HOUSTON, July 23, 2020 /PRNewswire/ -- Summit
Midstream Partners, LP (NYSE: SMLP) (the "Partnership") announced
today that it has further amended the expiration date on its offer
to exchange (the "Exchange Offer") any and all of its 9.50% Series
A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred
Units (the "Series A Preferred Units") for newly issued common
units representing limited partner interests in the Partnership,
from 5:00 p.m. New York city time on Friday, July 24, 2020, to 5:00 p.m. New
York city time on Tuesday, July 28,
2020, unless further extended. As of July 23, 2020, based on information provided by
American Stock Transfer & Trust Company, LLC, the depositary of
the Exchange Offer, 22,619 Series A Preferred Units had been
tendered and not validly withdrawn. In addition, SMLP is
providing updated 2020 financial guidance, preliminary second
quarter 2020 financial and operating results and the timing
for the release of its second quarter earnings and information for
its second quarter 2020 earnings call.
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Heath Deneke, President, Chief
Executive Officer and Chairman of SMLP commented, "We expect second
quarter 2020 financial and operational results to be in-line with
our expectations and consistent with the environment we described
on our last earnings call, which highlighted a slow-down in
production activity, deferral of well completions from customers,
particularly in the Williston and
DJ basins, and instances of temporary economic shut-ins of existing
production. The outperformance of a five-well pad site in our
Utica Shale segment was a growth driver for quarterly natural gas
volume throughput and we expect average daily volume throughput for
the Utica Shale segment to be up more than 80% compared to the
first quarter of 2020. Accordingly, we expect second quarter
2020 net income in the range of $46
million to $68 million,
adjusted EBITDA in the range of $63
million to $65 million,
natural gas volume throughput on our operated systems of 1.3 Bcf/d
to 1.4 Bcf/d and liquids volume throughput of 74 Mbbl/d to 78
Mbbl/d."
"We continue to monitor market dynamics and work closely with
our customers to refine our full year 2020 expectations. The
overall macro backdrop remains very challenging with the ongoing
COVID-19 pandemic, depressed commodity prices, reduced drilling and
completion activity and various oil and gas company bankruptcy
filings. Although crude oil prices have improved and the risk
of additional production curtailments in liquids-focused areas has
abated, certain producers behind our systems have been slower than
expected to bring production back online. Furthermore, in the
Utica Shale, a customer has recently curtailed in excess of 150
MMcf/d of production which we now expect will remain offline
awaiting more favorable natural gas prices in late 2020 and into
2021. Further, SMLP has recently amended a gathering contract
with a key Williston Basin
customer to extend the term of the gathering agreement acreage
dedication, in exchange for a modest gathering fee concession,
which has a modest impact to our 2020 financial guidance.
Given these developments, we are revising our 2020 EBITDA guidance
range to a new range of $250 million
to $260 million. We remain
focused on operating safely, controlling costs and managing capital
expenditures in a disciplined manner and are maintaining our 2020
total capital expenditures guidance range of $30 million to $50
million, including approximately $10
million to $20 million related
to equity investment in Double E. I look forward to speaking
in greater detail about the quarter and our revised guidance during
our upcoming second quarter 2020 earnings call in August."
Note Regarding Preliminary Results
The preliminary
financial information included in this release is subject to
completion of the Partnership's quarter-end close procedures and
further financial review. Actual results may differ from these
estimates as a result of the completion of the Partnership's
quarter-end closing procedures, review adjustments and other
developments that may arise between now and the time such financial
information for the period is finalized. As a result, these
estimates are preliminary, may change and constitute
forward-looking information and, as a result, are subject to risks
and uncertainties. These preliminary estimates should not be viewed
as a substitute for full interim financial statements prepared in
accordance with United States
generally accepted accounting principles (GAAP), and they should
not be viewed as indicative of our results for any future period.
Neither our independent registered public accounting firm nor any
other independent registered public accounting firm has audited,
reviewed or compiled, examined or performed any procedures with
respect to the preliminary results, nor have they expressed any
opinion or any other form of assurance on the preliminary
results.
Use of Non-GAAP Financial Measure
The following
provides a preliminary range of adjusted EBITDA for the three
months ended June 30, 2020 and a
reconciliation of net income.
|
Three Months Ended
June 30, 2020
|
|
Low
|
|
High
|
|
(In
thousands)
|
Reconciliation of
net income or loss to adjusted EBITDA:
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
45,750
|
|
$
67,750
|
Add:
|
|
|
|
Interest
expense
|
22,500
|
|
19,500
|
Depreciation and
amortization (1)
|
31,000
|
|
28,000
|
Proportional adjusted
EBITDA for equity method investees (2)
|
8,250
|
|
6,750
|
Loss (gain) on early
extinguishment of debt
|
(52,000)
|
|
(57,000)
|
Other, net (3)
|
7,500
|
|
-
|
Adjusted
EBITDA
|
$
63,000
|
|
$
65,000
|
|
|
|
|
|
(1)
|
Includes the
amortization expense associated with our favorable gas gathering
contracts as reported in other revenues.
|
(2)
|
Reflects SMLP's
proportionate share of Ohio Gathering adjusted EBITDA, subject to a
one-month lag.
|
(3)
|
Includes various
items such as, but not limited to income tax benefits and expenses,
adjustments related to MVC shortfall payments that recognize the
earnings from MVC shortfall payments ratably over the term of the
associated MVC, adjustments related to capital reimbursement
activity which represent contributions in aid of construction
revenue recognized in accordance with Accounting Standards Update
No. 2014-09 Revenue from Contracts with Customers ("Topic 606"),
unit-based and noncash compensation, net loss or gain on asset
sales, long-lived asset impairment, income or loss from equity
method investees and items of income or loss that we characterize
as unrepresentative of our ongoing operations, including
restructuring expenses.
|
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. Because adjusted EBITDA may be
defined differently by other entities in our industry, our
definition of this non-GAAP financial measure may not be comparable
to similarly titled measures of other entities, thereby diminishing
its utility.
Management uses adjusted EBITDA in making financial, operating
and planning decisions and in evaluating our financial performance.
Furthermore, management believes that adjusted EBITDA may provide
external users of our financial statements, such as investors,
commercial banks, research analysts and others, with additional
meaningful comparisons between current results and results of prior
periods as they are expected to be reflective of our core ongoing
business.
Adjusted EBITDA is used as a supplemental financial measure by
external users of our financial statements such as investors,
commercial banks, research analysts and others.
Adjusted EBITDA is used to assess:
- the ability of our assets to generate cash sufficient to make
future potential cash distributions and support our
indebtedness;
- the financial performance of our assets without regard to
financing methods, capital structure or historical cost basis;
- our operating performance and return on capital as compared to
those of other entities in the midstream energy sector, without
regard to financing or capital structure;
- the attractiveness of capital projects and acquisitions and the
overall rates of return on alternative investment opportunities;
and
- the financial performance of our assets without regard to (i)
income or loss from equity method investees, (ii) the impact of the
timing of minimum volume commitments shortfall payments under our
gathering agreements or (iii) the timing of impairments or other
income or expense items that we characterize as unrepresentative of
our ongoing operations.
Adjusted EBITDA has limitations as an analytical tool and
investors should not consider it in isolation or as a substitute
for analysis of our results as reported under GAAP. For
example:
- certain items excluded from adjusted EBITDA are significant
components in understanding and assessing an entity's financial
performance, such as an entity's cost of capital and tax
structure;
- adjusted EBITDA does not reflect our cash expenditures or
future requirements for capital expenditures or contractual
commitments;
- adjusted EBITDA does not reflect changes in, or cash
requirements for, our working capital needs; and
- although depreciation and amortization are noncash charges, the
assets being depreciated and amortized will often have to be
replaced in the future, and adjusted EBITDA does not reflect any
cash requirements for such replacements.
We compensate for the limitations of adjusted EBITDA as an
analytical tool by reviewing the comparable GAAP financial measure,
understanding the differences between the financial measures and
incorporating these data points into our decision-making
process.
Second Quarter 2020 Earnings Call Information
SMLP
will report operating and financial results for the second quarter
of 2020 on Friday, August 7, 2020,
before the start of trading on the New York Stock Exchange.
SMLP will host a conference call at 10:00
a.m. Eastern on Friday, August 7,
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 49844223. The conference call, webcast live and
archive of the call can be accessed through the Investors section
of SMLP's website at www.summitmidstream.com.
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 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
Houston, Texas.
Forward-Looking Statements
This press release includes
certain statements concerning expectations for the future that are
forward-looking within the meaning of the federal securities
laws. Forward-looking statements include, without limitation,
any statement that may project, indicate or imply future results,
events, performance or achievements and may contain the words
"expect," "intend," "plan," "anticipate," "estimate," "believe,"
"will be," "will continue," "will likely result," and similar
expressions, or future conditional verbs such as "may," "will,"
"should," "would," and "could." Forward-looking statements
also contain known and unknown risks and uncertainties (many
of which are difficult to predict and beyond
management's control) that may cause SMLP's actual results in
future periods to differ materially from anticipated or projected
results. An extensive list of specific material risks
and uncertainties affecting SMLP is contained in its 2019 Annual
Report on Form 10-K filed with the Securities and Exchange
Commission on March 9, 2020 and Quarterly Report on Form
10-Q for the three months ended March 31,
2020 filed with the Securities Exchange Commission on
May 8, 2020, each as amended and
updated from time to time. Any forward-looking statements in this
press release, including forward-looking statements regarding 2020
financial guidance or financial or operating expectations for 2020,
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 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.
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SOURCE Summit Midstream Partners, LP