HOUSTON, Nov. 6, 2020 /PRNewswire/ -- Summit Midstream
Partners, LP (NYSE: SMLP) announced today its financial and
operating results for the three months ended September 30, 2020, including net income of
$25.6 million, adjusted EBITDA of
$59.8 million and DCF of $37.6 million. Net income included a
$24.7 million gain from early
extinguishment of debt due to SMLP's open market repurchases and
public tender offers for its senior unsecured notes, at discounts
to par value. Operated natural gas volume throughput averaged
1,392 million cubic feet per day ("MMcf/d") and liquids volume
throughput averaged 69.0 thousand barrels per day ("Mbbl/d") for
the third quarter of 2020. Operated natural gas volumes were
relatively flat with the second quarter of 2020, which was impacted
by an aggregate volume increase of 64 MMcf/d from the Marcellus
Shale and DJ Basin segments relative to second quarter volumes,
partially offset by a 15.4% decrease in Utica Shale segment volume,
primarily due to a five-well pad site, representing more than 150
MMcf/d, that was temporarily shut-in due to low commodity prices
from mid-June through mid-August. Quarterly liquids volume
throughput decreased by 9.2% from the second quarter of 2020,
primarily due to natural production declines, the shut-in of
approximately 5 Mbbl/d of liquids throughput across our systems due
to low commodity prices and the continued deferral of drilling and
completion activities by certain customers in the Williston Basin segment.
Heath Deneke, President, Chief
Executive Officer and Chairman, commented, "Summit generated
$59.8 million of adjusted EBITDA
during the third quarter, which was slightly above our expectations
in August. Our results improved throughout the third quarter
as customers continued to return previously shut-in production to
service in large part due to strengthening of natural gas
prices. Given that most of the temporary production shut-ins
that impacted our financial results in the second and third
quarters have been restored or are in the process of being
restored, we continue to expect full-year 2020 adjusted EBITDA to
be within our $250 million to
$260 million guidance
range."
"We continue to make excellent progress advancing the Double E
project while locking in substantial savings relative to the
original development budget. Although the project did not
receive FERC approval in the third quarter of 2020 as originally
anticipated, we were pleased that FERC issued the 7(c) certificate
authorizing the project in October. This approval represents
a significant milestone for the project and enables us to advance
plans to secure third-party financing to fund the vast majority, if
not all, of our remaining Double E capital expenditures. We
expect to have third-party financing in place concurrent with
receipt of FERC's notice to proceed with construction, which is
expected to be obtained in the first quarter of 2021. Given
the success we've had in locking in capital savings relative to
budget, the total estimated cost to complete Double E is now
expected to come in under $430
million, gross, which represents an approximate 15%
reduction relative to the original capital budget. As a
result, SMLP's 70% share of development capital is now estimated to
be approximately $300 million, of
which, approximately $175 million
remains to be spent as of September 30,
2020."
"Due to the delay in receiving FERC approval on the Double E
project and the associated impact to the timing of our third-party
financing plans, SMLP now expects to directly fund an incremental
$10 million to $20 million of Double E capital in 2020 beyond
what was previously assumed in our capital guidance for the
year. As a result, we are revising SMLP's 2020 capital
expenditure guidance to $55 million
to $65 million."
"We also continued to make significant progress on our liability
management strategy in the third quarter of 2020, completing and
announcing several transactions, consistent with our primary
objectives to reduce leverage, simplify the balance sheet and
create long-term value for stakeholders across our capital
structure. Since closing of the GP Buy-In Transaction in May,
including the October 2020 privately
negotiated transaction to repurchase $95.6
million of our 2025 senior notes at a substantial discount
to par value, we have repurchased a total of $306.5 million face value of our aggregate senior
notes and reduced net indebtedness by more than $150 million relative to the end of 2019.
Additionally, we exchanged 62,816 Series A Preferred Units for
approximately 12.3 million SMLP common units during 3Q 2020,
reducing the face value of SMLP's aggregate Series A Preferred
Units by approximately $62.8 million
at an implied discount of 84% based on SMLP's common unit trading
price at closing. Furthermore, during the third quarter, we
executed a transaction support agreement to retire the $155.2 million SMP Holdings Term Loan through a
settlement with the Term Loan lenders. Upon closing of the TL
Restructuring, we plan to make a $26.5
million cash payment to SMP Holdings, representing a full
settlement of the $180.75 million
DPPO, and will release the 34.6 million SMLP common units that were
previously pledged as collateral to Term Loan lenders. In
exchange, the lenders will forgive the full amount of the
$155.2 million Term Loan and the GP
interest will be released from the collateral package. The TL
Restructuring has garnered the support and consent from 100% of the
lenders and is expected to close in the fourth quarter of
2020. Together with the Series A Preferred Equity Exchange,
the senior note repurchases and the full settlement of the DPPO,
SMLP has eliminated approximately $550.1
million of its fixed capital obligations since closing the
GP Buy-In Transaction. These liability management
transactions have been highly accretive to SMLP's equity valuation
given the substantial discounts captured and I believe that SMLP is
far better situated for long-term success as a result of these
initiatives."
Summary of Selected Balance Sheet Items Impacted by SMLP's
Liability Management Initiatives in 2020
The table below
summarizes the par value of key selected SMLP balance sheet line
items that have been, or are expected to be impacted by SMLP's
liability management initiatives in 2020. Current par value
is shown pro forma as of November 5,
2020 and includes expected impacts from the SMP Holdings
Term Loan Restructuring transaction, which was announced in
September 2020 and is expected to
close in the fourth quarter of 2020.
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($ in
millions)
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Par
Value
|
|
Total Retirement
Consideration
|
|
Financial
Instrument
|
At GP Buy-In
Transaction Closing (1)
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Retired
Amount
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Current
|
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Amount
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%
Discount
|
|
Recourse
Obligations to SMLP:
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2022 Senior
Notes
|
$300.0
|
($66.0)
|
$234.0
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|
$45.2
|
32%
|
|
2025 Senior Notes
(2)
|
500.0
|
(240.5)
|
259.5
|
|
148.3
|
38%
|
|
Deferred Purchase
Price Obligation (3)
|
180.8
|
(180.8)
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-
|
|
26.5
|
85%
|
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Series A Preferred
Units (4)
|
300.0
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(62.8)
|
237.2
|
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10.1
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84%
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Total SMLP
Recourse Debt, Obligations and Pref.
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$1,280.8
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($550.1)
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$730.7
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$230.0
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58%
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Non Recourse Debt
to SMLP:
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SMP Holdings Term
Loan (3)
|
$158.2
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($158.2)
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-
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$50.4
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68%
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Note: Current par
value is as of November 5, 2020 and is pro forma for the Term Loan
Restructuring transaction announced on 9/29/2020.
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(1) GP Buy-In
Transaction closed on 5/28/2020.
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(2) Represents
outstanding par value as of 9/30/2020, pro forma for privately
negotiated repurchase of $95.6 million par value in October
2020.
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(3) Pro forma for
Term Loan Restructuring transaction announced on 9/29/2020, which
is expected to close in the fourth quarter of 2020.
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(4) Par value
reflects the remaining portion of the original principal balance
outstanding; As of 9/30/2020, the Series A Preferred Units
had an outstanding balance of $249.4 million, inclusive of accrued
and unpaid distributions; Total retirement consideration
calculated using an SMLP common unit closing price of $0.80 per
unit on 7/31/2020, the date the Series A Preferred Exchange Offer
closed and 12.6 million SMLP common units that were provided as
consideration in the exchange, prior to applicable witholding
taxes.
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Third Quarter 2020 Business Highlights
In the third
quarter of 2020, SMLP's average daily natural gas throughput for
its operated systems increased 0.1% relative to the second quarter
of 2020, to 1,392 MMcf/d, and liquids volumes decreased 9.2%
relative to the second quarter of 2020, to 69 Mbbl/d. SMLP's
customers had approximately 21 DUCs in inventory and 18 wells that
had been completed but not turned-in-line upstream of its systems
as of September 30, 2020.
Core Focus Areas:
- Core Focus Areas generated combined quarterly segment adjusted
EBITDA of $32.0 million and had
combined capital expenditures of $6.3
million.
- Utica Shale segment adjusted EBITDA totaled $7.5 million, a $3.2
million decrease from the second quarter of 2020, which was
driven by a 15.4% decrease in volume throughput. Volume
throughput was lower in the third quarter of 2020 due to the
shut-in of a five-well pad site through mid-August that averaged
more than 150 MMcf/d once back online, deferrals of new well
connections and natural production declines. A total of 10
wells were connected in the Utica Shale segment during the quarter,
of which seven wells were turned-in-line upstream of the TPL-7
Connector pipeline. We do not anticipate any new well
connections for the remainder of the year, but we do expect
additional activity in the first half of 2021 as a result of a
previously announced gathering agreement amendment to incentivize
accelerated drilling behind our SMU
system.
- Ohio Gathering segment adjusted EBITDA totaled $7.1 million, a 5.1% decrease from the second
quarter of 2020. Lower segment adjusted EBITDA was driven by
a 5.2% decrease in volume throughput due to production shut-ins,
which accounted for approximately 139 MMcf/d of gross volumes for
the quarter, partially offset by 15 new wells that were connected,
of which 10 wells were turned-in-line in September; as a result of
our one-month lag in reporting for Ohio Gathering, these 10
September wells were not included in our third quarter operating or
financial results.
- Williston Basin segment
adjusted EBITDA totaled $11.7 million
in the third quarter of 2020, an 8.0% decrease from the second
quarter of 2020, primarily due to a 9.2% decrease in liquids volume
throughput to 69 Mbbl/d. This volume throughput decrease was
driven largely by natural production declines and impacted by
production shut-ins of approximately 5 Mbbl/d for the
quarter. In September, two of our Williston Basin customers emerged from
bankruptcy proceedings and at the end of the third quarter, there
were approximately 6 DUCs in inventory and 8 wells that have been
completed, but not yet turned to production behind our Williston Basin systems.
- DJ Basin segment adjusted EBITDA totaled $4.8 million in the third quarter of 2020, a 9.8%
increase from the second quarter of 2020, due to a 35.0%
quarter-over-quarter increase in total throughput to 27
MMcf/d. The volume throughput increase was primarily driven
by shut-in wells coming back online and nine new wells connected
behind the DJ Basin system in the quarter. As of September 30, 2020, our customers had 10
completed wells that had not yet been turned-in-line behind our DJ
Basin system; however, four of those wells came online in
October 2020 and the remaining six
are expected to be online by year end.
- Permian Basin segment adjusted EBITDA totaled $0.9 million in the third quarter of 2020, a
decrease of approximately 51.1% relative to the prior quarter
primarily due decreased margins on natural gas and NGL sales,
higher operating expenses and change in customer volume mix.
The 6.3% increase in volume throughput was largely attributable to
having a full quarter of throughput from a customer who signed a
contract extension in May. Our customers have two DUCs in
inventory behind the Permian Basin system, but we do not expect
them to be turned-in-line until 2021.
Legacy Areas:
- Legacy Areas generated $34.7
million of combined segment adjusted EBITDA in the third
quarter of 2020 and had combined capital expenditures of
$1.3 million.
- Piceance Basin segment adjusted EBITDA of $21.5 million decreased by $0.2 million from the second quarter of 2020 due
to lower volume throughput of 1.6%, which was primarily driven by
the impact of natural production declines.
- Barnett Shale segment adjusted EBITDA decreased by $1.3 million from the second quarter of 2020 to
$7.2 million, primarily due to
decreased gas sales and margin mix due to recent contract
amendments. Throughput volumes increased by 2.5% primarily
due to workovers and recompletions of existing wells behind the DFW
Midstream system.
- Marcellus Shale segment adjusted EBITDA increased by 23.2%
compared to the second quarter of 2020, to $6.0 million, due to a 16.8 % increase in volume
throughput to 396 MMcf/d. Our anchor customer connected nine
wells in July, which represented the primary driver of increased
performance. There were nine DUCs in inventory behind our
Marcellus Shale infrastructure at the end of the third quarter,
which we do not expect to be turned-in-line until the first half of
2021.
The following table presents average daily throughput by
reportable segment for the periods indicated:
|
|
Three months ended
September 30,
|
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|
Nine months ended
September 30,
|
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|
|
2020
|
|
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2019
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|
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2020
|
|
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2019
|
|
Average daily
throughput (MMcf/d):
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|
|
|
|
|
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|
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Utica
Shale
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|
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352
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290
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|
|
330
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|
|
|
279
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Williston Basin
(1)
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|
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14
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|
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9
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|
|
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14
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|
|
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12
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DJ Basin
|
|
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27
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|
|
|
33
|
|
|
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26
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|
|
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25
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Permian
Basin
|
|
|
34
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20
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33
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17
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Piceance Basin
(2)
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|
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361
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446
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370
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|
|
|
464
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Barnett
Shale
|
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208
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|
247
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|
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215
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|
|
|
255
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|
Marcellus
Shale
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|
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396
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|
|
349
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|
|
366
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|
358
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Aggregate average
daily throughput
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1,392
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|
|
1,394
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|
|
1,354
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|
|
1,410
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily
throughput (Mbbl/d):
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|
|
|
|
|
|
|
|
|
|
|
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|
Williston
Basin
|
|
|
69
|
|
|
|
105
|
|
|
|
81
|
|
|
|
101
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|
Aggregate average
daily throughput
|
|
|
69
|
|
|
|
105
|
|
|
|
81
|
|
|
|
101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Ohio Gathering
average daily throughput
(MMcf/d) (3)
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|
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512
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|
777
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|
554
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|
|
|
734
|
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__________
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(1)
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The Williston Basin
segment includes the Tioga Midstream system, which was sold in
March 2019.
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(2)
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The Piceance Basin
segment includes the RRG West system, which was sold in December
2019.
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(3)
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Gross basis,
represents 100% of volume throughput for Ohio Gathering, subject to
a one-month lag.
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The following table presents adjusted EBITDA by reportable
segment for the periods indicated:
|
|
Three months ended
September 30,
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|
|
Nine months ended
September 30,
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|
|
2020
|
|
|
2019
|
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|
2020
|
|
|
2019
|
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(In
thousands)
|
|
Reportable segment
adjusted EBITDA (1):
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|
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|
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|
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Utica
Shale
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$
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7,453
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|
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$
|
7,864
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|
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$
|
24,074
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|
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$
|
20,697
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Ohio Gathering
(2)
|
|
|
7,129
|
|
|
|
10,435
|
|
|
|
22,582
|
|
|
|
29,584
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Williston Basin
(3)
|
|
|
11,713
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|
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13,840
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|
|
|
40,632
|
|
|
|
49,224
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DJ Basin
|
|
|
4,766
|
|
|
|
6,554
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|
|
|
15,016
|
|
|
|
12,043
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Permian
Basin
|
|
|
893
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|
|
|
210
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|
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4,302
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|
|
|
(996)
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Piceance Basin
(4)
|
|
|
21,503
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|
|
|
24,044
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|
|
|
66,794
|
|
|
|
74,627
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Barnett
Shale
|
|
|
7,205
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|
|
|
10,901
|
|
|
|
24,475
|
|
|
|
33,483
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Marcellus
Shale
|
|
|
6,022
|
|
|
|
4,958
|
|
|
|
16,230
|
|
|
|
14,735
|
|
Total
|
|
$
|
66,684
|
|
|
$
|
78,806
|
|
|
$
|
214,105
|
|
|
$
|
233,397
|
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Less: Corporate
and Other (5)
|
|
|
6,854
|
|
|
|
6,859
|
|
|
|
23,781
|
|
|
|
27,032
|
|
Adjusted
EBITDA
|
|
$
|
59,830
|
|
|
$
|
71,947
|
|
|
$
|
190,324
|
|
|
$
|
206,365
|
|
__________
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(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.
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(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.
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(3)
|
The Williston Basin
segment includes the Tioga Midstream system, which was sold in
March 2019.
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(4)
|
The Piceance Basin
segment includes the RRG West system, which was sold in December
2019.
|
(5)
|
Corporate and Other
represents those results that are not specifically attributable to
a reportable segment (such as Double E) or that have not been
allocated to our reportable segments, including certain general and
administrative expense items and natural gas and crude oil
marketing services.
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Capital Expenditures
Capital expenditures totaled
$7.9 million in the third quarter of
2020, a decrease of 10.8% compared to the second quarter of 2020,
which included maintenance capital expenditures of $3.5 million. Capital expenditures in the
third quarter of 2020 were primarily related to growth projects in
our DJ Basin segment.
|
|
Nine months ended
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
(In
thousands)
|
|
Cash paid for
capital expenditures (1):
|
|
|
|
|
|
|
|
|
Utica
Shale
|
|
$
|
2,461
|
|
|
$
|
2,473
|
|
Williston
Basin
|
|
|
8,435
|
|
|
|
20,288
|
|
DJ Basin
|
|
|
11,349
|
|
|
|
66,775
|
|
Permian
Basin
|
|
|
6,342
|
|
|
|
43,422
|
|
Piceance
Basin
|
|
|
971
|
|
|
|
1,919
|
|
Barnett Shale
(2)
|
|
|
1,627
|
|
|
|
317
|
|
Marcellus
Shale
|
|
|
430
|
|
|
|
347
|
|
Total reportable
segment capital expenditures
|
|
|
31,615
|
|
|
|
135,541
|
|
Corporate and Other
(3)
|
|
|
3,697
|
|
|
|
16,122
|
|
Total cash paid for
capital expenditures
|
|
$
|
35,312
|
|
|
$
|
151,663
|
|
__________
|
|
(1)
|
Excludes cash paid
for capital expenditures by Ohio Gathering and Double E (after June
2019) due to equity method accounting.
|
(2)
|
For the nine months
ended September 30, 2019, the amount includes sales tax
reimbursements of $1.1 million.
|
(3)
|
For the nine months
ended September 30, 2019, and through the formation date of the
Double E joint venture in June 2019, reflects 100% of the capital
expenditures associated with Double E and excludes capital
contributions made by our JV partner.
|
Capital & Liquidity
As of September 30, 2020, SMLP had $437.4 million of undrawn commitments under its
$1.25 billion revolving credit
facility, after accounting for a $4.1
million issued but undrawn letter of credit. Subject
to covenant limits, our available borrowing capacity at
September 30, 2020 totaled
approximately $172 million.
Based upon the terms of SMLP's revolving credit facility and
total outstanding debt, net of cash, of $1.35 billion (inclusive of $589.1 million of senior unsecured notes), SMLP's
total leverage ratio and senior secured leverage ratio (as defined
in the credit agreement) as of September 30,
2020, were 4.87 to 1.0 and 2.74 to 1.0, respectively,
relative to maximum threshold limits of 5.50 to 1.0 and 3.75 to
1.0.
Double E Update
During the third quarter of 2020, SMLP
made cash investments totaling $11.2
million with respect to its 70% equity investment in Double
E. The estimated cost to complete the Double E Pipeline
Project has decreased by approximately 15% relative to original
development budget, and as such, SMLP's 70% share of capital costs
is now approximately $300 million, of
which approximately $125 million has
been funded as of September 30,
2020. As previously reported, on October 15, 2020, Double E received Federal
Energy Regulatory Commission ("FERC") approval of its application
to construct and operate the Double E Pipeline Project pursuant to
Section 7(c) of the Natural Gas Act. SMLP is in the process
of finalizing third-party financing for its remaining Double E
capital obligations and expects to secure this financing
concurrently with FERC's notice to proceed with construction, which
is anticipated in the first quarter of 2021. SMLP plans to
directly fund its Double E capital obligations until third-party
financing can be obtained. The estimated in-service date for
Double E has been extended to the fourth quarter of 2021.
MVC Shortfall Payments
SMLP billed its customers
$12.9 million in the third quarter of
2020 related to MVC shortfalls. For those customers that do
not have MVC shortfall credit banking mechanisms in their gathering
agreements, the MVC shortfall payments are accounted for as
gathering revenue in the period in which they are earned. In
the third quarter of 2020, SMLP recognized $12.9 million of gathering revenue associated
with MVC shortfall payments. SMLP also recognized
$2.3 million of adjustments to MVC
shortfall payments in the third quarter of 2020 related to
shortfall payment adjustments from customers in the Williston Basin segment and the Piceance Basin
segment. SMLP's MVC shortfall payment mechanisms contributed
$15.2 million of total adjusted
EBITDA in the third quarter of 2020.
|
Three months ended
September 30, 2020
|
|
|
MVC
Billings
|
|
|
|
Gathering
revenue
|
|
|
Adjustments
to MVC
shortfall
payments
|
|
|
Net impact to
adjusted EBITDA
|
|
|
(In
thousands)
|
|
Net change in
deferred revenue related to MVC
shortfall payments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Piceance
Basin
|
$
|
3,454
|
|
|
|
$
|
3,454
|
|
|
$
|
—
|
|
|
$
|
3,454
|
|
Total net
change
|
$
|
3,454
|
|
|
|
$
|
3,454
|
|
|
$
|
—
|
|
|
$
|
3,454
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MVC shortfall
payment adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Williston
Basin
|
$
|
954
|
|
|
|
$
|
954
|
|
|
$
|
2,125
|
|
|
$
|
3,079
|
|
Piceance
Basin
|
|
7,155
|
|
|
|
|
7,155
|
|
|
|
167
|
|
|
|
7,322
|
|
Marcellus
Shale
|
|
1,354
|
|
|
|
|
1,354
|
|
|
|
—
|
|
|
|
1,354
|
|
Total MVC shortfall
payment adjustments
|
$
|
9,463
|
|
|
|
$
|
9,463
|
|
|
$
|
2,292
|
|
|
$
|
11,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
(1)
|
$
|
12,917
|
|
|
|
$
|
12,917
|
|
|
$
|
2,292
|
|
|
$
|
15,209
|
|
__________
|
|
(1)
|
Exclusive of Ohio
Gathering due to equity method accounting.
|
|
Nine months ended
September 30, 2020
|
|
|
MVC
Billings
|
|
|
|
Gathering
revenue
|
|
|
Adjustments
to MVC
shortfall
payments
|
|
|
Net impact to
adjusted EBITDA
|
|
|
(In
thousands)
|
|
Net change in
deferred revenue related to MVC
shortfall payments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Piceance
Basin
|
$
|
10,531
|
|
|
|
$
|
10,531
|
|
|
$
|
—
|
|
|
$
|
10,531
|
|
Total net
change
|
$
|
10,531
|
|
|
|
$
|
10,531
|
|
|
$
|
—
|
|
|
$
|
10,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MVC shortfall
payment adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Williston
Basin
|
$
|
3,047
|
|
|
|
$
|
10,837
|
|
|
$
|
(1,416)
|
|
|
$
|
9,421
|
|
Piceance
Basin
|
|
21,046
|
|
|
|
|
20,941
|
|
|
|
557
|
|
|
|
21,498
|
|
Marcellus
Shale
|
|
3,898
|
|
|
|
|
3,898
|
|
|
|
—
|
|
|
|
3,898
|
|
Total MVC shortfall
payment adjustments
|
$
|
27,991
|
|
|
|
$
|
35,676
|
|
|
$
|
(859)
|
|
|
$
|
34,816
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
(1)
|
$
|
38,522
|
|
|
|
$
|
46,207
|
|
|
$
|
(859)
|
|
|
$
|
45,348
|
|
__________
|
|
(1)
|
Exclusive of Ohio
Gathering due to equity method accounting.
|
Quarterly Distribution Update
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 September
30, 2020. Unpaid distributions on the preferred units
will continue to accrue.
Previously Announced Reverse Unit Split
On
October 30, 2020, SMLP announced a
1-for-15 reverse unit split on its common units. Pursuant to the
reverse unit split, common unitholders will receive one common unit
for every 15 common units owned at the close of business on
November 9, 2020. The split
will take effect after markets close on Monday, November 9, 2020, and the common units
will trade on a split-adjusted basis beginning on Tuesday, November 10, 2020.
Third Quarter 2020 Earnings Call Information
SMLP will
host a conference call at 10:00 a.m.
Eastern on Friday, November 6, 2020,
to discuss its quarterly operating and financial results.
Interested parties may participate in the call by dialing
847-585-4405 or toll-free 888-771-4371 and entering the passcode
49988072. 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 Conferences
Members of SMLP's senior
management team will attend the RBC Capital Markets Midstream and
Energy Infrastructure Conference which will take place on
November 18-19, 2020 and the 2020
Wells Fargo Midstream and Utility Symposium which will take place
on December 8-9. Presentation materials associated with these
events will be accessible through the Investors section of SMLP's
website at www.summitmidstream.com prior to the beginning of each
respective conference.
Use of Non-GAAP Financial Measures
We report financial
results in accordance with U.S. generally accepted accounting
principles ("GAAP"). We also present adjusted EBITDA and
distributable cash flow, each a non-GAAP financial measure.
We define adjusted EBITDA as net income or loss, plus interest
expense, income tax expense, depreciation and amortization, our
proportional adjusted EBITDA for equity method investees,
adjustments related to MVC shortfall payments, adjustments related
to capital reimbursement activity, unit-based and noncash
compensation, impairments, items of income or loss that we
characterize as unrepresentative of our ongoing operations and
other noncash expenses or losses, less interest income, income tax
benefit, income (loss) from equity method investees and other
noncash income or gains. We define distributable cash flow as
adjusted EBITDA plus cash interest received and cash taxes
received, less cash interest paid, senior notes interest
adjustment, adjusted Series A Preferred Units cash distribution,
cash taxes paid and maintenance capital expenditures. Because
adjusted EBITDA and distributable cash flow may be defined
differently by other entities in our industry, our definitions of
these non-GAAP financial measures may not be comparable to
similarly titled measures of other entities, thereby diminishing
their utility.
Management uses these non-GAAP financial measures in making
financial, operating and planning decisions and in evaluating our
financial performance. Furthermore, management believes that these
non-GAAP financial measures may provide external users of our
financial statements, such as investors, commercial banks, research
analysts and others, with additional meaningful comparisons between
current results and results of prior periods as they are expected
to be reflective of our core ongoing business.
Adjusted EBITDA and distributable cash flow are used as
supplemental financial measures by external users of our financial
statements such as investors, commercial banks, research analysts
and others.
Adjusted EBITDA is used to assess:
- the ability of our assets to generate cash sufficient to make
future potential cash distributions and support our
indebtedness;
- the financial performance of our assets without regard to
financing methods, capital structure or historical cost basis;
- our operating performance and return on capital as compared to
those of other entities in the midstream energy sector, without
regard to financing or capital structure;
- the attractiveness of capital projects and acquisitions and the
overall rates of return on alternative investment opportunities;
and
- the financial performance of our assets without regard to (i)
income or loss from equity method investees, (ii) the impact of the
timing of minimum volume commitments shortfall payments under our
gathering agreements or (iii) the timing of impairments or other
income or expense items that we characterize as unrepresentative of
our ongoing operations.
Distributable cash flow is used to assess:
- the ability of our assets to generate cash sufficient to
support future potential cash distributions and
- the attractiveness of capital projects and acquisitions and the
overall rates of return on alternative investment
opportunities.
Both of these measures have limitations as analytical tools and
investors should not consider them in isolation or as a substitute
for analysis of our results as reported under GAAP. For
example:
- certain items excluded from adjusted EBITDA and distributable
cash flow are significant components in understanding and assessing
an entity's financial performance, such as an entity's cost of
capital and tax structure;
- adjusted EBITDA and distributable cash flow do not reflect our
cash expenditures or future requirements for capital expenditures
or contractual commitments;
- adjusted EBITDA and distributable cash flow do not reflect
changes in, or cash requirements for, our working capital needs;
and
- although depreciation and amortization are noncash charges, the
assets being depreciated and amortized will often have to be
replaced in the future, and adjusted EBITDA and distributable cash
flow do not reflect any cash requirements for such
replacements.
We compensate for the limitations of adjusted EBITDA and
distributable cash flow as analytical tools by reviewing the
comparable GAAP financial measures, understanding the differences
between the financial measures and incorporating these data points
into our decision-making process. Reconciliations of GAAP to
non-GAAP financial measures are attached to this press release.
We do not provide the GAAP financial measures of net income or
loss or net cash provided by operating activities on a
forward-looking basis because we are unable to predict, without
unreasonable effort, certain components thereof including, but not
limited to, (i) income or loss from equity method investees and
(ii) asset impairments. These items are inherently uncertain
and depend on various factors, many of which are beyond our
control. As such, any associated estimate and its impact on
our GAAP performance and cash flow measures could vary materially
based on a variety of acceptable management
assumptions.
About Summit Midstream Partners, LP
SMLP is a
value-driven limited partnership focused on developing, owning and
operating midstream energy infrastructure assets that are
strategically located in the core producing areas of unconventional
resource basins, primarily shale formations, in the continental
United States. SMLP provides natural gas, crude oil and
produced water gathering, processing and transportation services
pursuant to primarily long-term, fee-based agreements with
customers and counterparties in six unconventional resource basins:
(i) the Appalachian Basin, which includes the Utica and Marcellus shale formations in
Ohio and West Virginia; (ii) the Williston Basin, which includes the Bakken and
Three Forks shale formations in North
Dakota; (iii) the Denver-Julesburg Basin, which includes the
Niobrara and Codell shale
formations in Colorado and
Wyoming; (iv) the Permian Basin,
which includes the Bone Spring and Wolfcamp formations in
New Mexico; (v) the Fort Worth Basin, which includes the Barnett
Shale formation in Texas; and (vi)
the Piceance Basin, which includes the Mesaverde formation as well
as the Mancos and Niobrara shale formations in
Colorado. SMLP has an equity investment in Double E Pipeline,
LLC, which is developing natural gas transmission infrastructure
that will provide transportation service from multiple receipt
points in the Delaware Basin to
various delivery points in and around the Waha Hub in Texas.
SMLP also has an equity investment in Ohio Gathering, which
operates extensive natural gas gathering and condensate
stabilization infrastructure in the Utica Shale in Ohio. SMLP
is headquartered in Houston,
Texas.
Forward-Looking Statements
This press release
includes certain statements concerning expectations for the future
that are forward-looking within the meaning of the federal
securities laws. Forward-looking statements contain known and
unknown risks and uncertainties (many of which are difficult
to predict and beyond management's control) that may cause
SMLP's actual results in future periods to differ materially from
anticipated or projected results. An extensive list of
specific material risks and uncertainties affecting SMLP is
contained in its 2019 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March
9, 2020, and as amended and updated from time to time. Any
forward-looking statements in this press release, including
forward-looking statements regarding 2020 financial guidance or
financial or operating expectations for 2020, are made as of the
date of this press release and SMLP undertakes no obligation
to update or revise any forward-looking statements to
reflect new information or events.
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
(In
thousands)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
50,272
|
|
|
$
|
9,530
|
|
Restricted
cash
|
|
|
24
|
|
|
|
27,392
|
|
Accounts
receivable
|
|
|
76,497
|
|
|
|
97,418
|
|
Other current
assets
|
|
|
4,559
|
|
|
|
5,521
|
|
Total current
assets
|
|
|
131,352
|
|
|
|
139,861
|
|
Property, plant and
equipment, net
|
|
|
1,840,284
|
|
|
|
1,882,489
|
|
Intangible assets,
net
|
|
|
207,766
|
|
|
|
232,278
|
|
Investment in equity
method investees
|
|
|
389,088
|
|
|
|
309,728
|
|
Other noncurrent
assets
|
|
|
4,989
|
|
|
|
9,742
|
|
TOTAL
ASSETS
|
|
$
|
2,573,479
|
|
|
$
|
2,574,098
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
CAPITAL
|
|
|
|
|
|
|
|
|
Trade accounts
payable
|
|
$
|
16,205
|
|
|
$
|
24,415
|
|
Accrued
expenses
|
|
|
11,353
|
|
|
|
11,339
|
|
Deferred
revenue
|
|
|
17,827
|
|
|
|
13,493
|
|
Ad valorem taxes
payable
|
|
|
6,931
|
|
|
|
8,477
|
|
Accrued
interest
|
|
|
12,092
|
|
|
|
12,346
|
|
Accrued environmental
remediation
|
|
|
1,553
|
|
|
|
1,725
|
|
Other current
liabilities
|
|
|
10,747
|
|
|
|
12,206
|
|
Term loan (See TL
Restructuring discussion in Note 8)
|
|
|
155,200
|
|
|
|
5,546
|
|
Total current
liabilities
|
|
|
231,908
|
|
|
|
89,547
|
|
Long-term
debt
|
|
|
1,390,842
|
|
|
|
1,622,279
|
|
Noncurrent deferred
revenue
|
|
|
41,755
|
|
|
|
38,709
|
|
Noncurrent accrued
environmental remediation
|
|
|
2,003
|
|
|
|
2,926
|
|
Other noncurrent
liabilities
|
|
|
4,536
|
|
|
|
7,951
|
|
Total
liabilities
|
|
|
1,671,044
|
|
|
|
1,761,412
|
|
|
|
|
|
|
|
|
|
|
Mezzanine
Capital
|
|
|
|
|
|
|
|
|
Subsidiary Series A
Preferred Units
|
|
|
85,800
|
|
|
|
27,450
|
|
|
|
|
|
|
|
|
|
|
Partners'
Capital
|
|
|
|
|
|
|
|
|
Series A Preferred
Units
|
|
|
249,351
|
|
|
|
293,616
|
|
Common limited
partner capital
|
|
|
567,284
|
|
|
|
305,550
|
|
Noncontrolling
interest
|
|
|
—
|
|
|
|
186,070
|
|
Total partners'
capital
|
|
|
816,635
|
|
|
|
785,236
|
|
TOTAL LIABILITIES AND
CAPITAL
|
|
$
|
2,573,479
|
|
|
$
|
2,574,098
|
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
|
Three months ended
September 30,
|
|
|
Nine months ended
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
(In thousands,
except per-unit amounts)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gathering services
and related fees
|
|
$
|
71,964
|
|
|
$
|
80,968
|
|
|
$
|
229,667
|
|
|
$
|
243,039
|
|
Natural gas, NGLs and
condensate sales
|
|
|
10,783
|
|
|
|
12,219
|
|
|
|
35,246
|
|
|
|
68,438
|
|
Other
revenues
|
|
|
7,406
|
|
|
|
7,000
|
|
|
|
22,150
|
|
|
|
19,804
|
|
Total
revenues
|
|
|
90,153
|
|
|
|
100,187
|
|
|
|
287,063
|
|
|
|
331,281
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of natural gas
and NGLs
|
|
|
8,632
|
|
|
|
7,472
|
|
|
|
22,945
|
|
|
|
50,802
|
|
Operation and
maintenance
|
|
|
22,168
|
|
|
|
26,231
|
|
|
|
65,131
|
|
|
|
74,771
|
|
General and
administrative (1)
|
|
|
10,561
|
|
|
|
10,029
|
|
|
|
39,908
|
|
|
|
38,979
|
|
Depreciation and
amortization
|
|
|
29,505
|
|
|
|
27,443
|
|
|
|
88,801
|
|
|
|
82,044
|
|
Transaction
costs
|
|
|
726
|
|
|
|
129
|
|
|
|
1,944
|
|
|
|
2,562
|
|
Gain on asset sales,
net
|
|
|
(104)
|
|
|
|
(347)
|
|
|
|
(270)
|
|
|
|
(1,595)
|
|
Long-lived asset
impairment (2)
|
|
|
—
|
|
|
|
-
|
|
|
|
4,475
|
|
|
|
45,021
|
|
Goodwill Impairment
(3)
|
|
|
—
|
|
|
|
16,211
|
|
|
|
—
|
|
|
|
16,211
|
|
Total costs and
expenses
|
|
|
71,488
|
|
|
|
87,168
|
|
|
|
222,934
|
|
|
|
308,795
|
|
Other
income
|
|
|
795
|
|
|
|
12
|
|
|
|
644
|
|
|
|
304
|
|
Interest
expense
|
|
|
(19,018)
|
|
|
|
(23,462)
|
|
|
|
(64,836)
|
|
|
|
(68,547)
|
|
Gain on early
extinguishment of debt (4)
|
|
|
24,690
|
|
|
|
—
|
|
|
|
78,925
|
|
|
|
—
|
|
Income (loss) before
income taxes and
equity method investment income (loss)
|
|
|
25,132
|
|
|
|
(10,431)
|
|
|
|
78,862
|
|
|
|
(45,757)
|
|
Income tax benefit
(expense)
|
|
|
(298)
|
|
|
|
(21)
|
|
|
|
104
|
|
|
|
(1,427)
|
|
Income (loss) from
equity method investees
|
|
|
795
|
|
|
|
(677)
|
|
|
|
7,146
|
|
|
|
(1,197)
|
|
Net income
(loss)
|
|
$
|
25,629
|
|
|
$
|
(11,129)
|
|
|
$
|
86,112
|
|
|
$
|
(48,381)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per limited partner unit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common unit
– basic
|
|
$
|
1.29
|
|
|
$
|
(0.17)
|
|
|
$
|
2.41
|
|
|
$
|
(0.72)
|
|
Common unit
– diluted
|
|
$
|
1.25
|
|
|
$
|
(0.17)
|
|
|
$
|
2.34
|
|
|
$
|
(0.72)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
limited partner units outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common units
– basic
|
|
|
51,974
|
|
|
|
45,319
|
|
|
|
47,331
|
|
|
|
45,319
|
|
Common units
– diluted
|
|
|
53,650
|
|
|
|
45,319
|
|
|
|
48,782
|
|
|
|
45,319
|
|
__________
|
|
(1)
|
For the three and
nine months ended September 30, 2020, the amount includes $0.1
million and $3.4 million, respectively, of restructuring
expenses.
|
(2)
|
For the nine months
ended September 30, 2019, the amount is associated with (i) our
decision in March 2019 to idle our existing 20 MMcf/d DJ Basin
processing plant in conjunction with the commissioning of our new
60 MMcf/d DJ Basin processing plant resulting in an impairment
charge of $34.7 million; and (ii) our decommissioning in March 2019
of an underutilized Barnett Shale compressor station resulting in
an impairment charge of $10.2 million.
|
(3)
|
For the three and
nine months ended September 30, 2019, the amount represents an
impairment charge associated with our annual goodwill testing of
the Marcellus Shale reporting unit.
|
(4)
|
Subsequent to the GP
Buy-In Transaction, the Partnership commenced a debt buyback
program to repurchase our Senior Notes, which is ongoing. We
repurchased $66.0 million of the outstanding $300 million aggregate
principal amount of our 5.50% Senior Notes through September 30,
2020. The gain on early extinguishment of debt for the 5.50% Senior
Notes during the three and nine months ended September 30, 2020
totaled $11.3 million and $20.5 million, respectively, and is
inclusive of a $0.3 million write off of debt issuance costs. We
also repurchased $144.9 million of the outstanding $500 million
aggregate principal amount of our 5.75% Senior Notes through
September 30, 2020. The gain on early extinguishment of debt for
the 5.75% Senior Notes during the three and nine months ended
September 30, 2020 totaled $15.1 million and $60.2 million,
respectively, and is inclusive of a $1.3 million write off of debt
issuance costs.
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES UNAUDITED OTHER
FINANCIAL AND OPERATING DATA
|
|
Three months ended
September 30,
|
|
|
Nine months ended
September 30,
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
(Dollars in
thousands)
|
|
Other financial
data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
25,629
|
|
|
$
|
(11,129)
|
|
|
$
|
86,112
|
|
|
$
|
(48,381)
|
|
Net cash provided by
operating activities
|
$
|
41,436
|
|
|
$
|
43,043
|
|
|
$
|
146,807
|
|
|
$
|
127,617
|
|
Capital
expenditures
|
$
|
7,886
|
|
|
$
|
40,571
|
|
|
$
|
35,312
|
|
|
$
|
151,663
|
|
Contributions to
equity method investees
|
$
|
12,344
|
|
|
$
|
5,409
|
|
|
$
|
92,072
|
|
|
$
|
11,330
|
|
Adjusted
EBITDA
|
$
|
59,830
|
|
|
$
|
71,947
|
|
|
$
|
190,324
|
|
|
$
|
206,365
|
|
Cash flow available
for distributions (1)
|
$
|
37,551
|
|
|
$
|
42,591
|
|
|
$
|
118,270
|
|
|
$
|
126,140
|
|
Distributions
(2)
|
$
|
—
|
|
|
$
|
30,915
|
|
|
$
|
—
|
|
|
$
|
92,718
|
|
Distribution coverage
ratio (3)
|
n/a
|
|
|
1.38x
|
|
|
n/a
|
|
|
1.36x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate average
daily throughput – natural
gas (MMcf/d)
|
|
1,392
|
|
|
|
1,394
|
|
|
|
1,354
|
|
|
|
1,410
|
|
Aggregate average
daily throughput – liquids (Mbbl/d)
|
|
69
|
|
|
|
105
|
|
|
|
81
|
|
|
|
101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ohio Gathering
average daily throughput (MMcf/d) (4)
|
|
512
|
|
|
|
777
|
|
|
|
554
|
|
|
|
734
|
|
__________
|
|
(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)
|
Represents the ratio
of distributable cash flow to distributions declared and ultimately
paid to preferred and common unitholders. Distribution coverage
ratio calculation for the three months ended September 30, 2019 is
based on distributions declared and ultimately paid to preferred
and common unitholders in respect of the third quarter of
2019.
|
(4)
|
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
September 30,
|
|
|
Nine months ended
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
(In
thousands)
|
|
Reconciliations of
net income or loss to
adjusted EBITDA and distributable
cash flow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
25,629
|
|
|
$
|
(11,129)
|
|
|
$
|
86,112
|
|
|
$
|
(48,381)
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
19,018
|
|
|
|
23,462
|
|
|
|
64,836
|
|
|
|
68,547
|
|
Income tax (benefit)
expense
|
|
|
298
|
|
|
|
21
|
|
|
|
(104)
|
|
|
|
1,427
|
|
Depreciation and
amortization (1)
|
|
|
29,739
|
|
|
|
27,677
|
|
|
|
89,505
|
|
|
|
83,030
|
|
Proportional adjusted
EBITDA for equity
method investees (2)
|
|
|
7,129
|
|
|
|
10,435
|
|
|
|
22,582
|
|
|
|
29,584
|
|
Adjustments related to
MVC shortfall
payments (3)
|
|
|
2,292
|
|
|
|
3,534
|
|
|
|
(859)
|
|
|
|
2,868
|
|
Adjustments related to
capital reimbursement
activity (4)
|
|
|
(328)
|
|
|
|
(145)
|
|
|
|
(776)
|
|
|
|
(1,906)
|
|
Unit-based and noncash
compensation
|
|
|
1,622
|
|
|
|
1,291
|
|
|
|
6,191
|
|
|
|
5,370
|
|
Gain on early
extinguishment of debt (5)
|
|
|
(24,690)
|
|
|
|
—
|
|
|
|
(78,925)
|
|
|
|
—
|
|
Gain on asset sales,
net
|
|
|
(104)
|
|
|
|
(347)
|
|
|
|
(270)
|
|
|
|
(1,595)
|
|
Long-lived asset
impairment
|
|
|
—
|
|
|
|
—
|
|
|
|
4,475
|
|
|
|
45,021
|
|
Goodwill
Impairment
|
|
|
—
|
|
|
|
16,211
|
|
|
|
—
|
|
|
|
16,211
|
|
Other, net
(6)
|
|
|
20
|
|
|
|
260
|
|
|
|
4,703
|
|
|
|
4,992
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
equity method investees
|
|
|
795
|
|
|
|
(677)
|
|
|
|
7,146
|
|
|
|
(1,197)
|
|
Adjusted
EBITDA
|
|
$
|
59,830
|
|
|
$
|
71,947
|
|
|
$
|
190,324
|
|
|
$
|
206,365
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash interest
paid
|
|
|
18,368
|
|
|
|
22,752
|
|
|
|
62,441
|
|
|
|
66,435
|
|
Cash paid for
taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
150
|
|
Senior notes interest
adjustment (7)
|
|
|
410
|
|
|
|
3,063
|
|
|
|
(1,396)
|
|
|
|
3,063
|
|
Maintenance capital
expenditures
|
|
|
3,501
|
|
|
|
3,541
|
|
|
|
11,009
|
|
|
|
10,577
|
|
Cash flow available
for distributions (8)
|
|
$
|
37,551
|
|
|
$
|
42,591
|
|
|
$
|
118,270
|
|
|
$
|
126,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions
(9)
|
|
$
|
—
|
|
|
$
|
30,915
|
|
|
$
|
—
|
|
|
$
|
92,718
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution coverage
ratio (10)
|
|
n/a
|
|
|
1.38x
|
|
|
n/a
|
|
|
1.36x
|
|
__________
|
|
(1)
|
Includes the
amortization expense associated with our favorable gas gathering
contracts as reported in other revenues.
|
(2)
|
Reflects our
proportionate share of Ohio Gathering adjusted EBITDA, subject to a
one-month lag.
|
(3)
|
Adjustments related
to MVC shortfall payments are recognized ratably over the term of
the associated MVC.
|
(4)
|
Adjustments related
to capital reimbursement activity represent contributions in aid of
construction revenue recognized in accordance with Accounting
Standards Update No. 2014-09 Revenue from Contracts with Customers
("Topic 606").
|
(5)
|
Subsequent to the GP
Buy-In Transaction, the Partnership commenced a debt buyback
program to repurchase our Senior Notes, which is ongoing. We
repurchased $66.0 million of the outstanding $300 million aggregate
principal amount of our 5.50% Senior Notes through September 30,
2020. The gain on early extinguishment of debt for the 5.50% Senior
Notes during the three and nine months ended September 30, 2020
totaled $11.3 million and $20.5 million, respectively, and is
inclusive of a $0.3 million write off of debt issuance costs. We
also repurchased $144.9 million of the outstanding $500 million
aggregate principal amount of our 5.75% Senior Notes through
September 30, 2020. The gain on early extinguishment of debt for
the 5.75% Senior Notes during the three and nine months ended
September 30, 2020 totaled $15.1 million and $60.2 million,
respectively, and is inclusive of a $1.3 million write off of debt
issuance costs.
|
(6)
|
Represents items of
income or loss that we characterize as unrepresentative of our
ongoing operations. For the three months ended September 30, 2020,
the amount includes $0.1 million of restructuring expenses and $0.7
million of transaction costs associated with the GP Buy-In
Transaction. For the nine months ended September 30, 2020, the
amount includes $3.4 million of restructuring expenses and $2.1
million of transaction costs associated with the GP Buy-In
Transaction. For the nine months ended September 30, 2019, the
amount includes $3.4 million of severance expense associated with
our former Chief Executive Officer and $0.9 million of transaction
costs associated with the Equity Restructuring.
|
(7)
|
Senior notes interest
adjustment represents the net of interest expense accrued and paid
during the period. Interest on the $300.0 million 5.5% senior notes
is paid in cash semi-annually in arrears on February 15 and August
15 until maturity in August 2022. Interest on the $500.0
million 5.75% senior notes is paid in cash semi-annually in arrears
on April 15 and October 15 until maturity in April 2025.
|
(8)
|
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.
|
(9)
|
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.
|
(10)
|
Represents the ratio
of distributable cash flow to distributions declared and ultimately
paid to preferred and common unitholders. Distribution coverage
ratio calculation for the three months ended September 30, 2019 is
based on distributions declared and ultimately paid to preferred
and common unitholders in respect of the third quarter of
2019.
|
SUMMIT MIDSTREAM
PARTNERS, LP AND SUBSIDIARIES UNAUDITED
RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES
|
|
|
Nine months ended
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
(In
thousands)
|
|
Reconciliation of
net cash provided by operating activities to
adjusted
EBITDA and distributable cash flow:
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
|
146,807
|
|
|
$
|
127,617
|
|
Add:
|
|
|
|
|
|
|
|
|
Interest expense,
excluding amortization of debt issuance costs
|
|
|
59,966
|
|
|
|
63,828
|
|
Income tax (benefit)
expense
|
|
|
(104)
|
|
|
|
1,427
|
|
gain on fair value of
warrants
|
|
|
838
|
|
|
|
—
|
|
Changes in operating
assets and liabilities
|
|
|
(21,049)
|
|
|
|
8,262
|
|
Proportional adjusted
EBITDA for equity method investees (1)
|
|
|
22,582
|
|
|
|
29,584
|
|
Adjustments related to
MVC shortfall payments (2)
|
|
|
(859)
|
|
|
|
2,868
|
|
Adjustments related to
capital reimbursement activity (3)
|
|
|
(776)
|
|
|
|
(1,906)
|
|
Other, net
(4)
|
|
|
4,703
|
|
|
|
4,992
|
|
Less:
|
|
|
|
|
|
|
|
|
Distributions from
equity method investees
|
|
|
19,859
|
|
|
|
28,008
|
|
Noncash lease
expense
|
|
|
1,925
|
|
|
|
2,299
|
|
Adjusted
EBITDA
|
|
$
|
190,324
|
|
|
$
|
206,365
|
|
Less:
|
|
|
|
|
|
|
|
|
Cash interest
paid
|
|
|
62,441
|
|
|
|
66,435
|
|
Cash paid for
taxes
|
|
|
—
|
|
|
|
150
|
|
Senior notes interest
adjustment (5)
|
|
|
(1,396)
|
|
|
|
3,063
|
|
Maintenance capital
expenditures
|
|
|
11,009
|
|
|
|
10,577
|
|
Cash flow available
for distributions (6)
|
|
$
|
118,270
|
|
|
$
|
126,140
|
|
__________
|
|
(1)
|
Reflects our
proportionate share of Ohio Gathering adjusted EBITDA, subject to a
one-month lag.
|
(2)
|
Adjustments related
to MVC shortfall payments are recognized ratably over the term of
the associated MVC.
|
(3)
|
Adjustments related
to capital reimbursement activity represent contributions in aid of
construction revenue recognized in accordance with Accounting
Standards Update No. 2014-09 Revenue from Contracts with Customers
("Topic 606").
|
(4)
|
Represents items of
income or loss that we characterize as unrepresentative of our
ongoing operations. For the three months ended September 30, 2020,
the amount includes $0.1 million of restructuring expenses and $0.7
million of transaction costs associated with the GP Buy-In
Transaction. For the nine months ended September 30, 2020, the
amount includes $3.4 million of restructuring expenses and $2.1
million of transaction costs associated with the GP Buy-In
Transaction. For the nine months ended September 30, 2019, the
amount includes $3.4 million of severance expense associated with
our former Chief Executive Officer and $0.9 million of transaction
costs associated with the Equity Restructuring.
|
(5)
|
Senior notes interest
adjustment represents the net of interest expense accrued and paid
during the period. Interest on the $300.0 million 5.5% senior notes
is paid in cash semi-annually in arrears on February 15 and August
15 until maturity in August 2022. Interest on the $500.0 million
5.75% senior notes is paid in cash semi-annually in arrears on
April 15 and October 15 until maturity in April 2025.
|
(6)
|
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