- Cash sale price of $75 million
reduces SMLP's total leverage by ~0.3x and increases its liquidity
and financial flexibility for reinvestment
- Expands Double E's commercial relationship with Matador, a
top-tier Delaware producer with
nearly 125,000 net acres in New
Mexico and an existing economic interest in a processing
plant complex in Eddy County, New
Mexico currently connected to Double E
- Matador assumes additional take-or-pay firm capacity on Double
E
- Provides Summit additional financial flexibility to pursue
strategic, scale-building opportunities for Double E and around
Summit's other core assets in growth basins
- The transaction is expected to be free cash flow accretive to
SMLP unitholders
- Summit reiterates its 2022 Adjusted EBITDA guidance range of
$205 million to $220 million
HOUSTON, June 9, 2022
/PRNewswire/ -- Summit Midstream Partners, LP (NYSE: SMLP)
("Summit", "SMLP" or the "Partnership") announced today that its
wholly owned subsidiary, Summit Midstream Holdings, LLC ("SMP
Holdings"), has entered into a definitive agreement to sell Summit
Midstream Permian, LLC ("Summit Permian"), which owns the Lane
Gathering and Processing System ("Lane G&P System") in the
Delaware Basin to a wholly owned
subsidiary of Matador Resources Company ("Matador") for a cash sale
price of $75 million, subject to
customary transaction adjustments. Matador will also assume
Summit Midstream Marketing, LLC's, a wholly owned subsidiary of SMP
Holdings, take-or-pay firm capacity on the Double E Pipeline
associated with the Lane G&P System. The transaction is subject
to customary closing conditions and is expected to close in the
second quarter of 2022.
Heath Deneke, President, Chief
Executive Officer and Chairman, commented, "We are pleased to
announce this strategic transaction with Matador, a premier
upstream and midstream operator in the Delaware Basin. With
the sale of the Lane G&P System, Summit's focus in the
Delaware will be on fully
commercializing and expanding its highly strategic Double E
pipeline system. The assumption of additional take-or-pay firm
capacity further expands Double E's commercial relationship with
Matador, a significant acreage holder owning nearly 125,000 net
acres in Eddy and Lea Counties in southeastern New Mexico. Pro-forma for the transaction,
Matador will have two gas processing complexes connected to the
Double E system, including Matador's interest in San Mateo
Midstream, LLC's 460 MMcf/d Black River Processing Plant Complex
and the 60 MMcf/d Lane G&P System. The transaction is
highly credit accretive for Summit, reducing our total leverage
ratio by ~0.3x and creating additional liquidity and financial
flexibility to reinvest in strategic scale-building opportunities
in our Rockies and Northeast segments and Double E joint
venture. Additionally, after accounting for the transaction,
Summit is reiterating its full year 2022 Adjusted EBITDA guidance
range of $205 million to $220 million."
Lane G&P System Overview
The Lane G&P System includes approximately 45 miles of low
and high pressure gathering pipeline in Eddy and Lea
counties in the northern Delaware
Basin, three compressor stations and a 60 MMcf/d cryogenic
processing plant commissioned in December
2018. Gathering and processing services on the Lane G&P
System are provided pursuant to long-term, fee-based gathering
agreements with producers that are primarily targeting crude oil
production from the Bone Spring and Wolfcamp shale formations.
Residue natural gas is primarily delivered to the Double E
Pipeline.
Advisors
Guggenheim Securities served as financial advisor and
Locke Lord L.L.P. served as legal
advisor to Summit. O'Melveny & Myers LLP served as legal
advisor to Matador.
About Summit Midstream Partners, LP
SMLP is a value-driven limited partnership focused on
developing, owning and operating midstream energy infrastructure
assets that are strategically located in the core producing areas
of unconventional resource basins, primarily shale formations, in
the continental United States. SMLP provides natural gas,
crude oil and produced water gathering, processing and
transportation services pursuant to primarily long-term, fee-based
agreements with customers and counterparties in six unconventional
resource basins: (i) the Appalachian Basin, which includes the
Utica and Marcellus shale
formations in Ohio and
West Virginia; (ii) the
Williston Basin, which includes
the Bakken and Three Forks shale formations in North Dakota; (iii) the Denver-Julesburg
Basin, which includes the Niobrara
and Codell shale formations in Colorado and Wyoming; (iv) the Permian Basin, which
includes the Bone Spring and Wolfcamp formations in New Mexico; (v) the Fort Worth Basin, which includes the Barnett
Shale formation in Texas; and (vi)
the Piceance Basin, which includes the Mesaverde formation as well
as the Mancos and Niobrara shale formations in Colorado.
SMLP has an equity method investment in Double E Pipeline, LLC,
which provides interstate natural gas transportation service from
multiple receipt points in the Delaware Basin to various delivery points in
and around the Waha Hub in Texas. SMLP also has an equity
method investment in Ohio Gathering, which operates extensive
natural gas gathering and condensate stabilization infrastructure
in the Utica Shale in Ohio. SMLP is headquartered in
Houston, Texas.
Forward-Looking Statements
This press release includes certain statements concerning
expectations for the future that are forward-looking within the
meaning of the federal securities laws. Forward-looking
statements include, without limitation, any statement that may
project, indicate or imply future results, events, performance or
achievements and may contain the words "expect," "intend," "plan,"
"anticipate," "estimate," "believe," "will be," "will continue,"
"will likely result," and similar expressions, or future
conditional verbs such as "may," "will," "should," "would," and
"could." In addition, any statement concerning future
financial performance (including future revenues, earnings or
growth rates), ongoing business strategies and possible actions
taken by us or our subsidiaries are also forward-looking
statements. Forward-looking statements also contain known and
unknown risks and uncertainties (many of which are difficult
to predict and beyond management's control) that may cause
SMLP's actual results in future periods to differ materially from
anticipated or projected results. An extensive list of
specific material risks and uncertainties affecting SMLP is
contained in its 2021 Annual Report on Form 10-K filed with
the Securities and Exchange Commission (the
"SEC") on February 28, 2022, as amended and updated from
time to time. Any forward-looking statements in this press release
are made as of the date of this press release and SMLP
undertakes no obligation to update or revise any
forward-looking statements to reflect new information or
events.
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SOURCE Summit Midstream Partners, LP