITDA and distributable cash flow do 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 and distributable cash
flow do not reflect any cash requirements for such
replacements.
We compensate for the limitations of adjusted EBITDA and
distributable cash flow as analytical tools by reviewing the
comparable GAAP financial measures, understanding the differences
between the financial measures and incorporating these data points
into our decision-making process. Reconciliations of GAAP to
non-GAAP financial measures are attached to this press release.
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, (ii)
deferred purchase price obligation income or expense and (iii)
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.
Comparability Related to Drop Down Transactions
With respect to drop down transactions, SMLP's historical
results of operations may not be comparable to its future results
of operations. In March 2016,
SMLP acquired substantially all of the issued and outstanding
membership interests of Summit Utica, Meadowlark Midstream and
Tioga Midstream from Summit Investments, as well as substantially
all of Summit Investments' 40% equity interest in each of Ohio
Gathering and Ohio Condensate. In May
2015, SMLP acquired the assets comprising the Polar and
Divide system from two
subsidiaries of Summit Investments. SMLP accounted for the
2016 Drop Down and the Polar and Divide Drop Down on an "as-if
pooled" basis because these transactions were executed by entities
under common control. As such, SMLP's consolidated financial
statements reflect Summit Investments' fair value purchase
accounting, historical cost of construction, and the results of
operations of (i) Summit Utica since December 2014, (ii) Meadowlark Midstream (which
includes Niobrara G&P and certain crude oil and produced water
pipelines reported as part of Polar & Divide) since
February 2013, (iii) Tioga Midstream
since April 2014, (iv) Ohio Gathering
and Ohio Condensate since January
2014, and (v) Polar and Divide since February
2013, as if SMLP had owned and operated these assets during
the common control period.
About Summit Midstream Partners, LP
SMLP is a growth-oriented 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
services pursuant to primarily long-term and fee-based gathering
and processing agreements with customers and counterparties in five
unconventional resource basins: (i) the Appalachian Basin, which
includes the Marcellus and Utica
shale formations in West Virginia
and Ohio; (ii) the Williston Basin, which includes the Bakken and
Three Forks shale formations in North
Dakota; (iii) the Fort
Worth Basin, which includes the Barnett Shale formation in
Texas; (iv) the Piceance Basin,
which includes the Mesaverde formation as well as the Mancos and Niobrara shale formations in
Colorado and Utah; and (v) the Denver-Julesburg Basin,
which includes the Niobrara and Codell shale formations in
Colorado and Wyoming. SMLP
also owns substantially all of a 40% ownership interest in Ohio
Gathering, which is developing natural gas gathering and condensate
stabilization infrastructure in the Utica Shale in Ohio. SMLP
is headquartered in The Woodlands,
Texas, with regional corporate offices in Denver, Colorado and Atlanta, Georgia.
About Summit Midstream Partners, LLC
As of September 30, 2016, Summit
Midstream Partners, LLC ("Summit Investments") beneficially owned a
40.6% limited partner interest in SMLP and indirectly owns and
controls the general partner of SMLP, Summit Midstream GP, LLC,
which has sole responsibility for conducting the business and
managing the operations of SMLP. Summit Investments is a privately
held company controlled by Energy Capital Partners II, LLC, and
certain of its affiliates. As of September 30, 2016, an affiliate of Energy
Capital Partners II, LLC directly owned an 8.2% limited partner
interest in SMLP.
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
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 2015 Annual Report on Form 10-K as updated and
superseded by the Current Report on Form 8-K/A filed with the
Securities and Exchange Commission on September 1, 2016, and 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,
2016
|
|
December
31,
2015
|
|
(In
thousands)
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
7,597
|
|
|
$
|
21,793
|
|
Accounts
receivable
|
52,448
|
|
|
89,581
|
|
Other current
assets
|
4,766
|
|
|
3,573
|
|
Total current
assets
|
64,811
|
|
|
114,947
|
|
Property, plant and
equipment, net
|
1,853,058
|
|
|
1,812,783
|
|
Intangible assets,
net
|
431,713
|
|
|
461,310
|
|
Investment in equity
method investees
|
705,845
|
|
|
751,168
|
|
Goodwill
|
16,211
|
|
|
16,211
|
|
Other noncurrent
assets
|
8,439
|
|
|
8,253
|
|
Total
assets
|
$
|
3,080,077
|
|
|
$
|
3,164,672
|
|
|
|
|
|
Liabilities and
Partners' Capital
|
|
|
|
Current
liabilities:
|
|
|
|
Trade accounts
payable
|
$
|
13,110
|
|
|
$
|
40,808
|
|
Due to
affiliate
|
114
|
|
|
1,149
|
|
Deferred
revenue
|
—
|
|
|
677
|
|
Ad valorem taxes
payable
|
9,413
|
|
|
10,271
|
|
Accrued
interest
|
7,733
|
|
|
17,483
|
|
Accrued environmental
remediation
|
7,954
|
|
|
7,900
|
|
Other current
liabilities
|
19,075
|
|
|
13,297
|
|
Total current
liabilities
|
57,399
|
|
|
91,585
|
|
Long-term
debt
|
1,224,919
|
|
|
1,267,270
|
|
Deferred Purchase
Price Obligation
|
538,543
|
|
|
—
|
|
Deferred
revenue
|
49,042
|
|
|
45,486
|
|
Noncurrent accrued
environmental remediation
|
3,082
|
|
|
5,764
|
|
Other noncurrent
liabilities
|
7,692
|
|
|
7,268
|
|
Total
liabilities
|
1,880,677
|
|
|
1,417,373
|
|
|
|
|
|
Common limited
partner capital
|
1,158,343
|
|
|
744,977
|
|
Subordinated limited
partner capital
|
—
|
|
|
213,631
|
|
General partner
interests
|
29,904
|
|
|
25,634
|
|
Noncontrolling
interest
|
11,153
|
|
|
—
|
|
Summit Investments'
equity in contributed subsidiaries
|
—
|
|
|
763,057
|
|
Total partners'
capital
|
1,199,400
|
|
|
1,747,299
|
|
Total liabilities and
partners' capital
|
$
|
3,080,077
|
|
|
$
|
3,164,672
|
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
Three months
ended
September
30,
|
|
Nine months
ended
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(In thousands,
except per-unit amounts)
|
Revenues:
|
|
|
|
|
|
|
|
Gathering services and
related fees
|
$
|
80,296
|
|
|
$
|
101,574
|
|
|
$
|
234,583
|
|
|
$
|
239,768
|
|
Natural gas, NGLs and
condensate sales
|
9,578
|
|
|
8,710
|
|
|
25,747
|
|
|
33,290
|
|
Other
revenues
|
5,199
|
|
|
4,917
|
|
|
14,949
|
|
|
15,084
|
|
Total
revenues
|
95,073
|
|
|
115,201
|
|
|
275,279
|
|
|
288,142
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Cost of natural gas
and NGLs
|
6,986
|
|
|
6,959
|
|
|
20,140
|
|
|
24,974
|
|
Operation and
maintenance
|
23,059
|
|
|
24,660
|
|
|
72,311
|
|
|
71,044
|
|
General and
administrative
|
12,368
|
|
|
10,829
|
|
|
38,123
|
|
|
34,060
|
|
Transaction
costs
|
—
|
|
|
322
|
|
|
1,296
|
|
|
1,254
|
|
Depreciation and
amortization
|
27,979
|
|
|
26,396
|
|
|
83,670
|
|
|
77,945
|
|
Environmental
remediation
|
—
|
|
|
20,000
|
|
|
—
|
|
|
20,000
|
|
Loss (gain) on asset
sales, net
|
13
|
|
|
—
|
|
|
24
|
|
|
(214)
|
|
Long-lived asset
impairment
|
1,172
|
|
|
7,696
|
|
|
1,741
|
|
|
7,696
|
|
Total costs and
expenses
|
71,577
|
|
|
96,862
|
|
|
217,305
|
|
|
236,759
|
|
Other
income
|
51
|
|
|
1
|
|
|
92
|
|
|
2
|
|
Interest
expense
|
(15,733)
|
|
|
(14,360)
|
|
|
(47,650)
|
|
|
(44,863)
|
|
Deferred Purchase
Price Obligation expense
|
(6,188)
|
|
|
—
|
|
|
(31,116)
|
|
|
—
|
|
Income (loss) before
income taxes and income (loss) from equity method
investees
|
1,626
|
|
|
3,980
|
|
|
(20,700)
|
|
|
6,522
|
|
Income tax benefit
(expense)
|
142
|
|
|
(199)
|
|
|
(141)
|
|
|
(366)
|
|
Income (loss) from
equity method investees
|
270
|
|
|
(240)
|
|
|
(31,341)
|
|
|
(7,494)
|
|
Net income
(loss)
|
$
|
2,038
|
|
|
$
|
3,541
|
|
|
$
|
(52,182)
|
|
|
$
|
(1,338)
|
|
Less:
|
|
|
|
|
|
|
|
Net (loss) income
attributable to Summit Investments
|
—
|
|
|
(20,063)
|
|
|
2,745
|
|
|
(29,594)
|
|
Net income (loss)
attributable to noncontrolling interest
|
116
|
|
|
—
|
|
|
(108)
|
|
|
—
|
|
Net income (loss)
attributable to SMLP
|
1,922
|
|
|
23,604
|
|
|
(54,819)
|
|
|
28,256
|
|
Less net income
(loss) attributable to general partner, including IDRs
|
2,137
|
|
|
2,408
|
|
|
4,883
|
|
|
5,866
|
|
Net (loss) income
attributable to limited partners
|
$
|
(215)
|
|
|
$
|
21,196
|
|
|
$
|
(59,702)
|
|
|
$
|
22,390
|
|
|
|
|
|
|
|
|
|
(Loss) earnings
per limited partner unit:
|
|
|
|
|
|
|
|
Common unit –
basic
|
$
|
0.00
|
|
|
$
|
0.32
|
|
|
$
|
(0.89)
|
|
|
$
|
0.33
|
|
Common unit –
diluted
|
$
|
0.00
|
|
|
$
|
0.32
|
|
|
$
|
(0.89)
|
|
|
$
|
0.33
|
|
Subordinated unit –
basic and diluted
|
|
|
$
|
0.32
|
|
|
|
|
$
|
0.40
|
|
|
|
|
|
|
|
|
|
Weighted-average
limited partner units outstanding:
|
|
|
|
|
|
|
|
Common units –
basic
|
67,844
|
|
|
41,974
|
|
|
66,978
|
|
|
38,258
|
|
Common units –
diluted
|
67,844
|
|
|
42,147
|
|
|
66,978
|
|
|
38,387
|
|
Subordinated units –
basic and diluted
|
|
|
24,410
|
|
|
|
|
24,410
|
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
|
UNAUDITED OTHER
FINANCIAL AND OPERATING DATA
|
|
|
Three months
ended
September
30,
|
|
Nine months
ended
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Dollars in
thousands)
|
Other financial
data:
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
2,038
|
|
|
$
|
3,541
|
|
|
$
|
(52,182)
|
|
|
$
|
(1,338)
|
|
Net cash provided by
operating activities
|
$
|
37,205
|
|
|
$
|
33,101
|
|
|
$
|
168,705
|
|
|
$
|
138,097
|
|
Adjusted EBITDA
(1)
|
$
|
76,483
|
|
|
$
|
43,483
|
|
|
$
|
218,880
|
|
|
$
|
166,959
|
|
Capital
expenditures
|
$
|
31,363
|
|
|
$
|
73,912
|
|
|
$
|
122,735
|
|
|
$
|
205,429
|
|
Contributions to
equity method investees
|
$
|
4,512
|
|
|
$
|
9,979
|
|
|
$
|
20,157
|
|
|
$
|
74,375
|
|
Acquisitions of
gathering systems (2)
|
$
|
—
|
|
|
$
|
(4,323)
|
|
|
$
|
866,858
|
|
|
$
|
288,618
|
|
Distributable cash
flow (1)
|
$
|
55,568
|
|
|
$
|
26,566
|
|
|
$
|
158,104
|
|
|
$
|
114,183
|
|
Distributions
declared
|
$
|
44,439
|
|
|
$
|
40,977
|
|
|
$
|
126,529
|
|
|
$
|
116,983
|
|
Distribution coverage
ratio (3)
|
|
1.25x
|
|
|
*
|
|
|
*
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Operating
data:
|
|
|
|
|
|
|
|
Aggregate average
throughput – gas (MMcf/d)
|
1,572
|
|
|
1,446
|
|
1,536
|
|
|
1,533
|
|
Average throughput –
liquids (Mbbl/d)
|
92.2
|
|
|
68.2
|
|
91.0
|
|
|
61.5
|
|
|
|
|
|
|
|
|
|
* Not considered meaningful
|
(1) Includes
transaction costs. These unusual expenses are settled in
cash.
|
(2) Reflects
cash and noncash consideration, including working capital and
capital expenditure adjustments paid (received), to fund
acquisitions and/or drop downs.
|
(3)
Distribution coverage ratio calculation
for the three months ended September 30, 2016 is based on
distributions declared in respect of the third quarter of 2016.
Represents the ratio of distributable cash flow to distributions
declared. Due to the common control nature of drop down
transactions and to the extent that common control existed during a
given reporting period, our results are reported on an as-if pooled
basis with no adjustment to past distributions declared. As
such, we do not present year-to-date or prior-year distribution
coverage ratios when a drop down, and its funding, impacts
distributable cash flow.
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
|
UNAUDITED
RECONCILIATION OF REPORTABLE SEGMENT ADJUSTED EBITDA
|
TO ADJUSTED
EBITDA
|
|
|
Three months
ended
September
30,
|
|
Nine months
ended
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(In
thousands)
|
Reportable segment
adjusted EBITDA (1):
|
|
|
|
|
|
|
|
Utica Shale
(2)
|
$
|
17,042
|
|
|
$
|
11,031
|
|
|
$
|
50,071
|
|
|
$
|
22,651
|
|
Williston
Basin
|
21,815
|
|
|
(5,800)
|
|
|
60,745
|
|
|
17,817
|
|
Piceance/DJ
Basins
|
28,074
|
|
|
26,162
|
|
|
79,120
|
|
|
83,070
|
|
Barnett
Shale
|
13,128
|
|
|
13,143
|
|
|
41,118
|
|
|
45,444
|
|
Marcellus
Shale
|
5,146
|
|
|
5,795
|
|
|
14,554
|
|
|
18,492
|
|
Total
|
85,205
|
|
|
50,331
|
|
|
245,608
|
|
|
187,474
|
|
Less corporate
expenses (3)
|
8,722
|
|
|
6,848
|
|
|
26,728
|
|
|
20,515
|
|
Adjusted
EBITDA
|
$
|
76,483
|
|
|
$
|
43,483
|
|
|
$
|
218,880
|
|
|
$
|
166,959
|
|
|
|
|
|
|
|
|
|
(1)
We define reportable 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) impairments and (vi) other noncash expenses or losses, less
other noncash income or gains.
|
(2)
Includes our proportional share of
adjusted EBITDA for Ohio Gathering. 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) Corporate
expenses represent those results that are not specifically
attributable to a reportable segment or that have not been
allocated to our reportable segments, including certain general and
administrative expense items and transaction costs.
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
|
UNAUDITED
RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES
|
|
|
Three months
ended
September
30,
|
|
Nine months
ended
September
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Dollars in
thousands)
|
Reconciliations of
net income (loss) to adjusted EBITDA and distributable cash
flow:
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
2,038
|
|
|
$
|
3,541
|
|
|
$
|
(52,182)
|
|
|
$
|
(1,338)
|
|
Add:
|
|
|
|
|
|
|
|
Interest
expense
|
15,733
|
|
|
14,360
|
|
|
47,650
|
|
|
44,863
|
|
Income
tax expense
|
—
|
|
|
199
|
|
|
141
|
|
|
366
|
|
Depreciation and
amortization (1)
|
28,101
|
|
|
26,581
|
|
|
84,058
|
|
|
78,593
|
|
Proportional adjusted
EBITDA for equity method investees (2)
|
10,059
|
|
|
10,177
|
|
|
35,173
|
|
|
21,992
|
|
Adjustments related to
MVC shortfall payments (3)
|
11,541
|
|
|
(21,354)
|
|
|
33,818
|
|
|
1,914
|
|
Unit-based and noncash
compensation
|
2,050
|
|
|
2,044
|
|
|
6,000
|
|
|
5,595
|
|
Deferred Purchase
Price Obligation expense (4)
|
6,188
|
|
|
—
|
|
|
31,116
|
|
|
—
|
|
Loss on asset
sales
|
34
|
|
|
—
|
|
|
168
|
|
|
24
|
|
Long-lived asset
impairment
|
1,172
|
|
|
7,696
|
|
|
1,741
|
|
|
7,696
|
|
Less:
|
|
|
|
|
|
|
|
Interest
income
|
—
|
|
|
1
|
|
|
—
|
|
|
2
|
|
Income tax
benefit
|
142
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Income (loss) from
equity method investees
|
270
|
|
|
(240)
|
|
|
(31,341)
|
|
|
(7,494)
|
|
Gain on asset
sales
|
21
|
|
|
—
|
|
|
144
|
|
|
238
|
|
Adjusted EBITDA
(5)
|
$
|
76,483
|
|
|
$
|
43,483
|
|
|
$
|
218,880
|
|
|
$
|
166,959
|
|
Add:
|
|
|
|
|
|
|
|
Cash interest
received
|
—
|
|
|
1
|
|
|
—
|
|
|
2
|
|
Cash taxes
received
|
—
|
|
|
—
|
|
|
50
|
|
|
—
|
|
Less:
|
|
|
|
|
|
|
|
Cash interest
paid
|
25,753
|
|
|
23,972
|
|
|
57,217
|
|
|
54,303
|
|
Senior notes interest
adjustment (6)
|
(9,750)
|
|
|
(9,750)
|
|
|
(9,750)
|
|
|
(11,171)
|
|
Maintenance capital
expenditures
|
4,912
|
|
|
2,696
|
|
|
13,359
|
|
|
9,646
|
|
Distributable cash
flow (5)
|
$
|
55,568
|
|
|
$
|
26,566
|
|
|
$
|
158,104
|
|
|
$
|
114,183
|
|
|
|
|
|
|
|
|
|
Distributions
declared
|
$
|
44,439
|
|
|
$
|
40,977
|
|
|
$
|
126,529
|
|
|
$
|
116,983
|
|
|
|
|
|
|
|
|
|
Distribution coverage
ratio (7)
|
1.25x
|
|
|
*
|
|
*
|
|
*
|
|
|
|
|
|
|
|
|
* Not considered meaningful
|
(1) Includes
amortization of favorable and unfavorable gas gathering contracts
reported in other revenues.
|
(2) Reflects
our proportionate share of Ohio Gathering adjusted EBITDA, based on
a one-month lag.
|
(3)
Adjustments related to MVC shortfall
payments account for (i) the net increases or decreases in deferred
revenue for MVC shortfall payments and (ii) our inclusion of
expected annual MVC shortfall payments.
|
(4) Deferred Purchase Price Obligation expense
represents the change in the present value of the deferred purchase
price obligation.
|
(5)
Includes transaction costs. These
unusual expenses are settled in cash.
|
(6) 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 $300.0 million 7.5% senior
notes is paid in cash semi-annually in arrears on January 1 and
July 1 until maturity in July 2021.
|
(7)
Distribution coverage ratio
calculation for the three months ended September 30, 2016 is based
on distributions declared in respect of the third quarter of 2016.
Represents the ratio of distributable cash flow to distributions
declared. Due to the common control nature of drop down
transactions and to the extent that common control existed during a
given reporting period, our results are reported on an as-if pooled
basis with no adjustment to past distributions declared. As
such, we do not present year-to-date or prior-year distribution
coverage ratios when a drop down, and its funding, impacts
distributable cash flow.
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
|
UNAUDITED
RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES
|
|
|
Nine months
ended
September
30,
|
|
2016
|
|
2015
|
|
(In
thousands)
|
Reconciliation of
net cash provided by operating activities to adjusted EBITDA and
distributable cash flow:
|
|
|
|
Net cash provided by
operating activities
|
$
|
168,705
|
|
|
$
|
138,097
|
|
Add:
|
|
|
|
Interest expense,
excluding deferred loan costs
|
44,623
|
|
|
41,623
|
|
Income tax
expense
|
141
|
|
|
366
|
|
Changes in operating
assets and liabilities
|
(29,441)
|
|
|
(12,869)
|
|
Proportional adjusted
EBITDA for equity method investees (1)
|
35,173
|
|
|
21,992
|
|
Adjustments related to
MVC shortfall payments (2)
|
33,818
|
|
|
1,914
|
|
Less:
|
|
|
|
Distributions from
equity method investees
|
34,139
|
|
|
23,435
|
|
Interest
income
|
—
|
|
|
2
|
|
Write-off of debt
issuance costs
|
—
|
|
|
727
|
|
Adjusted EBITDA
(3)
|
$
|
218,880
|
|
|
$
|
166,959
|
|
Add:
|
|
|
|
Cash interest
received
|
—
|
|
|
2
|
|
Cash taxes
received
|
50
|
|
|
—
|
|
Less:
|
|
|
|
Cash interest
paid
|
57,217
|
|
|
54,303
|
|
Senior notes interest
adjustment (4)
|
(9,750)
|
|
|
(11,171)
|
|
Maintenance capital
expenditures
|
13,359
|
|
|
9,646
|
|
Distributable cash
flow (3)
|
$
|
158,104
|
|
|
$
|
114,183
|
|
|
|
|
|
|
|
|
(1) Reflects
our proportionate share of Ohio Gathering adjusted EBITDA, based on
a one-month lag.
|
(2)
Adjustments related to MVC shortfall
payments account for (i) the net increases or decreases in deferred
revenue for MVC shortfall payments and (ii) our inclusion of
expected annual MVC shortfall payments.
|
(3)
Includes transaction costs. These
unusual expenses are settled in cash.
|
(4) 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 $300.0 million 7.5% senior notes is paid in cash
semi-annually in arrears on January 1 and July 1 until maturity in
July 2021.
|
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SOURCE Summit Midstream Partners, LP