HOUSTON, Feb. 24,
2023 /PRNewswire/ -- Summit Midstream Partners, LP
(NYSE: SMLP) ("Summit", "SMLP" or the "Partnership") announced
today its financial and operating results for fourth quarter and
full-year 2022 and provided full-year 2023 financial guidance.
Highlights
- Generated fourth quarter 2022 net loss of $23.9 million, adjusted EBITDA of $50.3 million, cash flow available for
distributions ("Distributable Cash Flow" or "DCF") of $20.2 million and free cash flow ("FCF") of
$11.8 million
-
- Fourth quarter 2022 results include $4
million of severe weather outages and unusual expenses
- Generated adjusted EBITDA of $212.3
million and FCF of $73.5
million in 2022, exceeding the mid-point of our original
guidance range
- Executed four highly strategic, value- and credit-enhancing
acquisitions and divestitures, most recently closing on the DJ
Basin acquisitions on December 1,
2022
- Provided 2023 adjusted EBITDA guidance of $290 million to $320
million, representing approximately 40%1
year-over-year expected growth
-
- Expect to de-lever the balance sheet towards an approximately
4.35x leverage ratio by year end1
Management Commentary
Heath Deneke, President, Chief
Executive Officer and Chairman, commented, "Summit delivered solid
financial and operating results in 2022, and we made outstanding
progress executing our corporate strategy to high-grade our
portfolio of assets and increase our scale in a balance sheet
enhancing manner. We exceeded the mid-point of our Adjusted EBITDA
guidance range for the year, despite incurring approximately
$4 million of weather-related and
unusual expenses in the fourth quarter. During the year, we sold
our Lane Gathering and Processing System and Bison Gas System for
more than a 15x combined EBITDA multiple and reinvested those
proceeds in the fourth quarter to build a strong franchise position
in the DJ Basin with the acquisition of the Outrigger DJ and
Sterling systems. The Outrigger DJ and Sterling systems have been
successfully integrated with our Hereford operations and both
Summit and our DJ customers are already realizing the benefits of
operating a combined super-system in the basin. We estimate a full
quarter's contribution from the DJ Acquisitions would have
increased Adjusted EBITDA by approximately $8 million in the fourth quarter 2022. We have
also maintained strong momentum across our operating footprint
heading into 2023 with 12 customer rigs running behind our systems
and more than 235 DUCs accumulated to date."
"For 2023, we are setting an adjusted EBITDA guidance range of
$290 million to $320 million with total growth and maintenance
capital expenditures of $45 million
to $65 million. After normalizing for
acquisitions and divestitures in 2022, the midpoint of our guidance
range reflects approximately 15% year-over-year growth in adjusted
EBITDA and a resumption of drilling and completion activity that is
much more in line with our longer-term expectations for our
business. We expect to continue to de-lever the balance sheet
towards an approximate 4.35x leverage ratio by year
end1. We also remain very optimistic about our
opportunity set to further execute on strategic and
credit-accretive acquisitions and divestitures, commercializing
Double E, and capturing new commercial opportunities in the DJ and
other core basins that will take advantage of the capacity behind
our operating systems."
1
|
Based on the midpoint
of the $290 million to $320 million adjusted EBITDA guidance
range.
|
Fourth Quarter 2022 Business Highlights
SMLP's average daily natural gas throughput for its wholly owned
operated systems decreased by 29 MMcf/d to 1,148 MMcf/d, and
liquids volumes decreased by 2 Mbbl/d to 64 Mbbl/d, relative to the
third quarter of 2022. The decline in natural gas volumes was due
to the Bison Midstream divestiture in September 2022, which contributed 12 MMcf/d in
the third quarter of 2022. OGC natural gas throughput decreased
from 783 MMcf/d to 754 MMcf/d and generated $8.2 million of adjusted EBITDA net to SMLP for
the fourth quarter of 2022. Double E Pipeline gross volumes
transported declined by 25 MMcf/d to 289 MMcf/d and generated
$3.4 million of adjusted EBITDA net
to SMLP for the fourth quarter of 2022. Additionally, we incurred
approximately $3 million of unusual
compensation related expenses during the fourth quarter.
Natural gas-price driven segments:
- Natural gas price-driven segments had combined quarterly
segment adjusted EBITDA of $41.0
million and combined capital expenditures of $3.1 million in the fourth quarter of 2022.
- Northeast segment adjusted EBITDA of $19.1 million decreased by $0.3 million from the third quarter of 2022,
primarily due to a 6.0% decline in volume on our wholly owned
systems, partially offset by a $0.5
million increase in proportional EBITDA from our OGC joint
venture. The increase in proportional EBITDA was due to favorable
margin mix and lower operating expenses, partially offset by a 3.7%
decline in volume. Six new wells were brought online behind the
TPL-7 connection of our wholly owned SMU system in November
2022 and eight new wells were connected behind our OGC joint
venture during the quarter. There are currently four rigs running,
including two rigs behind on our wholly owned SMU system, and more than 40 DUCs behind the OGC,
SMU and MTN systems.
- Piceance segment adjusted EBITDA of $14.7 million increased by $0.4 million from the third quarter of 2022,
primarily due to a $0.7 million
decrease in operating expenses, partially offset by 3.3% of natural
production declines from the prior quarter. There is currently one
rig running and 17 wells that started coming online in late
February 2023.
- Barnett segment adjusted EBITDA of $7.2
million decreased by $0.6
million relative to the third quarter of 2022, primarily due
to a $0.3 million decrease in
retainage natural gas sales and $0.7
million increase in direct operating expenses. Volume
throughput on the system increased by 3.9% due to 8 wells connected
to the system during the second half of 2022. There are currently
three rigs running and 13 DUCs behind the system.
Oil price-driven segments
- Oil price-driven segments generated $18.0 million of combined segment adjusted EBITDA
in the fourth quarter of 2022 and had combined capital expenditures
of $6.8 million.
- Permian segment adjusted EBITDA of $4.2
million decreased by $0.7
million from the third quarter of 2022, primarily due to a
7.9% decline in Double E gross volume throughput from the prior
quarter due to unfavorable natural gas prices at Waha.
- Rockies segment adjusted EBITDA of $13.8
million decreased $0.4 million
relative to the third quarter of 2022, primarily due to
weather-related interruptions during December and the sale of Bison
in September 2022, partially offset
by the addition of the Outrigger DJ and Sterling assets that closed
in December 2022. We estimate the
winter storm negatively impacted gross margin by approximately
$1.0 million during the quarter. In
addition, there were several completions that were delayed during
the quarter, with 19 crude oil wells connected late in the fourth
quarter, relative to our previous expectation of 40 wells connected
during the quarter. Crude oil volumes were flat, while produced
water volumes declined 9.3% relative to the third quarter. There
are currently two rigs running and more than 150 DUCs behind the
systems.
The following table presents average daily throughput by
reportable segment for the periods indicated:
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Average daily
throughput (MMcf/d):
|
|
|
|
|
|
|
|
Northeast
(1)
|
599
|
|
710
|
|
652
|
|
765
|
Rockies
|
42
|
|
34
|
|
33
|
|
35
|
Permian
(1)
|
—
|
|
24
|
|
14
|
|
26
|
Piceance
|
295
|
|
317
|
|
306
|
|
326
|
Barnett
|
212
|
|
222
|
|
203
|
|
204
|
Aggregate average
daily throughput
|
1,148
|
|
1,307
|
|
1,208
|
|
1,356
|
|
|
|
|
|
|
|
|
Average daily
throughput (Mbbl/d):
|
|
|
|
|
|
|
|
Rockies
|
64
|
|
62
|
|
62
|
|
63
|
Aggregate average
daily throughput
|
64
|
|
62
|
|
62
|
|
63
|
|
|
|
|
|
|
|
|
Ohio Gathering average
daily throughput (MMcf/d) (2)
|
754
|
|
530
|
|
674
|
|
526
|
|
|
|
|
|
|
|
|
Double E average daily
throughput (MMcf/d) (3)
|
289
|
|
58
|
|
277
|
|
15
|
__________
(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
December 31,
|
|
Year Ended December
31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
(In
thousands)
|
|
(In
thousands)
|
Reportable segment
adjusted EBITDA (1):
|
|
|
|
|
|
|
|
Northeast
(2)
|
$
19,057
|
|
$
19,013
|
|
$
77,046
|
|
$
83,287
|
Rockies
|
13,819
|
|
14,911
|
|
57,810
|
|
64,517
|
Permian
(3)
|
4,203
|
|
2,600
|
|
18,051
|
|
6,614
|
Piceance
|
14,688
|
|
15,865
|
|
60,055
|
|
76,131
|
Barnett
|
7,227
|
|
10,187
|
|
31,624
|
|
36,729
|
Total
|
$
58,994
|
|
$
62,576
|
|
$
244,586
|
|
$
267,278
|
Less: Corporate
and Other (4)
|
8,666
|
|
7,870
|
|
32,296
|
|
28,855
|
Adjusted
EBITDA
|
$
50,328
|
|
$
54,706
|
|
$
212,290
|
|
$
238,423
|
__________
(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 $10.6 million in the fourth quarter of 2022
and $31.5 million for calendar year
2022, inclusive of maintenance capital expenditures of $3.8 million and $11.0
million, respectively. Capital expenditures in the fourth
quarter of 2022 were primarily related to growth projects to
connect new pad sites in our Northeast and Rockies segments.
|
|
Year Ended December
31,
|
|
|
2022
|
|
2021
|
|
|
(In
thousands)
|
Cash paid for
capital expenditures (1):
|
|
|
|
|
Northeast
|
|
$
8,743
|
|
$
11,237
|
Rockies
|
|
12,968
|
|
9,875
|
Permian
|
|
1,407
|
|
2,042
|
Piceance
|
|
6,116
|
|
579
|
Barnett
|
|
366
|
|
766
|
Total reportable
segment capital expenditures
|
|
$
29,600
|
|
$
24,499
|
Corporate and
Other
|
|
1,937
|
|
531
|
Total cash paid for
capital expenditures
|
|
$
31,537
|
|
$
25,030
|
__________
(1)
Excludes cash paid for capital expenditures by Ohio Gathering and
Double E due to equity method accounting.
|
2023 Guidance
SMLP is releasing guidance for 2023, which is summarized in the
table below. These projections are subject to risks and
uncertainties as described in the "Forward-Looking Statements"
section at the end of this release.
Our guidance range is anchored by recent drilling and completion
schedules provided by our customers and is reflective of the
current commodity price environment. We have taken a consistent
approach to our 2023 guidance range that we did with our 2022
guidance range. If our producer customers hit their production
targets and timing of planned well connects, we would expect to be
near the high end of our 2023 guidance range. The midpoint of our
guidance range reflects a conservative, yet appropriate, level of
risking to the most recent drill schedules and volume forecasts
provided by our customers. The low end of our guidance range
reflects additional delays to customer drilling and completion
schedules and planned well connects.
We expect approximately 295 to 365 well connections in 2023,
which is in line with pre-COVID levels and Summit's expectations
for activity levels in a normalized commodity price environment. Of
the expected well connections in 2023, approximately 15% are
dry-gas oriented wells, approximately 35% are liquids-rich
gas-oriented wells and approximately 50% are crude-oil oriented
wells. Customers are currently running 12 rigs behind our systems,
with more than 235 DUCs, providing line of sight to the 2023
estimated well connections and associated volume growth.
We expect our wholly owned natural gas gathering system
throughput to range from 1,340 MMcf/d to 1,430 MMcf/d, representing
approximately 15% growth at the mid-point of the guidance range
relative to 2022, with growth expected behind each of our systems.
OGC gross volume throughput is expected to range from 775 MMcf/d to
825 MMcf/d, as compared to 674 MMcf/d in 2022 and 754 MMcf/d in the
fourth quarter 2022, representing approximately 19% year-over-year
growth at the mid-point of the guidance range. Double E volume
throughput is expected to be approximately 325 MMcf/d, relative to
existing take-or-pay contracts of 810 MMcf/d, and contractually
increasing to 985 MMcf/d beginning in November 2023. Liquids volumes are expected to
range from 85 Mbbl/d to 95 Mbbl/d, primarily due to 70 to 80 new
well connections expected during the year, including 7 new well
connections from a key customer to whom we provide both crude oil
and produced water gathering services.
Adjusted EBITDA is expected to range from $290 million to $320
million, representing more than 40% year-over-year growth.
Our 2023 capital expenditure guidance of $45
million to $65 million,
excluding Double E, includes capital reimbursements related to
specific development projects with certain customers. Our full year
2023 growth capex guidance range is expected to be directed mostly
towards new pad connections in the Rockies segment and includes
approximately $10 million to
$15 million of one-time integration
and optimization projects behind the Rockies segment. Included in
this range is approximately $10
million to $15 million of
maintenance capex.
($ in
millions)
|
|
|
|
2023 Guidance
Range
|
|
|
|
|
Low
|
|
High
|
Well
Connections
|
|
|
|
|
|
|
Northeast (includes
OGC)
|
|
|
|
75
|
|
85
|
Piceance
|
|
|
|
55
|
|
70
|
Barnett
|
|
|
|
25
|
|
30
|
Rockies
|
|
|
|
140
|
|
180
|
Total
|
|
|
|
295
|
|
365
|
|
|
|
|
|
|
|
Natural Gas
Throughput (MMcf/d)
|
|
|
|
|
Northeast (excludes
OGC)
|
|
685
|
|
735
|
Piceance
|
|
305
|
|
320
|
Barnett
|
|
225
|
|
240
|
Rockies
|
|
125
|
|
135
|
Total
|
|
1,340
|
|
1,430
|
|
|
|
|
|
|
|
Rockies Liquids
Throughput (Mbbl/d)
|
|
85
|
|
95
|
OGC Natural Gas
Throughput (MMcf/d, gross)
|
|
775
|
|
825
|
Double E Natural Gas
Throughput (MMcf/d, gross)
|
|
325
|
|
325
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
Northeast
|
|
$95
|
|
$105
|
Piceance
|
|
60
|
|
65
|
Barnett
|
|
35
|
|
40
|
Permian
|
|
25
|
|
25
|
Rockies
|
|
105
|
|
115
|
Unallocated G&A,
Other
|
|
(30)
|
|
(30)
|
Total
|
|
$290
|
|
$320
|
|
|
|
|
|
|
|
Capital
Expenditures
|
|
|
|
|
|
|
Growth
|
|
|
|
$35
|
|
$50
|
Maintenance
|
|
|
|
$10
|
|
$15
|
Total
|
|
|
|
$45
|
|
$65
|
|
|
|
|
|
|
|
Investment in Double
E equity method investee
|
|
$5
|
|
$5
|
Capital & Liquidity
As of December 31, 2022, SMLP had
$11.8 million in unrestricted
cash-on-hand and $330 million drawn
under its $400 million ABL Revolver
and $64.1 million of borrowing
availability, after accounting for $5.9
million of issued, but undrawn, letters of credit. As of
December 31, 2022, SMLP's gross
availability based on the borrowing base calculation in the credit
agreement was $561 million, which is
$161 million greater than the
$400 million of lender commitments to
the ABL Revolver. As of December 31,
2022 SMLP was in compliance with all financial covenants,
including interest coverage of 2.52x relative to a minimum interest
coverage covenant of 2.0x and first lien leverage ratio of 1.31x
relative to a maximum first lien leverage ratio of 2.5x. As of
December 31, 2022, SMLP reported a
total leverage ratio of approximately 5.5x.
As of December 31, 2022, the
Permian Transmission Credit Facility balance was $155.4 million, a reduction of $4.6 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 $16.9
million in the fourth 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 fourth quarter of 2022,
SMLP recognized $10.2 million of
gathering revenue associated with MVC shortfall payments. SMLP had
no adjustments to MVC shortfall payments in the fourth quarter of
2022. SMLP's MVC shortfall payment mechanisms contributed
$10.2 million of total adjusted
EBITDA in the fourth quarter of 2022 and $40.5 million of total adjusted EBITDA for full
year 2022.
|
Three Months Ended
December 31, 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
|
$
8,983
|
|
$
2,246
|
|
$
—
|
|
$
2,246
|
Piceance
|
6,279
|
|
6,279
|
|
—
|
|
6,279
|
Northeast
|
1,678
|
|
1,678
|
|
—
|
|
1,678
|
Total MVC shortfall
payment adjustments
|
$
16,940
|
|
$
10,203
|
|
$
—
|
|
$ 10,203
|
|
|
|
|
|
|
|
|
Total
(1)
|
$
16,940
|
|
$
10,203
|
|
$
—
|
|
$ 10,203
|
__________
(1)
Exclusive of Ohio Gathering and Double E due to equity method
accounting.
|
|
Year Ended December
31, 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
|
$
8,983
|
|
$
8,983
|
|
$
—
|
|
$
8,983
|
Piceance
|
24,872
|
|
24,872
|
|
—
|
|
24,872
|
Northeast
|
6,352
|
|
6,352
|
|
—
|
|
6,352
|
Total MVC shortfall
payment adjustments
|
$
40,207
|
|
$
40,207
|
|
$
—
|
|
$ 40,207
|
|
|
|
|
|
|
|
|
Total
(1)
|
$
40,495
|
|
$
40,495
|
|
$
—
|
|
$ 40,495
|
__________
(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
Series A fixed-to-floating rate cumulative redeemable perpetual
preferred units (the "Series A Preferred Units") for the period
ended December 31, 2022. Unpaid
distributions on the Series A Preferred Units will continue to
accumulate.
Fourth Quarter 2022 Earnings Call Information
SMLP will host a conference call at 10:00
a.m. Eastern on February 24,
2023, to discuss its quarterly and full year operating and
financial results. The call can be accessed via teleconference at:
Q4 2022 Summit Midstream Partners LP Earnings Conference Call
(https://register.vevent.com/register/BI6d60dfbe2c6a46da9b6ba9a9ba2ba174).
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, Distributable Cash Flow, and Free 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.
Free Cash Flow
We define free cash flow as distributable cash flow attributable
to common and preferred unitholders less growth capital
expenditures, less investments in equity method investees, less
distributions to common and preferred unitholders. Free cash flow
excludes proceeds from asset sales and cash consideration paid for
acquisitions.
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 five 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 Fort Worth Basin, which includes the Barnett
Shale formation in Texas; and (v)
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", including the estimated closing date of the acquisitions,
sources and uses of funding, the benefits of the acquisitions to us
and any related opportunities. 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
|
|
December 31,
2022
|
|
December 31,
2021
|
|
(In
thousands)
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
11,808
|
|
$
7,349
|
Restricted
cash
|
1,723
|
|
12,223
|
Accounts
receivable
|
75,287
|
|
62,121
|
Other current
assets
|
8,724
|
|
5,676
|
Total current
assets
|
97,542
|
|
87,369
|
Property, plant and
equipment, net
|
1,718,754
|
|
1,726,082
|
Intangible assets,
net
|
198,718
|
|
172,927
|
Investment in equity
method investees
|
506,677
|
|
523,196
|
Other noncurrent
assets
|
38,273
|
|
12,888
|
TOTAL
ASSETS
|
$
2,559,964
|
|
$
2,522,462
|
|
|
|
|
LIABILITIES AND
CAPITAL
|
|
|
|
Trade accounts
payable
|
$
14,052
|
|
$
10,498
|
Accrued
expenses
|
20,601
|
|
14,462
|
Deferred
revenue
|
9,054
|
|
10,374
|
Ad valorem taxes
payable
|
10,245
|
|
8,570
|
Accrued compensation
and employee benefits
|
16,319
|
|
11,019
|
Accrued
interest
|
17,355
|
|
12,737
|
Accrued environmental
remediation
|
1,365
|
|
3,068
|
Accrued settlement
payable
|
6,667
|
|
4,833
|
Current portion of
long-term debt
|
10,507
|
|
—
|
Other current
liabilities
|
11,724
|
|
3,676
|
Total current
liabilities
|
117,889
|
|
79,237
|
Long-term debt,
net
|
1,479,855
|
|
1,355,072
|
Noncurrent deferred
revenue
|
37,694
|
|
42,570
|
Noncurrent accrued
environmental remediation
|
2,340
|
|
2,538
|
Other noncurrent
liabilities
|
38,784
|
|
32,357
|
Total
liabilities
|
1,676,562
|
|
1,511,774
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Mezzanine
Capital
|
|
|
|
Subsidiary Series A
Preferred Units
|
118,584
|
|
106,325
|
|
|
|
|
Partners'
Capital
|
|
|
|
Series A Preferred
Units
|
85,327
|
|
169,769
|
Common limited partner
capital
|
679,491
|
|
734,594
|
Total partners'
capital
|
764,818
|
|
904,363
|
TOTAL LIABILITIES AND
CAPITAL
|
$
2,559,964
|
|
$
2,522,462
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
Three Months
Ended
December
31,
|
|
Year
Ended
December
31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
(In thousands,
except per-unit amounts)
|
Revenues:
|
|
|
|
|
|
|
|
Gathering services and
related fees
|
$ 60,893
|
|
$ 66,201
|
|
$
248,358
|
|
$
281,705
|
Natural gas, NGLs and
condensate sales
|
18,861
|
|
23,467
|
|
86,225
|
|
82,768
|
Other
revenues
|
5,969
|
|
9,546
|
|
35,011
|
|
36,145
|
Total
revenues
|
85,723
|
|
99,214
|
|
369,594
|
|
400,618
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Cost of natural gas and
NGLs
|
12,664
|
|
23,795
|
|
76,826
|
|
81,969
|
Operation and
maintenance
|
22,936
|
|
19,297
|
|
84,152
|
|
74,178
|
General and
administrative (1)
|
12,960
|
|
9,752
|
|
44,943
|
|
58,166
|
Depreciation and
amortization
|
29,658
|
|
31,210
|
|
119,055
|
|
119,076
|
Transaction
costs
|
5,218
|
|
401
|
|
6,968
|
|
1,677
|
Gain on asset sales,
net
|
(98)
|
|
(17)
|
|
(507)
|
|
(369)
|
Long-lived asset
impairment
|
—
|
|
8,378
|
|
91,644
|
|
10,151
|
Total costs and
expenses
|
83,338
|
|
92,816
|
|
423,081
|
|
344,848
|
Other income (expense),
net
|
—
|
|
919
|
|
(4)
|
|
(613)
|
Gain (loss) on interest
rate swaps
|
(77)
|
|
—
|
|
16,414
|
|
—
|
Loss on sale of
business
|
(1,656)
|
|
—
|
|
(1,741)
|
|
—
|
Loss on ECP
Warrants
|
—
|
|
—
|
|
—
|
|
(13,634)
|
Interest
expense
|
(28,477)
|
|
(21,171)
|
|
(102,459)
|
|
(66,156)
|
Loss on early
extinguishment of debt
|
—
|
|
(3,523)
|
|
—
|
|
(3,523)
|
Loss before income
taxes and equity method investment income
|
(27,825)
|
|
(17,377)
|
|
(141,277)
|
|
(28,156)
|
Income tax (expense)
benefit
|
(18)
|
|
(14)
|
|
(325)
|
|
327
|
Income from equity
method investees
|
3,979
|
|
1,186
|
|
18,141
|
|
7,880
|
Net loss
|
$ (23,864)
|
|
$ (16,205)
|
|
$
(123,461)
|
|
$ (19,949)
|
|
|
|
|
|
|
|
|
Net loss per limited
partner unit:
|
|
|
|
|
|
|
|
Common unit –
basic
|
$
(3.03)
|
|
$
(3.42)
|
|
$ (12.71)
|
|
$
(6.57)
|
Common unit –
diluted
|
$
(3.03)
|
|
$
(3.42)
|
|
$ (12.71)
|
|
$
(6.57)
|
|
|
|
|
|
|
|
|
Weighted-average
limited partner units outstanding:
|
|
|
|
|
|
|
|
Common units –
basic
|
10,172
|
|
7,170
|
|
10,048
|
|
6,741
|
Common units –
diluted
|
10,172
|
|
7,170
|
|
10,048
|
|
6,741
|
__________
(1) For the year
ended December 31, 2021, the amount includes a $22.4 million loss
related to the Blacktail Release.
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
UNAUDITED OTHER
FINANCIAL AND OPERATING DATA
|
|
Three Months
Ended
December
31,
|
|
Year
Ended
December
31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
(In
thousands)
|
Other financial
data:
|
|
|
|
|
|
|
|
Net loss
|
$ (23,864)
|
|
$ (16,205)
|
|
$
(123,461)
|
|
$ (19,949)
|
Net cash provided by
operating activities
|
3,004
|
|
37,368
|
|
99,809
|
|
165,099
|
Capital
expenditures
|
10,582
|
|
13,250
|
|
31,537
|
|
25,030
|
Contributions to equity
method investees
|
—
|
|
46,590
|
|
8,444
|
|
148,699
|
Adjusted
EBITDA
|
50,328
|
|
54,706
|
|
212,290
|
|
238,423
|
Cash flow available for
distributions (1)
|
$
20,245
|
|
$
29,924
|
|
$ 107,390
|
|
$ 168,288
|
Free Cash
Flow
|
11,838
|
|
(26,681)
|
|
73,488
|
|
2,091
|
Distributions
(2)
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
|
|
|
|
|
|
|
Operating
data:
|
|
|
|
|
|
|
|
Aggregate average daily
throughput – natural gas (MMcf/d)
|
1,148
|
|
1,307
|
|
1,208
|
|
1,356
|
Aggregate average daily
throughput – liquids (Mbbl/d)
|
64
|
|
62
|
|
62
|
|
63
|
|
|
|
|
|
|
|
|
Ohio Gathering average
daily throughput (MMcf/d) (3)
|
754
|
|
530
|
|
674
|
|
526
|
Double E average daily
throughput (MMcf/d) (4)
|
289
|
|
58
|
|
277
|
|
15
|
__________
(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. Excludes
distributions paid on the Subsidiary Series A Preferred Units
issued at Summit Permian Transmission Holdco, LLC.
(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
December
31,
|
|
Year
Ended
December
31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
(In
thousands)
|
Reconciliations of
net income to adjusted EBITDA and Distributable
Cash Flow:
|
|
|
|
|
|
|
|
Net loss
|
$ (23,864)
|
|
$ (16,205)
|
|
$
(123,461)
|
|
$ (19,949)
|
Add:
|
|
|
|
|
|
|
|
Interest
expense
|
28,477
|
|
21,171
|
|
102,459
|
|
66,156
|
Income tax expense
(benefit)
|
18
|
|
14
|
|
325
|
|
(327)
|
Depreciation and
amortization (1)
|
29,892
|
|
31,425
|
|
119,993
|
|
119,995
|
Proportional adjusted
EBITDA for equity method investees (2)
|
11,612
|
|
8,619
|
|
45,419
|
|
29,022
|
Adjustments related to
capital reimbursement activity (3)
|
(1,218)
|
|
(1,552)
|
|
(6,041)
|
|
(6,571)
|
Unit-based and noncash
compensation
|
814
|
|
861
|
|
3,778
|
|
4,744
|
Loss on early
extinguishment of debt
|
—
|
|
3,523
|
|
—
|
|
3,523
|
Gain on asset sales,
net
|
(98)
|
|
(17)
|
|
(507)
|
|
(369)
|
Long-lived asset
impairment
|
—
|
|
8,378
|
|
91,644
|
|
10,151
|
Other, net
(4)
|
8,674
|
|
(325)
|
|
(3,178)
|
|
39,928
|
Less:
|
|
|
|
|
|
|
|
Income from equity
method investees
|
3,979
|
|
1,186
|
|
18,141
|
|
7,880
|
Adjusted
EBITDA
|
$ 50,328
|
|
$ 54,706
|
|
$
212,290
|
|
$
238,423
|
Less:
|
|
|
|
|
|
|
|
Cash interest
paid
|
43,379
|
|
17,302
|
|
89,472
|
|
57,655
|
Cash paid for
taxes
|
—
|
|
—
|
|
149
|
|
191
|
Senior notes interest
adjustment (5)
|
(17,099)
|
|
4,245
|
|
4,315
|
|
4,757
|
Maintenance capital
expenditures
|
3,803
|
|
3,235
|
|
10,964
|
|
7,532
|
Cash flow available
for distributions (6)
|
$ 20,245
|
|
$ 29,924
|
|
$
107,390
|
|
$
168,288
|
Less:
|
|
|
|
|
|
|
|
Growth capital
expenditures
|
6,779
|
|
10,015
|
|
20,573
|
|
17,498
|
Investment in equity
method investee
|
—
|
|
46,590
|
|
8,444
|
|
148,699
|
Distributions on
Subsidiary Series A Preferred Units
|
1,628
|
|
—
|
|
4,885
|
|
—
|
Free Cash
Flow
|
$ 11,838
|
|
$
(26,681)
|
|
$
73,488
|
|
$
2,091
|
__________
(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 year ended
December 31, 2022, the amount includes $16.4 million of realized
and unrealized gains related to the fair value of interest rate
swaps, $8.6 million in transaction costs, $2.5 million of severance
expenses and $1.7 million of losses related to sale of business.
For the year ended December 31, 2021, the amount includes $22.2
million of losses related to the Blacktail Release and a $13.6
million loss related to 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
|
|
Year
Ended
December
31,
|
|
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
|
$
99,809
|
|
$ 165,099
|
Add:
|
|
|
|
Interest expense,
excluding amortization of debt issuance costs
|
93,133
|
|
59,139
|
Income tax expense
(benefit)
|
325
|
|
(327)
|
Changes in operating
assets and liabilities
|
12,473
|
|
(5,867)
|
Proportional adjusted
EBITDA for equity method investees (1)
|
45,419
|
|
29,022
|
Adjustments related to
capital reimbursement activity (2)
|
(6,041)
|
|
(6,571)
|
Other, net
(3)
|
11,097
|
|
25,792
|
Less:
|
|
|
|
Distributions from
equity method investees
|
43,040
|
|
26,760
|
Noncash lease
expense
|
885
|
|
1,104
|
Adjusted
EBITDA
|
$ 212,290
|
|
$ 238,423
|
Less:
|
|
|
|
Cash interest
paid
|
89,472
|
|
57,655
|
Cash paid for
taxes
|
149
|
|
191
|
Senior notes interest
adjustment (4)
|
4,315
|
|
4,757
|
Maintenance capital
expenditures
|
10,964
|
|
7,532
|
Cash flow available
for distributions (5)
|
$ 107,390
|
|
$ 168,288
|
Less:
|
|
|
|
Growth capital
expenditures
|
20,573
|
|
17,498
|
Investment in equity
method investee
|
8,444
|
|
148,699
|
Distributions on
Subsidiary Series A Preferred Units
|
4,885
|
|
—
|
Free Cash
Flow
|
$ 73,488
|
|
$ 2,091
|
__________
(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 Year ended
December 31, 2022, the amount includes $8.6 million in transaction
costs and $2.5 million of severance expenses. For the year
ended December 31, 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