HOUSTON, Aug. 6, 2021 /PRNewswire/ -- Summit Midstream
Partners, LP (NYSE: SMLP) ("Summit", "SMLP" or the "Partnership")
announced today its financial and operating results for the three
months ended June 30, 2021, including
a net loss of $19.7 million, adjusted
EBITDA of $62.1 million and DCF of
$46.5 million. Net loss for the
quarter included $31.5 million of
non-cash charges including (i) a $19.3
million loss contingency accrual related to a previously
disclosed incident dating back to a 2015 release of produced water
from a pipeline owned by Meadowlark Midstream and (ii) an
$12.2 million accrual related to
Energy Capital Partners' full exercise of equity warrants in
exchange for 414,477 SMLP common units. Operated natural gas
volume throughput averaged 1,441 million cubic feet per day
("MMcf/d") and liquids volume throughput averaged 63 thousand
barrels per day ("Mbbl/d"). Operated natural gas volumes
increased 7.1% relative to the first quarter of 2021, largely due
to continued strong performance from the four Utica Shale wells
connected in the first quarter of 2021 and 20 new wells that were
turned-in-line during the second quarter of 2021 across the Utica
Shale, Williston Basin and
Marcellus Shale segments.
Quarterly liquids volume throughput decreased by 3.1% relative to
the first quarter of 2021, primarily as a result of natural
production declines.
Heath Deneke, President, Chief
Executive Officer and Chairman, commented, "Summit's second quarter
financial and operational results far exceeded our original
expectations set in March, and adjusted EBITDA of $62.1 million was in line with our recently
increased full year 2021 adjusted EBITDA guidance range of
$225 million to $240 million. Our quarterly results were
driven largely by our continued focus on operational excellence and
proactive cost management efforts, together with robust performance
from well connections to date. We are encouraged by the
substantially improved commodity price backdrop and we continue to
see signs of increasing customer activity around our footprint as
we look ahead to 2022, particularly in our Permian, Williston and Utica segments. We remain optimistic
that this positive momentum will continue to build through the end
of the year and into 2022."
"We are making excellent progress towards achieving our holistic
refinancing plans of our 2022 debt maturities, which is expected to
include a new $400 to $500 million asset-based revolver and a new high
yield notes offering of $700 to
$750 million. To date, we have
received $400 million of ABL Revolver
commitments from existing lenders and new lenders, conditioned on
the successful arrangement of a new high yield notes offering that
we expect to launch during the third quarter of 2021. When
completed, the ABL Revolver and new high yield notes will provide a
comprehensive financing solution for Summit with enhanced financial
flexibility, sufficient liquidity to grow the business and a
multi-year runway to continue harvesting substantial free cash flow
to further de-lever the balance sheet and drive significant
unitholder value going forward. Completing this refinancing
plan is the top priority for our team and we are excited about
closing this comprehensive financing solution and removing an
overhang that has negatively impacted our stakeholders for quite
some time."
"We also continue to make excellent progress with construction
of the Double E Pipeline while maintaining a premier project safety
and compliance record. With construction now approximately
60% complete, we are ahead of schedule and we are well on track to
place the project in-service during the fourth quarter of
2021. Additionally, we continue to expect to deliver the
project below the $425 million
revised budget with approximately $30
million of uncommitted contingency remaining in the
budget."
"Additionally, we recently announced that we have entered into
agreements with the government to resolve investigations into the
previously disclosed discovery in January
2015 of a produced water spill into Blacktail Creek, near
Marmon, North Dakota (the
"Blacktail Release"). The spill occurred on a produced water
gathering system owned by Meadowlark Midstream, which has been a
subsidiary of SMLP since 2016. We have been working to
resolve this matter since 2015 and I'm pleased that we have reached
a satisfactory settlement resolution for all parties. As part
of the settlement, SMLP has agreed to pay an aggregate amount of
$36.3 million, which has been fully
accrued, and which will be paid over a period of six years to the
state of North Dakota and the
federal government. A portion of the settlement proceeds will
provide funding for supplemental environmental projects in the
region. The settlement remains subject to court approval to
become effective."
"Safety and the environment are of the utmost importance to
Summit, our board and all of our employees. Since the Marmon
spill, SMLP has invested approximately $75
million in related environmental remediation efforts as well
as made improvements to our operating systems and our company-wide
processes and procedures that we believe are leading edge among
industry pipeline management best practices."
2022 Maturities – Refinancing Update
Over the last
several months, Summit has initiated a comprehensive plan to
refinance its existing $1.1 billion
revolving credit facility, due May
2022 (the "Revolver") and 5.50% senior unsecured notes due
2022 (the "2022 Notes" and together with the Revolver, the "2022
Maturities"). As of today, the 2022 Maturities have an
aggregate outstanding principal balance of approximately
$969 million, comprised of
approximately $735 million
outstanding under the Revolver, net of cash, and approximately
$234 million outstanding under the
2022 Notes.
To date, Summit has secured $400
million of commitments from a syndicate of existing and new
lenders for a new, 4.5-year, asset-based revolving credit facility,
based on the value of Summit's above-ground fixed assets. The
closing of the ABL Revolver is conditioned on the successful
arrangement of a new $700 million to
$750 million high yield notes
offering (the "New HY Notes"), which Summit expects to launch and
close before the end of September
2021, and other customary closing conditions. The ABL
Revolver and the New HY Notes will be scheduled to close
concurrently in the third quarter of 2021, and collectively, the
proceeds will be used to refinance the 2022 Maturities.
Second Quarter 2021 Business Highlights
In the second
quarter of 2021, SMLP's average daily natural gas throughput for
its operated systems increased by 7.1% to 1,441 MMcf/d, and liquids
volumes decreased by 3.1% to 63 Mbbl/d, relative to the first
quarter of 2021. SMLP's customers are currently operating
five drilling rigs on acreage behind SMLP's gathering systems and
had approximately 22 DUCs in inventory upstream of its systems as
of June 30, 2021, with visible line
of sight to completions for the majority of these DUCs by the end
of the third quarter of 2021.
Core Focus Areas:
- Core Focus Areas generated combined quarterly segment adjusted
EBITDA of $32.7 million and had
combined capital expenditures of $3.8
million in the second quarter of 2021.
- Utica Shale segment adjusted EBITDA totaled $10.7 million, a 38.0% increase over the first
quarter of 2021, which was driven primarily by an 86 MMcf/d
increase in quarterly volume throughput. The 4-well pad that
was connected in March of 2021, produced in excess of 170 MMcf/d in
the second quarter and six new wells were turned-in-line behind the
TPL-7 interconnect during the quarter. At June 30, 2021, our Utica Shale customers had four
DUCs, which are all expected to be turned-in-line by the end of the
year. Both the 4-well pad that was connected in the first
quarter and these four DUCs are subject to a gathering agreement we
amended last year, structured to incentivize accelerated upstream
activity and increased throughput volumes behind our SMU system.
- Ohio Gathering segment adjusted EBITDA totaled $6.8 million, which is in-line with first quarter
of 2021, driven by lower operating expenses, which were partially
offset by lower revenues due to a 7.9% decrease in volume
throughput. Three wells were connected during the second
quarter of 2021, and there are four DUCs that are expected to be
turned-in-line in the third quarter of 2021.
- Williston Basin segment
adjusted EBITDA totaled $9.6 million
in the second quarter of 2021, a 10.9% decrease from the first
quarter of 2021, primarily as a result of higher operating expenses
and 2 Mbbl/d of reduced liquids volume throughput and changes in
customer volume mix. Two wells were connected behind the
Bison gas gathering system in the second quarter of 2021 and
quarterly natural gas volume throughput of 12 MMcf/d was in-line
with the first quarter 2021 results. There were six DUCs in
inventory behind our liquids focused system as of June 30, 2021, all of which are expected to be
turned-in-line by the end of the third quarter.
- DJ Basin segment adjusted EBITDA totaled $5.1 million in the second quarter of 2021, a
4.5% decrease from the first quarter of 2021, primarily due to
changes in customer volume mix. Second quarter volume throughput
averaged 23 MMcf/d, which was in-line with first quarter volume
throughput and as of June 30, 2021,
there were no DUCs behind our DJ Basin infrastructure expected to
be turned-in-line in the near-term.
- Permian Basin segment adjusted EBITDA totaled $0.5 million in the second quarter of 2021, a
decrease of approximately $0.2
million compared to the first quarter of 2021, largely due
to increased operating expenses for compressor related maintenance
and property taxes, despite flat quarterly throughput volumes of 29
MMcf/d. There were no new wells connected during the quarter
and no DUCs currently behind the Permian system; however, there has
been an increase in commercial discussions that could result in
incremental volumes in the fourth quarter of 2021.
Legacy Areas:
- Legacy Areas generated $35.1
million of combined segment adjusted EBITDA in the second
quarter of 2021 and had combined capital expenditures of
-$0.5 million, after accounting for
certain expense reimbursements for previously capitalized projects
which were received during the quarter.
- Piceance Basin segment adjusted EBITDA of $20.3 million decreased by 3.4% from the first
quarter of 2021, primarily due to 14 MMcf/d of lower volume
throughput, compared to the first quarter of 2021. There were
no new wells connected in the second quarter behind our Piceance
infrastructure and volume throughput decreased primarily as a
result of natural production declines.
- Barnett Shale segment adjusted EBITDA of $8.9 million increased by 10.9% from the first
quarter of 2021, primarily due to a combination of lower operating
expenses, changes in customer margin mix and an increase in
quarterly volumes. Although there were no new wells
turned-in-line during the quarter, throughput volumes increased by
1.5% over the first quarter of 2021 due to workovers and
recompletions of existing wells. Our customers have seven
DUCs that are scheduled to be turned-in-line in the third quarter
of 2021.
- Marcellus Shale segment adjusted
EBITDA of $5.9 million increased 4.7%
from the first quarter of 2021, driven primarily by a 5.9% increase
in volume throughput, primarily as a result of nine new wells that
were turned-in-line towards the middle of the second quarter, as
expected.
The following table presents average daily throughput by
reportable segment for the periods indicated:
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Average daily
throughput (MMcf/d):
|
|
|
|
|
|
|
|
Utica
Shale
|
496
|
|
416
|
|
453
|
|
319
|
Williston
Basin
|
12
|
|
14
|
|
12
|
|
14
|
DJ Basin
|
23
|
|
20
|
|
23
|
|
26
|
Permian
Basin
|
29
|
|
32
|
|
29
|
|
33
|
Piceance
Basin
|
326
|
|
367
|
|
334
|
|
375
|
Barnett
Shale
|
198
|
|
203
|
|
195
|
|
218
|
Marcellus
Shale
|
357
|
|
339
|
|
347
|
|
351
|
Aggregate average
daily throughput
|
1,441
|
|
1,391
|
|
1,393
|
|
1,336
|
|
|
|
|
|
|
|
|
Average daily
throughput (Mbbl/d):
|
|
|
|
|
|
|
|
Williston
Basin
|
63
|
|
76
|
|
64
|
|
87
|
Aggregate average
daily throughput
|
63
|
|
76
|
|
64
|
|
87
|
|
|
|
|
|
|
|
|
Ohio Gathering
average daily throughput
(MMcf/d) (1)
|
514
|
|
540
|
|
536
|
|
575
|
__________
(1)
|
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,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
(In
thousands)
|
|
(In
thousands)
|
Reportable segment
adjusted EBITDA (1):
|
|
|
|
|
|
|
|
Utica
Shale
|
$
|
10,652
|
|
|
$
|
10,693
|
|
|
$
|
18,372
|
|
|
$
|
16,621
|
|
Ohio Gathering
(2)
|
6,841
|
|
|
7,514
|
|
|
13,713
|
|
|
15,453
|
|
Williston
Basin
|
9,626
|
|
|
12,727
|
|
|
20,431
|
|
|
28,919
|
|
DJ Basin
|
5,106
|
|
|
4,339
|
|
|
10,453
|
|
|
10,250
|
|
Permian
Basin
|
461
|
|
|
1,828
|
|
|
1,170
|
|
|
3,409
|
|
Piceance
Basin
|
20,324
|
|
|
21,734
|
|
|
41,358
|
|
|
45,291
|
|
Barnett
Shale
|
8,889
|
|
|
8,510
|
|
|
16,905
|
|
|
17,270
|
|
Marcellus
Shale
|
5,868
|
|
|
4,888
|
|
|
11,469
|
|
|
10,208
|
|
Total
|
$
|
67,767
|
|
|
$
|
72,233
|
|
|
$
|
133,871
|
|
|
$
|
147,421
|
|
Less: Corporate
and Other (3)
|
5,637
|
|
|
7,643
|
|
|
11,298
|
|
|
16,927
|
|
Adjusted
EBITDA
|
$
|
62,130
|
|
|
$
|
64,590
|
|
|
$
|
122,573
|
|
|
$
|
130,494
|
|
__________
(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)
|
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
$3.4 million in the second quarter of
2021, inclusive of maintenance capital expenditures of $1.2 million. Capital expenditures in the
second quarter of 2021 were primarily related to growth projects to
connect new pad sites in our Utica Shale and Williston Basin segments, which are expected
to commence production in the second half of 2021.
|
Six Months Ended
June 30,
|
|
2021
|
|
2020
|
|
(In
thousands)
|
Cash paid for
capital expenditures (1):
|
|
|
|
Utica
Shale
|
$
|
3,450
|
|
|
$
|
1,482
|
|
Williston
Basin
|
1,149
|
|
|
7,423
|
|
DJ Basin
|
3,758
|
|
|
8,428
|
|
Permian
Basin
|
(2,234)
|
|
|
4,921
|
|
Piceance
Basin
|
(719)
|
|
|
404
|
|
Barnett
Shale
|
148
|
|
|
869
|
|
Marcellus
Shale
|
293
|
|
|
430
|
|
Total reportable
segment capital expenditures
|
$
|
5,845
|
|
|
$
|
23,957
|
|
Corporate and
Other
|
117
|
|
|
3,469
|
|
Total cash paid for
capital expenditures
|
$
|
5,962
|
|
|
$
|
27,426
|
|
__________
(1)
|
Excludes cash paid
for capital expenditures by Ohio Gathering and Double E (after June
2019) due to equity method accounting.
|
Capital & Liquidity
As of June 30, 2021, SMLP had $762 million drawn under its $1.1 billion Revolver and $314.9 million of undrawn commitments, after
accounting for $23.1 million of
issued, but undrawn letters of credit. Year-to-date through
June 30, 2021, SMLP has reduced the
drawn balance on the Revolver by $95
million, including $40 million
in the second quarter of 2021. Subject to covenant limits,
our available borrowing capacity at June 30,
2021 totaled approximately $138
million. SMLP also had $7.2
million of unrestricted cash on hand as of June 30, 2021.
Based upon the terms of SMLP's Revolver, and total outstanding
debt, net of cash, of $1.25 billion
(inclusive of $493.5 million of
senior unsecured notes), SMLP's total leverage ratio and first lien
leverage ratio (as defined in the credit agreement) as of
June 30, 2021, were 5.0 to 1.0 and
3.0 to 1.0, respectively, relative to maximum threshold limits of
5.75 to 1.0 and 3.50 to 1.0.
Double E Update
As of today, construction of the
Double E Pipeline is approximately 60% complete and all of the
identified complex construction activities have been
completed. The project is progressing ahead of schedule and
costs continue to track well below budget. Summit continues
to expect that it will commission Double E and commence service in
the fourth quarter of 2021. Summit funded all of its
$42.8 million of Double E capital
calls in the second quarter of 2021 with borrowings under the
non-recourse credit facilities at its wholly-owned, unrestricted
subsidiary, Summit Permian Transmission, LLC ("Permian
Transmission"). As of June 30,
2021, there was $53.5 million
outstanding under the Permian Transmission credit facility.
MVC Shortfall Payments
SMLP billed its customers
$11.5 million in the second quarter
of 2021 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 2021, SMLP recognized $13.6 million of gathering revenue associated
with MVC shortfall payments. SMLP had no adjustments to MVC
shortfall payments in the second quarter of 2021. SMLP's MVC
shortfall payment mechanisms contributed $13.6 million of total adjusted EBITDA in the
second quarter of 2021.
|
Three Months Ended
June 30, 2021
|
|
MVC
Billings
|
|
|
Gathering
revenue
|
|
Adjustments
to MVC
shortfall
payments
|
|
Net impact to
adjusted
EBITDA
|
|
|
Net change in
deferred revenue related to MVC shortfall payments:
|
|
|
|
|
|
|
|
|
Piceance
Basin
|
$
|
3,639
|
|
|
|
$
|
3,639
|
|
|
$
|
—
|
|
|
$
|
3,639
|
|
Total net
change
|
$
|
3,639
|
|
|
|
$
|
3,639
|
|
|
$
|
—
|
|
|
$
|
3,639
|
|
|
|
|
|
|
|
|
|
|
MVC shortfall
payment adjustments:
|
|
|
|
|
|
|
|
|
Williston
Basin
|
$
|
—
|
|
|
|
$
|
2,145
|
|
|
$
|
—
|
|
|
$
|
2,145
|
|
Piceance
Basin
|
6,198
|
|
|
|
6,198
|
|
|
—
|
|
|
6,198
|
|
Marcellus
Shale
|
1,657
|
|
|
|
1,657
|
|
|
—
|
|
|
1,657
|
|
Total MVC shortfall
payment adjustments
|
$
|
7,855
|
|
|
|
$
|
10,000
|
|
|
$
|
—
|
|
|
$
|
10,000
|
|
|
|
|
|
|
|
|
|
|
Total
(1)
|
$
|
11,494
|
|
|
|
$
|
13,639
|
|
|
$
|
—
|
|
|
$
|
13,639
|
|
__________
(1)
|
Exclusive of Ohio
Gathering due to equity method accounting.
|
|
|
|
|
|
Six Months Ended
June 30, 2021
|
|
MVC
Billings
|
|
|
Gathering
revenue
|
|
Adjustments
to MVC
shortfall
payments
|
|
Net impact to
adjusted
EBITDA
|
|
|
Net change in
deferred revenue related to MVC shortfall payments:
|
|
|
|
|
|
|
|
|
Piceance
Basin
|
$
|
7,302
|
|
|
|
$
|
7,302
|
|
|
$
|
—
|
|
|
$
|
7,302
|
|
Total net
change
|
$
|
7,302
|
|
|
|
$
|
7,302
|
|
|
$
|
—
|
|
|
$
|
7,302
|
|
|
|
|
|
|
|
|
|
|
MVC shortfall
payment adjustments:
|
|
|
|
|
|
|
|
|
Williston
Basin
|
$
|
—
|
|
|
|
$
|
4,290
|
|
|
$
|
—
|
|
|
$
|
4,290
|
|
Piceance
Basin
|
12,362
|
|
|
|
12,362
|
|
|
—
|
|
|
12,362
|
|
Marcellus
Shale
|
—
|
|
|
|
3,208
|
|
|
—
|
|
|
3,208
|
|
Total MVC shortfall
payment adjustments
|
$
|
12,362
|
|
|
|
$
|
19,860
|
|
|
$
|
—
|
|
|
$
|
19,860
|
|
|
|
|
|
|
|
|
|
|
Total
(1)
|
$
|
19,664
|
|
|
|
$
|
27,162
|
|
|
$
|
—
|
|
|
$
|
27,162
|
|
__________
(1)
|
Exclusive of Ohio
Gathering due to equity method accounting.
|
Quarterly Distribution
The board of directors of
SMLP's general partner continues 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 for the period ended June 30,
2021. Unpaid distributions on the Series A preferred units
will continue to accrue.
Second Quarter 2021 Earnings Call Information
SMLP
will host a conference call at 10:00
a.m. Eastern on Friday, August 6,
2021, 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 50196089. 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.
Upcoming Investor Conference
Members of SMLP's senior
management team will virtually attend the Citi 2021 Midstream
Energy Conference on August 18,
2021. Presentation materials associated with this event will
be accessible through the Investors section of SMLP's website at
www.summitmidstream.com in advance 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, 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. Because
adjusted EBITDA may be defined differently by other entities in our
industry, our definition of this non-GAAP financial measure may not
be comparable to similarly titled measures of other entities,
thereby diminishing its utility.
Management uses adjusted EBITDA in making financial, operating
and planning decisions and in evaluating our financial performance.
Furthermore, management believes that adjusted EBITDA may provide
external users of our financial statements, such as investors,
commercial banks, research analysts and others, with additional
meaningful comparisons between current results and results of prior
periods as they are expected to be reflective of our core ongoing
business.
Adjusted EBITDA is used as a supplemental financial measure by
external users of our financial statements such as investors,
commercial banks, research analysts and others.
Adjusted EBITDA is used to assess:
- the ability of our assets to generate cash sufficient to make
future potential cash distributions and support our
indebtedness;
- the financial performance of our assets without regard to
financing methods, capital structure or historical cost basis;
- our operating performance and return on capital as compared to
those of other entities in the midstream energy sector, without
regard to financing or capital structure;
- the attractiveness of capital projects and acquisitions and the
overall rates of return on alternative investment opportunities;
and
- the financial performance of our assets without regard to (i)
income or loss from equity method investees, (ii) the impact of the
timing of minimum volume commitments shortfall payments under our
gathering agreements or (iii) the timing of impairments or other
income or expense items that we characterize as unrepresentative of
our ongoing operations.
Adjusted EBITDA has limitations as an analytical tool and
investors should not consider it in isolation or as a substitute
for analysis of our results as reported under GAAP. For
example:
- certain items excluded from adjusted EBITDA are significant
components in understanding and assessing an entity's financial
performance, such as an entity's cost of capital and tax
structure;
- adjusted EBITDA does not reflect our cash expenditures or
future requirements for capital expenditures or contractual
commitments;
- adjusted EBITDA does not reflect changes in, or cash
requirements for, our working capital needs; and
- although depreciation and amortization are noncash charges, the
assets being depreciated and amortized will often have to be
replaced in the future, and adjusted EBITDA does not reflect any
cash requirements for such replacements.
We compensate for the limitations of adjusted EBITDA as an
analytical tool by reviewing the comparable GAAP financial
measures, understanding the differences between the financial
measures and incorporating these data points into our
decision-making process.
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-oriented 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 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 2020 Annual Report on Form 10-K filed with
the Securities and Exchange Commission (the
"SEC") on March 4, 2021, 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
|
|
|
June 30,
2021
|
|
December
31,
2020
|
|
(In
thousands)
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
7,211
|
|
|
$
|
15,544
|
|
Restricted
cash
|
314
|
|
|
—
|
|
Accounts receivable,
net
|
61,233
|
|
|
61,932
|
|
Other current
assets
|
11,090
|
|
|
4,623
|
|
Total current
assets
|
79,848
|
|
|
82,099
|
|
Property, plant and
equipment, net
|
1,768,897
|
|
|
1,817,546
|
|
Intangible assets,
net
|
186,525
|
|
|
199,566
|
|
Investment in equity
method investees
|
433,440
|
|
|
392,740
|
|
Other noncurrent
assets
|
5,335
|
|
|
7,866
|
|
TOTAL
ASSETS
|
$
|
2,474,045
|
|
|
$
|
2,499,817
|
|
|
|
|
|
LIABILITIES AND
CAPITAL
|
|
|
|
Trade accounts
payable
|
$
|
14,824
|
|
|
$
|
11,878
|
|
Accrued
expenses
|
10,092
|
|
|
13,036
|
|
Deferred
revenue
|
10,593
|
|
|
9,988
|
|
Ad valorem taxes
payable
|
5,395
|
|
|
9,086
|
|
Accrued compensation
and employee benefits
|
5,847
|
|
|
9,658
|
|
Accrued
interest
|
8,007
|
|
|
8,007
|
|
Accrued environmental
remediation
|
1,959
|
|
|
1,392
|
|
Current portion of
long-term debt
|
762,000
|
|
|
—
|
|
Other current
liabilities
|
28,209
|
|
|
5,363
|
|
Total current
liabilities
|
846,926
|
|
|
68,408
|
|
Long-term debt,
excluding current portion
|
539,099
|
|
|
1,347,326
|
|
Noncurrent deferred
revenue
|
44,857
|
|
|
48,250
|
|
Noncurrent accrued
environmental remediation
|
1,192
|
|
|
1,537
|
|
Other noncurrent
liabilities
|
38,994
|
|
|
21,747
|
|
Total
liabilities
|
1,471,068
|
|
|
1,487,268
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Mezzanine
Capital
|
|
|
|
Subsidiary Series A
Preferred Units
|
97,679
|
|
|
89,658
|
|
|
|
|
|
Partners'
Capital
|
|
|
|
Series A Preferred
Units
|
161,907
|
|
|
174,425
|
|
Common limited
partner capital
|
743,391
|
|
|
748,466
|
|
Total partners'
capital
|
905,298
|
|
|
922,891
|
|
TOTAL LIABILITIES AND
CAPITAL
|
$
|
2,474,045
|
|
|
$
|
2,499,817
|
|
|
|
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
(In thousands,
except per-unit amounts)
|
Revenues:
|
|
|
|
|
|
|
|
Gathering services
and related fees
|
$
|
74,233
|
|
|
$
|
73,911
|
|
|
$
|
144,580
|
|
|
$
|
157,703
|
|
Natural gas, NGLs and
condensate sales
|
16,416
|
|
|
10,683
|
|
|
37,180
|
|
|
24,463
|
|
Other
revenues
|
9,392
|
|
|
7,413
|
|
|
17,599
|
|
|
14,744
|
|
Total
revenues
|
100,041
|
|
|
92,007
|
|
|
199,359
|
|
|
196,910
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Cost of natural gas
and NGLs
|
16,626
|
|
|
6,088
|
|
|
37,102
|
|
|
14,313
|
|
Operation and
maintenance
|
17,507
|
|
|
21,152
|
|
|
34,100
|
|
|
42,963
|
|
General and
administrative (1)
|
29,360
|
|
|
12,786
|
|
|
39,938
|
|
|
29,347
|
|
Depreciation and
amortization
|
28,364
|
|
|
29,630
|
|
|
56,875
|
|
|
59,296
|
|
Transaction
costs
|
450
|
|
|
1,207
|
|
|
217
|
|
|
1,218
|
|
Gain on asset sales,
net
|
(4)
|
|
|
(281)
|
|
|
(140)
|
|
|
(166)
|
|
Long-lived asset
impairment
|
33
|
|
|
654
|
|
|
1,525
|
|
|
4,475
|
|
Total costs and
expenses
|
92,336
|
|
|
71,236
|
|
|
169,617
|
|
|
151,446
|
|
Other income
(expense), net
|
(2,334)
|
|
|
276
|
|
|
(2,284)
|
|
|
(151)
|
|
Loss on ECP
Warrants
|
(12,159)
|
|
|
—
|
|
|
(13,634)
|
|
|
—
|
|
Interest
expense
|
(15,502)
|
|
|
(21,990)
|
|
|
(29,455)
|
|
|
(45,818)
|
|
Gain on early
extinguishment of debt
|
—
|
|
|
54,235
|
|
|
—
|
|
|
54,235
|
|
Income (loss) before
income taxes and equity method investment income
|
(22,290)
|
|
|
53,292
|
|
|
(15,631)
|
|
|
53,730
|
|
Income tax
benefit
|
248
|
|
|
389
|
|
|
262
|
|
|
402
|
|
Income from equity
method investees
|
2,304
|
|
|
3,040
|
|
|
4,619
|
|
|
6,351
|
|
Net income
(loss)
|
$
|
(19,738)
|
|
|
$
|
56,721
|
|
|
$
|
(10,750)
|
|
|
$
|
60,483
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per limited partner unit:
|
|
|
|
|
|
|
|
Common unit –
basic
|
$
|
(2.91)
|
|
|
$
|
16.66
|
|
|
$
|
(2.91)
|
|
|
$
|
15.73
|
|
Common unit –
diluted
|
$
|
(2.91)
|
|
|
$
|
15.92
|
|
|
$
|
(2.91)
|
|
|
$
|
15.27
|
|
|
|
|
|
|
|
|
|
Weighted-average
limited partner units outstanding:
|
|
|
|
|
|
|
|
Common units –
basic
|
6,656
|
|
|
2,977
|
|
|
6,392
|
|
|
2,999
|
|
Common units –
diluted
|
6,656
|
|
|
3,116
|
|
|
6,392
|
|
|
3,088
|
|
__________
(1)
|
For the three and six
months ended June 30, 2021, the amount includes a $19.3 million
incremental loss contingency related to the Blacktail Release and
$0.1 million and $1.0 of restructuring and severance expenses,
respectively. For the three and six months ended June 30, 2020, the
amount includes $0.6 million and $3.3 million of restructuring
expenses.
|
|
|
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
|
UNAUDITED OTHER
FINANCIAL AND OPERATING DATA
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
(In
thousands)
|
Other financial
data:
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
(19,738)
|
|
|
$
|
56,721
|
|
|
$
|
(10,750)
|
|
|
$
|
60,483
|
|
Net cash provided by
operating activities
|
34,787
|
|
|
35,170
|
|
|
86,217
|
|
|
105,371
|
|
Capital
expenditures
|
3,352
|
|
|
8,843
|
|
|
5,962
|
|
|
27,426
|
|
Contributions to
equity method investees
|
43,324
|
|
|
21,695
|
|
|
48,943
|
|
|
79,728
|
|
Adjusted
EBITDA
|
62,130
|
|
|
64,590
|
|
|
122,573
|
|
|
130,494
|
|
Cash flow available
for distributions (1)
|
$
|
46,465
|
|
|
$
|
42,669
|
|
|
$
|
92,628
|
|
|
$
|
73,594
|
|
Distributions
(2)
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
Operating
data:
|
|
|
|
|
|
|
|
Aggregate average
daily throughput – natural
gas (MMcf/d)
|
1,441
|
|
|
1,391
|
|
|
1,393
|
|
|
1,336
|
|
Aggregate average
daily throughput – liquids (Mbbl/d)
|
63
|
|
|
76
|
|
|
64
|
|
|
87
|
|
|
|
|
|
|
|
|
|
Ohio Gathering
average daily throughput (MMcf/d) (3)
|
514
|
|
|
540
|
|
|
536
|
|
|
575
|
|
__________
(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.
|
|
|
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
|
UNAUDITED
RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
(In
thousands)
|
Reconciliations of
net income or loss to
adjusted EBITDA and distributable
cash flow:
|
|
|
|
|
|
|
|
Net income
|
$
|
(19,738)
|
|
|
$
|
56,721
|
|
|
$
|
(10,750)
|
|
|
$
|
60,483
|
|
Add:
|
|
|
|
|
|
|
|
Interest
expense
|
15,502
|
|
|
21,990
|
|
|
29,455
|
|
|
45,818
|
|
Income tax (benefit)
expense
|
(248)
|
|
|
(389)
|
|
|
(262)
|
|
|
(402)
|
|
Depreciation and
amortization (1)
|
28,598
|
|
|
29,866
|
|
|
57,344
|
|
|
59,766
|
|
Proportional adjusted
EBITDA for equity method investees
(2)
|
6,841
|
|
|
7,514
|
|
|
13,713
|
|
|
15,453
|
|
Adjustments related to
MVC shortfall payments
(3)
|
—
|
|
|
2,291
|
|
|
—
|
|
|
(3,151)
|
|
Adjustments related to
capital reimbursement activity
(4)
|
(2,225)
|
|
|
(237)
|
|
|
(3,470)
|
|
|
(448)
|
|
Unit-based and noncash
compensation
|
1,048
|
|
|
1,846
|
|
|
3,015
|
|
|
4,569
|
|
Gain on early
extinguishment of debt
|
—
|
|
|
(54,235)
|
|
|
—
|
|
|
(54,235)
|
|
Gain on asset sales,
net
|
(4)
|
|
|
(281)
|
|
|
(140)
|
|
|
(166)
|
|
Long-lived asset
impairment
|
33
|
|
|
654
|
|
|
1,525
|
|
|
4,475
|
|
Other, net
(5)
|
34,627
|
|
|
1,890
|
|
|
36,762
|
|
|
4,683
|
|
Less:
|
|
|
|
|
|
|
|
Income from equity
method investees
|
2,304
|
|
|
3,040
|
|
|
4,619
|
|
|
6,351
|
|
Adjusted
EBITDA
|
$
|
62,130
|
|
|
$
|
64,590
|
|
|
$
|
122,573
|
|
|
$
|
130,494
|
|
Less:
|
|
|
|
|
|
|
|
Cash interest
paid
|
14,984
|
|
|
24,413
|
|
|
27,869
|
|
|
44,073
|
|
Cash paid for
taxes
|
15
|
|
|
—
|
|
|
15
|
|
|
—
|
|
Senior notes interest
adjustment (6)
|
(512)
|
|
|
(4,869)
|
|
|
—
|
|
|
(1,806)
|
|
Adjusted Series A
Preferred Units cash distribution (7)
|
—
|
|
|
—
|
|
|
—
|
|
|
7,125
|
|
Maintenance capital
expenditures
|
1,178
|
|
|
2,377
|
|
|
2,062
|
|
|
7,508
|
|
Cash flow available
for distributions (8)
|
$
|
46,465
|
|
|
$
|
42,669
|
|
|
$
|
92,628
|
|
|
$
|
73,594
|
|
__________
(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)
|
Represents items of
income or loss that we characterize as unrepresentative of our
ongoing operations. For the three months ended June 30, 2021, the
amount includes a $19.3 million incremental loss contingency
related to the Blacktail Release and a $12.2 million loss related
to the change in the fair value of the ECP Warrants. For the six
months ended June 30, 2021, the amount includes a $19.3 million
incremental loss contingency related to the Blacktail Release, a
$13.6 million loss related to the change in the fair value of the
ECP Warrants, $0.8 million of restructuring expenses and $0.2
million of severance expenses. For the three and six months ended
June 30, 2020, the amount represents restructuring expenses and
transaction costs associated with the GP Buy-In
Transaction.
|
|
|
(6)
|
Senior notes interest
adjustment represents the net of interest expense accrued and paid
during the period. Interest on the 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 5.75% senior notes
is paid in cash semi-annually in arrears on April 15 and October 15
until maturity in April 2025.
|
|
|
(7)
|
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.
|
|
|
(8)
|
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
|
|
|
Six Months Ended
June 30,
|
|
2021
|
|
2020
|
|
(In
thousands)
|
Reconciliation of
net cash provided by operating activities to
adjusted
EBITDA and distributable cash flow:
|
|
|
|
Net cash provided by
operating activities
|
$
|
86,217
|
|
|
$
|
105,371
|
|
Add:
|
—
|
|
|
|
Interest expense,
excluding amortization of debt issuance costs
|
26,008
|
|
|
42,682
|
|
Income tax (benefit)
expense
|
(262)
|
|
|
(402)
|
|
Loss on ECP warrants
and unsettled interest rate swaps
|
(16,326)
|
|
|
—
|
|
Changes in operating
assets and liabilities
|
(6,434)
|
|
|
(19,388)
|
|
Proportional adjusted
EBITDA for equity method investees (1)
|
13,713
|
|
|
15,453
|
|
Adjustments related to
MVC shortfall payments (2)
|
—
|
|
|
(3,151)
|
|
Adjustments related to
capital reimbursement activity (3)
|
(3,470)
|
|
|
(448)
|
|
Other, net
(4)
|
36,762
|
|
|
4,683
|
|
Less:
|
—
|
|
|
|
Distributions from
equity method investees
|
13,116
|
|
|
12,749
|
|
Noncash lease
expense
|
519
|
|
|
1,557
|
|
Adjusted
EBITDA
|
$
|
122,573
|
|
|
$
|
130,494
|
|
Less:
|
|
|
|
Cash interest
paid
|
27,869
|
|
|
44,073
|
|
Cash paid for
taxes
|
15
|
|
|
—
|
|
Senior notes interest
adjustment (5)
|
$
|
—
|
|
|
(1,806)
|
|
Adjusted Series A
Preferred Units cash distribution (6)
|
—
|
|
|
7,125
|
|
Maintenance capital
expenditures
|
2,062
|
|
|
7,508
|
|
Cash flow available
for distributions (7)
|
$
|
92,628
|
|
|
$
|
73,594
|
|
__________
(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 six months ended June 30, 2021, the
amount includes a $19.3 million incremental loss contingency
related to the Blacktail Release, $0.8 million of restructuring
expenses and $0.2 million of severance 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.
|
|
|
(5)
|
Senior notes interest
adjustment represents the net of interest expense accrued and paid
during the period. Interest on the 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 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.
|
|
|
(7)
|
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