THE WOODLANDS, Texas,
Aug. 2, 2018 /PRNewswire/
-- Summit Midstream Partners, LP (NYSE: SMLP) announced today
its financial and operating results for the three and six months
ended June 30, 2018. SMLP
reported a net loss of $49.9 million
for the second quarter of 2018, compared to net income of
$11.2 million for the prior-year
period. The net loss in the second quarter of 2018 included
$69.3 million of non-cash expense
related to the increase in the present value of the estimated
Deferred Purchase Price Obligation ("DPPO"). Net income for
the prior-year period included $5.1
million of non-cash DPPO income. Net cash provided by
operations totaled $58.8 million in
the second quarter of 2018, compared to $58.9 million in the prior-year period.
Adjusted EBITDA totaled $73.5 million
and distributable cash flow ("DCF") totaled $47.2 million for the second quarter of 2018,
compared to $72.6 million and
$50.0 million, respectively, for the
prior-year period.
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Natural gas volume throughput averaged 1,797 million cubic feet
per day ("MMcf/d") in the second quarter of 2018, an increase of
1.0% compared to 1,780 MMcf/d in the prior-year period, and an
increase of 3.5% compared to 1,737 MMcf/d in the first quarter of
2018. SMLP's natural gas volume throughput metrics exclude
its proportionate share of volume throughput from its 40% interest
in Ohio Gathering. Crude oil and produced water volume
throughput in the second quarter of 2018 averaged 88.9 thousand
barrels per day ("Mbbl/d"), an increase of 29.0% compared to 68.9
Mbbl/d in the prior-year period, and an increase of 4.6% compared
to 85.0 Mbbl/d in the first quarter of 2018.
Steve Newby, President and Chief
Executive Officer, commented, "SMLP reported strong financial and
operating results for the second quarter of 2018, with adjusted
EBITDA growth over the first quarter of 2018 of 4.5%.
Compared to the prior year period, second quarter 2018 results were
primarily driven by nearly 30% growth in liquids volumes across our
Williston gathering systems,
reflecting increased levels of drilling activity in the
Williston over the last four
quarters.
We are reaffirming our 2018 financial guidance, including
adjusted EBITDA guidance of $285.0
million to $300.0 million and
capex guidance of $175.0 million to
$225.0 million. We expect to
generate distribution coverage for the full year in excess of
1.00x. We have good visibility over the near-term with volume
growth expected on our Williston,
Utica, DJ and Barnett assets in
the second half of 2018, and particularly as we approach the fourth
quarter of the year.
Looking towards 2019, we continue to have a very positive
outlook for our business, primarily driven by customer activity
currently occurring and expected to occur on our Summit
Utica, Ohio Gathering,
Williston and DJ systems, together
with contributions from our Delaware associated natural gas gathering and
processing system and liquids gathering systems.
Our balance sheet continues to be strong with significant
liquidity and adequate leverage; we currently have no need to
access the equity capital markets in 2018 and 2019. We expect
that our distribution coverage will improve from current levels
beginning in the fourth quarter of 2018 and continuing throughout
2019.
On the commercial front, our team continues to make great
progress, particularly in the Delaware, establishing new customers and
expanding our service offerings with existing customers. We
were very pleased to announce last week that XTO has committed to
become an anchor shipper on the Double E Pipeline under a 10-year
take-or-pay agreement for up to 500,000 dekatherms per day, and
that SMLP and ExxonMobil have executed an option agreement giving
ExxonMobil the right to acquire up to a 50% interest in Double
E. We are excited to continue moving forward with this
project, and we expect to launch a binding open season next week
for an incremental 500,000 dekatherms per day of firm
capacity. We expect to provide details regarding the scope of
the Double E project, along with cost estimates, a development
timeline and financing details, after the end of the open
season.
We are executing on our strategy of becoming a significant
midstream provider in the Delaware. In addition to our
current development of a 60 MMcf/d associated gathering and
processing system for XTO, we have added several additional
customers on the natural gas gathering and processing business, we
have added crude oil gathering services, and we expect to announce
new produced water gathering and disposal services in the second
half of 2018. This activity, along with our plans to provide
residue natural gas transportation services through our Double E
Pipeline beginning in 2021, fits with our strategy of offering our
customers multiple services while economically maximizing our
footprint."
SMLP reported a net loss of $53.8
million for the first six months of 2018, compared to net
income of $10.7 million for the
prior-year period. Net cash provided by operations totaled
$110.0 million for the first six
months of 2018, compared to $121.3
million in the prior-year period. SMLP reported
adjusted EBITDA of $143.8 million and
DCF of $91.3 million for the six
months ended June 30, 2018, compared
to $144.0 million and $103.0 million, respectively, for the prior-year
period. Natural gas volume throughput averaged 1,767 MMcf/d
for the first six months of 2018, compared to 1,704 MMcf/d in the
prior-year period. Crude oil and produced water volume
throughput averaged 86.9 Mbbl/d in the first six months of 2018,
compared to 72.6 Mbbl/d in the prior-year period.
Second Quarter 2018 Segment Results
The following table presents average daily throughput by reportable
segment:
|
|
Three months ended
June 30,
|
|
|
Six months ended
June 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Average daily
throughput (MMcf/d):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utica
Shale
|
|
|
415
|
|
|
|
413
|
|
|
|
386
|
|
|
|
344
|
|
Williston
Basin
|
|
|
18
|
|
|
|
20
|
|
|
|
18
|
|
|
|
19
|
|
Piceance/DJ
Basins
|
|
|
576
|
|
|
|
596
|
|
|
|
577
|
|
|
|
605
|
|
Barnett
Shale
|
|
|
264
|
|
|
|
271
|
|
|
|
263
|
|
|
|
279
|
|
Marcellus
Shale
|
|
|
524
|
|
|
|
480
|
|
|
|
523
|
|
|
|
457
|
|
Aggregate average
daily throughput
|
|
|
1,797
|
|
|
|
1,780
|
|
|
|
1,767
|
|
|
|
1,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily
throughput (Mbbl/d):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Williston
Basin
|
|
|
88.9
|
|
|
|
68.9
|
|
|
|
86.9
|
|
|
|
72.6
|
|
Aggregate average
daily throughput
|
|
|
88.9
|
|
|
|
68.9
|
|
|
|
86.9
|
|
|
|
72.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ohio Gathering
average daily throughput (MMcf/d) (1)
|
|
|
727
|
|
|
|
706
|
|
|
|
749
|
|
|
|
737
|
|
|
|
|
|
|
|
(1)
|
Gross basis,
represents 100% of volume throughput for Ohio Gathering, based on a
one-month lag.
|
Utica Shale
The Utica Shale reportable segment includes Summit Midstream Utica
("SMU"), a natural gas gathering system
located in Belmont and
Monroe counties in southeastern
Ohio. SMU gathers and delivers
dry natural gas to interconnections with a third-party intrastate
pipeline that provides access to the Clarington Hub.
Segment adjusted EBITDA for the second quarter of 2018 totaled
$9.2 million, down 3.3% from
$9.5 million for the prior-year
period. A higher proportion of second quarter 2018 volumes on the
SMU system originated from the TPL-7
Connector, which generates a lower gathering fee than volumes
gathered directly from a pad site. Total volume throughput
averaged 415 MMcf/d in the second quarter of 2018, compared to 413
MMcf/d in the prior-year period and 356 MMcf/d in the first quarter
of 2018. Our customers commissioned nine new wells behind the
TPL-7 Connector during the quarter, and there were no new wells
turned in line on pad sites directly connected to SMU. TPL-7
Connector volumes totaled 124.1 MMcf/d in the second quarter of
2018, compared to 33.6 MMcf/d in the prior year period.
We expect our customers to commission dozens of new wells
beginning in the fourth quarter of 2018, and continuing throughout
2019. Currently, our customers are operating one drilling rig
on the SMU system, and we are expecting
two additional rigs to be added to the SMU system by the end of 2018. With higher
expected drilling activity, during the quarter, we worked to
identify several de-bottlenecking projects designed to increase our
total SMU capacity to from
approximately 690 MMcf/d to approximately 800 MMcf/d. These
de-bottlenecking projects will require less than $2.0 million of capex, which we expect to spend
in 2018 and the first quarter of 2019, to accommodate increasing
future volumes on SMU.
Ohio Gathering
The Ohio Gathering reportable segment includes our 40% ownership
interest in Ohio Gathering, a natural gas gathering system spanning
the condensate, liquids-rich and dry gas windows of the Utica Shale
in Harrison, Guernsey, Noble, Belmont and Monroe counties in southeastern Ohio.
This segment also includes our 40% ownership interest in Ohio
Condensate, a condensate stabilization facility located in
Harrison County, Ohio.
Segment adjusted EBITDA for the Ohio Gathering segment includes our
proportional share of adjusted EBITDA from Ohio Gathering and Ohio
Condensate, based on a one-month lag.
Segment adjusted EBITDA for the second quarter of 2018 totaled
$8.9 million, a decrease of 7.0% from
$9.6 million for the prior-year
period, primarily due to higher operating expenses and partially
offset by slightly higher volume throughput. Volume
throughput on the Ohio Gathering system averaged 727 MMcf/d, gross,
in the second quarter of 2018 compared to 706 MMcf/d, gross, in the
prior-year period and 771 MMcf/d, gross, in the first quarter of
2018. Volume throughput in the second quarter of 2018 was
down 5.7% compared to the first quarter of 2018 due to natural
declines from wells commissioned in the second half of 2017.
Twenty new wells were connected late in the second quarter of 2018
and contributed very little to average volume throughput in the
second quarter of 2018. We expect that these wells, together
with the commissioning of dozens of new wells in second half of
2018, will generate volume growth in the third and fourth quarters
of 2018. Currently, our customers have two drilling rigs
working on the Ohio Gathering system.
Williston Basin
The Polar and Divide, Tioga
Midstream and Bison Midstream systems provide our midstream
services for the Williston Basin
reportable segment. The Polar and Divide system gathers crude oil in
Williams and Divide counties in North Dakota and delivers to third-party
intra- and interstate pipelines as well as third-party rail
terminals. 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. Bison Midstream
gathers associated natural gas production in Mountrail and Burke counties in North Dakota and delivers to third-party
pipelines serving a third-party processing plant in Channahon,
Illinois.
Segment adjusted EBITDA for the Williston Basin segment totaled $19.0 million for the second quarter of 2018, an
increase of 10.9% compared to $17.2
million for the prior-year period. The $1.9 million increase primarily resulted from new
well connections generating higher liquids volumes across the Polar
and Divide system and lower
operating expenses. Liquids volumes averaged 88.9 Mbbl/d in
the second quarter of 2018, an increase of 29.0% from 68.9 Mbbl/d
in the prior-year period and an increase of 4.6% compared to the
first quarter of 2018. Compared to the prior-year period,
second quarter 2018 liquids volumes were positively impacted by the
completion of 20 new wells in the second quarter of 2018, together
with customers returning a portion of the liquids volumes that were
temporarily curtailed in the first quarter of 2018.
Associated natural gas volumes averaged 18 MMcf/d in the second
quarter of 2018, a decrease of 10.0% from the prior-year period,
and in line with volume throughput in the first quarter of
2018. No new associated natural gas wells were connected to
our Williston gathering systems in
the first half of 2018.
We expect that our customers will continue to drill and complete
new wells behind our liquids gathering systems in Williams and Divide counties throughout the balance of
2018, resulting in dozens of new wells and increasing liquids
volume throughput across the balance of 2018. Currently, our
customers are running two drilling rigs on the Polar and
Divide system. During the
quarter, we identified a de-bottlenecking project on our Polar and
Divide system that will add
approximately 30.0 Mbbl/d of additional crude oil gathering
capacity for less than $5.0 million
of capex.
Piceance/DJ Basins
The Grand River and the Niobrara
G&P 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 $27.7
million for the second quarter of 2018, an increase of 1.5%
from $27.3 million for the prior-year
period, primarily due to increased volume throughput from the
Niobrara G&P system, partially offset by lower volumes on the
Grand River system and higher operating expenses. Second
quarter 2018 volume throughput averaged 576 MMcf/d, a decrease of
3.4% from 596 MMcf/d in the prior-year period and roughly in line
with 578 MMcf/d in the first quarter of 2018. Volume declines
relative to the prior-year period were partially offset by the
completion of 50 new wells in the first quarter of 2018 and another
37 new wells in the second quarter of 2018. This activity was
partially offset by the impact of our anchor customer's continued
suspension of drilling activities behind our gathering system, and
the resulting natural declines from existing production, which was
partially offset by contractual MVC shortfall payments.
We expect that volumes on our DJ Basin system will continue to
grow throughout the balance of 2018 and that the new 60 MMcf/d
processing plant will be commissioned by the end of 2018.
Currently, our customers have four drilling rigs working on our DJ
Basin system, and we expect significant drilling and completion
activity in and around this DJ Basin gathering and processing
system for the foreseeable future.
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
$11.1 million for the second quarter
of 2018, a decrease of 14.7% from $13.0
million for the prior-year period. The decrease is due
to lower volume throughput on the DFW system, together with
$1.5 million of lower adjustments
related to MVC shortfall payments resulting from the expiration of
an MVC obligation with a certain customer beginning in the third
quarter of 2017. Financial results benefitted from lower
operating expense in the second quarter of 2018.
Volume throughput in the second quarter of 2018 averaged 264
MMcf/d, which was down 2.6% compared to the prior-year period
average of 271 MMcf/d and roughly in line with 263 MMcf/d in the
first quarter of 2018. Volume throughput for the second
quarter of 2018 was positively impacted by the commissioning of six
new wells during the first quarter of 2018.
One customer is currently operating a drilling rig in our
Barnett Shale segment, and another customer is currently completing
five new wells, which we expect to begin flowing late in the third
quarter of 2018. We expect volumes to be down slightly in the
third quarter, primarily due to our scheduled annual maintenance
activities, before volume growth resumes in the fourth quarter of
2018.
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
$6.5 million for the second quarter
of 2018, an increase of 20.1% from $5.4
million for the prior-year period, primarily due to an
increase in volume throughput and lower operating expenses.
Volume throughput for this segment averaged 524 MMcf/d in the
second quarter of 2018, an increase of 9.2% from 480 MMcf/d in the
prior-year period and roughly in line with 522 MMcf/d in the first
quarter of 2018. Volume throughput growth relative to the
prior-year period resulted from 27 new wells on our system in 2017,
and another 9 new wells late in the first quarter of 2018. No
new wells were completed in the second quarter of 2018, and no new
wells are expected for the balance of 2018.
MVC Shortfall Payments
SMLP billed its customers $12.3
million in the second quarter of 2018 related to MVC
shortfalls. For those customers that do not have credit
banking mechanisms in their gathering agreements, or do not have
the ability to use MVC shortfall payments as credits, the MVC
shortfall payments are accounted for as gathering revenue in the
period in which they are earned. In the second quarter of
2018, SMLP recognized $18.3 million
of gathering revenue associated with MVC shortfall payments from
certain customers in the Utica Shale, Williston Basin, Barnett Shale, Piceance/DJ
Basins and Marcellus Shale reportable segments. SMLP also
recognized ($3.5) million of
adjustments to MVC shortfall payments in the second quarter of
2018, primarily in the Williston
Basin segment, which adjusts downward, approximately 50% of a
certain customer's annual estimated MVC shortfall payment due in
December 2018. SMLP recognized
the vast majority of the remaining amount of this estimated annual
MVC shortfall payment as gathering revenue in the second quarter of
2018, and made an offsetting negative adjustment to MVC shortfall
payments to recognize approximately 25% of the this annual MVC in
the second quarter of 2018. SMLP will make quarterly
adjustments to recognize the balance of this estimated annual MVC
shortfall payment in the third and fourth quarters of 2018.
SMLP's MVC shortfall payment mechanisms contributed
$14.8 million of adjusted EBITDA in
the second quarter of 2018.
|
Three months ended
June 30, 2018
|
|
|
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
|
|
3,433
|
|
|
|
|
3,433
|
|
|
|
—
|
|
|
|
3,433
|
|
Barnett
Shale
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Marcellus
Shale
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total net
change
|
$
|
3,433
|
|
|
|
$
|
3,433
|
|
|
$
|
—
|
|
|
$
|
3,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MVC shortfall
payment adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utica
Shale
|
$
|
131
|
|
|
|
$
|
131
|
|
|
$
|
—
|
|
|
$
|
131
|
|
Williston
Basin
|
|
719
|
|
|
|
|
6,136
|
|
|
|
(3,386)
|
|
|
|
2,750
|
|
Piceance/DJ
Basins
|
|
7,030
|
|
|
|
|
7,412
|
|
|
|
(93)
|
|
|
|
7,319
|
|
Barnett
Shale
|
|
—
|
|
|
|
|
175
|
|
|
|
(63)
|
|
|
|
112
|
|
Marcellus
Shale
|
|
1,023
|
|
|
|
|
1,023
|
|
|
|
—
|
|
|
|
1,023
|
|
Total MVC shortfall
payment adjustments
|
$
|
8,903
|
|
|
|
$
|
14,877
|
|
|
$
|
(3,542)
|
|
|
$
|
11,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
(1)
|
$
|
12,336
|
|
|
|
$
|
18,310
|
|
|
$
|
(3,542)
|
|
|
$
|
14,768
|
|
|
|
|
|
|
|
(1)
|
Exclusive of Ohio
Gathering due to equity method accounting.
|
|
Six months ended
June 30, 2018
|
|
|
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
|
|
6,947
|
|
|
|
|
6,947
|
|
|
|
—
|
|
|
|
6,947
|
|
Barnett
Shale
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Marcellus
Shale
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total net
change
|
$
|
6,947
|
|
|
|
$
|
6,947
|
|
|
$
|
—
|
|
|
$
|
6,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MVC shortfall
payment adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utica
Shale
|
$
|
131
|
|
|
|
$
|
131
|
|
|
$
|
—
|
|
|
$
|
131
|
|
Williston
Basin
|
|
1,485
|
|
|
|
|
8,933
|
|
|
|
(3,386)
|
|
|
|
5,547
|
|
Piceance/DJ
Basins
|
|
13,556
|
|
|
|
|
14,227
|
|
|
|
(93)
|
|
|
|
14,134
|
|
Barnett
Shale
|
|
—
|
|
|
|
|
279
|
|
|
|
(63)
|
|
|
|
216
|
|
Marcellus
Shale
|
|
2,063
|
|
|
|
|
2,063
|
|
|
|
—
|
|
|
|
2,063
|
|
Total MVC shortfall
payment adjustments
|
$
|
17,235
|
|
|
|
$
|
25,633
|
|
|
$
|
(3,542)
|
|
|
$
|
22,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
(1)
|
$
|
24,182
|
|
|
|
$
|
32,580
|
|
|
$
|
(3,542)
|
|
|
$
|
29,038
|
|
|
|
|
|
|
|
(1)
|
Exclusive of Ohio
Gathering due to equity method accounting.
|
Capital Expenditures
Capital expenditures totaled $49.6
million in the second quarter of 2018, including maintenance
capital expenditures of approximately $3.3
million. There were no contributions to equity method
investees in the second quarter of 2018. Development
activities during the second quarter of 2018 were primarily related
to the ongoing construction and development of associated natural
gas gathering and processing infrastructure in the Delaware and DJ basins. We expect the
northern Delaware gathering and
processing system to be fully operational in the fourth quarter of
2018 and we expect the 60 MMcf/d processing plant expansion in the
DJ to be fully operational by the end of 2018.
Capital & Liquidity
As of June 30, 2018, SMLP had
$894.0 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 $1.16 billion
(inclusive of $800.0 million of
senior unsecured notes), SMLP's total leverage ratio and senior
secured leverage ratio (as defined in the credit agreement) as of
June 30, 2018 were 3.75 to 1.0 and
1.14 to 1.0, respectively.
Deferred Purchase Price Obligation
SMLP increased the estimated undiscounted amount of the Deferred
Purchase Price Obligation related to the 2016 Drop Down transaction
from $467.5 million at March 31, 2018, to $538.4
million at June 30,
2018. The increase is primarily related to revised Utica
Shale well connections, which resulted in higher volume throughput
estimates in 2019.
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," "DPPO" or "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 the G&A Adjuster,
as defined in the Contribution Agreement; 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, less the Cumulative
G&A Adjuster, as defined in the Contribution
Agreement.
The Deferred Payment calculation was designed to ensure that,
during the deferral period, all of the EBITDA growth and capex
development risk associated with the 2016 Drop Down Assets is held
by the GP, Summit Investments. The Deferred Payment was
structured such that SMLP will ultimately pay a 6.5x multiple of
the actual EBITDA generated from the 2016 Drop Down Assets in 2018
and 2019.
2018 Financial Guidance
SMLP is reaffirming its 2018 financial guidance, including adjusted
EBITDA guidance of $285.0 million to $300.0 million and capex guidance, including
contributions to equity method investees, of $175.0 million to
$225.0 million. The 2018 capex
guidance accounts for increased spending associated with providing
additional liquids gathering services in the Delaware, together with capacity expansions on
our SMU and Polar and Divide gathering systems, and accelerated
capex in the Utica Shale to meet a higher level of drilling
activity. SMLP continues to expect to incur maintenance capex
of $15.0 million to $20.0
million in 2018. SMLP expects to report an average
full year 2018 distribution coverage ratio in excess of
1.00x.
Quarterly Distribution
On July 26, 2018, 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 June 30, 2018.
This quarterly distribution remains unchanged from the previous
quarter and from the quarter ended June
30, 2017. This distribution will be paid on
August 14, 2018, to unitholders of
record as of the close of business on August
7, 2018.
Second Quarter 2018 Earnings Call Information
SMLP will host a conference call at 10:00
a.m. Eastern on Friday, August 3,
2018, 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 47115947. 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
August 17, 2018, at 11:59 p.m. Eastern, and can be accessed by
dialing 888-843-7419 and entering the replay passcode
47115947#. 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 the
2018 Citi One-on-One MLP/Midstream Infrastructure Conference being
held in Las Vegas, Nevada on
August 15, 2018 and August 16, 2018. The presentation materials
associated with this event will be accessible through the Investors
section of SMLP's website at www.summitmidstream.com prior to the
beginning of the conference.
Use of Non-GAAP Financial Measures
We report financial results in accordance with U.S. generally
accepted accounting principles ("GAAP"). We also present adjusted
EBITDA 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,
adjustments related to capital reimbursement activity, unit-based
and noncash compensation, the change in the Deferred Purchase Price
Obligation fair value, early extinguishment of debt 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, distributions to Series A Preferred
unitholders, Series A Preferred units distribution 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 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.
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
is in the process of developing new gathering and processing
infrastructure in a sixth basin, the Delaware Basin, in New Mexico. 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,
Atlanta, Georgia, Pittsburgh, Pennsylvania and Dallas, Texas.
About Summit Midstream Partners, LLC
Summit Midstream Partners, LLC ("Summit Investments") beneficially
owns a 35.2% 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. An affiliate of Energy Capital Partners
II, LLC directly owns an 8.1% 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 2017 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on February 26, 2018, 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.
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 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.
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
(In
thousands)
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
8,212
|
|
|
$
|
1,430
|
|
Accounts
receivable
|
|
|
80,166
|
|
|
|
72,301
|
|
Other current
assets
|
|
|
2,594
|
|
|
|
4,327
|
|
Total current
assets
|
|
|
90,972
|
|
|
|
78,058
|
|
Property, plant and
equipment, net
|
|
|
1,887,759
|
|
|
|
1,795,129
|
|
Intangible assets,
net
|
|
|
286,665
|
|
|
|
301,345
|
|
Goodwill
|
|
|
16,211
|
|
|
|
16,211
|
|
Investment in equity
method investees
|
|
|
670,827
|
|
|
|
690,485
|
|
Other noncurrent
assets
|
|
|
13,144
|
|
|
|
13,565
|
|
Total
assets
|
|
$
|
2,965,578
|
|
|
$
|
2,894,793
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Partners' Capital
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Trade accounts
payable
|
|
$
|
21,698
|
|
|
$
|
16,375
|
|
Accrued
expenses
|
|
|
19,433
|
|
|
|
12,499
|
|
Due to
affiliate
|
|
|
91
|
|
|
|
1,088
|
|
Deferred
revenue
|
|
|
10,778
|
|
|
|
4,000
|
|
Ad valorem taxes
payable
|
|
|
6,504
|
|
|
|
8,329
|
|
Accrued
interest
|
|
|
12,259
|
|
|
|
12,310
|
|
Accrued environmental
remediation
|
|
|
3,522
|
|
|
|
3,130
|
|
Other current
liabilities
|
|
|
7,412
|
|
|
|
11,258
|
|
Total current
liabilities
|
|
|
81,697
|
|
|
|
68,989
|
|
Long-term
debt
|
|
|
1,147,005
|
|
|
|
1,051,192
|
|
Deferred Purchase
Price Obligation
|
|
|
453,922
|
|
|
|
362,959
|
|
Noncurrent deferred
revenue
|
|
|
38,119
|
|
|
|
12,707
|
|
Noncurrent accrued
environmental remediation
|
|
|
1,617
|
|
|
|
2,214
|
|
Other noncurrent
liabilities
|
|
|
6,410
|
|
|
|
7,063
|
|
Total
liabilities
|
|
|
1,728,770
|
|
|
|
1,505,124
|
|
|
|
|
|
|
|
|
|
|
Series A Preferred
Units
|
|
|
293,616
|
|
|
|
294,426
|
|
Common limited
partner capital
|
|
|
907,099
|
|
|
|
1,056,510
|
|
General Partner
interests
|
|
|
25,137
|
|
|
|
27,920
|
|
Noncontrolling
interest
|
|
|
10,956
|
|
|
|
10,813
|
|
Total partners'
capital
|
|
|
1,236,808
|
|
|
|
1,389,669
|
|
Total liabilities and
partners' capital
|
|
$
|
2,965,578
|
|
|
$
|
2,894,793
|
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
Three months ended
June 30,
|
|
|
Six months ended
June 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
(In thousands,
except per-unit amounts)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gathering services
and related fees
|
|
$
|
89,585
|
|
|
$
|
84,801
|
|
|
$
|
173,946
|
|
|
$
|
202,814
|
|
Natural gas, NGLs and
condensate sales
|
|
|
31,891
|
|
|
|
10,595
|
|
|
|
58,008
|
|
|
|
21,715
|
|
Other
revenues
|
|
|
6,707
|
|
|
|
6,396
|
|
|
|
13,549
|
|
|
|
13,068
|
|
Total
revenues
|
|
|
128,183
|
|
|
|
101,792
|
|
|
|
245,503
|
|
|
|
237,597
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of natural gas
and NGLs
|
|
|
24,384
|
|
|
|
9,099
|
|
|
|
44,670
|
|
|
|
18,151
|
|
Operation and
maintenance
|
|
|
24,466
|
|
|
|
24,016
|
|
|
|
49,070
|
|
|
|
47,708
|
|
General and
administrative
|
|
|
13,484
|
|
|
|
12,949
|
|
|
|
27,926
|
|
|
|
27,081
|
|
Depreciation and
amortization
|
|
|
26,784
|
|
|
|
28,688
|
|
|
|
53,461
|
|
|
|
57,257
|
|
Transaction
costs
|
|
|
—
|
|
|
|
119
|
|
|
|
—
|
|
|
|
119
|
|
Loss (gain) on asset
sales, net
|
|
|
62
|
|
|
|
67
|
|
|
|
(12)
|
|
|
|
70
|
|
Long-lived asset
impairment
|
|
|
587
|
|
|
|
3
|
|
|
|
587
|
|
|
|
287
|
|
Total costs and
expenses
|
|
|
89,767
|
|
|
|
74,941
|
|
|
|
175,702
|
|
|
|
150,673
|
|
Other
income
|
|
|
27
|
|
|
|
64
|
|
|
|
20
|
|
|
|
135
|
|
Interest
expense
|
|
|
(14,837)
|
|
|
|
(17,553)
|
|
|
|
(29,959)
|
|
|
|
(34,269)
|
|
Early extinguishment
of debt
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(22,020)
|
|
Deferred Purchase
Price Obligation
|
|
|
(69,305)
|
|
|
|
5,058
|
|
|
|
(90,963)
|
|
|
|
(15,825)
|
|
(Loss) income before
income taxes and loss from equity
method investees
|
|
|
(45,699)
|
|
|
|
14,420
|
|
|
|
(51,101)
|
|
|
|
14,945
|
|
Income tax (expense)
benefit
|
|
|
(294)
|
|
|
|
211
|
|
|
|
(123)
|
|
|
|
(241)
|
|
Loss from equity
method investees
|
|
|
(3,920)
|
|
|
|
(3,385)
|
|
|
|
(2,534)
|
|
|
|
(4,041)
|
|
Net (loss)
income
|
|
$
|
(49,913)
|
|
|
$
|
11,246
|
|
|
$
|
(53,758)
|
|
|
$
|
10,663
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings
per limited partner unit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common unit –
basic
|
|
$
|
(0.79)
|
|
|
$
|
0.12
|
|
|
$
|
(0.97)
|
|
|
$
|
0.08
|
|
Common unit –
diluted
|
|
$
|
(0.79)
|
|
|
$
|
0.12
|
|
|
$
|
(0.97)
|
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
limited partner units outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common units –
basic
|
|
|
73,356
|
|
|
|
72,532
|
|
|
|
73,245
|
|
|
|
72,341
|
|
Common units –
diluted
|
|
|
73,356
|
|
|
|
72,842
|
|
|
|
73,245
|
|
|
|
72,708
|
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
|
UNAUDITED OTHER
FINANCIAL AND OPERATING DATA
|
|
|
Three months ended
June 30,
|
|
|
Six months ended
June 30,
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
(Dollars in
thousands)
|
|
Other financial
data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
|
(49,913)
|
|
|
$
|
11,246
|
|
|
$
|
(53,758)
|
|
|
$
|
10,663
|
|
Net cash provided by
operating activities
|
$
|
58,839
|
|
|
$
|
58,892
|
|
|
$
|
110,049
|
|
|
$
|
121,341
|
|
Capital
expenditures
|
$
|
49,616
|
|
|
$
|
31,484
|
|
|
$
|
90,394
|
|
|
$
|
45,912
|
|
Contributions to
equity method investees
|
$
|
—
|
|
|
$
|
10,713
|
|
|
$
|
—
|
|
|
$
|
15,649
|
|
Adjusted
EBITDA
|
$
|
73,495
|
|
|
$
|
72,577
|
|
|
$
|
143,804
|
|
|
$
|
143,987
|
|
Distributable cash
flow
|
$
|
47,161
|
|
|
$
|
50,009
|
|
|
$
|
91,312
|
|
|
$
|
102,960
|
|
Distributions
declared (1)
|
$
|
45,216
|
|
|
$
|
45,037
|
|
|
$
|
90,432
|
|
|
$
|
89,614
|
|
Distribution coverage
ratio (2)
|
1.04x
|
|
|
1.11x
|
|
|
1.01x
|
|
|
1.15x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate average
daily throughput – natural gas (MMcf/d)
|
|
1,797
|
|
|
|
1,780
|
|
|
|
1,767
|
|
|
|
1,704
|
|
Aggregate average
daily throughput – liquids (Mbbl/d)
|
|
88.9
|
|
|
68.9
|
|
|
|
86.9
|
|
|
72.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ohio Gathering
average daily throughput (MMcf/d) (3)
|
|
727
|
|
|
|
706
|
|
|
|
749
|
|
|
|
737
|
|
|
|
|
|
|
(1)
Represents distributions declared to common unitholders in respect
of a given period. For example, for the three months ended June 30,
2018, represents the distributions to be paid in August
2018.
|
(2)
Distribution coverage ratio calculation for the three months ended
June 30, 2018 and 2017 is based on distributions declared to common
unitholders in respect of the second quarter of 2018 and 2017.
Represents the ratio of distributable cash flow to distributions
declared.
|
(3)
Gross basis, represents 100% of volume throughput for Ohio
Gathering, based on a one-month lag.
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
|
UNAUDITED
RECONCILIATION OF REPORTABLE SEGMENT ADJUSTED EBITDA
|
TO ADJUSTED
EBITDA
|
|
|
|
Three months ended
June 30,
|
|
|
Six months ended
June 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
(In
thousands)
|
|
Reportable segment
adjusted EBITDA (1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utica
Shale
|
|
$
|
9,223
|
|
|
$
|
9,533
|
|
|
$
|
17,938
|
|
|
$
|
17,445
|
|
Ohio Gathering
(2)
|
|
|
8,935
|
|
|
|
9,606
|
|
|
|
19,412
|
|
|
|
18,679
|
|
Williston
Basin
|
|
|
19,030
|
|
|
|
17,155
|
|
|
|
35,000
|
|
|
|
34,964
|
|
Piceance/DJ
Basins
|
|
|
27,673
|
|
|
|
27,274
|
|
|
|
56,908
|
|
|
|
56,248
|
|
Barnett
Shale
|
|
|
11,093
|
|
|
|
12,998
|
|
|
|
20,952
|
|
|
|
25,086
|
|
Marcellus
Shale
|
|
|
6,543
|
|
|
|
5,446
|
|
|
|
13,219
|
|
|
|
11,093
|
|
Total
|
|
$
|
82,497
|
|
|
$
|
82,012
|
|
|
$
|
163,429
|
|
|
$
|
163,515
|
|
Less Corporate and
Other (3)
|
|
|
9,002
|
|
|
|
9,435
|
|
|
|
19,625
|
|
|
|
19,528
|
|
Adjusted
EBITDA
|
|
$
|
73,495
|
|
|
$
|
72,577
|
|
|
$
|
143,804
|
|
|
$
|
143,987
|
|
|
|
|
|
|
(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) unit-based and noncash compensation, (vi)
change in the Deferred Purchase Price Obligation, (vii) early
extinguishment of debt expense, (viii) impairments and (ix) other
noncash expenses or losses, less other noncash income or gains.
|
(2)
Represents our proportional share of adjusted EBITDA for Ohio
Gathering, based on 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)
Corporate and Other represents those results that are not
specifically attributable to a reportable segment or that have not
been allocated to our reportable segments, including certain
general and administrative expense items, natural gas and crude oil
marketing services, transaction costs, interest expense, early
extinguishment of debt and a change in the Deferred Purchase Price
Obligation.
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
|
UNAUDITED
RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES
|
|
|
|
Three months ended
June 30,
|
|
|
Six months ended
June 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
(In
thousands)
|
|
Reconciliations of
net income or loss to adjusted EBITDA and distributable cash flow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
|
(49,913)
|
|
|
$
|
11,246
|
|
|
$
|
(53,758)
|
|
|
$
|
10,663
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
14,837
|
|
|
|
17,553
|
|
|
|
29,959
|
|
|
|
34,269
|
|
Income tax expense
(benefit)
|
|
|
294
|
|
|
|
(211)
|
|
|
|
123
|
|
|
|
241
|
|
Depreciation and
amortization (1)
|
|
|
26,634
|
|
|
|
28,537
|
|
|
|
53,160
|
|
|
|
56,955
|
|
Proportional adjusted
EBITDA for equity method investees
(2)
|
|
|
8,935
|
|
|
|
9,606
|
|
|
|
19,412
|
|
|
|
18,679
|
|
Adjustments related to
MVC shortfall payments (3)
|
|
|
(3,542)
|
|
|
|
5,578
|
|
|
|
(3,542)
|
|
|
|
(23,062)
|
|
Adjustments related to
capital reimbursement activity (4)
|
|
|
115
|
|
|
|
—
|
|
|
|
155
|
|
|
|
—
|
|
Unit-based and noncash
compensation
|
|
|
2,261
|
|
|
|
1,871
|
|
|
|
4,223
|
|
|
|
3,999
|
|
Deferred Purchase
Price Obligation (5)
|
|
|
69,305
|
|
|
|
(5,058)
|
|
|
|
90,963
|
|
|
|
15,825
|
|
Early extinguishment
of debt (6)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
22,020
|
|
Loss (gain) on asset
sales, net
|
|
|
62
|
|
|
|
67
|
|
|
|
(12)
|
|
|
|
70
|
|
Long-lived asset
impairment
|
|
|
587
|
|
|
|
3
|
|
|
|
587
|
|
|
|
287
|
|
Loss from equity
method investees
|
|
|
3,920
|
|
|
|
3,385
|
|
|
|
2,534
|
|
|
|
4,041
|
|
Adjusted
EBITDA
|
|
$
|
73,495
|
|
|
$
|
72,577
|
|
|
$
|
143,804
|
|
|
$
|
143,987
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash interest
paid
|
|
|
18,755
|
|
|
|
5,342
|
|
|
|
30,962
|
|
|
|
33,382
|
|
Cash paid for
taxes
|
|
|
175
|
|
|
|
—
|
|
|
|
175
|
|
|
|
—
|
|
Senior notes interest
adjustment (7)
|
|
|
(3,063)
|
|
|
|
11,312
|
|
|
|
—
|
|
|
|
(469)
|
|
Distributions to
Series A Preferred unitholders (8)
|
|
|
14,250
|
|
|
|
—
|
|
|
|
14,250
|
|
|
|
—
|
|
Series A Preferred
units distribution adjustment (9)
|
|
|
(7,125)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Maintenance capital
expenditures
|
|
|
3,342
|
|
|
|
5,914
|
|
|
|
7,105
|
|
|
|
8,114
|
|
Distributable
cash flow
|
|
$
|
47,161
|
|
|
$
|
50,009
|
|
|
$
|
91,312
|
|
|
$
|
102,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions
declared (10)
|
|
$
|
45,216
|
|
|
$
|
45,037
|
|
|
$
|
90,432
|
|
|
$
|
89,614
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution coverage
ratio (11)
|
|
1.04x
|
|
|
1.11x
|
|
|
1.01x
|
|
|
1.15x
|
|
|
|
|
|
|
(1)
Includes the amortization expense associated with our favorable and
unfavorable gas gathering contracts as 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 for the three and six
months ended June 30, 2017 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. For
the three and six months ended June 30, 2018, adjustments related
to MVC shortfall payments are recognized in gathering services and
related fees.
|
(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)
Deferred Purchase Price Obligation represents the change in the
present value of the Deferred Purchase Price Obligation.
|
(6)
Early extinguishment of debt includes $17.9 million paid for
redemption and call premiums, as well as $4.1 million of
unamortized debt issuance costs which were written off in
connection with the repurchase of the outstanding $300.0 million
7.5% Senior Notes in the first quarter of 2017.
|
(7)
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.
|
(8)
Distributions on the Series A preferred units are paid in cash
semi-annually in arrears on June 15 and December 15 each year,
through and including December 15, 2022, and, thereafter,
quarterly in arrears on the 15th day of March, June, September and
December of each year.
|
(9)
Series A Preferred unit distribution adjustment represents the net
of distributions paid and accrued on the Series A Preferred
units.
|
(10)
Represents distributions declared to common unitholders in respect
of a given period. For example, for the three months ended June 30,
2018, represents the distributions to be paid in August 2018.
|
(11)
Distribution coverage ratio calculation for the three months ended
June 30, 2018 and 2017 is based on distributions declared in
respect of the second quarter of 2018 and 2017. Represents the
ratio of distributable cash flow to distributions
declared.
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
|
UNAUDITED
RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES
|
|
|
|
Six months ended
June 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
(In
thousands)
|
|
Reconciliation of
net cash provided by operating activities to adjusted
EBITDA and distributable cash
flow:
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
|
110,049
|
|
|
$
|
121,341
|
|
Add:
|
|
|
|
|
|
|
|
|
Interest expense,
excluding amortization of debt issuance costs
|
|
|
27,873
|
|
|
|
32,197
|
|
Income tax
expense
|
|
|
123
|
|
|
|
241
|
|
Changes in operating
assets and liabilities
|
|
|
6,858
|
|
|
|
12,896
|
|
Proportional adjusted
EBITDA for equity method investees (1)
|
|
|
19,412
|
|
|
|
18,679
|
|
Adjustments related to
MVC shortfall payments (2)
|
|
|
(3,542)
|
|
|
|
(23,062)
|
|
Adjustments related to
capital reimbursement activity (3)
|
|
|
155
|
|
|
|
—
|
|
Less:
|
|
|
|
|
|
|
|
|
Distributions from
equity method investees
|
|
|
17,124
|
|
|
|
18,003
|
|
Write-off of debt
issuance costs
|
|
|
—
|
|
|
|
302
|
|
Adjusted
EBITDA
|
|
$
|
143,804
|
|
|
$
|
143,987
|
|
Less:
|
|
|
|
|
|
|
|
|
Cash interest
paid
|
|
|
30,962
|
|
|
|
33,382
|
|
Cash paid for
taxes
|
|
|
175
|
|
|
|
—
|
|
Senior notes interest
adjustment (4)
|
|
|
—
|
|
|
|
(469)
|
|
Distributions to
Series A Preferred unitholders (5)
|
|
|
14,250
|
|
|
|
—
|
|
Series A Preferred
units distribution adjustment (6)
|
|
|
—
|
|
|
|
—
|
|
Maintenance capital
expenditures
|
|
|
7,105
|
|
|
|
8,114
|
|
Distributable
cash flow
|
|
$
|
91,312
|
|
|
$
|
102,960
|
|
|
|
|
|
|
(1)
Reflects our proportionate share of Ohio Gathering adjusted EBITDA,
based on a one-month lag.
|
(2)
Adjustments related to MVC shortfall payments for the six months
ended June 30, 2017 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. For the
six months ended June 30, 2018, adjustments related to MVC
shortfall payments are recognized in gathering services and related
fees.
|
(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)
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.
|
(5)
Distributions on the Series A Preferred units are paid in cash
semi-annually in arrears on June 15 and December 15 each year,
through and including December 15, 2022, and, thereafter,
quarterly in arrears on the 15th day of March, June, September and
December of each year.
|
(6)
Series A Preferred unit distribution adjustment represents the net
of distributions paid and accrued on the Series A Preferred
units.
|
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SOURCE Summit Midstream Partners, LP