HOUSTON, Nov. 4, 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 September 30, 2021, including net income of $7.0 million, adjusted EBITDA of $61.1 million and DCF of $45.7 million.  Operated natural gas throughput averaged 1,333 million cubic feet per day ("MMcf/d") and liquids throughput averaged 63 thousand barrels per day ("Mbbl/d").  Operated natural gas volumes decreased 7.5% relative to the second quarter of 2021, largely due to natural production declines, which was partially offset by volumes from 20 new wells that were turned-in-line during the quarter, including seven new Barnett wells that came online in September.  Third quarter 2021 liquids volume was flat relative to the second quarter of 2021, primarily as a result of six new wells that were turned-in-line in July that provided both crude oil and water volumes to Summit's Williston liquids system.

Summit Midstream Partners Logo. (PRNewsFoto/Summit Midstream Partners)

Heath Deneke, President, Chief Executive Officer and Chairman, commented, "Summit's third quarter financial and operational results exceeded our revised expectations established in late June 2021, with quarterly adjusted EBITDA of $61.1 million.  A total of 20 new wells were connected across our diversified operating footprint during the quarter and we expect approximately 45 new wells to be turned-in-line during the fourth quarter.  After posting our third consecutive quarter of strong results, and factoring in expected fourth quarter activity, we now expect full year 2021 adjusted EBITDA to be near the high end of our previously announced guidance of $225 million to $240 million." 

"The recent closing of the previously announced $400 million ABL Revolver and $700 million of secured bonds provides a new multi-year runway to continue harvesting substantial free cash flow from the business, reducing debt and further unlocking value across Summit's capital structure.  These new financings provide ample liquidity and financial flexibility over the next several years to continue our focus on strengthening the balance sheet, optimizing the base business, and pursuing value enhancing growth opportunities."

"The Double E Pipeline achieved mechanical completion in October of 2021 and we are now entering the commissioning phase to place the project in-service by the end of the year.  As the Double E Pipeline nears completion, we are also pleased to announce further reductions to the project budget, which is now expected to be approximately $400 million in total, or $280 million net to Summit.  This significant reduction versus the original $500 million budget in June 2019 is a real testament to the hard work, planning and efficiency of the entire project team that has worked diligently on this effort over the past 3 years, while maintaining a best-in-class safety and compliance record.  We are very excited to commence operations of the Double E Pipeline later this year and introduce a new strategic outlet for incremental gas takeaway in the northern Delaware Basin."

Third Quarter 2021 Business Highlights
In the third quarter of 2021, SMLP's average daily natural gas throughput for its operated systems decreased by 7.5% to 1,333 MMcf/d, and liquids volumes remained unchanged at 63 Mbbl/d, relative to the second quarter of 2021.  SMLP's customers are currently operating five drilling rigs on acreage behind SMLP's gathering systems,  and there were approximately 30 DUCs in inventory and 12 wells under development as of September 30, 2021.

Core Focus Areas:

  • Core Focus Areas generated combined quarterly segment adjusted EBITDA of $34.3 million and had combined capital expenditures of $4.3 million in the third quarter of 2021.
  • Utica Shale segment adjusted EBITDA totaled $8.3 million, a $2.3 million decrease relative to the second quarter of 2021, which was driven primarily by a 20.2% decline in volume throughput as a result of natural production declines, partially offset by two new wells connected behind the TPL-7 interconnect. Volumes from the four well pad that was connected in March of 2021 averaged 104 MMcf/d during the third quarter of 2021, and were responsible for the majority of the volume decline relative to the second quarter of 2021. As of September 30, 2021, our Utica Shale customers had 10 DUCs, including another four well pad that is expected to be turned-in-line in the fourth quarter of 2021.
  • Ohio Gathering segment adjusted EBITDA totaled $6.7 million, a 2.2% decrease from the second quarter of 2021, primarily driven by a 2.1% decrease in volume throughput. Four new dry gas wells were connected during the third quarter of 2021 and there are currently nine DUCs behind the system, of which three, when commissioned in the fourth quarter of 2021, will provide volumes to both the Ohio Gathering system and the TPL-7 interconnect included in the Utica Shale segment.
  • Williston Basin segment adjusted EBITDA totaled $11.3 million in the third quarter of 2021, a 17.1% increase from the second quarter of 2021, primarily as a result of favorable changes in customer volume mix, increased margins on certain contracts, reflecting higher commodity prices, and lower operating expenses. Six wells were connected behind our liquids gathering system in the third quarter of 2021, providing incremental crude oil and water volumes, which helped offset natural production declines. There are 12 wells currently in development behind our Polar Divide system, all which are expected to be turned-in-line later this year.
  • DJ Basin segment adjusted EBITDA totaled $7.4 million in the third quarter of 2021, a $2.3 million increase from the second quarter of 2021, and included a $1.8 million benefit from the settlement of a legal matter. One new well was turned-in-line during the quarter and volume throughput averaged 23 MMcf/d, which was in-line with the second quarter of 2021. As of September 30, 2021, there were no DUCs behind our DJ Basin infrastructure expected to be turned-in-line in the near-term; however, Summit is engaged with third parties regarding new agreements that could further utilize spare processing capacity and improve cash flows.
  • Permian Basin segment adjusted EBITDA totaled $0.6 million in the third quarter of 2021, a slight increase relative to the second quarter of 2021, primarily due to improved product sales margins and a change in customer volume mix. No new wells were connected during the quarter, but Summit recently signed a new commercial agreement with a new customer who is commissioning four new wells in the fourth quarter of 2021. Summit also executed a new offload agreement with a third party, which is expected to drive additional volumes behind the system heading into 2022.

Legacy Areas:

  • Legacy Areas generated $34.2 million of combined segment adjusted EBITDA in the third quarter of 2021 and had combined capital expenditures of $1.2 million.
  • Piceance Basin segment adjusted EBITDA of $18.9 million decreased by 7.0% from the second quarter of 2021, primarily due to a gathering rate reduction for a customer that became effective in July, lower quarterly volume throughput and increased operating expenses. No new wells were connected during the third quarter; however, one of our larger customers is expected to turn-in-line nine new wells during the fourth quarter of 2021, which would be the first new wells in the Piceance Basin segment since 2018.
  • Barnett Shale segment adjusted EBITDA of $9.6 million increased by 8.4% from the second quarter of 2021, primarily due to increased volumes and a change in customer volume mix as a result of seven new wells that were turned-in-line in September 2021, which represent the first new wells on the DFW system since 2019. In aggregate, these seven wells produced in excess of 55 MMcf/d in the first 30 days and represent some of the largest natural gas wells ever drilled in the Barnett.
  • Marcellus Shale segment adjusted EBITDA of $5.7 million decreased 2.8% from the second quarter of 2021, driven primarily by natural production declines, as no new wells were connected in the third quarter of 2021. There were four DUCs behind the Mountaineer system at the end of September 2021 that are expected to be connected during the fourth quarter of 2021.

The following table presents average daily throughput by reportable segment for the periods indicated:


Three Months Ended

September 30,


Nine Months Ended

September 30,


2021


2020


2021


2020

Average daily throughput (MMcf/d):








Utica Shale

396


352


434


330

Williston Basin

13


14


13


14

DJ Basin

23


27


23


26

Permian Basin

24


34


28


33

Piceance Basin

321


361


329


370

Barnett Shale

201


208


197


215

Marcellus Shale

355


396


350


366

Aggregate average daily throughput

1,333


1,392


1,374


1,354









Average daily throughput (Mbbl/d):








Williston Basin

63


69


64


81

Aggregate average daily throughput

63


69


64


81









Ohio Gathering average daily throughput

    (MMcf/d) (1)

503


512


525


554

__________


(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

September 30,


Nine Months Ended

September 30,


2021


2020


2021


2020


(In thousands)


(In thousands)

Reportable segment adjusted EBITDA (1):








Utica Shale

$

8,328



$

7,453



$

26,700



$

24,074


Ohio Gathering (2)

6,690



7,129



20,403



22,582


Williston Basin

11,276



11,713



31,707



40,632


DJ Basin

7,446



4,766



17,899



15,016


Permian Basin

559



893



1,729



4,302


Piceance Basin

18,908



21,503



60,266



66,794


Barnett Shale

9,637



7,205



26,542



24,475


Marcellus Shale

5,702



6,022



17,171



16,230


Total

$

68,546



$

66,684



$

202,417



$

214,105


Less:  Corporate and Other (3)

7,402



6,854



18,700



23,781


Adjusted EBITDA

$

61,144



$

59,830



$

183,717



$

190,324



__________



(1)

We define segment adjusted EBITDA as total revenues less total costs and expenses, plus (i) other income, (ii) our proportional adjusted EBITDA for equity method investees, (iii) depreciation and amortization, (iv) adjustments related to MVC shortfall payments, (v) adjustments related to capital reimbursement activity, (vi) unit-based and noncash compensation, (vii) impairments and (viii) other noncash expenses or losses, less other noncash income or gains.



(2)

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 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 $5.8 million in the third quarter of 2021, inclusive of maintenance capital expenditures of $2.2 million.  Capital expenditures in the third quarter of 2021 were primarily related to growth projects to connect new pad sites in our Utica Shale and Williston Basin segments.


Nine Months Ended

September 30,


2021


2020


(In thousands)

Cash paid for capital expenditures (1):




Utica Shale

$

6,247



$

2,461


Williston Basin

3,031



8,435


DJ Basin

481



11,349


Permian Basin

349



6,342


Piceance Basin

(32)



971


Barnett Shale

731



1,627


Marcellus Shale

525



430


Total reportable segment capital expenditures

$

11,332



$

31,615


Corporate and Other

448



3,697


Total cash paid for capital expenditures

$

11,780



$

35,312



__________



(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 September 30, 2021, SMLP had $725 million drawn under its $1.1 billion Revolver and $351.1 million of undrawn commitments, after accounting for $23.9 million of issued, but undrawn letters of credit.  Year-to-date through September 30, 2021, SMLP has reduced the drawn balance on the Revolver by $132 million, including $37 million in the third quarter of 2021.  Subject to covenant limits, our available borrowing capacity at September 30, 2021 totaled approximately $170.5 million.  SMLP also had $5.5 million of unrestricted cash on hand as of September 30, 2021.

Based upon the terms of SMLP's Revolver, and $1.21 billion of total outstanding debt, net of cash (inclusive of $493.5 million of senior unsecured notes), SMLP's total leverage ratio and first lien secured leverage ratio (as defined in the credit agreement) as of September 30, 2021, were 4.88 to 1.0 and 2.90 to 1.0, respectively, relative to maximum threshold limits of 5.75 to 1.0 and 3.50 to 1.0.

As of November 2, 2021, pro forma for the completion of the 2022 debt maturities refinancing transaction, SMLP had approximately $300 million outstanding on its new $400 million ABL Revolving Credit Facility and borrowing availability of $76.1 million, after accounting for $23.9 million of issued, but undrawn letters of credit, and Summit was in compliance with all financial covenants.

Double E Update
The Double E Pipeline is mechanically complete and currently interconnected with all five natural gas processing plant receipt points in the northern Delaware Basin, which represent the origination points for future natural gas flowing to Double E.  Double E is also now interconnected with two of the largest and newest downstream pipelines originating in the Waha Hub region, which will provide Double E's customers with access to the Texas Gulf Coast markets.  Additionally, Double E is nearing completion for a third downstream pipeline interconnection.

Summit is currently in the process of commissioning the Double E Pipeline and expects to place it in service during the fourth quarter of 2021, at an all-in, gross (8/8th's) cost of approximately $400 million, which is approximately $280 million net to Summit, for its 70% interest in the project.  Summit funded all of its Double E capital calls in the third 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 September 30, 2021, there was $107.0 million outstanding under the $160.0 million Permian Transmission construction facility.

Double E has 1.0 Bcf/d, or approximately 75% of its initial 1.35 Bcf/d of total throughput capacity, committed under long-term, take-or-pay firm transportation service agreements from some of the largest and most active producers in the Delaware Basin.  These volume commitments are structured to step-up over a three year period, with the first year of commitments totaling 585 MMcf/d.  Commitments step up each year such that, by year 4, Double E will earn take-or-pay revenue on the full 1.0 Bcf/d of existing contracted commitments.

Summit is engaged in various stages of discussions with multiple prospective shippers to subscribe the remaining uncontracted capacity and will provide additional details regarding these discussions at the appropriate time.

MVC Shortfall Payments
SMLP billed its customers $11.5 million in the third 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 third 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 third quarter of 2021.  SMLP's MVC shortfall payment mechanisms contributed $13.6 million of total adjusted EBITDA in the third quarter of 2021.


Three Months Ended September 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

$

3,705




$

3,705



$



$

3,705


Total net change

$

3,705




$

3,705



$



$

3,705











MVC shortfall payment adjustments:









Williston Basin

$




$

2,145



$



$

2,145


Piceance Basin

6,226




6,226





6,226


Marcellus Shale

1,571




1,571





1,571


Total MVC shortfall payment adjustments

$

7,797




$

9,942



$



$

9,942











Total (1)

$

11,502




$

13,647



$



$

13,647



__________



(1)

Exclusive of Ohio Gathering due to equity method accounting.

 


Nine Months Ended September 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

$

11,007




$

11,007



$



$

11,007


Total net change

$

11,007




$

11,007



$



$

11,007











MVC shortfall payment adjustments:









Williston Basin

$




$

6,435



$



$

6,435


Piceance Basin

18,588




18,588





18,588


Marcellus Shale

4,778




4,778





4,778


Total MVC shortfall payment adjustments

$

23,366




$

29,801



$



$

29,801











Total (1)

$

34,373




$

40,808



$



$

40,808



__________



(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 (the "Series A Pref Units") for the period ended September 30, 2021.  Unpaid distributions on the Series A Pref Units will continue to accrue.

Third Quarter 2021 Earnings Call Information
SMLP will host a conference call at 10:00 a.m. Eastern on Thursday, November 4, 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 50239464.  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 be attending the RBC Capital Markets Midstream and Energy Infrastructure Conference on November 16, 2021, the Bank of America General Leveraged Finance Conference on December 1, 2021, and the Wells Fargo 2021 Virtual Midstream, Utility & Renewables Symposium on December 8, 2021.  Presentation materials associated with these events will be accessible through the Investors section of SMLP's website at www.summitmidstream.com in advance 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, 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, income tax benefit, income (loss) from equity method investees and other noncash income or gains.  Because adjusted EBITDA may be defined differently by other entities in our industry, our definition of this non-GAAP financial measure may not be comparable to similarly titled measures of other entities, thereby diminishing its utility.

Management uses adjusted EBITDA in making financial, operating and planning decisions and in evaluating our financial performance. Furthermore, management believes that adjusted EBITDA may provide external users of our financial statements, such as investors, commercial banks, research analysts and others, with additional meaningful comparisons between current results and results of prior periods as they are expected to be reflective of our core ongoing business.

Adjusted EBITDA is used as a supplemental financial measure to assess:

  • the ability of our assets to generate cash sufficient to make future potential cash distributions and support our indebtedness;
  • the financial performance of our assets without regard to financing methods, capital structure or historical cost basis;
  • our operating performance and return on capital as compared to those of other entities in the midstream energy sector, without regard to financing or capital structure;
  • the attractiveness of capital projects and acquisitions and the overall rates of return on alternative investment opportunities; and
  • the financial performance of our assets without regard to (i) income or loss from equity method investees, (ii) the impact of the timing of minimum volume commitments shortfall payments under our gathering agreements or (iii) the timing of impairments or other income or expense items that we characterize as unrepresentative of our ongoing operations.

Adjusted EBITDA has limitations as an analytical tool and investors should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. For example:

  • certain items excluded from adjusted EBITDA are significant components in understanding and assessing an entity's financial performance, such as an entity's cost of capital and tax structure;
  • adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
  • adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; and
  • although depreciation and amortization are noncash charges, the assets being depreciated and amortized will often have to be replaced in the future, and adjusted EBITDA does not reflect any cash requirements for such replacements.

We compensate for the limitations of adjusted EBITDA as an analytical tool by reviewing the comparable GAAP financial measures, understanding the differences between the financial measures and incorporating these data points into our decision-making process.

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 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



September 30,
2021


December 31,
2020


(In thousands)

ASSETS




Cash and cash equivalents

$

5,505



$

15,544


Restricted cash

756




Accounts receivable, net

68,473



61,932


Other current assets

11,388



4,623


  Total current assets

86,122



82,099


Property, plant and equipment, net

1,748,174



1,817,546


Intangible assets, net

180,017



199,566


Investment in equity method investees

481,985



392,740


Other noncurrent assets

4,379



7,866


TOTAL ASSETS

$

2,500,677



$

2,499,817






LIABILITIES AND CAPITAL




Trade accounts payable

$

10,706



$

11,878


Accrued expenses

15,369



13,036


Deferred revenue

10,576



9,988


Ad valorem taxes payable

6,531



9,086


Accrued compensation and employee benefits

7,981



9,658


Accrued interest

8,592



8,007


Accrued environmental remediation

2,684



1,392


Other current liabilities

10,098



5,363


  Total current liabilities

72,537



68,408


Long-term debt

1,318,078



1,347,326


Noncurrent deferred revenue

43,248



48,250


Noncurrent accrued environmental remediation

2,924



1,537


Other noncurrent liabilities

37,860



21,747


Total liabilities

1,474,647



1,487,268


Commitments and contingencies








Mezzanine Capital




Subsidiary Series A Preferred Units

101,932



89,658






Partners' Capital




Series A Preferred Units

165,823



174,425


Common limited partner capital

758,275



748,466


  Total partners' capital

924,098



922,891


TOTAL LIABILITIES AND CAPITAL

$

2,500,677



$

2,499,817


 

 

SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



Three Months Ended

September 30,


Nine Months Ended

September 30,


2021


2020


2021


2020


(In thousands, except per-unit amounts)

Revenues:








Gathering services and related fees

$

70,924



$

71,964



$

215,504



$

229,667


Natural gas, NGLs and condensate sales

22,121



10,783



59,301



35,246


Other revenues

9,000



7,406



26,599



22,150


Total revenues

102,045



90,153



301,404



287,063


Costs and expenses:








Cost of natural gas and NGLs

21,072



8,632



58,174



22,945


Operation and maintenance

20,781



22,168



54,881



65,131


General and administrative (1)

8,477



10,561



48,414



39,908


Depreciation and amortization

30,992



29,505



87,866



88,801


Transaction costs

1,060



726



1,276



1,944


Gain on asset sales, net

(212)



(104)



(352)



(270)


Long-lived asset impairment

248





1,773



4,475


Total costs and expenses

82,418



71,488



252,032



222,934


Other income (expense), net

753



795



(1,532)



644


Loss on ECP Warrants





(13,634)




Interest expense

(15,530)



(19,018)



(44,985)



(64,836)


Gain on early extinguishment of debt



24,690





78,925


Income (loss) before income taxes and equity method investment income

4,850



25,132



(10,779)



78,862


Income tax benefit (expense)

79



(298)



341



104


Income from equity method investees

2,075



795



6,694



7,146


Net income (loss)

$

7,004



$

25,629



$

(3,744)



$

86,112










Net income (loss) per limited partner unit:








Common unit – basic

$

(0.17)



$

19.28



$

(2.99)



$

36.12


Common unit – diluted

$

(0.17)



$

18.67



$

(2.99)



$

35.04










Weighted-average limited partner units outstanding:








Common units – basic

6,999



3,465



6,596



3,155


Common units – diluted

6,999



3,577



6,596



3,252



__________



(1)

For the three and nine months ended September 30, 2021, the amount includes $2.9 million and $22.2 million losses related to the Blacktail Release. For the three and nine months ended September 30, 2020, the amount includes $0.1 million and $3.4 million of restructuring expenses, respectively.

 

 

SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES

UNAUDITED OTHER FINANCIAL AND OPERATING DATA



Three Months Ended

September 30,


Nine Months Ended

September 30,


2021


2020


2021


2020


(In thousands)

Other financial data:








Net income (loss)

$

7,004



$

25,629



$

(3,744)



$

86,112


Net cash provided by operating activities

41,514



41,436



127,731



146,807


Capital expenditures

5,818



7,886



11,780



35,312


Contributions to equity method investees

53,166



12,344



102,109



92,072


Adjusted EBITDA

61,144



59,830



183,717



190,324


Cash flow available for distributions (1)

$

45,736



$

37,551



$

138,364



$

118,270


Distributions (2)

n/a



n/a



n/a



n/a










Operating data:








Aggregate average daily throughput – natural

    gas (MMcf/d)

1,333



1,392



1,374



1,354


Aggregate average daily throughput – liquids (Mbbl/d)

63



69



64



81










Ohio Gathering average daily throughput (MMcf/d) (3)

503



512



525



554



__________



(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

September 30,


Nine Months Ended

September 30,


2021


2020


2021


2020


(In thousands)

Reconciliations of net income or loss to

    adjusted EBITDA and distributable

    cash flow:








Net income

$

7,004



$

25,629



$

(3,744)



$

86,112


Add:








Interest expense

15,530



19,018



44,985



64,836


Income tax (benefit) expense

(79)



298



(341)



(104)


Depreciation and amortization (1)

31,226



29,739



88,570



89,505


Proportional adjusted EBITDA for equity
    method investees (2)

6,690



7,129



20,403



22,582


Adjustments related to MVC shortfall
    payments (3)



2,292





(859)


Adjustments related to capital reimbursement
    activity (4)

(1,549)



(328)



(5,019)



(776)


Unit-based and noncash compensation

868



1,622



3,883



6,191


Gain on early extinguishment of debt



(24,690)





(78,925)


Gain on asset sales, net

(212)



(104)



(352)



(270)


Long-lived asset impairment

248





1,773



4,475


Other, net (5)

3,493



20



40,253



4,703


Less:








Income from equity method investees

2,075



795



6,694



7,146


Adjusted EBITDA

$

61,144



$

59,830



$

183,717



$

190,324


Less:








Cash interest paid

12,485



18,368



40,353



62,441


Cash paid for taxes

176





191




Senior notes interest adjustment (6)

512



410



512



(1,396)


Maintenance capital expenditures

2,235



3,501



4,297



11,009


   Cash flow available for distributions (7)

$

45,736



$

37,551



$

138,364



$

118,270



__________



(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 and nine months ended September 30, 2021, the amount includes $2.9 million and $22.2 million of losses related to the Blacktail Release.  Additionally, for the nine months ended September 30, 2021, the amount includes a $13.6 million loss related to the change in the fair value of the ECP Warrants. For the nine months ended September 30, 2020, the amount represents $3.4 million of restructuring expenses and $2.1 million of 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)

Represents cash flow available for distribution to preferred and common unitholders. Common distributions cannot be paid unless all accrued preferred distributions are paid. Cash flow available for distributions is also referred to as Distributable Cash Flow, or DCF.

 

 

SUMMIT MIDSTREAM PARTNERS, LP AND SUBSIDIARIES

UNAUDITED RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES



Nine Months Ended

September 30,


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

$

127,731



$

146,807


Add:




Interest expense, excluding amortization of debt issuance costs

39,809



59,966


Income tax (benefit) expense

(341)



(104)


Gain (loss) on ECP warrants and unsettled  interest rate swaps

(11,696)



838


Changes in operating assets and liabilities

(6,626)



(21,049)


Proportional adjusted EBITDA for equity method investees (1)

20,403



22,582


Adjustments related to MVC shortfall payments (2)


(859)


Adjustments related to capital reimbursement activity (3)

(5,019)



(776)


Other, net (4)

40,253



4,703


Less:




Distributions from equity method investees

20,004



19,859


Noncash lease expense

793



1,925


Adjusted EBITDA

$

183,717



$

190,324


Less:




Cash interest paid

40,353



62,441


Cash paid for taxes

191




Senior notes interest adjustment (5)

512



(1,396)


Maintenance capital expenditures

4,297



11,009


   Cash flow available for distributions (6)

$

138,364



$

118,270



__________



(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 nine months ended September 30, 2021, the amount includes $22.2 million of losses related to the Blacktail Release and a $13.6 million loss related to the change in the fair value of the ECP Warrants. 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.



(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)

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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