HOUSTON, Nov. 3, 2022
/PRNewswire/ -- Summit Midstream Partners, LP (NYSE: SMLP)
("Summit", "SMLP" or the "Partnership") announced today its
financial and operating results for the three months ended
September 30, 2022, and also
reiterated its expectation of achieving the high-end of its
previously announced 2022 Adjusted EBITDA guidance range of
$205 to $220
million.
Third Quarter 2022 Highlights & Management
Commentary
- Net loss of $7.8 million,
primarily driven by non-cash impairments associated with the Bison
sale
- Increased adjusted EBITDA by 8.5% to $54.7 million from $50.5
million for the second quarter of 2022
- Increased Distributable Cash Flow by 16.2% to $29.8 million from $25.6
million for the second quarter of 2022
- Completed the sale of the Bison Gas Gathering System in the
Williston Basin for $40 million in cash
- Reduced total debt by $66 million
and increased liquidity to $319.6
million
- Announced $305 million
synergistic and accretive bolt-on acquisitions in the DJ Basin at
an attractive 4.0x 2023 projected EBITDA multiple; partially
financed with a new issuance of $85
million of 8.5% Senior Secured Second Lien Notes due
2026
- Expect 2023 Adjusted EBITDA to exceed $300 million and generate more than $125 million of free cash flow inclusive of the
DJ Basin acquisitions
Heath Deneke, President, Chief
Executive Officer and Chairman, commented, "Summit's third quarter
2022 financial and operating results further positions us to
achieve the high-end of our previously announced 2022 Adjusted
EBITDA guidance range of $205 to
$220 million. We continue to see
strong momentum in all our operating segments, with 39 wells
connected during the quarter and another 40 wells expected in the
fourth quarter. We remain excited about the productivity of the new
wells that have been brought online, particularly in the
Utica shale, Barnett shale and
Williston basin. We experienced
nearly 40% volume growth behind OGC with the addition of only 12
new wells. In the Barnett, 8 new wells were brought online and
while volumes were relatively flat sequentially, we expect volumes
to increase in the fourth quarter. Liquids volumes increased over
20% in the Williston basin and
with several new wells expected in the near term, we expect volumes
to continue to grow.
Given our strong momentum in the back-half of 2022 and the
expected addition of more than 275 wells in 2023, pro forma for the
DJ Basin acquisitions, we expect 2023 Adjusted EBITDA to exceed
$300 million, resulting in more than
$125 million in free cash flow and a
meaningful reduction in total leverage to approximately 4.25x at
year-end 2023. To the extent that similar well connection activity
we are anticipating in 2023 across our operating footprint persists
into 2024, we would expect to approach our long-term total leverage
target of sub-3.5x in 2024, a major milestone for all of Summit's
stakeholders. We are actively pursuing strategic and commercial
initiatives that could further accelerate de-levering and believe
that our achievements in 2022 illustrate the flexibility of our
business. The divestitures of Bison and Lane G&P this year,
significant free cash flow generation year-to-date and the fully
committed $85 million debt financing,
positioned us to announce the synergistic and accretive bolt-on
acquisitions in the DJ Basin. These transactions met all our key
investment criteria and align with our corporate strategy to
maximize value through disciplined investing, focusing on
strategic, synergistic, and high free cash flowing assets that
align with our balance sheet and ESG objectives."
Third Quarter 2022 Business & Financial
Highlights
SMLP's average daily natural gas throughput for its wholly owned
operated systems decreased by 23 MMcf/d to 1,177 MMcf/d, and
liquids volumes increased by 12 Mbbl/d to 66 Mbbl/d, relative to
the second quarter of 2022. The decline in natural gas volumes was
due to the Lane G&P divestiture on June
30, 2022 which contributed 27 MMcf/d in the second quarter
of 2022. OGC natural gas throughput increased 221 MMcf/d to 783
MMcf/d and generated $7.7 million of
adjusted EBITDA net to SMLP for the third quarter of 2022. Double E
Pipeline gross volumes transported were flat at 314 MMcf/d and
generated $5.1 million of adjusted
EBITDA net to SMLP for the third quarter of 2022. SMLP's customers
are currently operating eight drilling rigs on acreage behind
SMLP's gathering systems and we expect approximately 40 wells to be
connected in the fourth quarter of 2022.
Natural gas price driven segments:
- Natural gas price-driven segments had combined quarterly
segment adjusted EBITDA of $41.5
million and combined capital expenditures of $3.0 million in the third quarter of 2022.
- Northeast segment adjusted EBITDA of $19.4 million increased by $0.8 million from the second quarter of 2022,
primarily due to a 0.8% increase in volume on our wholly-owned
systems and a 39% increase in volume at our OGC joint venture. We
connected 4 new wells behind our wholly-owned SMU system in August
2022 that produced approximately 100 MMcf/d during the third
quarter. We experienced nearly 40% volume growth behind our OGC
joint venture with the addition of only 12 new wells connected to
the system during the quarter. There are currently five rigs
running and over 25 DUCs behind the SMU
and OGC systems. We expect another 5 to 10 wells to come online in
the fourth quarter of 2022 behind OGC.
- Piceance segment adjusted EBITDA of $14.2 million decreased by $1.1 million from the second quarter of 2022.
Volume throughput decreased by 2.1% from the prior quarter,
primarily due to natural production declines and a $0.8 million increase in operating expenses
primarily due to a $0.6 million
increase in estimated annual property taxes. We now expect 17 wells
currently being drilled to be turned-in-line by one of our anchor
customers in the first quarter of 2023, due to a slight delay in
completion timing, but don't expect this to materially impact 2022
financial results.
- Barnett segment adjusted EBITDA of $7.9
million increased by $0.6
million relative to the second quarter of 2022 primarily due
to a 2.0% increase in volume throughput and a $0.2 million increase in natural gas sales. There
were 8 new wells connected to the system during the quarter and
while segment volumes were relatively flat sequentially, we expect
continued growth in volumes in the fourth quarter of 2022. The next
set of wells to come online are expected in the first quarter of
2023.
Oil price driven segments
- Oil price-driven segments generated $19.1 million of combined segment adjusted EBITDA
in the third quarter of 2022 and had combined capital expenditures
of $2.7 million.
- Permian segment adjusted EBITDA of $4.9
million was flat relative to the second quarter of 2022.
Double E gross volume throughput averaged 314 MMcf/d during the
third quarter of 2022, flat relative to the second quarter of 2022.
There continue to be over 100 rigs running in Eddy and Lea
Counties, New Mexico, which we
believe will be a catalyst for additional volumes and long-term
take-or-pay contracts behind our Double E joint venture.
- Rockies segment adjusted EBITDA of $14.3
million increased $0.4 million
relative to the second quarter of 2022, primarily due to a 12
Mbbl/d, or 22% increase in liquids volumes. Volume growth was
primarily driven by a return of previously interrupted volumes from
the winter storm during the second quarter of 2022 and 9 new wells
connected during the quarter. The segment was negatively impacted
by a one-time $0.7 million contract
adjustment attributable to our DJ Basin business. There are
currently two rigs running with over 50 DUCs behind the system and
approximately 40 wells expected to come online in the fourth
quarter of 2022.
The following table presents average daily throughput by
reportable segment for the periods indicated:
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Average daily
throughput (MMcf/d):
|
|
|
|
|
|
|
|
Northeast
(1)
|
637
|
|
751
|
|
670
|
|
784
|
Rockies
|
31
|
|
36
|
|
30
|
|
36
|
Permian
(1)
|
—
|
|
24
|
|
18
|
|
28
|
Piceance
|
305
|
|
321
|
|
310
|
|
329
|
Barnett
|
204
|
|
201
|
|
200
|
|
197
|
Aggregate average
daily throughput
|
1,177
|
|
1,333
|
|
1,228
|
|
1,374
|
|
|
|
|
|
|
|
|
Average daily
throughput (Mbbl/d):
|
|
|
|
|
|
|
|
Rockies
|
66
|
|
63
|
|
62
|
|
64
|
Aggregate average
daily throughput
|
66
|
|
63
|
|
62
|
|
64
|
|
|
|
|
|
|
|
|
Ohio Gathering
average daily throughput (MMcf/d)
(2)
|
783
|
|
503
|
|
648
|
|
525
|
|
|
|
|
|
|
|
|
Double E average
daily throughput (MMcf/d) (3)
|
314
|
|
—
|
|
272
|
|
—
|
__________
|
|
|
(1)
|
Exclusive of Ohio
Gathering and Double E due to equity method accounting.
|
(2)
|
Gross basis, represents
100% of volume throughput for Ohio Gathering, subject to a
one-month lag.
|
(3)
|
Gross basis, represents
100% of volume throughput for Double E.
|
The following table presents adjusted EBITDA by reportable
segment for the periods indicated:
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
(In
thousands)
|
|
(In
thousands)
|
Reportable segment
adjusted EBITDA (1):
|
|
|
|
|
|
|
|
Northeast
(2)
|
$
19,353
|
|
$
20,720
|
|
$
57,989
|
|
$
64,274
|
Rockies
|
14,262
|
|
18,722
|
|
43,991
|
|
49,606
|
Permian
(3)
|
4,882
|
|
1,422
|
|
13,848
|
|
4,014
|
Piceance
|
14,249
|
|
18,908
|
|
45,367
|
|
60,266
|
Barnett
|
7,864
|
|
9,637
|
|
24,397
|
|
26,542
|
Total
|
$
60,610
|
|
$
69,409
|
|
$
185,592
|
|
$
204,702
|
Less: Corporate
and Other (4)
|
5,868
|
|
8,265
|
|
23,630
|
|
20,985
|
Adjusted
EBITDA
|
$
54,742
|
|
$
61,144
|
|
$
161,962
|
|
$
183,717
|
__________
|
|
|
(1)
|
We define segment
adjusted EBITDA as total revenues less total costs and expenses,
plus (i) other 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)
|
Includes 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 during the respective
period.
|
(3)
|
Includes our
proportional share of adjusted EBITDA for Double E. We define
proportional adjusted EBITDA for our equity method investees as the
product of total revenues less total expenses, excluding
impairments and other noncash income or expense items;
multiplied by our ownership interest during the respective
period.
|
(4)
|
Corporate and Other
represents those results that are not specifically attributable to
a reportable segment or that have not been allocated to our
reportable segments, including certain general and administrative
expense items and natural gas and crude oil marketing
services.
|
Capital Expenditures
Capital expenditures totaled $6.2
million in the third quarter of 2022, inclusive of
maintenance capital expenditures of $2.3
million. Capital expenditures in the third quarter of 2022
were primarily related to growth projects to connect new pad sites
in our Northeast and Rockies segments. With $21.0 million of capital expenditures
year-to-date, we expect total capital expenditures in 2022 to be
around the midpoint of our original guidance range of $20 million to $35
million.
|
|
Nine Months Ended
September 30,
|
|
|
2022
|
|
2021
|
|
|
(In
thousands)
|
Cash paid for
capital expenditures (1):
|
|
|
|
|
Northeast
|
|
$
7,520
|
|
$
6,772
|
Rockies
|
|
6,204
|
|
3,512
|
Permian
|
|
1,406
|
|
349
|
Piceance
|
|
4,350
|
|
(32)
|
Barnett
|
|
248
|
|
731
|
Total reportable
segment capital expenditures
|
|
$
19,728
|
|
$
11,332
|
Corporate and
Other
|
|
1,227
|
|
448
|
Total cash paid for
capital expenditures
|
|
$
20,955
|
|
$
11,780
|
__________
|
|
|
(1)
|
Excludes cash paid for
capital expenditures by Ohio Gathering and Double E due to equity
method accounting.
|
Capital & Liquidity
As of September 30, 2022, SMLP had
$85 million drawn under its
$400 million ABL Revolver and
$309.1 million of borrowing
availability, after accounting for $5.9
million of issued, but undrawn, letters of credit. As of
September 30, 2022, SMLP's gross
availability based on the borrowing base calculation in the credit
agreement was $563 million, which is
$163 million greater than the
$400 million of lender commitments to
the ABL Revolver. Pro forma for the previously announced Outrigger
DJ Midstream LLC and Sterling Energy Investments LLC acquisitions,
SMLP expects to have approximately $325
million drawn under its $400
million ABL Revolver at year end 2022. As of September 30, 2022 SMLP was in compliance with
all financial covenants, including interest coverage of 2.57x
relative to a minimum interest coverage covenant of 2.0x and first
lien leverage ratio of 0.38x relative to a maximum first lien
leverage ratio of 2.5x. As of September 30,
2022, SMLP reported a total leverage ratio of 5.21x.
As of September 30, 2022, the
Permian Transmission Credit Facility balance was $156.6 million, a reduction of $3.4 million relative to the December 31, 2021 balance of $160.0 million due to scheduled mandatory
amortization. The Permian Transmission Term Loan remains
non-recourse to SMLP.
MVC Shortfall Payments
SMLP billed its customers $7.8
million in the third quarter of 2022 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 third quarter of 2022, SMLP
recognized $10.1 million of gathering
revenue associated with MVC shortfall payments. SMLP had no
adjustments to MVC shortfall payments in the third quarter of 2022.
SMLP's MVC shortfall payment mechanisms contributed $10.1 million of total adjusted EBITDA in the
third quarter of 2022.
|
Three Months Ended
September 30, 2022
|
|
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
|
$
—
|
|
$
—
|
|
$
—
|
|
$
—
|
Total net
change
|
$
—
|
|
$
—
|
|
$
—
|
|
$
—
|
|
|
|
|
|
|
|
|
MVC shortfall
payment adjustments:
|
|
|
|
|
|
|
|
Rockies
|
$
—
|
|
$
2,246
|
|
$
—
|
|
$
2,246
|
Piceance
|
6,210
|
|
6,210
|
|
—
|
|
6,210
|
Northeast
|
1,608
|
|
1,608
|
|
—
|
|
1,608
|
Total MVC shortfall
payment adjustments
|
$
7,818
|
|
$
10,064
|
|
$
—
|
|
$ 10,064
|
|
|
|
|
|
|
|
|
Total
(1)
|
$
7,818
|
|
$
10,064
|
|
$
—
|
|
$ 10,064
|
__________
|
|
|
(1
|
Exclusive of Ohio
Gathering and Double E due to equity method accounting.
|
|
Nine Months Ended
September 30, 2022
|
|
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
|
$
288
|
|
$
288
|
|
$
—
|
|
$
288
|
Total net
change
|
$
288
|
|
$
288
|
|
$
—
|
|
$
288
|
|
|
|
|
|
|
|
|
MVC shortfall
payment adjustments:
|
|
|
|
|
|
|
|
Rockies
|
$
—
|
|
$
6,739
|
|
$
—
|
|
$
6,739
|
Piceance
|
18,592
|
|
18,592
|
|
—
|
|
18,592
|
Northeast
|
4,674
|
|
4,674
|
|
—
|
|
4,674
|
Total MVC shortfall
payment adjustments
|
$
23,266
|
|
$
30,005
|
|
$
—
|
|
$ 30,005
|
|
|
|
|
|
|
|
|
Total
(1)
|
$
23,554
|
|
$
30,293
|
|
$
—
|
|
$ 30,293
|
__________
|
|
|
(1)
|
Exclusive of Ohio
Gathering and Double E due to equity method accounting.
|
Quarterly Distribution
The board of directors of SMLP's general partner continued to
suspend cash distributions payable on its common units and on its
9.50% Series A fixed-to-floating rate cumulative redeemable
perpetual preferred units (the "Series A Preferred Units") for the
period ended September 30, 2022.
Unpaid distributions on the Series A Preferred Units will continue
to accumulate.
Third Quarter 2022 Earnings Call Information
SMLP will host a conference call at 10:00
a.m. Eastern on November 4,
2022, to discuss its quarterly operating and financial
results. The call can be accessed via teleconference at: Q3 2022
Summit Midstream Partners LP Earnings Conference
Call (https://register.vevent.com/register/BI0835fc438bc64ded92d518ca8c8d6f95).
Once registration is completed, participants will receive a dial-in
number along with a personalized PIN to access the call. While not
required, it is recommended that participants join 10 minutes prior
to the event start. The conference call, live webcast and archive
of the call can be accessed through the Investors section of SMLP's
website at www.summitmidstream.com.
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, non-GAAP financial
measures.
Adjusted EBITDA
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, 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 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
measures, understanding the differences between the financial
measures and incorporating these data points into our
decision-making process.
Distributable Cash Flow
We define Distributable Cash Flow as adjusted EBITDA, as defined
above, less cash interest paid, cash paid for taxes, net interest
expense accrued and paid on the senior notes, and maintenance
capital expenditures.
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 method investment
in Double E Pipeline, LLC, which provides interstate natural gas
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 method
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." In addition, any statement concerning future financial
performance (including future revenues, earnings or growth rates),
ongoing business strategies and possible actions taken by us or our
subsidiaries are also forward-looking statements. 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 2021
Annual Report on Form 10-K filed with the Securities and
Exchange Commission (the "SEC") on February 28, 2022, as
amended and updated from time to time. Any forward-looking
statements in this press release are made as of the date of this
press release and SMLP undertakes no obligation to update or
revise any forward-looking statements to reflect new
information or events.
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
|
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
September
30,
2022
|
|
December 31,
2021
|
|
(In
thousands)
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
10,450
|
|
$
7,349
|
Restricted
cash
|
3,514
|
|
12,223
|
Accounts
receivable
|
57,593
|
|
62,121
|
Other current
assets
|
4,834
|
|
5,676
|
Total current
assets
|
76,391
|
|
87,369
|
Property, plant and
equipment, net
|
1,477,051
|
|
1,726,082
|
Intangible assets,
net
|
144,002
|
|
172,927
|
Investment in equity
method investees
|
513,974
|
|
523,196
|
Other noncurrent
assets
|
28,254
|
|
12,888
|
TOTAL
ASSETS
|
$
2,239,672
|
|
$
2,522,462
|
|
|
|
|
LIABILITIES AND
CAPITAL
|
|
|
|
Trade accounts
payable
|
$
9,448
|
|
$
10,498
|
Accrued
expenses
|
7,999
|
|
14,462
|
Deferred
revenue
|
9,176
|
|
10,374
|
Ad valorem taxes
payable
|
6,353
|
|
8,570
|
Accrued compensation
and employee benefits
|
7,857
|
|
11,019
|
Accrued
interest
|
34,185
|
|
12,737
|
Accrued environmental
remediation
|
1,604
|
|
3,068
|
Current portion of
long-term debt
|
9,009
|
|
—
|
Other current
liabilities
|
11,474
|
|
8,509
|
Total current
liabilities
|
97,105
|
|
79,237
|
Long-term debt, net of
issuance costs
|
1,165,189
|
|
1,355,072
|
Noncurrent deferred
revenue
|
38,793
|
|
42,570
|
Noncurrent accrued
environmental remediation
|
2,272
|
|
2,538
|
Other noncurrent
liabilities
|
29,269
|
|
32,357
|
Total
liabilities
|
1,332,628
|
|
1,511,774
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Mezzanine
Capital
|
|
|
|
Subsidiary Series A
Preferred Units
|
115,223
|
|
106,325
|
|
|
|
|
Partners'
Capital
|
|
|
|
Series A Preferred
Units
|
83,252
|
|
169,769
|
Common limited partner
capital
|
708,569
|
|
734,594
|
Total partners'
capital
|
791,821
|
|
904,363
|
TOTAL LIABILITIES AND
CAPITAL
|
$
2,239,672
|
|
$
2,522,462
|
|
|
|
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September
30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
(In thousands,
except per-unit amounts)
|
Revenues:
|
|
|
|
|
|
|
|
Gathering services and
related fees
|
$ 61,814
|
|
$ 70,924
|
|
$
187,465
|
|
$
215,504
|
Natural gas, NGLs and
condensate sales
|
16,628
|
|
22,121
|
|
67,364
|
|
59,301
|
Other
revenues
|
10,240
|
|
9,000
|
|
29,042
|
|
26,599
|
Total
revenues
|
88,682
|
|
102,045
|
|
283,871
|
|
301,404
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Cost of natural gas and
NGLs
|
15,080
|
|
21,072
|
|
64,162
|
|
58,174
|
Operation and
maintenance
|
21,877
|
|
20,781
|
|
61,216
|
|
54,881
|
General and
administrative
|
8,550
|
|
8,477
|
|
31,983
|
|
48,414
|
Depreciation and
amortization
|
28,841
|
|
30,992
|
|
89,397
|
|
87,866
|
Transaction
costs
|
1,517
|
|
1,060
|
|
1,750
|
|
1,276
|
Gain on asset sales,
net
|
(99)
|
|
(212)
|
|
(409)
|
|
(352)
|
Long-lived asset
impairments
|
7,016
|
|
248
|
|
91,644
|
|
1,773
|
Total costs and
expenses
|
82,782
|
|
82,418
|
|
339,743
|
|
252,032
|
Other income (expense),
net
|
—
|
|
753
|
|
(4)
|
|
(1,532)
|
Gain on interest rate
swaps
|
5,527
|
|
—
|
|
16,491
|
|
—
|
Loss on sale of
business
|
(85)
|
|
—
|
|
(85)
|
|
—
|
Loss on ECP
Warrants
|
—
|
|
—
|
|
—
|
|
(13,634)
|
Interest
expense
|
(24,932)
|
|
(15,530)
|
|
(73,982)
|
|
(44,985)
|
Loss before income
taxes and equity method investment income
|
(13,590)
|
|
4,850
|
|
(113,452)
|
|
(10,779)
|
Income tax (expense)
benefit
|
68
|
|
79
|
|
(307)
|
|
341
|
Income from equity
method investees
|
5,734
|
|
2,075
|
|
14,162
|
|
6,694
|
Net income
(loss)
|
$ (7,788)
|
|
$
7,004
|
|
$ (99,597)
|
|
$ (3,744)
|
|
|
|
|
|
|
|
|
Net loss per limited
partner unit:
|
|
|
|
|
|
|
|
Common unit –
basic
|
$
(1.28)
|
|
$
(0.17)
|
|
$
(9.68)
|
|
$
(2.99)
|
Common unit –
diluted
|
$
(1.28)
|
|
$
(0.17)
|
|
$
(9.68)
|
|
$
(2.99)
|
|
|
|
|
|
|
|
|
Weighted-average
limited partner units outstanding:
|
|
|
|
|
|
|
|
Common units –
basic
|
10,168
|
|
6,999
|
|
10,003
|
|
6,596
|
Common units –
diluted
|
10,168
|
|
6,999
|
|
10,003
|
|
6,596
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
|
UNAUDITED OTHER
FINANCIAL AND OPERATING DATA
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
(In
thousands)
|
Other financial
data:
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
(7,788)
|
|
$
7,004
|
|
$ (99,597)
|
|
$
(3,744)
|
Net cash provided by
operating activities
|
36,647
|
|
41,514
|
|
96,806
|
|
127,731
|
Capital
expenditures
|
6,161
|
|
5,818
|
|
20,955
|
|
11,780
|
Contributions to equity
method investees
|
—
|
|
53,166
|
|
8,444
|
|
102,109
|
Adjusted
EBITDA
|
54,742
|
|
61,144
|
|
161,962
|
|
183,717
|
Cash flow available for
distributions (1)
|
$
29,766
|
|
$
45,736
|
|
$
87,145
|
|
$ 138,364
|
Distributions
(2)
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
|
|
|
|
|
|
|
Operating
data:
|
|
|
|
|
|
|
|
Aggregate average daily
throughput – natural gas (MMcf/d)
|
1,177
|
|
1,333
|
|
1,228
|
|
1,374
|
Aggregate average daily
throughput – liquids (Mbbl/d)
|
66
|
|
63
|
|
62
|
|
64
|
|
|
|
|
|
|
|
|
Ohio Gathering average
daily throughput (MMcf/d) (3)
|
783
|
|
503
|
|
648
|
|
525
|
Double E average daily
throughput (MMcf/d) (4)
|
314
|
|
—
|
|
272
|
|
—
|
__________
|
|
|
(1)
|
Cash flow available for
distributions is also referred to as Distributable Cash Flow, or
DCF.
|
(2)
|
Represents
distributions declared and ultimately paid or expected to be paid
to preferred and 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 cash distributions payable
on its preferred and common units.
|
(3)
|
Gross basis, represents
100% of volume throughput for Ohio Gathering, subject to a
one-month lag.
|
(4)
|
Gross basis, represents
100% of volume throughput for Double E.
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
|
UNAUDITED
RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September
30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
(In
thousands)
|
Reconciliations of
net income to adjusted EBITDA and Distributable Cash
Flow:
|
|
|
|
|
|
|
|
Net income
(loss)
|
$ (7,788)
|
|
$
7,004
|
|
$ (99,597)
|
|
$ (3,744)
|
Add:
|
|
|
|
|
|
|
|
Interest
expense
|
24,932
|
|
15,530
|
|
73,982
|
|
44,985
|
Income tax expense
(benefit)
|
(68)
|
|
(79)
|
|
307
|
|
(341)
|
Depreciation and
amortization (1)
|
29,076
|
|
31,226
|
|
90,101
|
|
88,570
|
Proportional adjusted
EBITDA for equity method investees (2)
|
11,949
|
|
6,690
|
|
33,807
|
|
20,403
|
Adjustments related to
capital reimbursement activity (3)
|
(1,517)
|
|
(1,549)
|
|
(4,823)
|
|
(5,019)
|
Unit-based and noncash
compensation
|
692
|
|
868
|
|
2,964
|
|
3,883
|
Gain on asset sales,
net
|
(99)
|
|
(212)
|
|
(409)
|
|
(352)
|
Long-lived asset
impairment
|
7,016
|
|
248
|
|
91,644
|
|
1,773
|
Other, net
(4)
|
(3,717)
|
|
3,493
|
|
(11,852)
|
|
40,253
|
Less:
|
|
|
|
|
|
|
|
Income from equity
method investees
|
5,734
|
|
2,075
|
|
14,162
|
|
6,694
|
Adjusted
EBITDA
|
$ 54,742
|
|
$ 61,144
|
|
$
161,962
|
|
$
183,717
|
Less:
|
|
|
|
|
|
|
|
Cash interest
paid
|
4,054
|
|
12,485
|
|
46,093
|
|
40,353
|
Cash paid for
taxes
|
—
|
|
176
|
|
149
|
|
191
|
Senior notes interest
adjustment (5)
|
18,604
|
|
512
|
|
21,414
|
|
512
|
Maintenance capital
expenditures
|
2,318
|
|
2,235
|
|
7,161
|
|
4,297
|
Cash flow available
for distributions (6)
|
$ 29,766
|
|
$ 45,736
|
|
$ 87,145
|
|
$
138,364
|
__________
|
|
|
(1)
|
Includes the
amortization expense associated with our favorable gas gathering
contracts as reported in other revenues.
|
(2)
|
Reflects our
proportionate share of Double E and Ohio Gathering (subject to a
one-month lag) adjusted EBITDA.
|
(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 September 30,
2022, the amount includes $5.5 million of realized and unrealized
gains related to the fair value of interest rate swaps and $0.1
million of severance expenses. For the nine months ended
September 30, 2022, the amount includes $16.5 million of
realized and unrealized gains related to the fair value of interest
rate swaps and $2.5 million of severance expenses. For the three
and nine months ended September 30, 2021, the amount includes
$2.9 million and $22.2 million, respectively, of losses related to
the Blacktail Release. For the nine months ended September 30,
2021, the amount includes a $13.6 million loss related to the
change in the fair value of the ECP Warrants.
|
(5)
|
Senior notes interest
adjustment represents the net of interest expense accrued and paid
during the period. Interest on the 2025 senior notes is paid in
cash semi-annually in arrears on April 15 and October 15 until
maturity in April 2025. Interest on the 2026 senior notes is paid
in cash semi-annually in arrears on April 15 and October 15 until
maturity in October 2026.
|
(6)
|
Represents cash flow
available for distribution to preferred and common unitholders.
Common distributions cannot be paid unless all accrued preferred
distributions are paid. Cash flow available for distributions is
also referred to as Distributable Cash Flow, or DCF.
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
|
UNAUDITED
RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES
|
|
|
|
Nine Months
Ended
September
30,
|
|
2022
|
|
2021
|
|
(In
thousands)
|
Reconciliation of
net cash provided by operating activities to
adjusted
EBITDA and distributable cash flow:
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
96,806
|
|
$ 127,731
|
Add:
|
|
|
|
Interest expense,
excluding amortization of debt issuance costs
|
67,340
|
|
39,809
|
Income tax expense
(benefit)
|
307
|
|
(341)
|
Changes in operating
assets and liabilities
|
(3,969)
|
|
(6,626)
|
Proportional adjusted
EBITDA for equity method investees (1)
|
33,807
|
|
20,403
|
Adjustments related to
capital reimbursement activity (2)
|
(4,823)
|
|
(5,019)
|
Other, net
(3)
|
4,933
|
|
28,557
|
Less:
|
|
|
|
Distributions from
equity method investees
|
31,764
|
|
20,004
|
Noncash lease
expense
|
675
|
|
793
|
Adjusted
EBITDA
|
$ 161,962
|
|
$ 183,717
|
Less:
|
|
|
|
Cash interest
paid
|
46,093
|
|
40,353
|
Cash paid for
taxes
|
149
|
|
191
|
Senior notes interest
adjustment (4)
|
21,414
|
|
512
|
Maintenance capital
expenditures
|
7,161
|
|
4,297
|
Cash flow available
for distributions (5)
|
$
87,145
|
|
$ 138,364
|
__________
|
|
|
(1)
|
Reflects our
proportionate share of Double E and Ohio Gathering adjusted EBITDA,
subject to a one-month lag.
|
(2)
|
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").
|
(3)
|
Represents items of
income or loss that we characterize as unrepresentative of our
ongoing operations. For the nine months ended September 30,
2022, the amount includes $2.5 million of severance expenses. For
the nine months ended September 30, 2021, the amount includes
$22.2 million of losses related to the Blacktail
Release.
|
(4)
|
Senior notes interest
adjustment represents the net of interest expense accrued and paid
during the period. Interest on the 2025 senior notes is paid in
cash semi-annually in arrears on April 15 and October 15 until
maturity in April 2025. Interest on the 2026 senior notes is paid
in cash semi-annually in arrears on April 15 and October 15 until
maturity in October 2026.
|
(5)
|
Represents cash flow
available for distribution to preferred and common unitholders.
Common distributions cannot be paid unless all accrued preferred
distributions are paid. Cash flow available for distributions is
also referred to as Distributable Cash Flow, or DCF.
|
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SOURCE Summit Midstream Partners, LP