HOUSTON, Aug. 7, 2020 /PRNewswire/ -- Summit
Midstream Partners, LP (NYSE: SMLP) announced today its financial
and operating results for the three months ended June 30, 2020, including net income of
$56.7 million, adjusted EBITDA of
$64.6 million and DCF of $42.7 million. Net income included a
$54.2 million gain from early
extinguishment of debt as a result of SMLP's open market
repurchases of senior unsecured notes at discounts to par
value. Operated natural gas volume throughput averaged 1,391
MMcf/d and liquids volume throughput averaged 76 Mbbl/d for the
quarter. Increased quarterly operated natural gas volume
throughput was primarily driven by seven wells that came online in
March 2020 in the Utica Shale
segment, which included a five-well pad site which generated
aggregate production rates in excess of 160 MMcf/d for the majority
of the quarter as well as six wells turned-in-line upstream of the
TPL-7 Connector pipeline. Liquids volume throughput was
adversely impacted by approximately 14 Mbbl/d of temporary
production shut-ins. Although producers are starting to
return previously shut-in wells to service, incremental volumes
from previously curtailed production are expected to be moderate in
the near-term.
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Heath Deneke, President, Chief
Executive Officer and Chairman, commented, "Our industry continued
to face a number of headwinds in the second quarter of 2020, with
oil prices briefly turning negative for the first time in history,
the commencement of temporary production shut-ins, deferred
drilling and completion activities, upstream bankruptcy filings and
impacts from the ongoing COVID-19 pandemic. With this
backdrop, we experienced quarter-over-quarter volume throughput
declines across all our segments except for our Utica Shale
segment, which increased by approximately 87.4% relative to the
first quarter of 2020, mainly due to the outperformance of new
wells connected in March. We began to experience production
curtailments from certain customers, predominantly in our
liquids-focused basins during the first two months of the quarter;
however, with the improvement and relative stabilization of crude
oil prices in the $40 per barrel
area, some shut-in wells started to come back online late in the
quarter. We also recently amended two gathering contracts
with key Williston Basin customers
that we expect to become effective in the third quarter of
2020. Although the specific terms of each customer contract
differ, both amendments extended the term of the gathering
agreement acreage dedication in exchange for a modest gathering fee
concession. In June, we experienced production
shut-ins on certain pads in our Utica Shale segment that we expect
will continue through late into the fourth quarter of 2020, when
natural gas prices are expected to increase and our customers can
capture better margins. These shut-ins were unexpected and
included the five-well pad that had outperformed expectations early
in the second quarter. In light of these actions, on
July 23, 2020, we revised our full
year 2020 adjusted EBITDA guidance range to $250 million to $260
million, which is down marginally from our previous guidance
of the low end of our $260 million to
$285 million guidance range that was
disclosed in May."
"We remain committed to strengthening the balance sheet,
enhancing financial flexibility and focusing on initiatives that
are within our control, such as maintaining a lean cost structure,
employing capital discipline and operating safely and
responsibly. The GP Buy-In transaction represented a major
step forward in our comprehensive liability management strategy,
and was an important step in our ongoing initiative to strengthen
the balance sheet because it facilitated the reallocation of
$76 million per year of cash from
equity distributions to de-leveraging initiatives, while providing
the flexibility to continue optimizing our capital structure in a
manner that is fully aligned with the interests of our public
common unitholders. Immediately after closing the GP Buy-In
transaction on May 28, 2020, we began
repurchasing our senior notes in the open market. Our debt
repurchase initiative has been successful in a relatively short
timeframe, and we have repurchased $137.9
million of face value of aggregate senior notes at a
weighted average discount of 42% as of August 6, 2020. In addition, on
June 18, 2020, we launched an offer
to exchange our Series A Preferred Units ("Preferred Units") for
common units (the "Exchange Offer") because there was an
opportunity to structure a transaction that could provide value
across SMLP's capital structure. Upon closing the Exchange
Offer, we retired $62.8 million face
value of Preferred Units, representing 21% of the initial 300,000
preferred units outstanding, at an 84% discount to face value based
on the $0.80 SMLP common unit closing
price on July 31, 2020. We
provided value to our common unitholders by retiring Preferred
Units below face value and afforded participating Preferred Unit
holders enhanced liquidity via our common units, all while
preserving cash for other strategic initiatives, since only common
units were offered as consideration. We expect to continue to
employ our comprehensive liability management strategy over the
coming quarters and will consider the entire gamut of options
available to us. We plan on working with our revolving credit
facility lenders to develop the tools and flexibility needed to
reposition the balance sheet and we will continue to focus on
potential asset divestitures and joint ventures of certain of our
Legacy and Core Focus Areas. I'm proud of the progress our
team has made on enhancing our balance sheet to date; however,
there are still many remaining opportunities to pursue."
"There have been several positive developments regarding the
Double E Pipeline project, which represents a critical
infrastructure need for the northern Delaware Basin. We have
been pursuing opportunities to reduce costs without sacrificing
quality, safety or timeline of the project, and I'm pleased to
announce that we have locked-in approximately 80% of expected
development capital expenditures, which includes pipe costs,
pipeline construction and substantially all of the privately-owned
rights-of-way. We now expect SMLP's 70% aggregate share of
the Double E Pipeline project development capital to be
$315 million, which is an approximate
10% reduction relative to the original $350
million expectation that was developed at FID in June
2019. We continue to progress third party financing options
for the majority of SMLP's remaining share of capital expenditures
and expect to finalize an agreement in the third quarter of 2020 in
connection with the receipt of our FERC 7(c) certificate.
Utilizing third-party capital to finance Double E will allow SMLP
to retain cash for other strategic initiatives, including continued
debt reduction and repositioning of SMLP's balance sheet."
Reaffirming 2020 Financial Guidance
SMLP is reaffirming its updated 2020 financial guidance provided
on July 23, 2020. Projections
associated with this guidance are subject to risks and
uncertainties as described in the "Forward-Looking Statements"
section at the end of this release.
2020 Financial Guidance
- 2020 adjusted EBITDA of $250
million to $260 million;
- 2020 total capital expenditures of $30
million to $50 million, which
includes approximately $10 million to
$20 million related to our equity
investment in Double E.
2020 adjusted EBITDA guidance of $250
million to $260 million
incorporates impacts primarily from production shut-ins and two
amended gathering contracts with Williston customers that are expected to
become effective in the third quarter of 2020 and have moderately
lower gathering rates and extended terms. Customers in our
Williston Basin and DJ Basin
reportable segments have been slower to bring curtailed production
back online than initially anticipated and we are expecting
prolonged production shut-ins and a deferral of well completions in
these areas for the second half of 2020. Financial guidance
also includes the impacts of well shut-ins in the Utica Shale
segment through late into the fourth quarter 2020 and sustained
shut-ins of condensate and wet gas volumes on Ohio Gathering, which
had approximately 70 MMcf/d of gross volumes curtailed as of the
end of the second quarter.
SMLP's total 2020 capital expenditures guidance range of
$30 million to $50 million remains unchanged relative to the
guidance released on May 3, 2020;
however, the range of estimates related to SMLP's equity investment
in Double E was increased by $10
million to accommodate additional capital commitments from
SMLP to Double E due to a potential delay to receiving the FERC
7(c) certificate and closing of third-party financing to the fourth
quarter of 2020.
GP Buy-In Financial Statement Recast
In the second quarter of 2020, SMLP completed its previously
announced GP Buy-In transaction with Summit Midstream Partners, LLC
("Summit Investments"). For GAAP purposes, the GP Buy-In was
a transaction between entities under common control with a change
in reporting entity and as a result, SMLP's historical financial
results contained in this press release have been recast for the
period the entities were under common control by Summit
Investments. Although SMLP is the surviving entity for legal
purposes, Summit Investments is the surviving entity for accounting
purposes; therefore, the historical financial results of SMLP prior
to the GP Buy-In presented in this press release are those of
Summit Investments.
Second Quarter 2020 Business Highlights
In the second quarter of 2020, SMLP's average daily natural gas
throughput for its operated systems increased 8.6% relative to the
first quarter of 2020, to 1,391 MMcf/d, and liquids volumes
decreased 22.4% relative to the first quarter of 2020, to 76
Mbbl/d. SMLP's customers currently have approximately 66 DUCs
in inventory and 14 wells that have been completed but not
turned-in-line upstream of its systems.
Core Focus Areas:
- Core Focus Areas generated combined quarterly segment adjusted
EBITDA of $37.1 million and had
combined capital expenditures of $6.8
million.
- Utica Shale segment adjusted EBITDA totaled $10.7 million, a $4.8
million increase from the first quarter of 2020, which was
driven by an 87.4% increase in volume throughput. Volume throughput
was higher in the second quarter of 2020 as a result of seven new
wells connected in March 2020,
including a five-well pad that averaged more than 160 MMcf/d for
the majority of the quarter, as well as six wells that were
turned-in-line during the quarter behind the TPL-7 Connector
pipeline. Volume throughput was partially offset by two pads that
were shut-in in mid-June, which accounted for a decrease in average
daily volume throughput of approximately 24 MMcf/d for the quarter.
We expect these two pads to remain shut-in until late in the fourth
quarter of 2020 based on guidance from our customers. Subsequent to
June 30, 2020 we also executed an
amendment to a gathering agreement that will incentivize drilling
behind our SMU system, resulting in
additional expected well activity in 2021 and 2022.
- Ohio Gathering segment adjusted EBITDA totaled $7.5 million, a 5.4% decrease from the first
quarter of 2020. Lower segment adjusted EBITDA was driven by an
11.5% decrease in volume throughput due to production shut-ins,
which accounted for an average of approximately 70 MMcf/d of gross
volumes for the quarter, and natural production declines, partially
offset by six new wells that were connected in the condensate
window in May 2020 and lower
operating expenses.
- Williston Basin segment
adjusted EBITDA totaled $12.7 million
in the second quarter of 2020, a 21.4% decrease from the first
quarter of 2020, primarily due to a 22.4% quarter-over-quarter
decrease in liquids volume throughput to 76 Mbbl/d and higher than
expected non-recurring maintenance expenses. This volume throughput
decrease was driven largely by several production shut-ins across
multiple customers, which accounted for a loss of approximately 14
Mbbl/d in liquids volume throughput for the quarter, and natural
production declines. There are approximately 24 DUCs in inventory
and 8 wells that have been completed, but not yet turned to
production behind our Williston
Basin systems. We expect the cadence of future well connections to
be highly dependent on prevailing commodity prices, in-basin
differentials and the regulatory environment.
- DJ Basin segment adjusted EBITDA totaled $4.3 million in the second quarter of 2020, a
26.6% decrease from the first quarter of 2020, due to a 37.5%
quarter-over-quarter decrease in total throughput to 20 MMcf/d. The
volume throughput decrease was largely a result of production
shut-ins representing an average of approximately 9 MMcf/d during
the quarter and planned maintenance which took our Hereford Plant
offline for four days during the quarter, partially offset by seven
new well connections. We expect continued deferrals of well
connections in the near-term and our customers currently have 13
wells in DUC inventory and 6 completed wells that have not yet been
turned-in-line behind our DJ Basin system. Volume throughput on the
DJ Basin system for the month of July averaged 25 MMcf/d, as our
customers have consistently reversed well shut-in activities that
impacted us in the second quarter of 2020.
- Permian Basin segment adjusted EBITDA totaled a quarterly
record of $1.8 million in the second
quarter of 2020, an increase of approximately 15.6% relative to the
prior quarter largely driven by margin mix and improvements in
natural gas and NGL pricing. Although average second quarter volume
throughput of 32 MMcf/d was relatively comparable to the first
quarter, volumes steadily improved over the second quarter and
average volume throughput for June was approximately 37 MMcf/d.
This ramp in volume throughput was a result of a limited number of
shut-ins that occurred in the early part of the second quarter and
an increase of approximately 9 MMcf/d starting in May, when a
contract extension became effective. Overall, our outlook for our
Permian Basin segment remains unchanged relative to our original
2020 financial guidance.
Legacy Areas:
- Legacy Areas generated $35.1
million of combined segment adjusted EBITDA in the second
quarter of 2020 and had combined capital expenditures of
$0.3 million.
- Piceance Basin segment adjusted EBITDA of $21.7 million decreased by $1.8 million from the first quarter of 2020 due
to lower volume throughput of 4.2%, which was primarily driven by
the impact of natural production declines.
- Barnett Shale segment adjusted EBITDA decreased by $0.2 million from the first quarter of 2020 to
$8.5 million, as a result of a
decline in volume throughput. Increased volumes from workovers of
existing wells behind the DFW Midstream system partially mitigated
natural production declines.
- Marcellus Shale segment adjusted
EBITDA of $4.9 million decreased by
8.1% compared to the first quarter of 2020 due to a 7.0% decrease
in volume throughput to 339 MMcf/d. Our anchor customer did not
connect any new wells and had 18 DUCs in inventory at the end of
the second quarter; however, 9 of those wells were connected to our
Mountaineer Midstream system in July and spot rate volumes have
recently been averaging in excess of 400 MMcf/d.
The following table presents average daily throughput by
reportable segment for the periods indicated:
|
Three months ended
June 30,
|
|
|
Six months ended
June 30,
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Average daily
throughput (MMcf/d):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utica
Shale
|
|
416
|
|
|
|
260
|
|
|
|
319
|
|
|
|
273
|
|
Williston Basin
(1)
|
|
14
|
|
|
|
11
|
|
|
|
14
|
|
|
|
13
|
|
DJ Basin
|
|
20
|
|
|
|
20
|
|
|
|
26
|
|
|
|
21
|
|
Permian
Basin
|
|
32
|
|
|
|
17
|
|
|
|
33
|
|
|
|
16
|
|
Piceance Basin
(2)
|
|
367
|
|
|
|
462
|
|
|
|
375
|
|
|
|
473
|
|
Barnett
Shale
|
|
203
|
|
|
|
251
|
|
|
|
218
|
|
|
|
260
|
|
Marcellus
Shale
|
|
339
|
|
|
|
347
|
|
|
|
351
|
|
|
|
363
|
|
Aggregate average
daily throughput
|
|
1,391
|
|
|
|
1,368
|
|
|
|
1,336
|
|
|
|
1,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily
throughput (Mbbl/d):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Williston
Basin
|
|
76
|
|
|
|
94
|
|
|
|
87
|
|
|
|
99
|
|
Aggregate average
daily throughput
|
|
76
|
|
|
|
94
|
|
|
|
87
|
|
|
|
99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ohio Gathering
average daily throughput (MMcf/d) (3)
|
|
540
|
|
|
|
713
|
|
|
|
575
|
|
|
|
712
|
|
__________
|
(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 for the periods indicated:
|
Three months ended
June 30,
|
|
|
Six months ended
June 30,
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
(In
thousands)
|
|
Reportable segment
adjusted EBITDA (1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utica
Shale
|
$
|
10,693
|
|
|
$
|
6,640
|
|
|
$
|
16,621
|
|
|
$
|
12,833
|
|
Ohio Gathering
(2)
|
|
7,514
|
|
|
|
9,939
|
|
|
|
15,453
|
|
|
|
19,149
|
|
Williston Basin
(3)
|
|
12,727
|
|
|
|
16,650
|
|
|
|
28,919
|
|
|
|
35,384
|
|
DJ Basin
|
|
4,339
|
|
|
|
2,816
|
|
|
|
10,250
|
|
|
|
5,489
|
|
Permian
Basin
|
|
1,828
|
|
|
|
(656)
|
|
|
|
3,409
|
|
|
|
(1,206)
|
|
Piceance Basin
(4)
|
|
21,734
|
|
|
|
24,584
|
|
|
|
45,291
|
|
|
|
50,583
|
|
Barnett
Shale
|
|
8,510
|
|
|
|
11,208
|
|
|
|
17,270
|
|
|
|
22,582
|
|
Marcellus
Shale
|
|
4,888
|
|
|
|
4,635
|
|
|
|
10,208
|
|
|
|
9,777
|
|
Total
|
$
|
72,233
|
|
|
$
|
75,816
|
|
|
$
|
147,421
|
|
|
$
|
154,591
|
|
Less: Corporate
and Other (5)
|
|
7,643
|
|
|
|
8,256
|
|
|
|
16,927
|
|
|
|
20,173
|
|
Adjusted
EBITDA
|
$
|
64,590
|
|
|
$
|
67,560
|
|
|
$
|
130,494
|
|
|
$
|
134,418
|
|
__________
|
(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) impairments and (viii) other noncash expenses or losses, less
other noncash income or gains.
|
(2)
|
Represents our
proportional share of adjusted EBITDA for Ohio Gathering, subject
to a one-month lag. We define proportional adjusted EBITDA
for our equity method investees as the product of (i) total
revenues less total expenses, excluding impairments and other
noncash income or expense items and (ii) amortization for
deferred contract costs; multiplied by our ownership interest 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 and natural gas and crude oil
marketing services.
|
Capital Expenditures
Capital expenditures totaled $8.8
million in the second quarter of 2020, including maintenance
capital expenditures of $2.4 million,
a decrease of 52.4% compared to the first quarter of 2020.
Capital expenditures in the second quarter of 2020 were primarily
related to growth projects in our Williston Basin, DJ Basin and Permian Basin
segments.
|
|
Six months ended
June 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
(In
thousands)
|
|
Cash paid for
capital expenditures (1):
|
|
|
|
|
|
|
|
|
Utica
Shale
|
|
$
|
1,482
|
|
|
$
|
1,065
|
|
Williston
Basin
|
|
|
7,423
|
|
|
|
14,230
|
|
DJ Basin
|
|
|
8,428
|
|
|
|
50,373
|
|
Permian
Basin
|
|
|
4,921
|
|
|
|
28,163
|
|
Piceance
Basin
|
|
|
404
|
|
|
|
1,497
|
|
Barnett Shale
(2)
|
|
|
869
|
|
|
|
(37)
|
|
Marcellus
Shale
|
|
|
430
|
|
|
|
108
|
|
Total reportable
segment capital expenditures
|
|
|
23,957
|
|
|
|
95,399
|
|
Corporate and Other
(3)
|
|
|
3,469
|
|
|
|
15,693
|
|
Total cash paid for
capital expenditures
|
|
$
|
27,426
|
|
|
$
|
111,092
|
|
__________
|
(1)
|
Excludes cash paid
for capital expenditures by Ohio Gathering and Double E (after June
2019) due to equity method accounting.
|
(2)
|
For the six months
ended June 30, 2019, the amount includes sales tax reimbursements
of $1.1 million.
|
(3)
|
For the six months
ended June 30, 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 June 30, 2020, SMLP had
$512.9 million of undrawn commitments
under its $1.25 billion revolving
credit facility. Subject to covenant limits, and after
accounting for a $4.1 million issued
but undrawn letter of credit, our available borrowing capacity at
June 30, 2020 was approximately
$191 million.
Based upon the terms of SMLP's revolving credit facility and
total outstanding debt, net of cash, of $1.4
billion (inclusive of $668.0
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, 2020, were
4.9 to 1.0 and 2.5 to 1.0, respectively, relative to maximum
threshold limits of 5.50 to 1.0 and 3.75 to 1.0.
Double E Update
During the second quarter of 2020, SMLP made cash investments
totaling $21.7 million with respect
to its 70% equity investment in Double E Pipeline, LLC. As of
June 30, 2020, the full $80 million commitment of the Subsidiary Series A
Preferred Units had been issued. The estimated cost to
complete the Double E Pipeline Project has decreased by
approximately $50 million to
$450 million as a result of locking
in privately-owned rights-of-way, pipe costs and construction costs
that are lower than the original budgeted amounts set at FID in
June 2019. Accordingly, SMLP's 70% share is now approximately
$315 million, of which approximately
$114 million, including the
Subsidiary Series A Preferred Units, has been funded as of
June 30, 2020. SMLP continues
to actively pursue third party financing alternatives to fund the
substantial majority of SMLP's remaining Double E capital
obligations and expects to have third-party financing secured by
the end of the third quarter 2020, concurrently with our receipt of
the FERC 7 (c) certificate. A successful financing would
defer to 2021 or potentially eliminate any additional SMLP
investment beyond the approximately $10
million to $20 million
expected in 2020. We continue to expect to receive a FERC
7(c) certificate for Double E in the third quarter of 2020.
MVC Shortfall Payments
SMLP billed its customers $12.7
million in the second quarter of 2020 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 second quarter
of 2020, SMLP recognized $12.7
million of gathering revenue associated with MVC shortfall
payments. SMLP also recognized $2.3
million of adjustments to MVC shortfall payments in the
second quarter of 2020 related to shortfall payment adjustments
from customers in the Williston
Basin segment and the Piceance Basin segment. SMLP's MVC
shortfall payment mechanisms contributed $15.0 million of total adjusted EBITDA in the
second quarter of 2020.
|
Three months ended
June 30, 2020
|
|
|
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
|
$
|
3,419
|
|
|
|
$
|
3,419
|
|
|
$
|
—
|
|
|
$
|
3,419
|
|
Total net
change
|
$
|
3,419
|
|
|
|
$
|
3,419
|
|
|
$
|
—
|
|
|
$
|
3,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MVC shortfall
payment adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Williston
Basin
|
$
|
1,091
|
|
|
|
$
|
1,091
|
|
|
$
|
2,124
|
|
|
$
|
3,215
|
|
Piceance
Basin
|
|
6,935
|
|
|
|
|
6,935
|
|
|
|
167
|
|
|
|
7,102
|
|
Marcellus
Shale
|
|
1,258
|
|
|
|
|
1,258
|
|
|
|
—
|
|
|
|
1,258
|
|
Total MVC shortfall
payment adjustments
|
$
|
9,284
|
|
|
|
$
|
9,284
|
|
|
$
|
2,291
|
|
|
$
|
11,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
(1)
|
$
|
12,703
|
|
|
|
$
|
12,703
|
|
|
$
|
2,291
|
|
|
$
|
14,994
|
|
__________
|
(1) Exclusive of Ohio
Gathering due to equity method accounting.
|
|
Six months ended
June 30, 2020
|
|
|
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
|
$
|
7,077
|
|
|
|
$
|
7,077
|
|
|
$
|
—
|
|
|
$
|
7,077
|
|
Total net
change
|
$
|
7,077
|
|
|
|
$
|
7,077
|
|
|
$
|
—
|
|
|
$
|
7,077
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MVC shortfall
payment adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Williston
Basin
|
$
|
2,093
|
|
|
|
$
|
9,883
|
|
|
$
|
(3,541)
|
|
|
$
|
6,342
|
|
Piceance
Basin
|
|
13,891
|
|
|
|
|
13,786
|
|
|
|
390
|
|
|
|
14,176
|
|
Marcellus
Shale
|
|
2,544
|
|
|
|
|
2,544
|
|
|
|
—
|
|
|
|
2,544
|
|
Total MVC shortfall
payment adjustments
|
$
|
18,528
|
|
|
|
$
|
26,213
|
|
|
$
|
(3,151)
|
|
|
$
|
23,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
(1)
|
$
|
25,605
|
|
|
|
$
|
33,290
|
|
|
$
|
(3,151)
|
|
|
$
|
30,139
|
|
__________
|
(1) Exclusive of Ohio
Gathering due to equity method accounting.
|
Quarterly Distribution Update
The board of directors of SMLP's general partner suspended cash
distributions payable on its common units and on its 9.50% Series A
fixed-to-floating rate cumulative redeemable perpetual preferred
units for the period ended June 30,
2020. Unpaid distributions on the preferred units will
continue to accrue.
Second Quarter 2020 Earnings Call Information
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.
Upcoming Investor Conferences
Members of SMLP's senior management team will attend the for
2020 Citi One-on-One Midstream / Energy Infrastructure Virtual
Conference which will take place on August
12-13, 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, 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, adjusted Series A Preferred Units cash distribution,
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
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.
Distributable cash flow is used to assess:
- the ability of our assets to generate cash sufficient to
support future potential 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, processing and
transportation services pursuant to primarily long-term, fee-based
agreements with customers and counterparties in six unconventional
resource basins: (i) the Appalachian Basin, which includes the
Utica and Marcellus shale
formations in Ohio and
West Virginia; (ii) the
Williston Basin, which includes
the Bakken and Three Forks shale formations in North Dakota; (iii) the Denver-Julesburg
Basin, which includes the Niobrara
and Codell shale formations in Colorado and Wyoming; (iv) the Permian Basin, which
includes the Bone Spring and Wolfcamp formations in New Mexico; (v) the Fort Worth Basin, which includes the Barnett
Shale formation in Texas; and (vi)
the Piceance Basin, which includes the Mesaverde formation as well
as the Mancos and Niobrara shale formations in Colorado.
SMLP has an equity investment in Double E Pipeline, LLC, which is
developing natural gas transmission infrastructure that will
provide transportation service from multiple receipt points in the
Delaware Basin to various delivery
points in and around the Waha Hub in Texas. SMLP also has an
equity investment in Ohio Gathering, which operates extensive
natural gas gathering and condensate stabilization infrastructure
in the Utica Shale in Ohio. SMLP is headquartered in
Houston, Texas.
Forward-Looking Statements
This press release includes certain statements concerning
expectations for the future that are forward-looking within the
meaning of the federal securities laws. Forward-looking
statements 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 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.
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
(In
thousands)
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
36,571
|
|
|
$
|
9,530
|
|
Restricted
cash
|
|
|
5,048
|
|
|
|
27,392
|
|
Accounts
receivable
|
|
|
77,199
|
|
|
|
97,418
|
|
Other current
assets
|
|
|
4,252
|
|
|
|
5,521
|
|
Total current
assets
|
|
|
123,070
|
|
|
|
139,861
|
|
Property, plant and
equipment, net
|
|
|
1,855,889
|
|
|
|
1,882,489
|
|
Intangible assets,
net
|
|
|
215,901
|
|
|
|
232,278
|
|
Investment in equity
method investees
|
|
|
383,058
|
|
|
|
309,728
|
|
Other noncurrent
assets
|
|
|
8,584
|
|
|
|
9,742
|
|
Total
assets
|
|
$
|
2,586,502
|
|
|
$
|
2,574,098
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Capital
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Trade accounts
payable
|
|
$
|
18,422
|
|
|
$
|
24,415
|
|
Accrued
expenses
|
|
|
11,331
|
|
|
|
11,339
|
|
Deferred
revenue
|
|
|
15,354
|
|
|
|
13,493
|
|
Ad valorem taxes
payable
|
|
|
6,307
|
|
|
|
8,477
|
|
Accrued
interest
|
|
|
11,737
|
|
|
|
12,346
|
|
Accrued environmental
remediation
|
|
|
1,795
|
|
|
|
1,725
|
|
Other current
liabilities
|
|
|
9,859
|
|
|
|
12,206
|
|
Short-term debt and
current portion of long-term debt
|
|
|
38,000
|
|
|
|
5,546
|
|
Total current
liabilities
|
|
|
112,805
|
|
|
|
89,547
|
|
Long-term
debt
|
|
|
1,545,133
|
|
|
|
1,622,279
|
|
Noncurrent deferred
revenue
|
|
|
42,348
|
|
|
|
38,709
|
|
Noncurrent accrued
environmental remediation
|
|
|
2,311
|
|
|
|
2,926
|
|
Other noncurrent
liabilities
|
|
|
8,618
|
|
|
|
7,951
|
|
Total
liabilities
|
|
|
1,711,215
|
|
|
|
1,761,412
|
|
|
|
|
|
|
|
|
|
|
Mezzanine
Capital
|
|
|
|
|
|
|
|
|
Subsidiary Series A
Preferred Units
|
|
|
78,563
|
|
|
|
27,450
|
|
|
|
|
|
|
|
|
|
|
Partners'
Capital
|
|
|
|
|
|
|
|
|
Series A Preferred
Units
|
|
|
307,866
|
|
|
|
293,616
|
|
Common limited
partner capital
|
|
|
488,858
|
|
|
|
305,550
|
|
Noncontrolling
interest
|
|
|
—
|
|
|
|
186,070
|
|
Total partners'
capital
|
|
|
796,724
|
|
|
|
785,236
|
|
Total liabilities,
mezzanine capital and partners' capital
|
|
$
|
2,586,502
|
|
|
$
|
2,574,098
|
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
Three months ended
June 30,
|
|
|
Six months ended
June 30,
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
(In thousands,
except per-unit amounts)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gathering services
and related fees
|
$
|
73,911
|
|
|
$
|
75,107
|
|
|
$
|
157,703
|
|
|
$
|
162,071
|
|
Natural gas, NGLs and
condensate sales
|
|
10,683
|
|
|
|
18,291
|
|
|
|
24,463
|
|
|
|
56,219
|
|
Other
revenues
|
|
7,413
|
|
|
|
6,288
|
|
|
|
14,744
|
|
|
|
12,804
|
|
Total
revenues
|
|
92,007
|
|
|
|
99,686
|
|
|
|
196,910
|
|
|
|
231,094
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of natural gas
and NGLs
|
|
6,088
|
|
|
|
11,571
|
|
|
|
14,313
|
|
|
|
43,330
|
|
Operation and
maintenance
|
|
21,152
|
|
|
|
24,318
|
|
|
|
42,963
|
|
|
|
48,540
|
|
General and
administrative (1)
|
|
12,786
|
|
|
|
10,565
|
|
|
|
29,347
|
|
|
|
28,950
|
|
Depreciation and
amortization
|
|
29,630
|
|
|
|
26,837
|
|
|
|
59,296
|
|
|
|
54,601
|
|
Transaction
costs
|
|
1,207
|
|
|
|
96
|
|
|
|
1,218
|
|
|
|
2,433
|
|
Gain on asset sales,
net
|
|
(281)
|
|
|
|
(287)
|
|
|
|
(166)
|
|
|
|
(1,248)
|
|
Long-lived asset
impairment (2)
|
|
654
|
|
|
|
70
|
|
|
|
4,475
|
|
|
|
45,021
|
|
Total costs and
expenses
|
|
71,236
|
|
|
|
73,170
|
|
|
|
151,446
|
|
|
|
221,627
|
|
Other income
(expense)
|
|
276
|
|
|
|
83
|
|
|
|
(151)
|
|
|
|
292
|
|
Interest
expense
|
|
(21,990)
|
|
|
|
(22,343)
|
|
|
|
(45,818)
|
|
|
|
(45,085)
|
|
Gain on early
extinguishment of debt (3)
|
|
54,235
|
|
|
|
—
|
|
|
|
54,235
|
|
|
|
—
|
|
Income (loss) before
income taxes and income (loss)
from equity method investees
|
|
53,292
|
|
|
|
4,256
|
|
|
|
53,730
|
|
|
|
(35,326)
|
|
Income tax benefit
(expense)
|
|
389
|
|
|
|
(1,149)
|
|
|
|
402
|
|
|
|
(1,406)
|
|
Income (loss) from
equity method investees
|
|
3,040
|
|
|
|
(79)
|
|
|
|
6,351
|
|
|
|
(520)
|
|
Net income
(loss)
|
$
|
56,721
|
|
|
$
|
3,028
|
|
|
$
|
60,483
|
|
|
$
|
(37,252)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per
limited partner unit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common unit –
basic
|
$
|
1.11
|
|
|
$
|
(0.06)
|
|
|
$
|
1.05
|
|
|
$
|
(0.54)
|
|
Common unit –
diluted
|
$
|
1.06
|
|
|
$
|
(0.06)
|
|
|
$
|
1.02
|
|
|
$
|
(0.54)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
limited partner units outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common units –
basic
|
|
44,650
|
|
|
|
45,319
|
|
|
|
44,985
|
|
|
|
45,319
|
|
Common units –
diluted
|
|
46,737
|
|
|
|
45,319
|
|
|
|
46,323
|
|
|
|
45,319
|
|
__________
|
(1) For the three and
six months ended June 30, 2020, the amount includes $0.6 million
and $3.3 million, respectively, of restructuring
expenses.
|
(2) For the six
months ended June 30, 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; and (ii) our decommissioning in March 2019
of an underutilized Barnett Shale compressor station resulting in
an impairment charge of $10.2 million.
|
(3) Subsequent to the
GP Buy-In Transaction, the Partnership commenced a debt buyback
program to repurchase our Senior Notes, which is ongoing. We
repurchased $25.8 million of the outstanding $300 million aggregate
principal amount of our 5.50% Senior Notes through June 30, 2020.
The gain on early extinguishment of debt for the 5.50% Senior Notes
during the three and six months ended June 30, 2020 totaled $9.2
million and is inclusive of a $0.1 million write off of debt
issuance costs. We also repurchased $106.2 million of the
outstanding $500 million aggregate principal amount of our 5.75%
Senior Notes through June 30, 2020. The gain on early
extinguishment of debt for the 5.75% Senior Notes during the three
and six months ended June 30, 2020 totaled $45.1 million and is
inclusive of a $1.0 million write off of debt issuance
costs.
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
|
UNAUDITED OTHER
FINANCIAL AND OPERATING DATA
|
|
|
Three months ended
June 30,
|
|
|
Six months ended
June 30,
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
(Dollars in
thousands)
|
|
Other financial
data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
56,721
|
|
|
$
|
3,028
|
|
|
$
|
60,483
|
|
|
$
|
(37,252)
|
|
Net cash provided by
operating activities
|
$
|
35,170
|
|
|
$
|
39,381
|
|
|
$
|
105,371
|
|
|
$
|
84,574
|
|
Capital
expenditures
|
$
|
8,843
|
|
|
$
|
50,244
|
|
|
$
|
27,426
|
|
|
$
|
111,092
|
|
Contributions to
equity method investees
|
$
|
21,695
|
|
|
$
|
5,921
|
|
|
$
|
79,728
|
|
|
$
|
5,921
|
|
Adjusted
EBITDA
|
$
|
64,590
|
|
|
$
|
67,560
|
|
|
$
|
130,494
|
|
|
$
|
134,418
|
|
Distributable cash
flow
|
$
|
42,669
|
|
|
$
|
35,886
|
|
|
$
|
73,594
|
|
|
$
|
69,299
|
|
Distributions
declared (1)
|
$
|
—
|
|
|
$
|
23,778
|
|
|
$
|
—
|
|
|
$
|
47,553
|
|
Distribution coverage
ratio (2)
|
n/a
|
|
|
1.51x
|
|
|
n/a
|
|
|
1.46x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate average
daily throughput – natural gas
(MMcf/d)
|
|
1,391
|
|
|
|
1,368
|
|
|
|
1,336
|
|
|
|
1,419
|
|
Aggregate average
daily throughput – liquids (Mbbl/d)
|
|
76
|
|
|
|
94
|
|
|
|
87
|
|
|
|
99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ohio Gathering
average daily throughput (MMcf/d) (3)
|
|
540
|
|
|
|
713
|
|
|
|
575
|
|
|
|
712
|
|
__________
|
(1) Represents
distributions declared to common unitholders in respect of a given
period. On May 3, 2020, the board of directors of SMLP's general
partner announced an immediate suspension of the distribution
payable on its common units and on its 9.50% Series A
fixed-to-floating rate cumulative redeemable perpetual preferred
units. For the three months ended June 30, 2019, represents the
distributions declared in July 2019 and paid in August
2019.
|
(2) Represents the
ratio of distributable cash flow to distributions declared.
Distribution coverage ratio calculation for the three months ended
June 30, 2019 is based on distributions declared to common
unitholders in respect of the second quarter of
2019.
|
(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
June 30,
|
|
|
Six months ended
June 30,
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
(In
thousands)
|
|
Reconciliations of
net income or loss to adjusted EBITDA and distributable
cash flow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
56,721
|
|
|
$
|
3,028
|
|
|
$
|
60,483
|
|
|
$
|
(37,252)
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
21,990
|
|
|
|
22,343
|
|
|
|
45,818
|
|
|
|
45,085
|
|
Income tax (benefit)
expense
|
|
(389)
|
|
|
|
1,149
|
|
|
|
(402)
|
|
|
|
1,406
|
|
Depreciation and
amortization (1)
|
|
29,866
|
|
|
|
27,200
|
|
|
|
59,766
|
|
|
|
55,353
|
|
Proportional adjusted
EBITDA for equity method investees
(2)
|
|
7,514
|
|
|
|
9,939
|
|
|
|
15,453
|
|
|
|
19,149
|
|
Adjustments related to
MVC shortfall payments
(3)
|
|
2,291
|
|
|
|
3,533
|
|
|
|
(3,151)
|
|
|
|
(666)
|
|
Adjustments related to
capital reimbursement activity
(4)
|
|
(237)
|
|
|
|
(1,046)
|
|
|
|
(448)
|
|
|
|
(1,761)
|
|
Unit-based and noncash
compensation
|
|
1,846
|
|
|
|
1,553
|
|
|
|
4,569
|
|
|
|
4,079
|
|
Gain on early
extinguishment of debt (5)
|
|
(54,235)
|
|
|
|
—
|
|
|
|
(54,235)
|
|
|
|
—
|
|
Gain on asset sales,
net
|
|
(281)
|
|
|
|
(287)
|
|
|
|
(166)
|
|
|
|
(1,248)
|
|
Long-lived asset
impairment
|
|
654
|
|
|
|
70
|
|
|
|
4,475
|
|
|
|
45,021
|
|
Other, net
(6)
|
|
1,890
|
|
|
|
(1)
|
|
|
|
4,683
|
|
|
|
4,732
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
equity method investees
|
|
3,040
|
|
|
|
(79)
|
|
|
|
6,351
|
|
|
|
(520)
|
|
Adjusted
EBITDA
|
$
|
64,590
|
|
|
$
|
67,560
|
|
|
$
|
130,494
|
|
|
$
|
134,418
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash interest
paid
|
|
24,413
|
|
|
|
23,751
|
|
|
|
44,073
|
|
|
|
43,683
|
|
Cash paid for
taxes
|
|
—
|
|
|
|
150
|
|
|
|
—
|
|
|
|
150
|
|
Senior notes interest
adjustment (7)
|
|
(4,869)
|
|
|
|
(3,063)
|
|
|
|
(1,806)
|
|
|
|
—
|
|
Adjusted Series A
Preferred Units cash distribution
(8)
|
|
—
|
|
|
|
7,125
|
|
|
|
7,125
|
|
|
|
14,250
|
|
Maintenance capital
expenditures
|
|
2,377
|
|
|
|
3,711
|
|
|
|
7,508
|
|
|
|
7,036
|
|
Distributable cash
flow
|
$
|
42,669
|
|
|
$
|
35,886
|
|
|
$
|
73,594
|
|
|
$
|
69,299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions
declared (9)
|
$
|
—
|
|
|
$
|
23,778
|
|
|
$
|
—
|
|
|
$
|
47,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution coverage
ratio (10)
|
n/a
|
|
|
1.51x
|
|
|
n/a
|
|
|
1.46x
|
|
__________
|
(1) Includes the
amortization expense associated with our favorable gas gathering
contracts as reported in other revenues.
|
(2) Reflects our
proportionate share of Ohio Gathering adjusted EBITDA, subject to a
one-month lag.
|
(3) Adjustments
related to MVC shortfall payments are recognized ratably over the
term of the associated MVC.
|
(4) Adjustments
related to capital reimbursement activity represent contributions
in aid of construction revenue recognized in accordance with
Accounting Standards Update No. 2014-09 Revenue from Contracts with
Customers ("Topic 606").
|
(5) Subsequent to the
GP Buy-In Transaction, the Partnership commenced a debt buyback
program to repurchase our Senior Notes, which is ongoing. We
repurchased $25.8 million of the outstanding $300 million aggregate
principal amount of our 5.50% Senior Notes through June 30, 2020.
The gain on early extinguishment of debt for the 5.50% Senior Notes
during the three and six months ended June 30, 2020 totaled $9.2
million and is inclusive of a $0.1 million write off of debt
issuance costs. We also repurchased $106.2 million of the
outstanding $500 million aggregate principal amount of our 5.75%
Senior Notes through June 30, 2020. The gain on early
extinguishment of debt for the 5.75% Senior Notes during the three
and six months ended June 30, 2020 totaled $45.1 million and is
inclusive of a $1.0 million write off of debt issuance
costs.
|
(6) Represents items
of income or loss that we characterize as unrepresentative of our
ongoing operations. For the three months ended June 30, 2020, the
amount includes $1.4 million of transaction costs associated with
the GP Buy-In Transaction and $0.6 million of restructuring
expenses. For the six months ended June 30, 2020, the amount
includes $3.3 million of restructuring expenses and $1.4 million of
transaction costs associated with the GP Buy-In Transaction. For
the six months ended June 30, 2019, the amount includes $3.4
million of severance expense associated with our former Chief
Executive Officer and $0.9 million of transaction costs associated
with the Equity Restructuring.
|
(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) Adjusted Series A
Preferred Units cash distribution represents the amount of cash
distributions paid, or accrued, on the Series A Preferred Units.
Distributions on the Series A Preferred Units are due to be paid or
accrued 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) Represents
distributions declared to common unitholders in respect of a given
period. On May 3, 2020, the board of directors of SMLP's general
partner announced an immediate suspension of the distribution
payable on its common units. For the three months ended June 30,
2019, represents the distributions declared in July 2019 and paid
in August 2019.
|
(10) Represents the
ratio of distributable cash flow to distributions declared.
Distribution coverage ratio calculation for the three months ended
June 30, 2019 is based on distributions declared in respect of the
second quarter of 2019.
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
|
UNAUDITED
RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES
|
|
|
Six months ended
June 30,
|
|
|
2020
|
|
|
2019
|
|
|
(In
thousands)
|
|
Reconciliation of
net cash provided by operating activities to adjusted
EBITDA and distributable cash
flow:
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
105,371
|
|
|
$
|
84,574
|
|
Add:
|
|
|
|
|
|
|
|
Interest expense,
excluding amortization of debt issuance costs
|
|
42,682
|
|
|
|
41,964
|
|
Income tax (benefit)
expense
|
|
(402)
|
|
|
|
1,406
|
|
Changes in operating
assets and liabilities
|
|
(19,388)
|
|
|
|
4,767
|
|
Proportional adjusted
EBITDA for equity method investees (1)
|
|
15,453
|
|
|
|
19,149
|
|
Adjustments related to
MVC shortfall payments (2)
|
|
(3,151)
|
|
|
|
(666)
|
|
Adjustments related to
capital reimbursement activity (3)
|
|
(448)
|
|
|
|
(1,761)
|
|
Other, net
(4)
|
|
4,683
|
|
|
|
4,732
|
|
Less:
|
|
|
|
|
|
|
|
Distributions from
equity method investees
|
|
12,749
|
|
|
|
18,217
|
|
Noncash lease
expense
|
|
1,557
|
|
|
|
1,530
|
|
Adjusted
EBITDA
|
$
|
130,494
|
|
|
$
|
134,418
|
|
Less:
|
|
|
|
|
|
|
|
Cash interest
paid
|
|
44,073
|
|
|
|
43,683
|
|
Cash paid for
taxes
|
|
—
|
|
|
|
150
|
|
Senior notes interest
adjustment (5)
|
|
(1,806)
|
|
|
|
—
|
|
Adjusted Series A
Preferred Units cash distribution
(6)
|
|
7,125
|
|
|
|
14,250
|
|
Maintenance capital
expenditures
|
|
7,508
|
|
|
|
7,036
|
|
Distributable cash
flow
|
$
|
73,594
|
|
|
$
|
69,299
|
|
__________
|
(1) Reflects our
proportionate share of Ohio Gathering adjusted EBITDA, subject to a
one-month lag.
|
(2) Adjustments
related to MVC shortfall payments are recognized ratably over the
term of the associated MVC.
|
(3) Adjustments
related to capital reimbursement activity represent contributions
in aid of construction revenue recognized in accordance with
Accounting Standards Update No. 2014-09 Revenue from Contracts with
Customers ("Topic 606").
|
(4) Represents items
of income or loss that we characterize as unrepresentative of our
ongoing operations. For the three months ended June 30, 2020, the
amount includes $1.4 million of transaction costs associated with
the GP Buy-In Transaction and $0.5 million of restructuring
expenses. For the six months ended June 30, 2020, the amount
includes $3.3 million of restructuring expenses and $1.4 million of
transaction costs associated with the GP Buy-In Transaction. For
the six months ended June 30, 2019, the amount includes $3.4
million of severance expense associated with our former Chief
Executive Officer and $0.9 million of transaction costs associated
with the Equity Restructuring.
|
(5) 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.
|
(6) Adjusted Series A
Preferred Units cash distribution represents the amount of cash
distributions paid, or accrued, on the Series A Preferred Units.
Distributions on the Series A Preferred Units are due to be paid or
accrued 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