THE WOODLANDS, Texas,
Feb. 28, 2020 /PRNewswire/ -- Summit
Midstream Partners, LP (NYSE: SMLP) announced today its financial
and operating results for the three months ended December 31, 2019, including a net loss of
$327.1 million, adjusted EBITDA of
$77.5 million, DCF of $47.1 million, and a quarterly distribution
coverage ratio of 4.0x. Net loss for the quarter was
primarily related to a $336.7 million
non-cash impairment associated with our equity investments in Ohio
Gathering and Ohio Condensate due to an expected decrease in
customer activity as a result of lower forward commodity
prices. Net loss also included a $14.2
million non-cash impairment related to the $12.0 million sale of a natural gas gathering and
processing sub-system in the Piceance Basin ("RRG West") in
December 2019, and $5.7 million of restructuring, severance and
transaction expenses associated with the November 2019 DPPO amendment and our ongoing
initiative to reduce our cost structure.
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Heath Deneke, President and Chief
Executive Officer, commented, "SMLP has taken a number of actions
since the fourth quarter of 2019 to prepare for a challenging macro
environment in 2020. In general, we expect a reduction in our
customers' 2020 drilling and completion activities compared to 2019
as a result of a weakening commodity price backdrop, together with
more limited access to capital in the upstream sector. Our
2020 adjusted EBITDA guidance of $260
million to $285 million is
based on current plans from our customers, with the lower end of
guidance incorporating a substantial amount of risking to each
customer's development timelines and production forecasts, which we
believe reflects the current market backdrop. If our
customers perform consistently with the recent forecasts that they
have provided, we will be positioned to achieve the high end of our
guidance range. We expect 2020 total capital expenditures of
$50 million to $70 million, including maintenance capex and
approximately $10 million related to
our equity method investment in Double E."
"We made significant progress on a number of major initiatives
since the fourth quarter that were designed to mitigate the
negative impact of further industry weakness in 2020, strengthen
the balance sheet, increase our financial flexibility, and
right-size our cost structure. These initiatives included:
- Our partial payment of the DPPO in the amount of $122.75 million, and extension of the DPPO
payment from 2020 to 2022,
- Our announcement to shift the next $80
million of Double E capital investments to a third-party
investor at a 7% annualized distribution rate, while retaining
long-term upside from the project,
- Our recent announcement to reduce our quarterly distribution by
56.5% to $0.125 per unit, which will
enable us to incrementally retain over $60
million of annualized cash flow that will be used to
accelerate de-leveraging,
- Our continued commitment to reducing costs across our
organization and enhancing operating margins, which we expect will
result in at least $10 million of
expense savings in 2020, and will enable up to $20 million of annual run rate expense savings
thereafter, and
- Our enhanced capital discipline, and a higher return threshold
for incremental capital investments, as represented by the
significant reductions in total capital expenditures, which we now
expect to be less than $70 million
for 2020."
"We believe that the above actions will enable SMLP to generate
sufficient cash in 2020 to pay down approximately $50 million of outstanding debt, excluding the
impact of any future potential asset sales. We continue to
actively evaluate potential divestitures and joint ventures of
certain of our assets, and will continue to do so in a patient and
disciplined manner. Our expectation is that any divestiture
will serve to accelerate de-leveraging of SMLP's balance
sheet."
"We reported adjusted EBITDA in the fourth quarter of 2019
totaling $77.5 million, which was a
quarterly record for SMLP, but slightly below our expectations,
primarily due to deferred well connections in the quarter and
faster than expected declines from new wells, primarily behind our
Utica Shale and Ohio Gathering systems. Fourth quarter
results reflected higher sequential adjusted EBITDA across five of
our eight reportable segments as a result of higher volumes and
expense reductions that we began to realize in the quarter.
The Williston Basin segment
generated exceptionally strong results for the quarter, including a
12.6% sequential quarterly increase in volume throughput to a
record 118.5 Mbbl/d, and a $6.4
million sequential quarterly increase in segment adjusted
EBITDA."
2020 Financial Guidance
SMLP is releasing financial guidance for 2020, which is
summarized in the table below. These projections are subject
to risks and uncertainties as described in the "Forward-Looking
Statements" section at the end of the release.
|
2020 Financial
Guidance Range
|
($ in
millions)
|
Low
|
|
High
|
Natural Gas
Throughput (MMcf/d)
|
|
|
|
Core Focus Areas
|
625
|
-
|
715
|
Legacy Areas
|
900
|
-
|
945
|
Total
|
1,525
|
-
|
1,660
|
|
|
|
|
Liquids Throughput
(Mbbl/d)
|
100
|
-
|
105
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
Core Focus Areas
|
$155
|
-
|
$175
|
Legacy Areas
|
$135
|
-
|
$140
|
Unallocated G&A, Other
|
($30)
|
-
|
($30)
|
Total
|
$260
|
-
|
$285
|
|
|
|
|
Capital
Expenditures
|
|
|
|
Growth Capital Expenditures
|
$37
|
-
|
$53
|
Maintenance Capital Expenditures
|
$13
|
-
|
$17
|
Total
|
$50
|
-
|
$70
|
|
|
|
|
Current Distribution
Coverage Ratio
|
2.75x
|
-
|
3.25x
|
We believe our 2020 financial guidance reflects an appropriate
level of risking to the most recent drill schedules and volume
forecasts provided by our customers. The mid-point of our
guidance incorporates an approximately 45% reduction in new well
connects on our systems in 2020 as compared to 2019; however,
approximately 70% of the new wells that are included in our
forecast in 2020 are either drilled or are currently being
drilled. The remaining new wells that are expected to be
drilled and completed in our 2020 forecasts have active permits and
have recently been affirmed by our customers to be included in
their 2020 capital programs. Our customers are currently
operating 6 drilling rigs behind our systems. We expect the
vast majority of our customers' well completion activities to occur
between the second and fourth quarters of the year. SMLP's
2020 financial guidance also includes the impact of contractual MVC
step-downs, including a $4.8 million
decrease relative to 2019 in the Barnett Shale, a $3.3 million decrease in the Piceance Basin, and
a $1.0 million decrease in the
Williston Basin. Our guidance also includes the $10 million benefit from a cost savings
initiative that we began in 2019, but does not fully incorporate
the up to $20 million run rate
benefit that we are targeting by the end of 2020.
Capital Expenditures
- Growth capital expenditures of $37
million to $53 million,
focused primarily on pad connections and line looping projects to
accommodate near-term volume growth in the Williston Basin, Utica Shale and DJ Basin
segments;
- Maintenance capital expenditures of $13
million to $17 million;
- With the exception of an estimated $10
million investment in Double E, which is included in the
growth capital expenditures noted above, we expect third-party
capital arrangements to finance the remainder of our capital
contributions to Double E in 2020.
Fourth Quarter 2019 Business Highlights
In the fourth
quarter of 2019, SMLP's average daily natural gas throughput for
its operated systems decreased 2.7% over the third quarter of 2019
to 1,356 MMcf/d, and liquids volumes increased 12.6% over the third
quarter of 2019 to 118.5 Mbbl/d. SMLP's customers currently
maintain more than 110 DUCs in inventory upstream of our
systems.
Core Focus Areas:
- Core Focus Areas generated combined sequential quarterly
segment adjusted EBITDA growth of 15.9% over the third quarter of
2019, to $45.1 million.
- Utica Shale segment adjusted EBITDA of $8.6 million, a 9.3% increase over the third
quarter of 2019, included a $2.1
million payment related to a contract amendment, partially
offset by a 7.1% decrease in high margin volumes gathered from pad
sites directly connected to the gathering system. Volumes in the
fourth quarter of 2019 were negatively impacted by steeper than
anticipated declines associated with well completions that occurred
in the second quarter of 2019. We continue to expect one of our
Utica Shale customers to commence production from a five-well pad
site in March 2020 with initial flow
rates in excess of 150 MMcf/d, which would represent approximately
65% of our fourth quarter 2019 pad level volume. These new wells
are expected to generate a significant increase in volume
throughput and segment adjusted EBITDA in 2020.
- Ohio Gathering segment adjusted EBITDA totaled $9.5 million, a $0.9
million decrease from the third quarter of 2019. Lower
segment adjusted EBITDA was driven by a 6.6% decrease in volume
throughput, due to natural declines associated with 13 new wells
that were connected in the third quarter of 2019, and no new well
connections in the fourth quarter. We are forecasting Ohio
Gathering volume throughput and segment adjusted EBITDA to be lower
in 2020 compared to 2019 due to a reduction in expected drilling
and completion activities.
- In the Utica Shale and Ohio Gathering combined segments, we
expect our customers to complete approximately 35 wells in 2020, or
roughly half of the number of wells completed in 2019.
- Williston Basin volume
throughput averaged 118.5 Mbbl/d in the fourth quarter, a record
for SMLP and a 12.6% increase over the third quarter of 2019.
Higher volume throughput was driven by 12 new well connections in
the fourth quarter, which enabled segment adjusted EBITDA of
$20.2 million, a 46.0% increase over
the prior quarter. Our customers are currently operating one
drilling rig and have 38 DUCs in inventory. We expect that segment
adjusted EBITDA for the Williston
Basin will remain relatively flat in 2020 compared to 2019,
primarily as the result of lower operating expenses in 2020 versus
2019, offset by a reduction in drilling activity by one of our
historically more active customers that is shifting resources to
delineate and unlock inventory in other parts of the basin. We are
encouraged by recent well results on the system and we are seeing a
significant increase in planned drilling and completion activity
from certain of our other Williston Basin customers towards the end of
2020, which we expect will continue into 2021 and beyond.
- DJ Basin segment adjusted EBITDA totaled $6.6 million in the fourth quarter of 2019, a
1.1% increase over the third quarter of 2019, due to a 6.1%
increase in total throughput over the third quarter of 2019 to 35
MMcf/d. We expect segment adjusted EBITDA growth in 2020, primarily
as a result of a full year's benefit of our recently expanded 60
MMcf/d processing plant and associated monthly demand payments. Our
outlook for the DJ Basin in 2020 contemplates approximately 50 well
completions, which we expect will generate higher volume throughput
in 2020 compared to the fourth quarter of 2019, and is based on our
customers' current one rig drilling program and supplemented by
more than 25 wells that our customers have in DUC inventory.
- The Permian Basin segment generated $0.1 million of segment
adjusted EBITDA in the fourth quarter of 2019, down from
$0.2 million from the prior quarter.
Fourth quarter results were positively influenced by 11 new well
connects in the period, which facilitated total volume throughput
of 25 MMcf/d, a 25.0% improvement over the third quarter. Segment
adjusted EBITDA in the fourth quarter of 2019 was negatively
impacted by a $0.5 million increase
in operating expenses. Our 2020 outlook for our Permian Basin
segment contemplates modest growth in volume throughput and segment
adjusted EBITDA.
Legacy Areas:
- Legacy Areas generated $39.0
million of combined segment adjusted EBITDA in the fourth
quarter of 2019 and had combined capital expenditures of
$0.2 million.
- Piceance Basin segment adjusted EBITDA of $24.1 million, an increase of $0.1 million over the third quarter of 2019.
- Disposed of RRG West, an underutilized natural gas gathering
and processing sub-system in the Piceance Basin that included over
1,200 miles of pipeline in western Colorado and eastern Utah, and represented less than 25 MMcf/d of
volume throughput. The transaction, which was effective
December 1, 2019, generated sale
proceeds of $12.0 million, and has
significantly reduced our segment operating expenses, which will
enable more effective operation of our higher utilization areas in
the Piceance Basin going forward.
- Barnett Shale segment adjusted EBITDA decreased $1.3 million from the third quarter of 2019, as a
result of a 4.0% decline in volume throughput and the expiration of
a multi-year customer MVC in October
2019 that reduced segment adjusted EBITDA by approximately
$1.0 million in the fourth quarter of
2019 compared to the third quarter of 2019.
- Marcellus Shale segment adjusted
EBITDA of $5.3 million, up
$0.4 million over the third quarter
of 2019 due to an 8.0% increase in volume throughput from 5 new
wells that were completed late in the third quarter of 2019. Our
anchor customer has nine DUCs in inventory and is currently
drilling nine additional wells.
The following table presents average daily throughput by
reportable segment on a quarter-over-quarter and year-over-year
basis:
|
|
Three months ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Average daily
throughput (MMcf/d):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utica
Shale
|
|
|
254
|
|
|
|
309
|
|
|
|
273
|
|
|
|
359
|
|
Williston Basin
(1)
|
|
|
13
|
|
|
|
18
|
|
|
|
12
|
|
|
|
18
|
|
DJ Basin
|
|
|
35
|
|
|
|
21
|
|
|
|
27
|
|
|
|
17
|
|
Permian
Basin
|
|
|
25
|
|
|
|
3
|
|
|
|
19
|
|
|
|
1
|
|
Piceance Basin
(2)
|
|
|
415
|
|
|
|
526
|
|
|
|
452
|
|
|
|
551
|
|
Barnett
Shale
|
|
|
237
|
|
|
|
255
|
|
|
|
251
|
|
|
|
253
|
|
Marcellus
Shale
|
|
|
377
|
|
|
|
401
|
|
|
|
363
|
|
|
|
474
|
|
Aggregate average
daily throughput
|
|
|
1,356
|
|
|
|
1,533
|
|
|
|
1,397
|
|
|
|
1,673
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily
throughput (Mbbl/d):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Williston
Basin
|
|
|
118.5
|
|
|
|
108.9
|
|
|
|
105.3
|
|
|
|
94.9
|
|
Aggregate average
daily throughput
|
|
|
118.5
|
|
|
|
108.9
|
|
|
|
105.3
|
|
|
|
94.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ohio Gathering
average daily throughput (MMcf/d) (3)
|
|
|
726
|
|
|
|
780
|
|
|
|
732
|
|
|
|
769
|
|
__________
|
(1)
|
The Williston Basin
segment includes the Tioga Midstream system, which was sold in
March 2019.
|
(2)
|
The Piceance Basin
segment includes the RRG West system, which was sold in December
2019.
|
(3)
|
Gross basis,
represents 100% of volume throughput for Ohio Gathering, subject to
a one-month lag.
|
The following table presents adjusted EBITDA by reportable
segment on a quarter-over-quarter and year-over-year basis:
|
|
Three months ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
(In
thousands)
|
|
|
Reportable segment
adjusted EBITDA (1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utica
Shale
|
|
$
|
8,595
|
|
|
$
|
5,826
|
|
|
$
|
29,292
|
|
|
$
|
30,285
|
|
|
Ohio Gathering
(2)
|
|
|
9,542
|
|
|
|
10,386
|
|
|
|
39,126
|
|
|
|
39,969
|
|
|
Williston Basin
(3)
|
|
|
20,213
|
|
|
|
21,852
|
|
|
|
69,437
|
|
|
|
76,701
|
|
|
DJ Basin
|
|
|
6,625
|
|
|
|
3,030
|
|
|
|
18,668
|
|
|
|
7,558
|
|
|
Permian
Basin
|
|
|
117
|
|
|
|
(309)
|
|
|
|
(879)
|
|
|
|
(1,200)
|
|
|
Piceance Basin
(4)
|
|
|
24,138
|
|
|
|
28,832
|
|
|
|
98,765
|
|
|
|
111,042
|
|
|
Barnett
Shale
|
|
|
9,560
|
|
|
|
11,498
|
|
|
|
43,043
|
|
|
|
43,268
|
|
|
Marcellus
Shale
|
|
|
5,316
|
|
|
|
5,498
|
|
|
|
20,051
|
|
|
|
24,267
|
|
|
Total
|
|
$
|
84,106
|
|
|
$
|
86,613
|
|
|
$
|
317,503
|
|
|
$
|
331,890
|
|
|
Less: Corporate
and Other (5)
|
|
|
6,569
|
|
|
|
9,748
|
|
|
|
30,362
|
|
|
|
37,805
|
|
|
Adjusted
EBITDA
|
|
$
|
77,537
|
|
|
$
|
76,865
|
|
|
$
|
287,141
|
|
|
$
|
294,085
|
|
|
__________
|
(1)
|
We define segment
adjusted EBITDA as total revenues less total costs and expenses,
plus (i) other income excluding interest income, (ii) our
proportional adjusted EBITDA for equity method investees, (iii)
depreciation and amortization, (iv) adjustments related to MVC
shortfall payments, (v) adjustments related to capital
reimbursement activity, (vi) unit-based and noncash compensation,
(vii) change in the Deferred Purchase Price Obligation, (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, subject
to a one-month lag. We define proportional adjusted EBITDA
for our equity method investees as the product of (i) total
revenues less total expenses, excluding impairments and other
noncash income or expense items and (ii) amortization for
deferred contract costs; multiplied by our ownership interest in
Ohio Gathering during the respective period.
|
(3)
|
The Williston Basin
segment includes the Tioga Midstream system, which was sold in
March 2019.
|
(4)
|
The Piceance Basin
segment includes the RRG West system, which was sold in December
2019.
|
(5)
|
Corporate and Other
represents those results that are not specifically attributable to
a reportable segment (such as Double E) or that have not been
allocated to our reportable segments, including certain general and
administrative expense items, natural gas and crude oil marketing
services, interest expense and a change in the Deferred Purchase
Price Obligation.
|
Capital Expenditures
Capital expenditures totaled
$30.6 million in the fourth quarter
of 2019, including maintenance capital expenditures of $3.6 million, a decrease of 24.5% compared to the
third quarter of 2019. Capital expenditures in the fourth
quarter of 2019 were primarily related to the commissioning of the
60 MMcf/d processing plant in the DJ Basin along with associated
compressor station investments as well as pad connection capital
expenditures in the Utica Shale and Williston Basin. SMLP
also made capital contributions totaling $7.0 million in the fourth quarter of 2019, with
respect to its 70% equity investment in Double E Pipeline,
LLC.
|
|
Year ended
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
(In
thousands)
|
|
Cash paid for
capital expenditures (1):
|
|
|
|
|
|
|
|
|
Utica
Shale
|
|
$
|
3,902
|
|
|
$
|
5,719
|
|
Williston
Basin
|
|
|
30,861
|
|
|
|
25,202
|
|
DJ Basin
|
|
|
80,487
|
|
|
|
64,920
|
|
Permian
Basin
|
|
|
47,263
|
|
|
|
83,823
|
|
Piceance
Basin
|
|
|
1,946
|
|
|
|
7,887
|
|
Barnett Shale
(2)
|
|
|
184
|
|
|
|
1,370
|
|
Marcellus
Shale
|
|
|
693
|
|
|
|
1,030
|
|
Total reportable
segment capital expenditures
|
|
|
165,336
|
|
|
|
189,951
|
|
Corporate and Other
(3)
|
|
|
16,955
|
|
|
|
10,635
|
|
Total cash paid for
capital expenditures
|
|
$
|
182,291
|
|
|
$
|
200,586
|
|
__________
|
(1)
|
Excludes cash paid
for capital expenditures by Ohio Gathering and Double E (after June
2019) due to equity method accounting.
|
(2)
|
For the year ended
December 31, 2019, the amount includes sales tax reimbursements of
$1.1 million.
|
(3)
|
For 2019, and through
the formation date of the Double E joint venture in June 2019,
reflects 100% of the capital expenditures associated with Double E
and excludes capital contributions made by our JV
partner.
|
Capital & Liquidity
As of December 31, 2019, SMLP had $563.9 million of undrawn commitments under its
$1.25 billion revolving credit
facility. Subject to covenant limits, and after accounting
for an issued but undrawn letter of credit, our available borrowing
capacity at December 31, 2019 was
approximately $100 million.
Based upon the terms of SMLP's revolving credit facility and total
outstanding debt of $1.48 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
December 31, 2019, were 5.1 to 1.0
and 2.3 to 1.0, respectively, relative to maximum threshold
limits of 5.5 to 1.0 and 3.75 to 1.0.
SMLP's total and senior secured leverage ratios at December 31, 2019 were negatively impacted by a
Barnett Shale customer's decision to not make a multi-year MVC
shortfall payment totaling $7.3
million when due in the fourth quarter of 2019. SMLP
is disputing this customer's decision and is pursuing all available
means to collect any and all amounts owed by this customer.
Upon collection, the revolving credit facility will permit SMLP to
recognize this MVC shortfall payment as EBITDA in the leverage
ratio calculations. If this payment had been made when due,
total leverage ratio at December 31,
2019 would have been 5.0 to 1.0.
Double E Financing Plan
In December 2019, SMLP announced that it had entered
into agreements with an affiliate of TPG, a global alternative
asset firm ("TPG"), for the purchase of up to $80 million of redeemable, preferred interests in
Summit Permian Transmission Holdco, LLC ("Permian Holdco"), a newly
created, unrestricted subsidiary of SMLP that indirectly owns
SMLP's 70% interest in Double E Pipeline, LLC ("Double E").
In connection with the transaction, TPG will fund the next
$80 million of Permian Holdco's
capital calls associated with Double E. Permian Holdco will
pay an annualized distribution rate of 7% on the outstanding
preferred units and has the option to pay this in-kind during the
construction period. In addition, the parties have agreed to
certain features that allow Permian Holdco to issue up to an
additional $60 million of preferred
units under the same terms and conditions.
Concurrently with the receipt of Double E's Federal Energy
Regulatory Commission ("FERC") 7(c) certificate, which is expected
in the third quarter of 2020, SMLP expects to utilize a
non-recourse commercial bank financing to fund the substantial
majority of SMLP's remaining capital obligations, and further shift
its Double E capital commitments in 2020 to a third party. In
total, SMLP expects that the preferred equity financing and the
bank financing will cover more than 70% of SMLP's $350 million
funding obligation associated with Double E.
MVC Shortfall Payments
SMLP billed its customers
$29.6 million in the fourth quarter
of 2019 related to MVC shortfalls. For those customers that
do not have MVC shortfall credit banking mechanisms in their
gathering agreements, the MVC shortfall payments are accounted for
as gathering revenue in the period in which they are earned.
In the fourth quarter of 2019, SMLP recognized $14.5 million of gathering revenue associated
with MVC shortfall payments. SMLP also recognized
$0.6 million of adjustments to MVC
shortfall payments in the fourth quarter of 2019 related to
shortfall payments from customers in the Williston Basin segment and the Barnett Shale
segment. SMLP's Barnett Shale MVC expired in the fourth
quarter of 2019. SMLP's MVC shortfall payment mechanisms
contributed $15.1 million of total
adjusted EBITDA in the fourth quarter of 2019.
|
Three months ended
December 31, 2019
|
|
|
MVC
Billings
|
|
|
|
Gathering
revenue
|
|
|
Adjustments
to MVC
shortfall
payments
|
|
|
Net impact
to adjusted
EBITDA
|
|
|
(In
thousands)
|
|
Net change in
deferred revenue related to MVC shortfall payments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Piceance
Basin
|
$
|
3,370
|
|
|
|
$
|
3,370
|
|
|
$
|
—
|
|
|
$
|
3,370
|
|
Total net
change
|
$
|
3,370
|
|
|
|
$
|
3,370
|
|
|
$
|
—
|
|
|
$
|
3,370
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MVC shortfall
payment adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Williston
Basin
|
$
|
9,105
|
|
|
|
$
|
1,476
|
|
|
$
|
1,387
|
|
|
$
|
2,863
|
|
Piceance
Basin
|
|
8,543
|
|
|
|
|
7,129
|
|
|
|
—
|
|
|
|
7,129
|
|
Barnett
Shale
|
|
7,264
|
|
|
|
|
1,264
|
|
|
|
(779)
|
|
|
|
485
|
|
Marcellus
Shale
|
|
1,295
|
|
|
|
|
1,295
|
|
|
|
—
|
|
|
|
1,295
|
|
Total MVC shortfall
payment adjustments
|
$
|
26,207
|
|
|
|
$
|
11,164
|
|
|
$
|
608
|
|
|
$
|
11,772
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
(1)
|
$
|
29,577
|
|
|
|
$
|
14,534
|
|
|
$
|
608
|
|
|
$
|
15,142
|
|
__________
|
(1) Exclusive of Ohio
Gathering due to equity method accounting.
|
|
Year ended
December 31, 2019
|
|
|
MVC
Billings
|
|
|
|
Gathering
revenue
|
|
|
Adjustments
to MVC
shortfall
payments
|
|
|
Net impact
to adjusted
EBITDA
|
|
|
(In
thousands)
|
|
Net change in
deferred revenue related to MVC shortfall payments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Piceance
Basin
|
$
|
13,476
|
|
|
|
$
|
13,476
|
|
|
$
|
—
|
|
|
$
|
13,476
|
|
Total net
change
|
$
|
13,476
|
|
|
|
$
|
13,476
|
|
|
$
|
—
|
|
|
$
|
13,476
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MVC shortfall
payment adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Williston
Basin
|
$
|
11,461
|
|
|
|
$
|
11,461
|
|
|
$
|
—
|
|
|
$
|
11,461
|
|
Piceance
Basin
|
|
28,900
|
|
|
|
|
28,900
|
|
|
|
(103)
|
|
|
|
28,797
|
|
Barnett
Shale
|
|
7,264
|
|
|
|
|
1,264
|
|
|
|
3,579
|
|
|
|
4,843
|
|
Marcellus
Shale
|
|
5,073
|
|
|
|
|
5,073
|
|
|
|
—
|
|
|
|
5,073
|
|
Total MVC shortfall
payment adjustments
|
$
|
52,698
|
|
|
|
$
|
46,698
|
|
|
$
|
3,476
|
|
|
$
|
50,174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
(1)
|
$
|
66,174
|
|
|
|
$
|
60,174
|
|
|
$
|
3,476
|
|
|
$
|
63,650
|
|
__________
|
(1) Exclusive of Ohio
Gathering due to equity method accounting.
|
Quarterly Distribution
On January 29, 2020, the board of directors of
SMLP's general partner declared a quarterly cash distribution of
$0.125 per unit on all of its
outstanding common units, or $0.50
per unit on an annualized basis, for the quarter ended December 31, 2019. This distribution was
paid on February 14, 2020, to
unitholders of record as of the close of business on February 7, 2020.
Fourth Quarter 2019 Earnings Call Information
SMLP
will host a conference call at 10:00
a.m. Eastern on Friday, February 28,
2020, 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 49342130. 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
March 13, 2020, at 11:59 p.m. Eastern, and can be accessed by
dialing 888-843-7419 and entering the replay passcode
49342130#. 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 Barclays Midstream &
Infrastructure Corporate Access Days in New York, New York on March 3, 2020. 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
present value, impairments, items of income or loss that we
characterize as unrepresentative of our ongoing operations and
other noncash expenses or losses, less interest income, income tax
benefit, income (loss) from equity method investees and other
noncash income or gains. 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
income or expense items that we characterize as unrepresentative of
our ongoing operations.
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 and
(ii) asset impairments. These items are inherently uncertain
and depend on various factors, many of which are beyond our
control. As such, any associated estimate and its impact on
our GAAP performance and cash flow measures could vary materially
based on a variety of acceptable management
assumptions.
About Summit Midstream Partners, LP
SMLP is a
value-driven limited partnership focused on developing, owning and
operating midstream energy infrastructure assets that are
strategically located in the core producing areas of unconventional
resource basins, primarily shale formations, in the continental
United States. SMLP provides natural gas, crude oil and
produced water gathering services pursuant to primarily long-term
and fee-based gathering and processing agreements with customers
and counterparties in six unconventional resource basins: (i) the
Appalachian Basin, which includes the Utica and Marcellus shale formations in
Ohio and West Virginia; (ii) the Williston Basin, which includes the Bakken and
Three Forks shale formations in North
Dakota; (iii) the Denver-Julesburg Basin, which includes the
Niobrara and Codell shale
formations in Colorado and
Wyoming; (iv) the Permian Basin,
which includes the Bone Spring and Wolfcamp formations in
New Mexico; (v) the Fort Worth Basin, which includes the Barnett
Shale formation in Texas; and (vi)
the Piceance Basin, which includes the Mesaverde formation as well
as the Mancos and Niobrara shale formations in Colorado.
SMLP has an equity investment in Double E Pipeline, LLC, which is
developing natural gas transmission infrastructure that will
provide transportation service from multiple receipt points in the
Delaware Basin to various delivery
points in and around the Waha Hub in Texas. SMLP also has an
equity investment in Ohio Gathering, which operates extensive
natural gas gathering and condensate stabilization infrastructure
in the Utica Shale in Ohio. SMLP is headquartered in
The Woodlands, Texas.
About Summit Midstream Partners, LLC
Summit Midstream
Partners, LLC ("Summit Investments") beneficially owns a 48.5%
limited partner interest in SMLP and indirectly owns and controls
the non-economic 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 a 6.3% limited partner interest in SMLP.
Forward-Looking Statements
Investors are cautioned
that certain statements contained in this release are
"forward-looking" statements. Forward-looking statements include,
without limitation, any statement that may project, indicate or
imply future results, events, performance or achievements and may
contain the words "expect," "intend," "plan," "anticipate,"
"estimate," "believe," "will be," "will continue," "will likely
result," and similar expressions, or future conditional verbs such
as "may," "will,\" "should," "would," and "could." In addition, any
statement concerning future financial performance (including future
revenues, earnings or growth rates), ongoing business strategies or
prospects, and possible actions taken by us, our subsidiaries,
Summit Investments or our Sponsor, are also forward-looking
statements.
Forward-looking statements are based on current expectations and
projections about future events and are inherently subject to a
variety of risks and uncertainties, many of which are beyond the
control of our management team. All forward-looking statements in
this release and subsequent written and oral forward-looking
statements attributable to us, or to persons acting on our behalf,
are expressly qualified in their entirety by the cautionary
statements in this paragraph. These risks and uncertainties
include, among others:
- our ability to sustain our current rate of cash
distributions;
- fluctuations in natural gas, NGLs and crude oil prices;
- the extent and success of our customers' drilling efforts, as
well as the quantity of natural gas, crude oil and produced water
volumes produced within proximity of our assets;
- failure or delays by our customers in achieving expected
production in their natural gas, crude oil and produced water
projects;
- competitive conditions in our industry and their impact on our
ability to connect hydrocarbon supplies to our gathering and
processing assets or systems;
- actions or inactions taken or nonperformance by third parties,
including suppliers, contractors, operators, processors,
transporters and customers, including the inability or failure of
our shipper customers to meet their financial obligations under our
gathering agreements and our ability to enforce the terms and
conditions of certain of our gathering agreements in the event of a
bankruptcy of one or more of our customers;
- our ability to divest of certain of our assets to third parties
on attractive terms, which is subject to a number of factors,
including prevailing conditions and outlook in the natural gas, NGL
and crude oil industries and markets;
- the ability to attract and retain key management
personnel;
- commercial bank and capital market conditions and the potential
impact of changes or disruptions in the credit and/or capital
markets;
- changes in the availability and cost of capital and the results
of our financing efforts, including availability of funds in the
credit and/or capital markets;
- restrictions placed on us by the agreements governing our debt
and preferred equity instruments;
- the availability, terms and cost of downstream transportation
and processing services;
- natural disasters, accidents, weather-related delays, casualty
losses and other matters beyond our control;
- operational risks and hazards inherent in the gathering,
compression, treating and/or processing of natural gas, crude oil
and produced water;
- weather conditions and terrain in certain areas in which we
operate;
- any other issues that can result in deficiencies in the design,
installation or operation of our gathering, compression, treating
and processing facilities;
- timely receipt of necessary government approvals and permits,
our ability to control the costs of construction, including costs
of materials, labor and rights-of-way and other factors that may
impact our ability to complete projects within budget and on
schedule;
- our ability to finance our obligations related to capital
expenditures or the Deferred Purchase Price Obligation, including
through opportunistic asset divestitures or joint ventures and the
impact any such divestitures or joint ventures could have on our
results;
- the effects of existing and future laws and governmental
regulations, including environmental, safety and climate change
requirements and federal, state and local restrictions or
requirements applicable to oil and/or gas drilling, production or
transportation;
- the ability of SMP Holdings to meet its obligations under its
senior secured term loan facility;
- changes in tax status;
- the effects of litigation;
- changes in general economic conditions; and
- certain factors discussed elsewhere in this release.
Developments in any of these areas could cause actual results to
differ materially from those anticipated or projected or cause a
significant reduction in the market price of our common units,
preferred units and senior notes.
The foregoing list of risks and uncertainties may not contain
all of the risks and uncertainties that could affect us. In
addition, in light of these risks and uncertainties, the matters
referred to in the forward-looking statements contained in this
document may not in fact occur. Accordingly, undue reliance should
not be placed on these statements. We undertake no obligation to
publicly update or revise any forward-looking statements as a
result of new information, future events or otherwise, except as
otherwise required by law.
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
(In
thousands)
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
32,340
|
|
|
$
|
4,345
|
|
Accounts
receivable
|
|
|
102,118
|
|
|
|
97,936
|
|
Other current
assets
|
|
|
5,018
|
|
|
|
3,971
|
|
Total current
assets
|
|
|
139,476
|
|
|
|
106,252
|
|
Property, plant and
equipment, net
|
|
|
1,882,251
|
|
|
|
1,963,713
|
|
Intangible assets,
net
|
|
|
232,278
|
|
|
|
273,416
|
|
Goodwill
|
|
|
—
|
|
|
|
16,211
|
|
Investment in equity
method investees
|
|
|
309,728
|
|
|
|
649,250
|
|
Other noncurrent
assets
|
|
|
9,718
|
|
|
|
11,720
|
|
Total
assets
|
|
$
|
2,573,451
|
|
|
$
|
3,020,562
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Capital
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Trade accounts
payable
|
|
$
|
24,415
|
|
|
$
|
38,414
|
|
Accrued
expenses
|
|
|
11,482
|
|
|
|
21,963
|
|
Due to
affiliate
|
|
|
311
|
|
|
|
240
|
|
Deferred
revenue
|
|
|
13,493
|
|
|
|
11,467
|
|
Ad valorem taxes
payable
|
|
|
8,477
|
|
|
|
10,550
|
|
Accrued
interest
|
|
|
12,311
|
|
|
|
12,286
|
|
Accrued environmental
remediation
|
|
|
1,725
|
|
|
|
2,487
|
|
Other current
liabilities
|
|
|
11,933
|
|
|
|
12,645
|
|
Total current
liabilities
|
|
|
84,147
|
|
|
|
110,052
|
|
Long-term
debt
|
|
|
1,470,299
|
|
|
|
1,257,731
|
|
Noncurrent Deferred
Purchase Price Obligation
|
|
|
178,453
|
|
|
|
383,934
|
|
Noncurrent deferred
revenue
|
|
|
38,709
|
|
|
|
39,504
|
|
Noncurrent accrued
environmental remediation
|
|
|
2,926
|
|
|
|
3,149
|
|
Other noncurrent
liabilities
|
|
|
7,951
|
|
|
|
4,968
|
|
Total
liabilities
|
|
|
1,782,485
|
|
|
|
1,799,338
|
|
|
|
|
|
|
|
|
|
|
Mezzanine
Capital
|
|
|
|
|
|
|
|
|
Subsidiary Series A
Preferred Units
|
|
|
27,450
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Partners'
Capital
|
|
|
|
|
|
|
|
|
Series A Preferred
Units
|
|
|
293,616
|
|
|
|
293,616
|
|
Common limited
partner capital
|
|
|
469,900
|
|
|
|
902,358
|
|
General Partner
interests
|
|
|
—
|
|
|
|
25,250
|
|
Total partners'
capital
|
|
|
763,516
|
|
|
|
1,221,224
|
|
Total liabilities,
mezzanine capital and partners' capital
|
|
$
|
2,573,451
|
|
|
$
|
3,020,562
|
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
Three months ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
(In thousands,
except per-unit amounts)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gathering services
and related fees
|
|
$
|
83,708
|
|
|
$
|
84,243
|
|
|
$
|
326,747
|
|
|
$
|
344,616
|
|
Natural gas, NGLs and
condensate sales
|
|
|
18,556
|
|
|
|
42,809
|
|
|
|
86,994
|
|
|
|
134,834
|
|
Other
revenues
|
|
|
9,983
|
|
|
|
6,619
|
|
|
|
29,787
|
|
|
|
27,203
|
|
Total
revenues
|
|
|
112,247
|
|
|
|
133,671
|
|
|
|
443,528
|
|
|
|
506,653
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of natural gas
and NGLs
|
|
|
12,636
|
|
|
|
36,112
|
|
|
|
63,438
|
|
|
|
107,661
|
|
Operation and
maintenance
|
|
|
23,416
|
|
|
|
23,426
|
|
|
|
97,587
|
|
|
|
96,878
|
|
General and
administrative (1)
|
|
|
16,695
|
|
|
|
13,211
|
|
|
|
54,139
|
|
|
|
52,877
|
|
Depreciation and
amortization
|
|
|
28,273
|
|
|
|
26,896
|
|
|
|
110,206
|
|
|
|
107,100
|
|
Transaction
costs
|
|
|
709
|
|
|
|
—
|
|
|
|
1,788
|
|
|
|
—
|
|
Loss (gain) on asset
sales, net
|
|
|
59
|
|
|
|
6
|
|
|
|
(1,536)
|
|
|
|
—
|
|
Long-lived asset
impairment (2)
|
|
|
15,486
|
|
|
|
5,059
|
|
|
|
60,507
|
|
|
|
7,186
|
|
Goodwill impairment
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
16,211
|
|
|
|
—
|
|
Total costs and
expenses
|
|
|
97,274
|
|
|
|
104,710
|
|
|
|
402,340
|
|
|
|
371,702
|
|
Other income
(expense)
|
|
|
147
|
|
|
|
(247)
|
|
|
|
451
|
|
|
|
(169)
|
|
Interest
expense
|
|
|
(19,626)
|
|
|
|
(15,714)
|
|
|
|
(74,429)
|
|
|
|
(60,535)
|
|
Deferred Purchase
Price Obligation
|
|
|
13,881
|
|
|
|
32,784
|
|
|
|
1,982
|
|
|
|
(20,975)
|
|
Income (loss) before
income taxes and loss from equity
method investees
|
|
|
9,375
|
|
|
|
45,784
|
|
|
|
(30,808)
|
|
|
|
53,272
|
|
Income tax benefit
(expense)
|
|
|
196
|
|
|
|
55
|
|
|
|
(1,174)
|
|
|
|
(33)
|
|
Loss from equity
method investees (4)
|
|
|
(336,654)
|
|
|
|
(7,185)
|
|
|
|
(337,851)
|
|
|
|
(10,888)
|
|
Net (loss)
income
|
|
$
|
(327,083)
|
|
|
$
|
38,654
|
|
|
$
|
(369,833)
|
|
|
$
|
42,351
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income per
limited partner unit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common unit
– basic
|
|
$
|
(3.79)
|
|
|
$
|
0.39
|
|
|
$
|
(4.84)
|
|
|
$
|
0.06
|
|
Common unit
– diluted
|
|
$
|
(3.79)
|
|
|
$
|
0.39
|
|
|
$
|
(4.84)
|
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
limited partner units outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common units
– basic
|
|
|
88,110
|
|
|
|
73,369
|
|
|
|
82,365
|
|
|
|
73,304
|
|
Common units
– diluted
|
|
|
88,110
|
|
|
|
73,767
|
|
|
|
82,365
|
|
|
|
73,615
|
|
__________
|
(1) For the three
months and the year ended December 31, 2019, the amount includes
$5.0 million of restructuring expenses. For the year ended
December 31, 2019, includes $3.4 million of severance expenses. For
three months and the year ended December 31, 2018, the amount
includes $1.1 million of severance expenses.
|
(2) For the year
ended December 31, 2019, the amount is associated with (i) our
decision in March 2019 to idle our existing 20 MMcf/d DJ Basin
processing plant in conjunction with the commissioning of our new
60 MMcf/d DJ Basin processing plant resulting in an impairment
charge of $34.7 million; (ii) a $14.2 million impairment charge
associated with the sale of certain Red Rock Gathering system
assets in the fourth quarter of 2019; and (iii) our decommissioning
in March 2019 of an underutilized Barnett Shale compressor station
resulting in an impairment charge of $10.2
million.
|
(3) For the year
ended December 31, 2019, the amount represents an impairment charge
associated with our annual goodwill testing of the Marcellus Shale
reporting unit.
|
(4) For the year
ended December 31, 2019, the amount includes a $336.7 million
impairment charge associated with our equity method investment in
Ohio Gathering and Ohio Condensate.
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
UNAUDITED OTHER
FINANCIAL AND OPERATING DATA
|
|
|
Three months ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
(Dollars in
thousands)
|
|
Other financial
data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
|
(327,083)
|
|
|
$
|
38,654
|
|
|
$
|
(369,833)
|
|
|
$
|
42,351
|
|
Net cash provided by
operating activities
|
$
|
38,918
|
|
|
$
|
61,437
|
|
|
$
|
182,337
|
|
|
$
|
227,929
|
|
Capital
expenditures
|
$
|
30,628
|
|
|
$
|
63,553
|
|
|
$
|
182,291
|
|
|
$
|
200,586
|
|
Contributions to
equity method investees
|
$
|
6,986
|
|
|
$
|
4,924
|
|
|
$
|
18,316
|
|
|
$
|
4,924
|
|
Adjusted
EBITDA
|
$
|
77,537
|
|
|
$
|
76,865
|
|
|
$
|
287,141
|
|
|
$
|
294,085
|
|
Distributable cash
flow
|
$
|
47,094
|
|
|
$
|
44,361
|
|
|
$
|
167,433
|
|
|
$
|
179,302
|
|
Distributions
declared (1)
|
$
|
11,687
|
|
|
$
|
45,280
|
|
|
$
|
83,030
|
|
|
$
|
180,932
|
|
Distribution coverage
ratio (2)
|
4.03x
|
|
|
0.98x
|
|
|
2.02x
|
|
|
0.99x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate average
daily throughput – natural gas (MMcf/d)
|
|
1,356
|
|
|
|
1,533
|
|
|
|
1,397
|
|
|
|
1,673
|
|
Aggregate average
daily throughput – liquids (Mbbl/d)
|
|
118.5
|
|
|
|
108.9
|
|
|
|
105.3
|
|
|
|
94.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ohio Gathering
average daily throughput (MMcf/d) (3)
|
|
726
|
|
|
|
780
|
|
|
|
732
|
|
|
|
769
|
|
__________
|
(1) Represents
distributions declared to common unitholders in respect of a given
period. For example, for the three months ended December 31, 2019,
represents the distributions declared in January 2020 and paid in
February 2020.
|
(2) Distribution
coverage ratio calculation for the three months ended December 31,
2019 and 2018 is based on distributions declared to common
unitholders in respect of the fourth quarter of 2019 and 2018.
Represents the ratio of distributable cash flow to distributions
declared.
|
(3) Gross basis,
represents 100% of volume throughput for Ohio Gathering, subject to
a one-month lag.
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
UNAUDITED
RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES
|
|
|
|
Three months ended
December 31,
|
|
|
Year ended
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
(In
thousands)
|
|
Reconciliations of
net income or loss to adjusted EBITDA and distributable
cash flow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
|
(327,083)
|
|
|
$
|
38,654
|
|
|
$
|
(369,833)
|
|
|
$
|
42,351
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
19,626
|
|
|
|
15,714
|
|
|
|
74,429
|
|
|
|
60,535
|
|
Income tax
expense
|
|
|
(196)
|
|
|
|
(55)
|
|
|
|
1,174
|
|
|
|
33
|
|
Depreciation and
amortization (1)
|
|
|
28,507
|
|
|
|
27,015
|
|
|
|
111,426
|
|
|
|
106,767
|
|
Proportional adjusted
EBITDA for equity method investees
(2)
|
|
|
9,542
|
|
|
|
10,386
|
|
|
|
39,126
|
|
|
|
39,969
|
|
Adjustments related to
MVC shortfall payments (3)
|
|
|
608
|
|
|
|
2,909
|
|
|
|
3,476
|
|
|
|
(3,632)
|
|
Adjustments related to
capital reimbursement activity (4)
|
|
|
(250)
|
|
|
|
(476)
|
|
|
|
(2,156)
|
|
|
|
(427)
|
|
Unit-based and noncash
compensation
|
|
|
2,801
|
|
|
|
2,140
|
|
|
|
8,171
|
|
|
|
8,328
|
|
Deferred Purchase
Price Obligation (5)
|
|
|
(13,881)
|
|
|
|
(32,784)
|
|
|
|
(1,982)
|
|
|
|
20,975
|
|
(Gain) loss on asset
sales, net
|
|
|
59
|
|
|
|
6
|
|
|
|
(1,536)
|
|
|
|
—
|
|
Long-lived asset
impairment
|
|
|
15,486
|
|
|
|
5,059
|
|
|
|
60,507
|
|
|
|
7,186
|
|
Goodwill
impairment
|
|
|
—
|
|
|
|
—
|
|
|
|
16,211
|
|
|
|
—
|
|
Other, net
(6)
|
|
|
5,664
|
|
|
|
1,112
|
|
|
|
10,277
|
|
|
|
1,112
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from equity
method investees
|
|
|
(336,654)
|
|
|
|
(7,185)
|
|
|
|
(337,851)
|
|
|
|
(10,888)
|
|
Adjusted
EBITDA
|
|
$
|
77,537
|
|
|
$
|
76,865
|
|
|
$
|
287,141
|
|
|
$
|
294,085
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash interest
paid
|
|
|
22,783
|
|
|
|
20,552
|
|
|
|
76,883
|
|
|
|
64,678
|
|
Cash paid for
taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
150
|
|
|
|
175
|
|
Senior notes interest
adjustment (7)
|
|
|
(3,063)
|
|
|
|
(3,063)
|
|
|
|
—
|
|
|
|
—
|
|
Distributions to
Series A Preferred unitholders (8)
|
|
|
14,250
|
|
|
|
14,250
|
|
|
|
28,500
|
|
|
|
28,500
|
|
Series A Preferred
units distribution adjustment (9)
|
|
|
(7,125)
|
|
|
|
(7,125)
|
|
|
|
—
|
|
|
|
—
|
|
Maintenance capital
expenditures
|
|
|
3,598
|
|
|
|
7,890
|
|
|
|
14,175
|
|
|
|
21,430
|
|
Distributable cash
flow
|
|
$
|
47,094
|
|
|
$
|
44,361
|
|
|
$
|
167,433
|
|
|
$
|
179,302
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions
declared (10)
|
|
$
|
11,687
|
|
|
$
|
45,280
|
|
|
$
|
83,030
|
|
|
$
|
180,932
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution coverage
ratio (11)
|
|
4.03x
|
|
|
0.98x
|
|
|
2.02x
|
|
|
0.99x
|
|
__________
|
(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, subject to a
one-month lag.
|
(3) Adjustments
related to MVC shortfall payments recognize the earnings from MVC
shortfall payments ratably over the term of the associated
MVC.
|
(4) Adjustments
related to capital reimbursement activity represent contributions
in aid of construction revenue recognized in accordance with
Accounting Standards Update No. 2014-09 Revenue from Contracts with
Customers ("Topic 606").
|
(5) Deferred Purchase
Price Obligation represents the change in the present value of the
Deferred Purchase Price Obligation.
|
(6) Represents items
of income or loss that we characterize as unrepresentative of our
ongoing operations, including, in the three months and the year
ended December 31, 2019, $5.0 million related to restructuring
expenses and $0.7 million of transaction costs associated with the
November 2019 DPPO amendment. For the year ended December 31, 2019,
the amount includes $3.4 million of severance expense associated
with our former Chief Executive Officer, $0.9 million of
transaction costs associated with the Equity Restructuring, and
$0.9 million of transaction costs primarily associated with the
November 2019 DPPO amendment. For the three months and the year
ended December 31, 2018, the amount consisted of severance expense
to our former Chief Financial Officer.
|
(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.
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.
|
(10) Represents
distributions declared to common unitholders in respect of a given
period. For example, for the three months ended December 31, 2019,
represents the distributions declared in January 2020 and paid in
February 2020.
|
(11) Distribution
coverage ratio calculation for the three months ended December 31,
2019 and 2018 is based on distributions declared in respect of the
fourth quarter of 2019 and 2018. Represents the ratio of
distributable cash flow to distributions
declared.
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
UNAUDITED
RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES
|
|
|
|
Year ended
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
(In
thousands)
|
|
Reconciliation of
net cash provided by operating activities to adjusted
EBITDA and distributable cash
flow:
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
|
182,337
|
|
|
$
|
227,929
|
|
Add:
|
|
|
|
|
|
|
|
|
Interest expense,
excluding amortization of debt issuance costs
|
|
|
70,018
|
|
|
|
56,250
|
|
Income tax
expense
|
|
|
1,174
|
|
|
|
33
|
|
Changes in operating
assets and liabilities
|
|
|
23,275
|
|
|
|
8,122
|
|
Proportional adjusted
EBITDA for equity method investees (1)
|
|
|
39,126
|
|
|
|
39,969
|
|
Adjustments related to
MVC shortfall payments (2)
|
|
|
3,476
|
|
|
|
(3,632)
|
|
Adjustments related to
capital reimbursement activity (3)
|
|
|
(2,156)
|
|
|
|
(427)
|
|
Other, net
(4)
|
|
|
10,277
|
|
|
|
1,112
|
|
Less:
|
|
|
|
|
|
|
|
|
Distributions from
equity method investees
|
|
|
37,300
|
|
|
|
35,271
|
|
Noncash lease
expense
|
|
|
3,086
|
|
|
|
—
|
|
Adjusted
EBITDA
|
|
$
|
287,141
|
|
|
$
|
294,085
|
|
Less:
|
|
|
|
|
|
|
|
|
Cash interest
paid
|
|
|
76,883
|
|
|
|
64,678
|
|
Cash paid for
taxes
|
|
|
150
|
|
|
|
175
|
|
Distributions to
Series A Preferred unitholders (5)
|
|
|
28,500
|
|
|
|
28,500
|
|
Maintenance capital
expenditures
|
|
|
14,175
|
|
|
|
21,430
|
|
Distributable cash
flow
|
|
$
|
167,433
|
|
|
$
|
179,302
|
|
__________
|
(1) Reflects our
proportionate share of Ohio Gathering adjusted EBITDA, subject to a
one-month lag.
|
(2) Adjustments
related to MVC shortfall payments are recognized 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) Represents items
of income or loss that we characterize as unrepresentative of our
ongoing operations, including, in the year ended December 31, 2019,
$5.0 million related to restructuring expenses, $3.4 million of
severance expense associated with our former Chief Executive
Officer, $0.9 million of transaction costs associated with the
Equity Restructuring, and $0.9 million of transaction costs
primarily associated with the November 2019 DPPO amendment. For the
year ended December 31, 2018, the amount consisted of severance
expense to our former Chief Financial Officer.
|
(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.
|
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SOURCE Summit Midstream Partners, LP